<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
- - ----- Exchange Act of 1934.
For the quarterly period ended September 30, 1995
Transition report pursuant to Section 13 or 15(d) of the
- - ----- Securities Exchange Act of 1934.
Commission file number 0-11428
INFORMATION RESOURCES, INC.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2947987
------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 North Clinton Street, Chicago, Illinois 60661
------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 726-1221
--------------
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
Common, $.01 par value per share
Preferred Stock Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
The number of shares of the registrant's common stock, $.01 par value per share
outstanding, as of October 31, 1995, was 27,355,366.
<PAGE>
INFORMATION RESOURCES, INC. and Subsidiaries
INDEX
-----
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
- - ------------------------------
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 11
PART II. OTHER INFORMATION
- - --------------------------
Item 6 - Exhibits and Reports on Form 8-K 17
Signatures 18
2
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1995 DECEMBER 31, 1994
- - ------ ------------------ -----------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 35,582 $ 11,792
Accounts receivable, net 100,057 119,851
Deferred income taxes 4,974 4,471
Escrow receivable 8,000 --
Prepaid expenses and other 6,668 7,075
-------- --------
Total Current Assets 155,281 143,189
-------- --------
Property and equipment 132,188 145,537
Accumulated depreciation and amortization (73,231) (85,244)
-------- --------
58,957 60,293
Investments 18,332 20,995
Other assets 117,954 130,077
-------- --------
$350,524 $354,554
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Current maturities of capitalized leases $ 2,544 $ 1,998
Accounts payable 31,635 19,665
Accrued compensation and benefits 18,411 14,008
Accrued expenses 17,501 14,004
Deferred revenue 24,931 17,733
Other 5,679 6,207
-------- --------
Total Current Liabilities 100,701 73,615
-------- --------
Long-term debt 4,218 31,452
Deferred income taxes 11,557 16,122
Deferred gain 4,219 4,463
Other liabilities 3,160 1,701
STOCKHOLDERS' EQUITY
Preferred stock-authorized, 1,000,000 shares
$.01 par value - none issued -- --
Common stock - authorized 60,000,000 shares,
$.01 par value; issued and outstanding
in 1995: 27,342,610 shares; issued and
outstanding in 1994: 26,493,277 shares 273 265
Capital in excess of par value 180,477 169,703
Retained earnings 45,744 57,506
Cumulative translation adjustment 175 (273)
-------- --------
Total Stockholders' Equity 226,669 227,201
-------- --------
$350,524 $354,554
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------- ----------------------
SEPTEMBER 30 SEPTEMBER 30
--------------------- ----------------------
1995 1994 1995 1994
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 87,288 $ 92,915 $ 301,415 $ 272,776
Costs and expenses:
Operating expenses (91,582) (83,020) (291,689) (234,801)
Selling, general and
administrative expenses (17,252) (11,202) (41,285) (32,615)
Nonrecurring expenses (22,759) -- (22,759) --
--------- -------- --------- ---------
(131,593) (94,222) (355,733) (267,416)
--------- -------- --------- ---------
Operating profit (loss) (44,305) (1,307) (54,318) 5,360
Net gain on disposition of assets 41,126 -- 41,126 --
Interest expense and other, net (446) (437) (3,132) (693)
Litigation provision -- (3,000) -- (8,000)
Equity in gain (loss) of affiliated companies 91 (683) 246 (5,012)
--------- -------- --------- ---------
Loss before income taxes,
minority interest and cumulative effect
of change in accounting principle (3,534) (5,427) (16,078) (8,345)
Income tax (expense) benefit (1,400) 2,130 4,244 3,016
--------- -------- --------- ---------
Loss before minority interest
and cumulative effect of change in
accounting principle (4,934) (3,297) (11,834) (5,329)
Minority interest 132 193 132 949
--------- -------- --------- ---------
Loss before cumulative effect
of change in accounting principle (4,802) (3,104) (11,702) (4,380)
Cumulative effect on prior years of
change in accounting principle -- -- -- (6,594)
--------- -------- --------- ---------
Net loss $ (4,802) $ (3,104) $ (11,702) $ (10,974)
========= ======== ========= =========
Net loss per common and
common equivalent share:
Before cumulative effect of accounting change $ (.18) $ (.12) $ (.44) $ (.17)
Cumulative effect of accounting change -- -- -- (.25)
--------- -------- --------- ---------
Net loss $ (.18) $ $(.12) $ (.44) $ (.42)
========= ======== ========= =========
Weighted average common and common
equivalent shares 27,128 26,174 26,856 25,948
========= ======== ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
--------------------------------
1995 1994
--------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(11,702) $(10,974)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 19,208 15,324
Amortization of capitalized software costs 5,893 6,067
Amortization of deferred data procurement costs 62,434 47,921
Deferred income taxes (5,400) (4,119)
Equity in (gain) loss of affiliated companies and minority interest (378) 4,063
Cumulative effect of change in revenue recognition -- 6,594
Nonrecurring expenses 22,759 --
Net gain on disposition of assets (41,126) --
Other 1,525 1,073
Change in assets and liabilities:
Increase in current assets (7,224) (18,757)
Increase in other assets (920) (978)
Increase (decrease) in current liabilities 8,347 (4,153)
Other, net (96) 367
-------- --------
Total adjustments 65,022 53,402
-------- --------
Net cash provided by operating activities 53,320 42,428
INVESTING ACTIVITIES:
Proceeds from disposition of assets 92,000 --
Purchase of property and equipment - net (18,369) (16,958)
Capitalized software costs (7,179) (8,807)
Deferred data procurement costs (72,482) (58,961)
Investment in joint ventures (4,812) (1,832)
-------- --------
Net cash used in investing activities (10,842) (86,558)
FINANCING ACTIVITIES:
Net borrowings (repayments) of capitalized leases 2,291 (1,183)
Net bank (repayments) borrowings (29,000) 29,515
Proceeds from exercise of stock options 6,503 2,440
Capital contributions from minority interest 1,341 136
-------- --------
Net cash (used) provided by financing activities (18,865) 30,908
Effect of exchange rate on cash 177 1,000
-------- --------
Net increase (decrease) in cash 23,790 (12,222)
Cash and cash equivalents at beginning of period 11,792 19,368
-------- --------
Cash and cash equivalents at end of period $ 35,582 $ 7,146
======== ========
</TABLE>
(continued)
5
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT'D.
UNAUDITED
(IN THOUSANDS)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
1995 1994
-------- --------
<S> <C> <C>
CASH PAID (REFUNDED) DURING THE PERIOD FOR:
Interest $ 3,155 $ 1,419
Income taxes $ (836) $ 975
</TABLE>
In March, 1995, Information Resources, Inc. ("IRI") and Middle East Market
Research Bureau ("MEMRB") International entered into a strategic alliance
agreement. In connection with this agreement, IRI issued common stock having a
market value of approximately $2.6 million to the stockholders of MEMRB and
obtained an option to acquire up to a 49% ownership interest in MEMRB.
The accompanying notes are an integral part of these statements.
6
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - ---------------------------------------------------
Basis of presentation: The accompanying condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements included in Information Resources, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1994. The condensed consolidated financial
information furnished herein reflects all adjustments (consisting of normal
recurring accruals) which are, in the opinion of management, necessary for a
fair presentation of the condensed consolidated financial statements for the
periods shown.
Principles of consolidation: The condensed consolidated financial statements
include the accounts of Information Resources, Inc. and its subsidiaries
(collectively "the Company") after elimination of intercompany transactions.
Reclassifications: Certain amounts in the 1994 consolidated financial
statements have been reclassified to conform to the 1995 presentation.
NOTE 2 - ACCOUNTS RECEIVABLE
- - ----------------------------
Accounts receivable are as follows:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
(in 000's)
<S> <C> <C>
Billed $ 62,084 $ 58,666
Unbilled 35,916 59,806
Other 7,153 4,305
-------- --------
105,153 122,777
Reserve for accounts receivable (5,096) (2,926)
-------- --------
$100,057 $119,851
======== ========
</TABLE>
NOTE 3 - INVESTMENTS
- - --------------------
In February 1995, IRI purchased 39% of its French joint venture, IRI-SECODIP,
from its joint venture partner increasing IRI's ownership in the joint venture
from 50% to 89%. IRI - SECODIP has been consolidated since January 1, 1995.
7
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
(UNAUDITED)
In March 1995, IRI entered into an alliance with MEMRB, a market research
company based in Cyprus. In connection with this agreement, IRI issued common
stock having a market value of approximately $2.6 million and obtained an option
to acquire up to a 49% ownership interest in MEMRB. IRI's $2.6 million
investment in MEMRB has been accounted for as a cost investment in the
consolidated financial statements.
NOTE 4 - OTHER ASSETS
- - ---------------------
Other assets are as follows:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ ------------------
(in 000's)
<S> <C> <C>
Deferred data procurement costs -
net of accumulated amortization of
of $136,553 in 1995 and
$78,408 in 1994 $ 93,019 $ 87,799
Capitalized software costs - net of
accumulated amortization of
$10,194 in 1995 and
$14,255 in 1994 7,957 23,357
Goodwill - net of accumulated
amortization of $1,873 in
1995 and $1,436 in 1994 6,460 4,450
Other 10,518 14,471
-------- --------
$117,954 $130,077
======== ========
</TABLE>
NOTE 5 - LONG TERM DEBT
- - -----------------------
The Company repaid the entire amount outstanding under its bank credit facility
in July 1995 using proceeds from the sale of the Company's general software
business. (See Note 7 - Net Gain on Disposition of Assets.)
In November 1995, the Company replaced its $65 million bank credit facility
maturing in 1997 with a new $50 million facility maturing in 1998, with interest
rate options at or below prime. The credit facility contains financial
covenants which restrict the Company's ability to incur additional indebtedness
or allow liens on its assets. The financial covenants also require the Company
to meet tangible net worth levels, cash flow coverage amounts, leverage
limitations and quick ratios.
8
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
(UNAUDITED)
NOTE 6 - NONRECURRING EXPENSES
- - ------------------------------
Nonrecurring expenses in 1995 included a $12.4 million write-down of assets,
principally accelerated recognition of deferred European data procurement costs,
to net realizable value and a $10.4 million charge principally relating to the
Company's Towne-Oller facility closing and related severance charge. The
nonrecurring expense relating to the Company's Towne Oller business was
initiated by the Company's decision to transition Towne-Oller service from the
use of warehouse withdrawal data to InfoScan scanner data.
NOTE 7 - NET GAIN ON DISPOSITION OF ASSETS
- - ------------------------------------------
On July 27, 1995 (the "Closing Date"), the Company completed the sale to Oracle
Corporation ("Oracle") of certain assets, liabilities and related software
application products relating to its on-line analytical processing business
(the "General Software Business") previously operated by the Company's software
division. The sale transaction was consummated pursuant to the terms of an
Amended and Restated Asset Purchase Agreement dated as of June 12, 1995 between
the Company and Oracle (the "Purchase Agreement"). Oracle acquired the EXPRESS
technology and the general purpose EXPRESS-based products including the
DataServer platform, Express Financial Management System and Express Executive
Information System. The Company retained sales and marketing application
products for use in the consumer packaged goods industry. The Company and
Oracle also entered into certain on-going licensing and support agreements. In
consideration for such assets and liabilities, Oracle paid approximately $100
million in cash subject to post-closing adjustment. Approximately $11.8 million
of the sales proceeds were deposited to an interest-bearing escrow trust account
of which $3.8 million was released in August 1995. The remaining $8.0 million
constitutes a general escrow to be held for approximately one year. A portion
of the sale proceeds were used to repay the Company's bank credit facility. The
remainder of the proceeds will be used to pay expenses of the sale and held for
general corporate purposes.
The following information sets forth, for the periods and at the dates
indicated, summarized unaudited pro forma condensed consolidated financial
information for the Company. This financial information is derived from the
historical consolidated financial statements and notes thereto and reflects the
condensed consolidated results of operations as if the following transactions
had occurred on December 31, 1993.
The transactions impacting pro forma financial information are:
(1) In July 1995, the Company sold its General Software Business to Oracle for
approximately $100 million.
(2) In July 1995, the Company repaid all of its outstanding bank borrowings
using the cash proceeds of the sale.
The pro forma condensed consolidated financial information reflects: (1)
recognition of the impact of the sale of the General Software Business to Oracle
and (2) the decrease of net interest expense resulting from the assumed payment
of bank loans with proceeds from the sale. The net gain on the sale of the
General Software Business to Oracle is not reflected in the unaudited pro forma
condensed consolidated statement of operations for the periods presented. In
addition, in accordance with the rules and regulations of the Securities and
Exchange Commission, interest income on the remaining excess cash proceeds from
the sale of the General Software Business after repayment of bank indebtedness
and related expenses has not been benefited in the unaudited pro forma condensed
consolidated statements of operations for the periods presented. The pro forma
unaudited condensed consolidated financial information is not necessarily
indicative of the consolidated results of operations as they might have been if
the sales had been consummated on the assumed date.
9
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
(UNAUDITED)
NOTE 7 - NET GAIN ON DISPOSITION OF ASSETS, CONT'D.
- - ---------------------------------------------------
The following table presents, on a pro forma basis, a condensed consolidated
statement of operations for the nine months ended September 30, 1995 and the
year ended December 31, 1994. (In millions, except per share data):
Condensed Consolidated Statement of Operations
- - ----------------------------------------------
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Nine Months Ended Twelve Months Ended
September 30, 1995 December 31, 1994
------------------ --------------------
<S> <C> <C>
Revenues $ 261.2 $ 313.3
======= =======
Operating profit (loss) (46.4) 12.5
======= =======
Interest expense and other, net (.2) .3
======= =======
Loss before income taxes,
minority interest and cumulative
effect of change in accounting principle (47.5) (4.7)
======= =======
Net loss before cumulative effect
of change in accounting principle $ (29.1) $ (3.5)
======= =======
Net loss per common and common
equivalent share $ (1.08) $ (.13)
======= =======
Weighted average common and common
equivalent shares 26,856 26,056
======= =======
</TABLE>
If the remaining excess cash proceeds from sale were invested in U.S. Treasury
securities, pro forma net loss before cumulative effect of change in accounting
principle would be benefited by $.03 and $.07 per share for the nine months
ended September 30, 1995 and the year ended December 31, 1994, respectively.
10
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENTS'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
----------------------------- ------------------------------
NINE MONTHS THREE MONTHS
ENDED ENDED NINE MONTHS THREE MONTHS
SEPTEMBER 30 SEPTEMBER 30 ENDED ENDED
1995 1994 1995 1994 1995/1994 1995/1994
------ ------ ------ ------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0% 10.5% (6.1)%
Operating expenses (96.7) (86.0) (104.9) (89.3) 24.2 10.3
Selling, general & admin. (13.7) (12.0) (19.8) (12.1) 26.7 54.5
Nonrecurring expenses (7.6) -- (26.1) -- * *
----- ----- ------ ----- ---- -----
Operating profit (loss) (18.0) 2.0 (50.8) (1.4) * *
===== ===== ====== ===== ==== =====
Net earnings (loss) (3.9) (4.0) (5.5) (3.3) 6.7 54.7
===== ===== ====== ===== ==== =====
</TABLE>
* Not meaningful
REVENUES
A summary of IRI's revenues is as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------ ------------------------
1995 1994 1995 1994
---------- ------------ ---------- ------------
(IN 000'S)
<S> <C> <C> <C> <C>
North American Information and
Software Services $232,289 $223,666 $73,329 $74,878
International Information and Software Services 28,928 8,892 10,524 3,373
Software Business sold to Oracle 40,198 40,218 3,435 14,664
-------- -------- ------- -------
Total Revenues $301,415 $272,776 $87,288 $92,915
======== ======== ======= =======
</TABLE>
11
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
The Company's consolidated revenue from operations for the nine months ended
September 30, 1995 increased 10.5% to $301.4 million compared to $272.8 million
for the first nine months of 1994. Consolidated revenue for the three month
period ended September 30, 1995 decreased 6.1% to $87.3 million compared to
$92.9 million for the same period of 1994. The year-to-date revenue growth
resulted principally from increased revenues from the expansion of International
Information and Software Services operations and an increase from North American
Information and Software Services. The decrease in third quarter consolidated
revenues was due to the sale of the General Software Business to Oracle in July
1995 and slightly lower revenues from the Company's North American Information
and Software Services operations partially offset by a significant increase in
revenues of the Company's International Information and Software Services
operations.
Revenues from the Company's North American Information and Software Services
operations for the nine months ended September 30, 1995 were $232.3 million, an
increase of 3.9% over the same period in 1994. North American Information and
Software Services revenues for the third quarter of 1995 were $73.3 million, a
decrease of 2.1% over the same three month period in 1994. Base InfoScan
contract revenues were at levels below the nine months and third quarter of
1994, largely due to the continuing effects of a competitive pricing environment
which began in late 1993. Sales of census-based services were up sharply from a
low base. Non-base contract, or ad hoc use of the Company's information
services increased for the nine months of 1995 but were relatively flat for the
third quarter of 1995. Included in the North American revenue was the portion
of the software applications business retained by the Company, which reported
revenue of $37.7 million and $11.4 million for the nine months and third quarter
of 1995, respectively.
The Company's International Information and Software Services operations made a
significant contribution to the overall revenue growth. International
Information and Software Services revenue for the nine months ended September
30, 1995 increased $20.0 million to $28.9 million from $8.9 million in the
comparable period of 1994. Revenue for the three months ended September 30,
1995 increased $7.1 million to $10.5 million from $3.4 million in the comparable
period of 1994. Revenues generated by the Company's information business
operating in France, which was consolidated beginning in 1995, were $11.3
million and $4.1 million for the nine and three month periods ended September
30, 1995. In dollar terms, the Company's foreign revenues also benefited from
the weakening of the U.S. dollar compared to certain local currencies.
Consolidated results for all periods included the operations of the General
Software Business until sold to Oracle on July 27, 1995. Revenues from this
business for the first nine months of 1995 and 1994 were $40.2 million and $40.2
million, respectively, and for the third quarter of 1995 and 1994 were $3.4
million and $14.7 million, respectively.
12
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
OPERATING EXPENSES
Consolidated operating expenses increased $56.9 million or 24.2% to $291.7
million in the first nine months of 1995 from $234.8 million in the first nine
months of 1994. Consolidated operating expenses increased $8.6 million or 10.3%
to $91.6 million in the third quarter of 1995 from $83.0 million in the second
quarter of 1994. For the nine and three months ended September 30, 1995
approximately $23.5 million and $8.4 million, respectively, of the increases
were attributable to the expansion of the Company's International Information
and Software Services operations of which approximately $16.9 million and $5.9
million, respectively, was due to the inclusion in the consolidated financial
statements, in 1995, of the Company's recently acquired majority interest in its
French affiliate. Expense increases for foreign operations were also caused by
the weakening of the U.S. dollar in 1995.
The overall increase in the Company's total operating expenses for the nine
month period ended September 30, 1995 reflected a $13.2 million increase in
North American Information and Software Services compensation expense, a $18.5
million increase in International Information and Software Services compensation
expense, a $14.5 million increase in amortization of deferred data procurement
costs, principally in Europe, and a $6.2 million increase in computer expenses
required to deliver InfoScan services in Europe and the United States. Aside
from expense increases relating to the international expansion, consolidated
operating expenses also increased as a result of increases in computer
operations and in client service staff to support current and planned future
revenue increases, primarily related to census data. In addition, increases in
computer operations to support the Company's "OMEGA" production re-engineering
and future cost reduction project were required.
Consolidated results for all periods included the operations of the General
Software Business until sold to Oracle Corporation on July 27, 1995. This part
of the software business reported operating expenses for the nine and three
months ended September 30, 1995 of approximately $41.1 million and $5.7 million
compared to $42.0 million and $14.7 million for the same periods in 1994.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated selling, general and administrative expenses increased $8.7 million
or 26.7% to $41.3 million in the first nine months of 1995 from $32.6 million in
the same nine month period in 1994. Consolidated selling, general and
administrative expenses increased $6.1 million or 54.5% to $17.3 million in the
third quarter of 1995 compared to $11.2 million in the same three month period
of 1994. The year-to-date increase was due to $6.7 million of special charges
incurred in the third quarter principally related to a reserve for accounts
receivable. In addition, for the nine and three months ended September 30, 1995
approximately $1.6 million and $.4 million, respectively, of the increase in
total selling, general and administrative expenses were due to consolidation of
the Company's French affiliate. For the nine months of 1995, the remaining
dollar increases in consolidated selling, general and administrative expenses
were also attributable to increased spending for promotion and advertising.
Excluding special charges, consolidated selling, general and administrative
expenses decreased for the three months of 1995 due to the sale of the Company's
General Software Business. Consolidated selling, general and administrative
expense in 1994 included a one-time charge of $1.4 million incurred in
connection with the cancelled acquisition of Asia-based SRG Holdings Limited.
Consolidated results for all periods included the operations of the Company's
General Software Business until sold to Oracle on July 27, 1995. This part of
the software business reported selling, general and administrative expenses for
the nine and three months ended September 30, 1995 of approximately $7.1 million
and $1.4 million compared to $7.5 million and $2.8 million for the same periods
in 1994.
13
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
NONRECURRING EXPENSES
Nonrecurring expenses in 1995 included a $12.4 million write-down of assets,
principally accelerated recognition of deferred European data procurement costs,
to net realizable value and a $10.4 million charge principally relating to the
Company's Towne-Oller facility closing and related severance charge. The
nonrecurring expense relating to the Company's Towne-Oller business was
initiated by the Company's decision to transition Towne-Oller service from the
use of warehouse withdrawal data to InfoScan scanner data.
NET GAIN ON DISPOSITION OF ASSETS
The Company sold its General Software Business to Oracle Corporation in July
1995 which resulted in a net gain before income taxes of approximately $41.1
million.
INTEREST EXPENSE AND OTHER, NET
Other expenses for the nine months ended September 30, 1995 and 1994 were $3.1
million and $.7 million respectively. Interest expense relating to bank
borrowings increased in the first nine months of 1995 by $2.2 million relative
to the first nine months of 1994, due to extensive cash requirements needed for
the expansion of the Company's international information operations into Europe.
In July 1995, the Company repaid its bank borrowings in full.
LITIGATION PROVISION
The 1994 results reflected a pre-tax provision of $3.0 million and $8.0 million
for the three and nine months ended September 30, 1994, respectively, related to
shareholder litigation, for which a settlement was approved by the federal
district court on March 3, 1995.
EQUITY IN GAIN (LOSS) OF AFFILIATED COMPANIES
Equity in gain (loss) of affiliated companies reflected gains and losses
recognized related to equity investments. The increase was primarily due to the
Company's increased ownership interest in its French affiliate which, effective
January 1, 1995, has been included as a consolidated subsidiary of the Company.
INCOME TAXES
The Company's effective tax rate on operations including minority interest was
26.6% and 40.8% for the nine months ended September 30, 1995 and 1994,
respectively. The Company's 1995 income tax benefit and its effective tax rate
was lower than the Federal statutory rate due to certain unbenefited foreign
losses, goodwill amortization and other nondeductible expenses. The principal
causes of the Company's effective tax rate in excess of the Federal statutory
rate in 1994 were state and local taxes, goodwill amortization and other
nondeductible expenses.
14
<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.
NET LOSS
As a result of the factors described above, consolidated net loss was ($11.7)
million for the nine months ended September 30, 1995 and ($4.8) million for the
third quarter of 1995 versus a net loss of ($11.0) million for the nine months
ended September 30, 1994 and ($3.1) million for the third quarter of 1994. For
the nine and three months ended September 30, 1995, pre-tax operating losses of
the International Information and Software Services business before special
charges totaled approximately ($28.0) million and ($9.0) million, respectively,
equating to an after-tax loss of ($.63) and ($.20) per share, respectively. For
the nine and three months ended September 30, 1994, pre-tax operating losses of
the International Information and Software Services business including IRI-
SECODIP as an equity investment totaled approximately ($16.9) million and ($6.5)
million, respectively, equating to an after-tax loss of ($.39) and ($.15) per
share, respectively.
Included in 1995 results were a $41.1 million nonrecurring pre-tax gain from the
sale of the Company's General Software Business to Oracle which was offset by a
nonrecurring pre-tax charge of ($22.8) million primarily related to the
accelerated recognition of deferred European data procurement costs and the
reorganization of the Company's Towne-Oller unit and the ($6.7) million of
special charges included in selling, general and administrative expense.
Included in 1994 results were one-time pre-tax charges of ($20.4) million
relating to the cumulative effect of change in accounting principle for revenue
recognition, shareholder litigation reserves and charges for the cancelled
acquisition of SRG Holdings Limited.
LIQUIDITY AND CAPITAL RESOURCES:
CASH FLOW
The Company's cash requirements continue to be extensive, primarily by reason of
the European expansion of its information operations. The Company's current
cash resources include its $35.6 million cash balance, $50.0 million bank line
of credit and internally generated funds. The Company anticipates that it will
have sufficient funds from its cash balance, bank line of credit and internally
generated funds to satisfy its working capital needs for the foreseeable future.
Consolidated net cash provided by operating activities was $53.3 million for the
first nine months of 1995 compared to $42.4 million for the same period in 1994.
Cash provided by operating activities increased due primarily to cash received
from customers in 1995 reflected as deferred revenue. Cash used for net
investing activities was $10.8 million for the first nine months of 1995 versus
$86.6 million for the same period in 1994.
15
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
This decrease was primarily due to the proceeds received from the sale of the
General Software Business to Oracle, partially offset by increases in data
procurement costs attributable to the expansion of the Company's data collection
efforts in Europe and, to a much lesser degree, the United States. Cash used by
financing activities was ($18.9) million for the first nine months of 1995 in
comparison to cash provided of $30.9 million for the first nine months of 1994.
The net financing activities reflected net bank repayments of $29.0 million in
1995. Net financing activities in 1994 reflected net bank borrowings of $29.5
million used to fund the Company's continuing development of its international
information operations.
SALE OF GENERAL SOFTWARE BUSINESS
On July 27, 1995, the Company sold its General Software Business to Oracle for
approximately $100 million in cash subject to post-closing adjustment.
Approximately $11.8 million of the sales proceeds were deposited to an interest-
bearing escrow trust account of which $3.8 million was released in August 1995.
The remaining $8.0 million constitutes a general escrow to be held for
approximately one year. On July 28, 1995 the entire amount outstanding under
the credit facility was repaid by using a portion of the proceeds from the sale
of the General Software Business. The remainder of the proceeds will be used to
pay expenses associated with the sale and held for general corporate purposes.
FINANCINGS
The Company repaid the entire amount outstanding under its credit facility in
July 1995. The primary use of borrowings had been for the expansion of the
Company's operations in Europe.
In November 1995, the Company replaced its $65 million bank credit facility
maturing in 1997 with a new $50 million facility maturing in 1998, with interest
rate options at or below prime. The credit facility contains financial
covenants which restrict the Company's ability to incur additional indebtedness
or allow liens on its assets. The financial covenants also require the Company
to meet tangible net worth levels, cash flow coverage amounts, leverage
limitations and quick ratios.
CAPITAL EXPENDITURES AND OTHER DEFERRED COSTS
Consolidated capital expenditures were $18.4 million and $17.0 million for the
nine months of 1995 and 1994, respectively.
Consolidated deferred data procurement expenditures were $72.5 million and $59.0
million for the nine months of 1995 and 1994, respectively. The increase in
deferred data procurement expenditures was principally related to the expansion
of the Company's international information operations. Management expects to
continue its development of these businesses in Europe and accordingly, these
operations will continue to require substantial funding.
Consolidated software development costs were $7.2 million and $8.8 million for
the nine months of 1995 and 1994, respectively. Due to the sale of the General
Software Business to Oracle, software development costs are expected to decrease
significantly from historical levels.
16
<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 November 10, 1995 EF
among Information Resources, Inc., the
Bank Parties thereto and Harris Trust and
Savings Bank, as Agent (filed herewith).
27 Financial Data Schedule (filed herewith). EF
b. Reports on Form 8-K.
Form 8-K dated July 27, 1995 (filed with the SEC on August 11, 1995).
Items Reported:
Item 2: Disposition of Assets
Item 7: Financial Statements and Exhibits
17
<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/ Gary M. Hill
----------------------------------------
Gary M. Hill
Executive Vice President
and Chief Financial Officer
(Authorized officer of Registrant and
principal financial officer)
/s/ John P. McNicholas, Jr.
----------------------------------------------
John P. McNicholas, Jr.
Senior Vice President and Controller
(Principal accounting officer)
November 14, 1995
<PAGE>
================================================================================
Credit Agreement
Dated as of November 10, 1995
among
Information Resources, Inc.,
The Banks Party Hereto,
and
Harris Trust and Savings Bank,
as Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Description Page
<S> <C> <C>
Section 1. The Credit Facilities.......................................................... 1
Section 1.1. The Revolving Credit Commitments............................................. 1
Section 1.2. Letters of Credit............................................................ 1
Section 1.3. Applicable Interest Rates.................................................... 4
Section 1.4. Minimum Borrowing Amounts.................................................... 6
Section 1.5. Manner of Borrowing Committed Loans and Designating Applicable Interest Rates 6
Section 1.6. The Bid Loans................................................................ 8
Section 1.7. Requests for Bid Loans....................................................... 8
Section 1.8. Notice of Bids; Advice of Rate............................................... 9
Section 1.9. Acceptance or Rejection of Bids.............................................. 9
Section 1.10. Notice of Acceptance or Rejection of Bids.................................... 10
Section 1.11. Interest on Bid Loans........................................................ 10
Section 1.12. Telephonic Notice............................................................ 11
Section 1.13. Interest Periods............................................................. 11
Section 1.14. Maturity of Loans............................................................ 12
Section 1.15. Prepayments.................................................................. 12
Section 1.16. Default Rate................................................................. 12
Section 1.17. The Notes.................................................................... 13
Section 1.18. Funding Indemnity............................................................ 13
Section 1.19. Commitment Terminations...................................................... 14
Section 2. Fees and Extensions............................................................ 14
Section 2.1. Fees......................................................................... 14
Section 2.2. Extensions of Termination Date............................................... 15
Section 3. Place and Application of Payments.............................................. 16
Section 4. Definitions; Interpretation.................................................... 16
Section 4.1. Definitions.................................................................. 16
Section 4.2. Interpretation............................................................... 23
Section 4.3. Change in Accounting Principles.............................................. 23
Section 5. Representations and Warranties................................................. 24
Section 5.1. Organization and Qualification............................................... 24
Section 5.2. Subsidiaries................................................................. 24
Section 5.3. Margin Stock................................................................. 25
Section 5.4. Financial Reports............................................................ 25
Section 5.5. Litigation and Other Controversies........................................... 25
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 5.6. Taxes........................................................................ 25
Section 5.7. Approvals.................................................................... 26
Section 5.8. Investment Company........................................................... 26
Section 5.9. ERISA........................................................................ 26
Section 5.10. Compliance with Laws......................................................... 26
Section 5.11. Other Agreements............................................................. 27
Section 6. Conditions Precedent........................................................... 27
Section 6.1. Initial Credit Event......................................................... 27
Section 6.2. All Credit Events............................................................ 28
Section 7. Covenants...................................................................... 29
Section 7.1. Corporate Existence, Etc..................................................... 29
Section 7.2. Maintenance of Properties.................................................... 29
Section 7.3. Taxes and Assessments........................................................ 29
Section 7.4. Insurance.................................................................... 29
Section 7.5. Financial Reports............................................................ 29
Section 7.6. Consolidated Tangible Net Worth.............................................. 31
Section 7.7. Leverage Ratio............................................................... 31
Section 7.8. Quick Ratio.................................................................. 31
Section 7.9. Cash Flow Coverage Ratio..................................................... 31
Section 7.10. Indebtedness for Borrowed Money and Guarantees............................... 32
Section 7.11. Liens........................................................................ 32
Section 7.12. Leases....................................................................... 33
Section 7.13. Sales and Leasebacks......................................................... 33
Section 7.14. Mergers, Consolidations and Sales............................................ 33
Section 7.15. ERISA........................................................................ 34
Section 7.16. Compliance with Laws......................................................... 34
Section 8. Events of Default and Remedies................................................. 34
Section 8.1. Events of Default............................................................ 34
Section 8.2. Non-Bankruptcy Defaults...................................................... 36
Section 8.3. Bankruptcy Defaults.......................................................... 37
Section 8.4. Collateral for Undrawn Letters of Credit..................................... 37
Section 8.5. Notice of Default............................................................ 38
Section 8.6. Expenses..................................................................... 38
Section 9. Change in Circumstances........................................................ 38
Section 9.1. Change of Law................................................................ 38
Section 9.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR......................................................... 38
Section 9.3. Increased Cost and Reduced Return............................................ 39
Section 9.4. Lending Offices.............................................................. 40
Section 9.5. Discretion of Bank as to Manner of Funding................................... 40
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 10. The Agent...................................................................... 40
Section 10.1. Appointment and Authorization of Agent....................................... 40
Section 10.2. Agent and its Affiliates..................................................... 40
Section 10.3. Action by Agent.............................................................. 41
Section 10.4. Consultation with Experts.................................................... 41
Section 10.5. Liability of Agent; Credit Decision.......................................... 41
Section 10.6. Indemnity.................................................................... 42
Section 10.7. Resignation of Agent and Successor Agent..................................... 42
Section 11. Miscellaneous.................................................................. 42
Section 11.1. Withholding Taxes............................................................ 42
Section 11.2. No Waiver, Cumulative Remedies............................................... 43
Section 11.3. Non-Business Days............................................................ 44
Section 11.4. Documentary Taxes............................................................ 44
Section 11.5. Survival of Representations.................................................. 44
Section 11.6. Survival of Indemnities...................................................... 44
Section 11.7. Sharing of Set-Off........................................................... 44
Section 11.8. Notices...................................................................... 45
Section 11.9. Counterparts................................................................. 45
Section 11.10. Successors and Assigns....................................................... 45
Section 11.11. Participants................................................................. 45
Section 11.12. Assignment of Commitments by Banks........................................... 46
Section 11.13. Amendments................................................................... 46
Section 11.14. Headings..................................................................... 47
Section 11.15. Costs and Expenses........................................................... 47
Section 11.16. Set-off...................................................................... 47
Section 11.17. Entire Agreement............................................................. 48
Section 11.18. Governing Law................................................................ 48
Section 11.19. Severability of Provisions................................................... 48
Section 11.20. Confidentiality.............................................................. 48
Section 11.21. Submission to Jurisdiction; Waiver of Jury Trial............................. 48
Signature Page..................................................................................... 49
</TABLE>
-iii-
<PAGE>
Exhibit A - Note
Exhibit B - Bid Note
Exhibit C - Bid loan Request Confirmation
Exhibit D - Invitation to Bid
Exhibit E - Confirmation of Bid
Exhibit F - Notice of Acceptance of Bid
Exhibit G - Opinion of Counsel
Exhibit H - Notice of Payment Request
Schedule 5.2 - Subsidiaries
Schedule 5.5 - Pending Litigation
Schedule 7.5 - Compliance Certificate
-iv-
<PAGE>
INFORMATION RESOURCES, INC.
CREDIT AGREEMENT
To each of the Banks signatory hereto
Ladies and Gentlemen:
The undersigned, Information Resources, Inc., a Delaware corporation (the
"Borrower"), applies to you for your several commitments, subject to the terms
and conditions hereof and on the basis of the representations and warranties
hereinafter set forth, to make a revolving credit for loans and letters of
credit (the "Revolving Credit") available to the Borrower, all as more fully
hereinafter set forth. Each of you is hereinafter referred to as a "Bank," all
of you are hereinafter referred to collectively as the "Banks," and Harris Trust
and Savings Bank in its capacity as agent for the Banks hereunder is hereinafter
referred to as the "Agent."
Section 1. The Credit Facilities.
Section 1.1. The Revolving Credit Commitments. Subject to the terms and
conditions hereof, each Bank, by its acceptance hereof, severally agrees to make
a loan or loans (individually a "Committed Loan" and collectively the "Committed
Loans") to the Borrower from time to time on a revolving basis up to the amount
of such Bank's revolving credit commitment set forth on the applicable signature
page hereof or pursuant to Section 11.12 hereof (its "Revolving Credit
Commitment" and, cumulatively for all the Banks, the "REVOLVING CREDIT
COMMITMENTS"), subject to any reductions thereof pursuant to the terms hereof,
before the Termination Date. Subject to Section 7.19 hereof, the sum of the
aggregate principal amount of all Loans (whether Committed Loans or Bid Loans)
and of L/C Obligations at any time outstanding shall not exceed the Revolving
Credit Commitments in effect at such time. Each Borrowing of Committed Loans
shall be made ratably from the Banks in proportion to their respective
Percentages. As provided in Section 1.5(a) hereof, the Borrower may elect that
each Borrowing of Committed Loans be either Domestic Rate Loans or Eurodollar
Loans. Committed Loans may be repaid and the principal amount thereof reborrowed
before the Termination Date, subject to the terms and conditions hereof.
Section 1.2. Letters of Credit. (a) General Terms. Subject to the terms
and conditions hereof, as part of the Revolving Credit, the Agent shall issue
standby letters of credit (each a "Letter of Credit") for the Borrower's account
in an aggregate undrawn face amount up to the amount of the L/C Commitment,
provided that the aggregate L/C Obligations at any time outstanding shall not
exceed the difference between the Revolving Credit Commitments in effect at such
time and the aggregate principal amount of all Loans (whether Committed Loans or
Bid Loans) then outstanding. Each Letter of Credit shall be in a face amount of
not less than $100,000 at the time of issuance. Each Letter of Credit shall be
issued by the Agent, but each Bank shall be obligated to reimburse the Agent for
such Bank's Percentage of the amount of each drawing thereunder and,
accordingly, each
<PAGE>
Letter of Credit shall constitute usage of the Revolving Credit Commitment of
each Bank pro rata in accordance with its Percentage.
(b) Applications. At any time before the Termination Date, the Agent
shall, at the request of the Borrower, issue one or more Letters of Credit, in a
form satisfactory to the Agent, with expiration dates no later than the earlier
of twenty-four (24) months from the date of issuance of the relevant Letter of
Credit or the Termination Date, in an aggregate face amount as set forth above,
upon the receipt of an application duly executed by the Borrower for the
relevant Letter of Credit in the form then customarily prescribed by the Agent
(each an "Application"). Notwithstanding anything contained in any Application
to the contrary: (i) the Borrower shall pay fees in connection with each Letter
of Credit as set forth in Section 2.1 hereof, (ii) except as otherwise provided
in Section 1.8 hereof, before the occurrence of a Default or an Event of
Default, the Agent will not call for the funding by the Borrower of any amount
under a Letter of Credit, or for any other form of collateral security for the
Borrower's obligations in connection with such Letter of Credit, before being
presented with a drawing thereunder, and (iii) if the Agent is not timely
reimbursed for the amount of any drawing under a Letter of Credit on the date
such drawing is paid, the Borrower's obligation to reimburse the Agent for the
amount of such drawing shall bear interest (which the Borrower hereby promises
to pay) from and after the date such drawing is paid at a rate per annum equal
to the sum of 2% plus the Domestic Rate from time to time in effect. If the
Agent issues any Letter of Credit with an expiration date that is automatically
extended unless the Agent gives notice that the expiration date will not so
extend beyond its then scheduled expiration date, the Agent will give such
notice of non-renewal before the time necessary to prevent such automatic
extension if before such required notice date (i) the expiration date of such
Letter of Credit if so extended would be after the Termination Date, (ii) the
Commitments have been terminated, or (iii) an Event of Default exists and the
Required Banks have given the Agent instructions not to so permit the extension
of the expiration date of such Letter of Credit. The Agent agrees to issue
amendments to the Letter(s) of Credit increasing the amount, or extending the
expiration date, thereof at the request of the Borrower subject to the
conditions of Section 6.2 hereof and the other terms of this Section 1.2.
(c) The Reimbursement Obligations. Subject to Section 1.2(b) hereof,
the obligation of the Borrower to reimburse the Agent for all drawings under a
Letter of Credit (a "Reimbursement Obligation") shall be governed by the
Application related to such Letter of Credit, except that reimbursement shall be
made by no later than 12:00 Noon (Chicago time) on the date when each drawing is
paid in immediately available funds at the Agent's principal office in Chicago,
Illinois. If the Borrower does not make any such reimbursement payment on the
date due and the Participating Banks fund their participations therein in the
manner set forth in Section 1.2(d) below, then all payments thereafter received
by the Agent in discharge of any of the relevant Reimbursement Obligations shall
be distributed in accordance with Section 1.2(d) below.
(d) The Participating Interests. Each Bank (other than the Bank then
acting as Agent in issuing Letters of Credit), by its acceptance hereof,
severally agrees to purchase from the Agent, and the Agent hereby agrees to sell
to each such Bank (a "Participating
-2-
<PAGE>
Bank"), an undivided percentage participating interest (a "Participating
Interest"), to the extent of its Percentage, in each Letter of Credit issued by,
and each Reimbursement Obligation owed to, the Agent. Upon any failure by the
Borrower to pay any Reimbursement Obligation at the time required on the date
the related drawing is paid, as set forth in Section 1.2(c) above, or if the
Agent is required at any time to return to the Borrower or to a trustee,
receiver, liquidator, custodian or other Person any portion of any payment of
any Reimbursement Obligation, each Participating Bank shall, not later than the
Business Day it receives a certificate in the form of Exhibit C hereto from the
Agent to such effect, if such certificate is received before 1:00 p.m. (Chicago
time), or not later than the following Business Day, if such certificate is
received after such time, pay to the Agent an amount equal to such Participating
Bank's Percentage of such unpaid or recaptured Reimbursement Obligation together
with interest on such amount accrued from the date the related payment was made
by the Agent to the date of such payment by such Participating Bank at a rate
per annum equal to the Federal Funds Rate for each such day. Each such
Participating Bank shall thereafter be entitled to receive its Percentage of
each payment received in respect of the relevant Reimbursement Obligation and of
interest paid thereon, with the Agent retaining its Percentage as a Bank
hereunder.
The several obligations of the Participating Banks to the Agent under this
Section 1.2 shall be absolute, irrevocable and unconditional under any and all
circumstances whatsoever (except, without limiting the Borrower's obligations
under each Application, to the extent the Borrower is relieved from its
obligation to reimburse the Agent for a drawing under a Letter of Credit because
of the Agent's gross negligence or willful misconduct in determining that
documents received under the Letter of Credit comply with the terms thereof) and
shall not be subject to any set-off, counterclaim or defense to payment which
any Participating Bank may have or have had against the Borrower, the Agent, any
other Bank or any other Person whatsoever. Without limiting the generality of
the foregoing, such obligations shall not be affected by any Default or Event of
Default or by any reduction or termination of any Commitment of any Bank, and
each payment by a Participating Bank under this Section 1.2 shall be made
without any offset, abatement, withholding or reduction whatsoever. The Agent
shall be entitled to offset amounts received for the account of a Bank under
this Agreement against unpaid amounts due from such Bank to the Agent hereunder
(whether as fundings of participations, indemnities or otherwise), but shall not
be entitled to offset against amounts owed to the Agent by any Bank arising
outside of this Agreement.
(e) Indemnification. The Participating Banks shall, to the extent of
their respective Percentages, indemnify the Agent (to the extent not reimbursed
by the Borrower) against any cost, expense (including reasonable counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with any Letter of Credit. The obligations of
the Participating Banks under this Section 1.2(e) and all other parts of
-3-
<PAGE>
this Section 1.2 shall survive termination of this Agreement and of all
Applications, Letters of Credit, and all drafts or other documents presented in
connection with drawings thereunder.
Section 1.3. Applicable Interest Rates (a) Domestic Rate Loans. Each
Domestic Rate Loan made or maintained by a Bank shall bear interest during each
Interest Period it is outstanding (computed on the basis of a year of 360 days
and actual days elapsed) on the unpaid principal amount thereof from the date
such Loan is advanced, continued or created by conversion from a Eurodollar Loan
until maturity (whether by acceleration or otherwise) at a rate per annum equal
to the Domestic Rate from time to time in effect, payable on the last day of its
Interest Period and at maturity (whether by acceleration or otherwise).
"Domestic Rate" means for any day the greater of:
(i) the rate of interest announced by the Agent from time to time
as its prime commercial rate, or equivalent, as in effect on such day, with
any change in the Domestic Rate resulting from a change in said prime
commercial rate to be effective as of the date of the relevant change in
said prime commercial rate it being understood and agreed such rate may not
be the Agent's best or lowest rate; and
(ii) the sum of (x) the rate determined by the Agent to be the
prevailing rate per annum (rounded upwards, if necessary, to the next
higher 1/100 of 1%) at approximately 10:00 a.m. (Chicago time) (or as soon
thereafter as is practicable) on such day (or, if such day is not a
Business Day, on the immediately preceding Business Day) for the purchase
at face value of overnight Federal funds in an amount comparable to the
principal amount owed to the Agent for which such rate is being determined,
plus (y) 1/2 of 1% (0.50%).
(b) Eurodollar Loans. Each Eurodollar Loan made or maintained by a Bank
shall bear interest during each Interest Period it is outstanding (computed on
the basis of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Loan is advanced, continued, or created by
conversion from a Domestic Rate Loan until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the sum of the Eurodollar Margin plus
the Adjusted LIBOR applicable for such Interest Period, payable on the last day
of the Interest Period and at maturity (whether by acceleration or otherwise),
and, if the applicable Interest Period is longer than three months, on each day
occurring every three months after the commencement of such Interest Period.
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate per
annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR
_________________________________
1 - Eurodollar Reserve Percentage
-4-
<PAGE>
"LIBOR" means, for an Interest Period for a Borrowing of Eurodollar Loans,
(a) the LIBOR Index Rate for such Interest Period, if such rate is available,
and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of
the rates of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds
are offered to the Agent at 11:00 a.m. (London, England time) two (2) Business
Days before the beginning of such Interest Period by three (3) or more major
banks in the interbank eurodollar market selected by the Agent for delivery on
the first day of and for a period equal to such Interest Period and in an amount
equal or comparable to the principal amount of the Eurodollar Loan scheduled to
be made by the Agent as part of such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum
(rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period, which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the day two (2) Business Days before the commencement
of such Interest Period.
"Telerate Page 3750" means the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace Page 3750 on that service or
such other service as may be nominated by the British Bankers' Association as
the information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. Dollar deposits).
"Eurodollar Reserve Percentage" means, for any Borrowing of Eurodollar
Loans, the daily average for the applicable Interest Period of the maximum rate,
expressed as a decimal, at which reserves (including, without limitation, any
supplemental, marginal and emergency reserves) are imposed during such Interest
Period by the Board of Governors of the Federal Reserve System (or any
successor) on "eurocurrency liabilities", as defined in such Board's Regulation
D (or in respect of any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Loans is determined or any
category of extensions of credit or other assets that include loans by non-
United States offices of any Bank to United States residents), subject to any
amendments of such reserve requirement by such Board or its successor, taking
into account any transitional adjustments thereto. For purposes of this
definition, the Eurodollar Loans shall be deemed to be "eurocurrency
liabilities" as defined in Regulation D without benefit or credit for any
prorations, exemptions or offsets under Regulation D.
"Eurodollar Margin" means 1.00% per annum until the first Pricing Date, and
thereafter from one Pricing Date to the next a rate per annum determined in
accordance with the following schedule:
Cash Flow Coverage Ratio
for such Pricing Date: Eurodollar Margin:
Less than 1.0 to 1.0 1.00%
-5-
<PAGE>
Equal to or greater than 1.0 to 1.0, but less 0.75%
than or equal to 1.25 to 1.0
Greater than 1.25 to 1.0 0.50%
(c) Rate Determinations. The Agent shall determine each interest rate
applicable to the Committed Loans and Reimbursement Obligations hereunder, and
its determination thereof shall be conclusive and binding except in the case of
manifest error or willful misconduct.
Section 1.4. Minimum Borrowing Amounts. Each Borrowing of Domestic Rate
Loan shall be in an amount equal to $250,000 or such greater amount which is an
integral multiple of $250,000. Each Borrowing of Eurodollar Loan shall be in an
amount equal to $1,000,000 or such greater amount which is an integral multiple
of $1,000,000.
Section 1.5. Manner of Borrowing Committed Loans and Designating
Applicable Interest Rates. (a) Notice to the Agent. In order to borrow any
Committed Loans, the Borrower shall give notice to the Agent by no later than
10:00 a.m. (Chicago time): (i) at least three (3) Business Days before the date
on which the Borrower requests the Banks to advance a Borrowing of Eurodollar
Loans and (ii) on the date the Borrower requests the Banks to advance a
Borrowing of Domestic Rate Loans. The Loans included in each Borrowing shall
bear interest initially at the type of rate specified in such notice of a new
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Borrowing or, subject to
Section 1.4's minimum amount requirement for each outstanding Borrowing, a
portion thereof, as follows: (i) if such Borrowing is of Eurodollar Loans, on
the last day of the Interest Period applicable thereto, the Borrower may
continue part or all of such Borrowing as Eurodollar Loans or convert part or
all of such Borrowing into Domestic Rate Loans or (ii) if such Borrowing is of
Domestic Rate Loans, on any Business Day, the Borrower may convert all or part
of such Borrowing into Eurodollar Loans for an Interest Period or Interest
Periods specified by the Borrower. The Borrower shall give all such notices
requesting the advance, continuation or conversion of a Borrowing to the Agent
by telephone or telecopy (which notice shall be irrevocable once given and, if
by telephone, shall be promptly confirmed in writing). Notices of the
continuation of a Borrowing of Eurodollar Loans for an additional Interest
Period or of the conversion of part or all of a Borrowing of Eurodollar Loans
into Domestic Rate Loans or of Domestic Rate Loans into Eurodollar Loans must be
given by no later than 10:00 a.m. (Chicago time) at least three (3) Business
Days before the date of the requested continuation or conversion. All such
notices concerning the advance, continuation or conversion of a Borrowing shall
specify the date of the requested advance, continuation or conversion of a
Borrowing (which shall be a Business Day), the amount of the requested Borrowing
to be advanced, continued or converted, the type of Committed Loans to comprise
such new, continued or converted Borrowing and, if such Borrowing is to be
comprised of Eurodollar Loans and the Interest Period applicable thereto. The
Borrower agrees that the Agent may rely on any such telephonic or telecopy
notice given by any person it in good faith believes is an Authorized
Representative without the necessity of independent investigation, and in the
event any such notice by telephone conflicts with any written confirmation, such
telephonic notice shall govern if the Agent has acted in reliance thereon.
(b) Notice to the Banks. The Agent shall give prompt telephonic or
telecopy notice to each Bank of any notice from the Borrower received pursuant
to Section 1.5(a) above
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and, if such notice requests the Banks to make Eurodollar Loans, the Agent shall
give notice to the Borrower and each Bank by like means of the interest rate
applicable thereto (but, if such notice is given by telephone, the Agent shall
confirm such rate in writing) promptly after the Agent has made such
determination.
(c) Borrower's Failure to Notify; Automatic Continuations and
Conversions. Any outstanding Borrowing of Domestic Rate Loans shall
automatically be continued for an additional Interest Period on the last day of
its then current Interest Period unless the Borrower has notified the Agent
within the period required by Section 1.5(a) that the Borrower intends to
convert such Borrowing, subject to Section 6.2 hereof, into a Borrowing of
Eurodollar Loans or such Borrowing is prepaid in accordance with Section 1.8(a).
If the Borrower fails to give notice pursuant to Section 1.5(a) above of the
continuation or conversion of any outstanding principal amount of a Borrowing of
Eurodollar Loans before the last day of its then current Interest Period within
the period required by Section 1.5(a) or, whether or not such notice has been
given, one or more of the conditions set forth in Section 6.2 for the
continuation or conversion of a Borrowing of Eurodollar Loans would not be
satisfied, and such Borrowing is not prepaid in accordance with Section 1.8(a),
such Borrowing shall automatically be converted into a Borrowing of Domestic
Rate Loans.
(d) Disbursement of Committed Loans. Not later than 12:00 noon (Chicago
time) on the date of any requested advance of a new Borrowing of Committed
Loans, subject to Section 6 hereof, each Bank shall make available its Committed
Loan comprising part of such Borrowing in funds immediately available at the
principal office of the Agent in Chicago, Illinois. The Agent shall make the
proceeds of each new Borrowing of Committed Loans available to the Borrower at
the Agent's principal office in Chicago, Illinois.
(e) Agent Reliance on Bank Funding. Unless the Agent shall have been
notified by a Bank prior to (or, in the case of a Borrowing of Domestic Rate
Loans, by 12:00 noon (Chicago time) on) the date on which such Bank is scheduled
to make payment to the Agent of the proceeds of a Loan (which notice shall be
effective upon receipt) that such Bank does not intend to make such payment, the
Agent may assume that such Bank has made such payment when due and the Agent may
in reliance upon such assumption (but shall not be required to) make available
to the Borrower the proceeds of the Loan to be made by such Bank and, if any
Bank has not in fact made such payment to the Agent, such Bank shall, on demand,
pay to the Agent the amount made available to the Borrower attributable to such
Bank together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Borrower and ending
on (but excluding) the date such Bank pays such amount to the Agent at a rate
per annum equal to the Federal Funds Rate. If such amount is not received from
such Bank by the Agent immediately upon demand, the Borrower will, on demand,
repay to the Agent the proceeds of the Loan attributable to such Bank with
interest thereon at a rate per annum equal to the interest rate applicable to
the relevant Loan, but without such payment being considered a payment or
prepayment of a Loan under Section 1.18 hereof, so that the Borrower will have
no liability under such Section with respect to such payment.
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Section 1.6. The Bid Loans. At any time before the Termination Date,
the Borrower may request the Banks to offer to make uncommitted loans (each a
"Bid Loan" and collectively the "Bid Loans") to it or any other Borrower in the
manner set forth in Sections 1.6 through 1.12 and in amounts such that the
aggregate principal amount of all Committed Loans and Bid Loans at any time
outstanding hereunder shall not exceed the Commitments of the Banks then in
effect. The Banks may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept any such offers in the
manner set forth in Sections 1.6 through 1.12. Each Bank may offer to make Bid
Loans in any amount (whether greater than, equal to, or less than its
Commitment), subject to the limitation that the aggregate principal amount of
all Loans outstanding at any time may not at any time exceed the Commitments
then in effect and subject to the other conditions of this Agreement.
Section 1.7. Requests for Bid Loans. (a) Requests and Confirmations.
In order to request a Borrowing of Bid Loans (a "Bid Loan Request"), the
Borrower shall give telephonic notice to the Agent no later than 2:00 p.m.
(Chicago time) one (1) Business Day before the proposed date of such borrowing,
which must be a Business Day (the "Borrowing Date"), followed on the same day by
a duly completed confirmation (a "Bid Loan Request Confirmation"), delivered by
telecopier or other means of facsimile communication, substantially in the form
of Exhibit C hereto or otherwise containing the information required by this
Section 1.7, to be received by the Agent no later than 2:30 p.m. (Chicago time)
on such day. Bid Loan Request Confirmations that do not conform substantially to
the format of Exhibit C or otherwise contain the information required by this
Section 1.7 shall be rejected by the Agent, and the Agent shall give telephonic
notice to the Borrower of such rejection promptly after it determines (which
determination shall be conclusive) that the Bid Loan Request Confirmation does
not substantially conform to the format of Exhibit C or otherwise contain the
information required by this Section 1.7. Requests for Bid Loans shall in each
case refer to this Agreement and specify (i) the proposed Borrowing Date (which
must be a Business Day), (ii) the aggregate principal amount thereof (which
shall not be less than $5,000,000 and shall be an integral multiple of
$1,000,000) and (iii) up to three (3) Interest Periods of 7-180 days for the
entire amount specified in such Bid Loan Request (and, if so desired by the
Borrower, specifying the maximum amount the Borrower would borrow for any
specific Interest Period).
(b) Invitation to Bid. Upon receipt by the Agent of a Bid Loan Request
Confirmation that conforms substantially to the format of Exhibit C hereto or
otherwise contains the information required by this Section 1.7, the Agent
shall, by telephone (no later than 3:30 p.m. (Chicago time) on the same day the
Agent receives a Bid Loan Request Confirmation), promptly confirmed by a
telecopy or other form of facsimile communication in the form of Exhibit D
hereto, invite each Bank to bid, on the terms and conditions of this Agreement,
to make Bid Loans pursuant to the Bid Loan Request.
(c) Bids. Each Bank may, in its sole discretion, offer to make a Bid
Loan or Loans (a "Bid") to the Borrower responsive to the Bid Loan Request.
Each Bid by a Bank must be received by the Agent by telephone not later than
9:00 a.m. (Chicago time) on the proposed Borrowing Date promptly confirmed in
writing by a duly completed confirmation (a
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"Confirmation of Bid") delivered by telecopier or other means of facsimile
communication substantially in the form of Exhibit E hereto or otherwise
containing the information required by this subsection (c), to be received by
the Agent on the same day; provided, however, that any Bid made by the Agent
must be made by telephone to the Borrower by no later than 8:45 a.m. (Chicago
time). Each Bid and each Confirmation of Bid shall refer to this Agreement and
specify (i) the principal amount (which shall not be less than $5,000,000 and
shall be an integral multiple of $1,000,000) of each Bid Loan that the Bank is
willing to make to the Borrower, (ii) the interest rate (which shall be computed
on the basis of a 360 day year and actual days elapsed for a period equal to the
Interest Period applicable thereto) at which the Bank is prepared to make each
Bid Loan, and (iii) the Interest Period applicable to each such offered Bid
Loan. The Agent shall reject any Bid if such Bid (i) does not specify all of the
information specified in the immediately preceding sentence, (ii) contains any
qualifying, conditional, or similar language other than as provided for in the
immediately preceding sentence, (iii) proposes terms other than or in addition
to those set forth in the Bid Loan Request to which it responds other than as
provided for in the immediately preceding sentence, or (iv) is received by the
Agent later than 9:00 a.m. (Chicago time). Any Bid submitted by a Bank pursuant
to this Section 1.7 shall be irrevocable and shall be promptly confirmed by a
telecopy or other form of facsimile communication in the form of Exhibit E;
provided that in all events the telephone Bid received by the Agent shall be
binding on the relevant Bank and shall not be altered, modified, or in any other
manner affected by any inconsistent terms contained in, or terms missing from,
the Bank's Confirmation of Bid. Each offer contained in a Bid to make a Bid Loan
in a certain amount, at a certain interest rate, and for a certain Interest
Period is referred to herein as an "Offer".
Section 1.8. Notice of Bids; Advice of Rate. The Agent shall give
telephonic notice to the Borrower no later than 9:15 a.m. (Chicago time) on the
proposed Borrowing Date of the number of Bids received, the interest rate(s) and
Interest Period(s) applicable to each Bid, the maximum principal amount bid at
each interest rate for each Interest Period, and the identity of the Bank making
such Bid. The Agent shall send a written summary of all Bids received by it to
the Borrower on the same day.
Section 1.9. Acceptance or Rejection of Bids. The Borrower may in its
sole and absolute discretion, subject only to the provisions of this Section
1.9, irrevocably accept or reject, in whole or in part, any Offer contained in a
Bid. No later than 9:45 a.m. (Chicago time) on the proposed Borrowing Date, the
Borrower shall give telephonic notice to the Agent of whether and to what extent
it has decided to accept or reject any or all of the Offers contained in the
Bids made in response to a Bid Loan Request, which notice shall be promptly
confirmed by a telecopy or other form of facsimile communication to be received
by the Agent on the proposed Borrowing Date; provided, however, that in the
event any Offers are accepted (i) the Borrower shall accept Offers for any of
the Interest Periods specified by the Borrower in its Bid Loan Request
Confirmation solely on the basis of ascending interest rates for each such
Interest Period, (ii) if the Borrower declines to borrow the maximum principal
amount of Bid Loans in respect of which Offers at a particular interest rate for
a particular Interest Period have been made, or is prevented from doing so by
any other condition hereof, then the Borrower shall accept a pro rata portion of
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each such Offer, based as nearly as possible on the ratio of the maximum
aggregate principal amounts of Bid Loans for which each such Offer was made by
each Bank (provided that, if the available principal amount of Bid Loans to be
so allocated is not sufficient to enable Bid Loans to be so allocated to each
relevant Bank in integral multiples of $1,000,000, then the Borrower may round
allocations up or down in integral multiples not less than $500,000 as it shall
deem appropriate), (iii) the aggregate principal amount of all Offers accepted
by the Borrower shall not exceed the maximum amount contained in the related Bid
Loan Request Confirmation, and (iv) no Offer of a Bid Loan shall be accepted in
a principal amount less than $5,000,000. Any telephonic notice given by the
Borrower pursuant to this Section 1.9 shall be irrevocable and shall not be
altered, modified, or in any other manner affected by any inconsistent terms
contained in, or terms missing from, any written confirmation of such notice.
Failure of the Borrower to accept an Offer in accordance with the provisions of
this Section 1.9 shall constitute a rejection of such Offer.
Section 1.10. Notice of Acceptance or Rejection of Bids. (a) Notice to
Banks Making Bids. The Agent shall give telephonic notice to each Bank whether
any of the Offers contained in its Bid has been accepted (and if so, in what
amount, at what interest rate and for what Interest Period) no later than 10:00
a.m. (Chicago time) on the proposed Borrowing Date, and each successful bidder
will thereupon become bound, subject to Section 6 and the other applicable
conditions hereof, to make the Bid Loan(s) in respect of which its Bid has been
accepted. As soon as practicable thereafter the Agent shall send written notice
substantially in the form of Exhibit F hereto to each such successful bidder;
provided, however, that failure to give such notice shall not affect the
obligation of such successful bidder to disburse its Bid Loans as herein
required.
(b) Disbursement of Bid Loans. Not later than 12:00 Noon (Chicago time)
on the Borrowing Date for each Borrowing of a Bid Loan(s), each Bank bound to
make a Bid Loan(s) in accordance with Section 1.10(a) shall make available to
the Agent the principal amount of each such Bid Loan in immediately available
funds at the Agent's principal office in Chicago, Illinois. The Agent shall
promptly thereafter make available to the Borrower like funds as received from
each Bank at such office of the Agent in Chicago, Illinois.
(c) Bid Summaries to the Banks. Before the close of business on each
Borrowing Date for Bid Loans, the Agent shall notify each Bank of the aggregate
amount of Bid Loans advanced pursuant to a Bid Loan Request on such Borrowing
Date, the Interest Period(s) therefor, and the lowest and highest interest rates
at which Bid Loans were made for each Interest Period.
Section 1.11. Interest on Bid Loans. Each Borrower shall pay interest
on the unpaid principal amount of each Bid Loan borrowed by such Borrower from
the applicable Borrowing Date to the maturity thereof at the rate of interest
applicable to such Bid Loan as determined pursuant to the above provisions
(calculated on the basis of a 360 day year and the actual number of days
elapsed) payable on the last day of the Interest Period applicable to such Bid
Loan and at maturity (whether by acceleration or otherwise), and, if the
applicable Interest Period is longer than 90 days, on each day occurring every
90 days after the date such Loan is made.
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Section 1.12. Telephonic Notice. Each Bank's telephonic notice to the
Agent of its Bid pursuant to Section 1.7(c), and the Borrower's telephonic
acceptance of any Offer contained in a Bid pursuant to Section 1.9, shall be
irrevocable and binding on such Bank and the Borrower and shall not be altered,
modified, or in any other manner affected by any inconsistent terms contained
in, or missing from, any telecopy or other confirmation of such telephonic
notice. It is understood and agreed by the parties hereto that the Agent shall
be entitled to act, or to fail to act, hereunder in reliance on its records of
any telephonic notices provided for herein and that the Agent shall not incur
any liability to any Person in so doing if its records conflict with any
telecopy or other confirmation of a telephonic notice or otherwise, provided
that the Agent has acted, or failed to act, in good faith. It is further
understood and agreed by the parties hereto that the times of day as set forth
herein are for the convenience of all the parties for providing notices and that
no party shall incur any liability or other responsibility for any failure to
provide such notices within the specified times; provided, however, that the
Agent shall have no obligation to notify the Borrower of any Bid received by it
later than 9:00 a.m. (Chicago time) on the proposed Borrowing Date, and no
acceptance by the Borrower of any Offer contained in a Bid shall be effective to
bind any Bank to make a Bid Loan, nor shall the Agent be under any obligation to
notify any Person of an acceptance, if notice of such acceptance is received by
the Agent later than 9:45 a.m. (Chicago time) on the proposed Borrowing Date.
Section 1.13. Interest Periods. As provided in Section 1.5(a) hereof
in the case of Committed Loans, and Section 1.7 hereof, in the case of Bid
Loans, at the time of each request to advance, continue, or create by conversion
a Borrowing of Loans hereunder (other than Domestic Rate Loans), the Borrower
shall select an Interest Period applicable to such Loans from among the
available options. The term "Interest Period" means the period commencing on the
date a Borrowing of Loans is advanced, continued, or created by conversion and
ending: (a) in the case of Domestic Rate Loans, on the last day of the calendar
quarter in which such Borrowing is advanced, continued, or created by conversion
(or on the last day of the following calendar quarter if such Loan is advanced,
continued or created by conversion on the last day of a calendar quarter), (b)
in the case of a Eurodollar Loan, 1, 2, 3, or 6 months thereafter and (c) in the
case of Bid Loans, the date, as the Borrower may select, 7-180 days thereafter;
provided, however, that:
(a) any Interest Period for a Borrowing of Domestic Rate Loans that
otherwise would end after the Termination Date shall end on the Termination
Date;
(b) for any Borrowing of Fixed Rate Loans, the Borrower may not
select an Interest Period that extends beyond the Termination Date;
(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
Borrowing of Eurodollar Loans to occur in the following calendar month, the
last day of such Interest Period shall be the immediately preceding
Business Day; and
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(d) for purposes of determining an Interest Period for a Borrowing
of Eurodollar Loans, a month means a period starting on one day in a
calendar month and ending on the numerically corresponding day in the next
calendar month; provided, however, that if there is no numerically
corresponding day in the month in which such an Interest Period is to end
or if such an Interest Period begins on the last Business Day of a calendar
month, then such Interest Period shall end on the last Business Day of the
calendar month in which such Interest Period is to end.
Section 1.14. Maturity of Loans. Each Committed Loan shall mature and
become due and payable by the Borrower on the Termination Date. Each Bid Loan
shall mature and become due and payable by the Borrower on the last day of the
Interest Period applicable thereto.
Section 1.15. Prepayments. (a) Committed Loans. The Borrower shall
have the privilege of prepaying without premium or penalty and in whole or in
part (but, if in part, then: (i) if such Borrowing is of Domestic Rate Loans, in
an amount not less than $250,000, (ii) if such Borrowing is of Eurodollar Loans,
in an amount not less than $1,000,000, and (iii) in each case, in an amount such
that the minimum amount required for a Borrowing of Committed Loans pursuant to
Section 1.4 hereof remains outstanding) any Borrowing of Eurodollar Loans at any
time upon three (3) Business Days' prior notice to the Agent or, in the case of
a Borrowing of Domestic Rate Loans, notice delivered to the Agent by the
Borrower no later than 10:00 a.m. (Chicago time) on the date of prepayment, such
prepayment to be made by the payment of the principal amount to be prepaid and
accrued interest thereon to the date fixed for prepayment. In the case of
Eurodollar Loans, such prepayment may only be made on the last day of the
Interest Period then applicable to such Loans. The Agent will promptly advise
each Bank of any such prepayment notice it receives from the Borrower. Any
amount paid or prepaid before the Termination Date may, subject to the terms and
conditions of this Agreement, be borrowed, repaid and borrowed again.
(b) Bid Loans. The Borrower may not prepay any Bid Loan before its
maturity.
Section 1.16. 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, at a rate
per annum equal to the sum of two percent (2%) plus the Domestic Rate from
time to time in effect.
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Section 1.17. The Notes. (a) The Committed Loans made to the Borrower
by a Bank shall be evidenced by a single promissory note of the Borrower issued
to such Bank in the form of Exhibit A hereto (individually, a "Committed Loan
Note" and, collectively, the "Committed Loan Notes"), each such Committed Loan
Note to be payable to the order of the applicable Bank in the principal amount
of its Commitment and otherwise in the form of Exhibit A hereto.
(b) All Bid Loans made to the Borrower by a Bank shall be evidenced by a
promissory note of the Borrower, payable to the order of such Bank and otherwise
in the form of Exhibit B hereto (individually a "Bid Note" and collectively the
"Bid Notes").
(c) Each 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, all payments of principal and interest and the principal balance from time
to time outstanding thereon, the type of such Loan, and, for any Fixed Rate
Loan, the Interest Period and the interest rate applicable thereto. The record
thereof, whether shown on such books and records of a Bank or on a schedule to
any Note, shall be prima facie evidence as to all such matters; provided,
however, that the failure of any Bank to record any of the foregoing or any
error in any such record shall not limit or otherwise affect the obligation of
the Borrower to repay all Loans made to it hereunder together with accrued
interest thereon. At the request of any Bank and upon such Bank tendering to
the Borrower the Note to be replaced, the Borrower shall furnish a new Note to
such Bank to replace any outstanding Note, and at such time the first notation
appearing on a schedule on the reverse side of, or attached to, such Note shall
set forth the aggregate unpaid principal amount of all Loans, if any, then
outstanding thereon.
Section 1.18. Funding Indemnity. If any Bank shall incur any loss,
cost or expense (including, without limitation, any loss of profit, and any
loss, cost or expense incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain any Eurodollar
Loan or the relending or reinvesting of such deposits or amounts paid or prepaid
to such Bank) as a result of:
(a) any payment, prepayment or conversion of a 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 6 or otherwise) by the Borrower to borrow or continue a Fixed Rate
Loan, or to convert a Domestic Rate Loan into a Eurodollar Loan, on the
date specified in a notice given pursuant to Section 1.5(a) or 1.7 or
established pursuant to Section 1.5(c) hereof,
(c) any failure by the 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,
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then, upon the demand of such Bank, the Borrower shall pay to such Bank such
amount as will reimburse such Bank for such loss, cost or expense. If any Bank
makes such a claim for compensation, it shall provide to the Borrower, with a
copy to the Agent, a certificate setting forth the amount of such loss, cost or
expense in reasonable detail (including an explanation of the basis for and the
computation of such loss, cost or expense) and the amounts shown on such
certificate if reasonably calculated shall be conclusive.
Section 1.19. Commitment Terminations. The Borrower shall have the
right at any time and from time to time, upon five (5) Business Days' prior
written notice to the Agent, to terminate the Revolving Credit Commitments
without premium or penalty and in whole or in part, any partial termination to
be (i) in an amount not less than $1,000,000, and (ii) allocated ratably among
the Banks in proportion to their respective Percentages, provided that the
Revolving Credit Commitments may not be reduced to an amount less than the sum
of the aggregate principal amount of Loans and of L/C Obligations then
outstanding. Any termination of the Revolving Credit Commitments below
$2,000,000 shall reduce the L/C Commitment by a like amount. The Agent shall
give prompt notice to each Bank of any such termination of Revolving Credit
Commitments. Any termination of the Commitments pursuant to this Section 1.19
may not be reinstated.
Section 2. Fees and Extensions.
Section 2.1. Fees. (a) Facility Fee. The Borrower shall pay to the
Agent for the ratable account of the Banks in accordance with their Percentages
a facility fee at the rate of 0.15% per annum (computed on the basis of a year
of 360 days and the actual number of days elapsed) on the average daily amount
of Commitments hereunder (whether used or unused). Such facility fee shall be
payable quarter-annually in arrears on the last day of each March, June,
September and December in each year (commencing December 31, 1995) and on the
Termination Date, unless the Revolving Credit Commitments are terminated in
whole on an earlier date, in which event the facility fee for the period to the
date of such termination in whole shall be paid on the date of such termination.
(b) Letter of Credit Fees. On the date of issuance or extension, or
increase in the amount, of any Letter of Credit pursuant to Section 1.2 hereof,
the Borrower shall pay to the Agent for its own account an issuance fee equal to
1/8 of 1% (computed on the basis of a year of 360 days and the actual number of
days elapsed) of the face amount of (or of the increase in the face amount of)
such Letter of Credit. Quarterly in arrears, on the last day of each calendar
quarter, commencing on December 31, 1995, the Borrower shall pay to the Agent,
for the ratable benefit of the Banks in accordance with their Percentages, a
letter of credit fee at a rate per annum equal to the Eurodollar Margin
(computed on the basis of a year of 360 days and the actual number of days
elapsed) in effect during each day of such quarter applied to the daily average
face amount of Letters of Credit outstanding during such quarter. In addition,
the Borrower shall pay to the Agent for its own account the Agent's standard
drawing, negotiation, amendment, and other administrative fees for each Letter
of Credit. Such standard fees referred to in the preceding sentence may be
established by the Agent from time to time.
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(c) Usage Fee. For each calendar quarter that the daily average
outstanding principal amount of the Committed Loans equals or exceeds 50% of the
daily average Commitments in effect for such calendar quarter, the Borrower
shall pay to the Agent for the ratable benefit of the Banks, based on their
daily average outstanding Committed Loans, a fee equal to 25/100th of 1% (0.25%)
per annum of the principal amount of the daily average amount of all Committed
Loans outstanding during such calendar quarter, payable in arrears on the last
day of each calendar quarter and on the Termination Date, unless the Revolving
Credit Commitments are terminated in whole on an earlier date, in which event
the usage fee for the period commencing on the last day of most recent ending
calendar quarter to the date of such termination in whole shall be paid on the
date of such termination.
(d) Closing Fees. On the date hereof, the Borrower shall pay to the
Agent for the benefit of the Banks a closing fee equal to 0.05% of its Revolving
Credit Commitment.
(e) Agent Fees. The Borrower shall pay to the Agent fees with respect
to the syndication and administration of the credit facilities described in this
Agreement as are agreed to between the Agent and the Borrower in that certain
fee letter dated October 31, 1995, or as otherwise agreed to between them.
Section 2.2. Extensions of Termination Date. (a) No later than sixty
(60) days before each anniversary date of this Agreement the Borrower may make a
request for a one year extension of the Termination Date in a written notice to
the Agent. The Agent will promptly inform the Banks of any such request, and
each Bank shall notify the Agent in writing within thirty (30) days before the
anniversary date following such request whether such Bank agrees to the
requested extension. If a Bank fails to so notify the Agent whether such Bank
agrees to such extension, such Bank shall be deemed to have refused to grant the
requested extension. Upon receipt of the Agent of the written consent of all the
Banks, the Termination Date shall be automatically extended an additional year.
Otherwise, subject to subsection (b) below, the Termination Date will remain as
scheduled. All costs and expenses incurred by the Agent in connection with each
extension request (including reasonable attorneys' fees) shall be paid by the
Borrower in accordance with Section 11.15 hereof.
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(b) If any Bank shall fail to consent to the extension of the
Termination Date within 30 days of receipt by such Bank of notice of any request
pursuant to Section 2.2(a), then upon termination of such 30-day period, the
Borrower may demand that such Bank assign in accordance with Section 11.12 to
one or more assignees designated by the Borrower and acceptable to the Agent in
its sole discretion all (but not less than all) of such Bank's Commitment and
the Committed Loans owing to it prior to the then scheduled Termination Date.
The Bank to be so replaced shall cooperate with the Borrower and substitute bank
to accomplish such substitution on the terms of Section 11.12 and shall execute
an assignment agreement reasonably satisfactory to such Bank.
Section 3. Place and Application of Payments.
All payments of principal of and interest on the Loans and the
Reimbursement Obligations, and of all other Obligations payable by the Borrower
under this Agreement and the other Loan Documents, shall be made by the Borrower
to the Agent by no later than 12:00 noon (Chicago time) on the due date thereof
at the principal office of the Agent in Chicago, Illinois (or such other
location in the State of Illinois as the Agent may designate to the Borrower)
for the benefit of the Bank or Banks entitled thereto. Any payments received
after such time shall be deemed to have been received by the Agent on the next
Business Day. All such payments shall be made in U.S. Dollars, in immediately
available funds at the place of payment, in each case without set-off or
counterclaim. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal or interest on Committed Loans,
facility fees and on Reimbursement Obligations in which the Banks have purchased
Participating Interests ratably to the Banks and like funds relating to the
payment of any other amount payable to any Bank to such Bank, in each case to be
applied in accordance with the terms of this Agreement.
Section 4. Definitions; Interpretation.
Section 4.1. Definitions. The following terms when used herein shall
have the following meanings:
"Account" is defined in Section 8.4 hereof.
"Adjusted LIBOR" is defined in Section 1.3(b) hereof.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise.
"Agent" means Harris Trust and Savings Bank and any successor pursuant to
Section 10.7 hereof.
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"Application" is defined in Section 1.2(b) hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by the Borrower pursuant to Section 6.1(f) hereof or on any
update of any such list provided by the Borrower to the Agent, or any further or
different officer of the Borrower so named by any Authorized Representative of
the Borrower in a written notice to the Agent.
"Bank" is defined in the introductory paragraph of this Agreement and
includes each assignee bank pursuant to Section 11.12 hereof.
"Bid" is defined in Section 1.7(c) hereof.
"Bid loan" is defined in Section 1.6 hereof.
"Bid Loan Request" is defined in Section 1.7(a) hereof.
"Bid Loan Request Confirmation" is defined in Section 1.7(a) hereof.
"Bid Note" is defined in Section 1.17(b) hereof.
"Borrower" is defined in the introductory paragraph of this Agreement.
"Borrowing" means the total of Loans of a single type advanced, continued
for an additional Interest Period, or converted from a different type into such
type by the Banks on a single date and for a single Interest Period. Borrowings
of Committed Loans are made and maintained ratably from each of the Banks
according to their Percentages. Borrowings of a Bid Loan or Bid Loans are made
from a Bank or Banks in accordance with the procedures of Section 1.6 through
1.12. A Borrowing is "advanced" on the day Banks advance funds comprising such
Borrowing to the Borrower, is "continued" on the date a new Interest Period for
the same type of Loans commences for such Borrowing, and is "converted" when
such Borrowing is changed from one type of Loan to the other, all as requested
by the Borrower pursuant to Section 1.5(a) in the case of Committed Loans or
Section 1.7 in the case of Bid Loans.
"Borrowing Date" is defined in Section 1.7(a) hereof.
"Business Day" means any day other than a Saturday or Sunday on which banks
are not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the borrowing or payment of a Eurodollar
Loan, on which banks are dealing in U.S. Dollar deposits in the interbank
eurodollar market in London, England.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Cash Flow Coverage Ratio" is defined in Section 7.9 hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Commitments" means the Revolving Credit Commitments and the L/C
Commitment.
"Committed Loan" is defined in Section 1.1 hereof.
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"Committed Loan Note" is defined in 1.17(a) hereof.
"Confirmation of Bid" is defined in Section 1.7(c).
"Consolidated Cash Flow" means, with reference to any period, the sum of
(a) Consolidated Net Income for such period plus all amounts deducted in
arriving at such Consolidated Net Income amount (but without duplication) in
respect of (i) Consolidated Interest Expense for such period, plus (ii) federal,
state and local income taxes for such period, plus (iii) all amounts properly
charged for depreciation of fixed assets and amortization of intangible assets
during such period on the books of the Borrower and its Consolidated
Subsidiaries, plus (iv) all amounts properly charged for amortization of the
InfoScan Costs and Software Costs during such period on the books of the
Borrower and its Subsidiaries, (b) 100% of the net proceeds received by the
Borrower from any new offering of equity securities of the Borrower received at
any time during such period and (c) 100% of the net proceeds received by the
Borrower from the issuance of any Subordinated Debt of the Borrower received at
any time during such period.
"Consolidated Fixed Charges" means, with reference to any period, the sum
of (i) the aggregate amount of payments required to be made by the Borrower and
its Consolidated Subsidiaries during such period in respect of principal on all
Indebtedness for Borrowed Money (whether at maturity, as a result of mandatory
sinking fund redemption, mandatory prepayment, acceleration or otherwise), plus
(ii) Consolidated Interest Expense for such period, plus (iii) capital
expenditures (as determined in accordance with GAAP) of the Borrower and its
Consolidated Subsidiaries during such period, plus (iv) dividends paid by the
Borrower and, to the extent not received by the Borrower, its Subsidiaries on
its capital stock during such period, plus (v) cash payments made in connection
with InfoScan Costs and Software Costs during such period and cash investments
in joint ventures and other investments and acquisitions during such period.
"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 Borrower and its Consolidated Subsidiaries for such period determined in
accordance with GAAP.
"Consolidated Net Income" means, with reference to any period, the net
income (or net loss) of the Borrower and its Consolidated Subsidiaries for such
period as computed on a consolidated basis in accordance with GAAP.
"Consolidated Quick Ratio" means, as of any time the same is to be
determined, the ratio of (i) the sum of (a) cash and cash equivalents of the
Borrower and its Consolidated Subsidiaries, (b) accounts receivable of the
Borrower and its Consolidated Subsidiaries net of any reserves established on
the books of the Borrower and Consolidated Subsidiaries in respect of such
accounts receivable and (c) the outstanding principal balance of the Oracle
Escrow to (ii) current liabilities of the Borrower and its Consolidated
Subsidiaries, all determined on a consolidated basis in accordance with GAAP,
provided there shall be excluded from current liabilities the current portion of
deferred taxes.
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"Consolidated Tangible Net Worth" means, as of any time the same is to be
determined, the excess of total assets of the Borrower and its Consolidated
Subsidiaries over total liabilities of the Borrower and its Consolidated
Subsidiaries, total assets and total liabilities each to be determined on a
consolidated basis in accordance with GAAP, excluding, however, from the
determination of total assets all assets which would be classified as Goodwill
under GAAP.
"Consolidated Total Liabilities" means, as of any time the same is to be
determined, the aggregate of all indebtedness, obligations, liabilities,
reserves and any other items which would be listed as a liability on a balance
sheet of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any Subsidiary, are treated as a single
employer under Section 414 of the Code.
"Credit Event" means the advancing of any Loan, the continuation of or
conversion into a Eurodollar Loan, or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Rate" is defined in Section 1.3(a) hereof.
"Domestic Rate Loan" means a Loan bearing interest prior to maturity at a
rate specified in Section 1.3(a) hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Eurodollar Loan" means a Loan bearing interest prior to maturity at the
rate specified in Section 1.3(b) hereof.
"Eurodollar Margin" is defined in Section 1.3(b) hereof.
"Eurodollar Reserve Percentage" is defined in Section 1.3(b) hereof.
"Event of Default" means any event or condition identified as such in
Section 8.1 hereof.
"Federal Funds Rate" means the fluctuating interest rate per annum
described in part (x) of clause (ii) of the definition of Domestic Rate
appearing in Section 1.3(a) hereof.
"Fixed Rate Loans" means Eurodollar Loans and Bid Loans.
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"GAAP" means generally accepted accounting principles as in effect from
time to time, and, subject to Section 4.3 hereof, applied by the Borrower and
its Subsidiaries on a basis consistent with the preparation of the Borrower's
financial statements referred to in Section 5.4 hereof.
"Headquarters Complex Lease" means the Lease Agreement dated as of
September 27, 1990 by and between Randolph/Clinton Limited Partnership and the
Borrower pursuant to which the Borrower has leased property formerly owned by it
and commonly known as 150 North Clinton Street, 162 North Clinton Street and 564
West Randolph Street, Chicago, Illinois and any buildings or improvements now or
hereafter existing thereon pursuant to the terms and conditions stated therein.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money borrowed (including by the issuance of debt
securities), (ii) all indebtedness for the deferred purchase price of property
or services (other than trade accounts payable arising in the ordinary course of
business), (iii) all indebtedness secured by any Lien upon Property of such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness, (iv) all Capitalized Lease Obligations of such Person and
(v) all obligations of such Person on or with respect to letters of credit,
bankers' acceptances and other extensions of credit whether or not representing
obligations for borrowed money.
"InfoScan Costs" means the assets of the Borrower identified as Infoscan
Costs (consisting of deferred data procurement costs) on the consolidated
balance sheet of the Borrower dated as at December 31, 1994, which balance sheet
has heretofore been furnished to the Banks.
"Interest Period" is defined in Section 1.13 hereof.
"L/C Commitment" means $2,000,000.
"L/C Obligations" means the aggregate undrawn face amounts of all
outstanding Letters of Credit and all unpaid Reimbursement Obligations.
"Lending Office" is defined in Section 9.4 hereof.
"Letter of Credit" is defined in Section 1.2(a) hereof.
"LIBOR" is defined in Section 1.3(b) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of a
vendor or lessor under any conditional sale, capital lease or other title
retention arrangement.
"Loan" means and includes Committed Loans and Bid Loans, and each of them
singly, and the term "type" of Loan refers to its status as a Committed Loan or
Bid Loan or, if a Committed Loan, to its status as a Domestic Rate Loan or
Eurodollar Loan.
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"Loan Documents" means this Agreement, the Notes and the Applications.
"Note" means and includes the Committed Loan Notes and the Bid Notes and
each individually, unless the context in which such term is used shall otherwise
require.
"Obligations" means all fees payable hereunder, all obligations of the
Borrower to pay principal and interest on Loans and Reimbursement Obligations,
and all other payment obligations of the Borrower arising under or in relation
to any Loan Document.
"Oracle Escrow" means the $8,000,000 escrow established July 27, 1995
payable to the Borrower with interest on or about July 27, 1996 net of any
claims by Oracle Corporation.
"Oracle Sale" means the sale by the Borrower to Oracle Corporation of a
portion of the Borrower's software business consisting of the Borrower's EXPRESS
technology for on-line analytical processing (OLAP) along with certain related
application products for a sale price of approximately $100,000,000.
"Participating Bank" is defined in Section 1.2(d) hereof.
"Participating Interest" is defined in Section 1.2(d) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Percentage" means, for each Bank, the percentage of the Revolving Credit
Commitments represented by such Bank's Revolving Credit Commitment or, if the
Revolving Credit Commitments have been terminated, the percentage held by such
Bank (including through participation interests in Reimbursement Obligations) of
the aggregate principal amount of all outstanding Obligations.
"Person" means an individual, partnership, corporation, association, trust,
unincorporated organization or any other entity or organization, including a
government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code that
either (i) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (ii) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.
"Pricing Date" means, for any fiscal quarter of the Borrower ended after
the date hereof, the latest date by which the Borrower is required to deliver a
Compliance Certificate for such fiscal quarter pursuant to Section 7.5(b). The
Eurodollar Margin established on a Pricing Date shall remain in effect until the
next Pricing Date. If the Borrower has not
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delivered a Compliance Certificate by the date such Compliance Certificate is
required to be delivered under Section 7.5(b), until a Compliance Certificate is
delivered before the next Pricing Date, the Eurodollar Margin shall be 1% per
annum. If the Borrower subsequently delivers such a Compliance Certificate
before the next Pricing Date, the Eurodollar Margin established by such late
delivered Compliance Certificate shall take effect from the date of delivery
until the next Pricing Date. In all other circumstances, the Eurodollar Margin
established by a Compliance Certificate shall be in effect from the Pricing Date
that occurs immediately after the end of the Borrower's fiscal quarter covered
by such Compliance Certificate until the next Pricing Date.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Reimbursement Obligation" is defined in Section 1.2(c) hereof.
"Required Banks" means, as of the date of determination thereof, Banks
holding at least 65% of the Percentages.
"Revolving Credit" is defined in the introductory paragraph of this
Agreement.
"Revolving Credit Commitment" is defined in Section 1.1 hereof.
"Software Costs" means the assets of the Borrower identified as Software
Costs on the consolidated balance sheet of the Borrower dated as at December 31,
1994, which balance sheet has heretofore been furnished to the Banks.
"Subordinated Debt" means Indebtedness for Borrowed Money of the Borrower
subordinated in right of payment to the Loans pursuant to a subordination
agreement in form and substance satisfactory to the Banks and certain other
Indebtedness for Borrowed Money, pursuant to documentation, containing interest
rates, payment terms, maturities, amortization schedules, covenants, defaults,
remedies, subordination provisions and other material terms in form and
substance satisfactory to the Banks.
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Borrower, by one or more of its
Subsidiaries, or by the Borrower and one or more of its Subsidiaries. "Domestic
Subsidiary" means any Subsidiary organized under the laws of any state of the
United States of America all or substantially all of whose assets are located in
and substantially all of whose revenues are derived from operations in the
United States of America. "Consolidated Subsidiary" means those Subsidiaries
whose accounts are or should be consolidated with those of the Borrower under
GAAP.
"Termination Date" means October 31, 1998, or such later date to which the
same may be extended pursuant to Section 2.2 hereof, or such earlier date on
which the
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Revolving Credit Commitments are terminated in whole pursuant to Section 1.19,
8.2 or 8.3 hereof.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"U.S. Dollars" and "$" each means the lawful currency of the United States
of America.
"Unused Commitments" means, at any time, the difference between the
Revolving Credit Commitments then in effect (without giving effect to Section
7.19 hereof) and the aggregate outstanding principal amount of Loans and L/C
Obligations.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA.
"Wholly-owned Subsidiary" means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors' qualifying shares as
required by law) or other equity interests are owned by the Borrower and/or one
or more Wholly-owned Subsidiaries within the meaning of this definition.
Section 4.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The words
"hereof", "herein", AND "hereunder" and words of like import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All references to time of day herein are references
to Chicago, Illinois time unless otherwise specifically provided. Where the
character or amount of any asset or liability or item of income or expense is
required to be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, it shall be done in
accordance with GAAP except where such principles are inconsistent with the
specific provisions of this Agreement.
Section 4.3. Change in Accounting Principles. If, after the date of
this Agreement, there shall occur any change in generally accepted accounting
principles from those used in the preparation of the financial statements
referred to in Section 5.4 hereof and such change shall result in a change in
the method of calculation of any financial covenant, standard or term found in
this Agreement, either the Borrower or the Required Banks may by notice to the
Banks and the Borrower, respectively, require that the Banks and the Borrower
negotiate in good faith to amend such covenant, standard and term so as
equitably to reflect such change in accounting principles, with the desired
result being that the criteria for evaluating the financial condition of the
Borrower and its Subsidiaries shall be the same as if such change had not been
made. No delay by the Borrower or the Required Banks in requiring such
negotiation shall limit their right to so require such a negotiation at any time
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after such a change in accounting principles. Until any such covenant, standard,
or term is amended in accordance with this Section 4.3, financial covenants
shall be computed and determined in accordance with generally accepted
accounting principles in effect prior to such change in accounting principles.
Without limiting the generality of the foregoing, the Borrower shall neither be
deemed to be in compliance with any financial covenant hereunder nor out of
compliance with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof.
Section 5. Representations and Warranties.
The Borrower represents and warrants to each Bank as follows:
Section 5.1. Organization and Qualification. The Borrower is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Delaware, has full and adequate corporate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to so qualify
would not have a material adverse effect upon the Borrower or its business. The
Borrower has full right and authority to enter into this Agreement, to make the
borrowings herein provided for, to issue its Notes in evidence thereof, to
execute and deliver the Applications, and to perform all of its obligations
hereunder and under the other Loan Documents; and this Agreement and the other
Loan Documents do not, nor does the performance or observance by the Borrower of
any of the matters and things herein or therein provided for, contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon the Borrower or any provision of the certificate of
incorporation or by-laws of the Borrower or any covenant, indenture or agreement
of or affecting the Borrower or any of its Properties, or result in the creation
or imposition of any Lien on any Property of the Borrower.
Section 5.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly licensed
or qualified and in good standing in each jurisdiction in which the nature of
the business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to so qualify
would not have a material adverse effect upon such Subsidiary or its business.
Schedule 5.2 hereto identifies each Subsidiary, the jurisdiction of its
incorporation or organization, as the case may be, the percentage of issued and
outstanding shares of each class of its capital stock or other equity interests
owned by the Borrower and the Subsidiaries and, if such percentage is not 100%
(excluding directors' qualifying shares as required by law), a description of
each class of its authorized capital stock and other equity interests and the
number of shares of each class issued and outstanding. All of the outstanding
shares of capital stock and other equity interests of each Subsidiary are
validly issued and outstanding and fully paid and nonassessable and all such
shares and other equity interests indicated on Schedule 5.2 as
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owned by the Borrower or a Subsidiary are owned, beneficially and of record, by
the Borrower or such Subsidiary free and clear of all Liens. Except as
contemplated by the Joint Venture Agreement dated as of June 12, 1992 by and
between the Borrower, GfK, AG, Taylor Nelson Group, Limited, Addison Consultancy
Group, PLC, and Precis [1137] Limited, there are no outstanding commitments or
other obligations of any Subsidiary to issue, and no options, warrants or other
rights of any Person to acquire, any shares of any class of capital stock or
other equity interests of any Subsidiary.
Section 5.3. Margin Stock. Neither the Borrower nor any Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Loan or Letter of Credit will be used to purchase or carry any such margin stock
or to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
Section 5.4. Financial Reports. The consolidated balance sheet of the
Borrower and its Subsidiaries as at December 31, 1994, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, and accompanying
notes thereto, which financial statements are accompanied by the audit report of
Grant Thornton, independent public accountants, and the unaudited interim
consolidated balance sheet of the Borrower and its Subsidiaries as at June 30,
1995, and the related consolidated statements of income, retained earnings and
cash flows of the Borrower and its Subsidiaries for the six (6) month then
ended, heretofore furnished to the Banks, fairly present the consolidated
financial condition of the Borrower and its Subsidiaries as at said dates and
the consolidated results of their operations and cash flows for the periods then
ended in conformity with generally accepted accounting principles applied on a
consistent basis. Neither the Borrower nor any Subsidiary has contingent
liabilities which are material to it other than as indicated on such financial
statements or, with respect to future periods, on the financial statements
furnished pursuant to Section 7.5 hereof. Since June 30, 1995, there has been no
change in the condition (financial or otherwise) or business prospects of the
Borrower or any Subsidiary except those occurring in the ordinary course of
business and as previously disclosed in the Borrower's press release relating to
the Oracle Sale, none of which in the aggregate have been materially adverse.
Section 5.5. Litigation and Other Controversies. Except as disclosed
on Schedule 5.5 attached hereto and made a part hereof, there is no litigation
or governmental proceeding or labor controversy pending, nor to the knowledge of
the Borrower threatened, against the Borrower or any Subsidiary which if
adversely determined would (i) impair the validity or enforceability of, or
impair the ability of the Borrower to perform its obligations under, this
Agreement or any other Loan Document or (ii) result in any material adverse
change in the financial condition, Properties, business or operations of the
Borrower or any Subsidiary.
Section 5.6. Taxes. All tax returns required to be filed by the
Borrower or any Subsidiary in any jurisdiction have, in fact, been filed, and
all taxes, assessments, fees and other governmental charges upon the Borrower or
any Subsidiary or upon any of their
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respective Properties, income or franchises, which are shown to be due and
payable in such returns, have been paid. Except for the outstanding dispute
regarding a tax assessement against the Borrower's Towne-Oller business unit,
the Borrower does not know of any proposed additional tax assessment against it
or its Subsidiaries for which adequate provision in accordance with GAAP has not
been made on its accounts. Adequate provisions in accordance with GAAP for taxes
on the books of the Borrower and each Subsidiary have been made for all open
years, and for its current fiscal period.
Section 5.7. Approvals. No authorization, consent, license, or
exemption from, or filing or registration with, any court or governmental
department, agency or instrumentality, nor any approval or consent of the
stockholders of the Borrower or any other Person, is or will be necessary to the
valid execution, delivery or performance by the Borrower of this Agreement or
any other Loan Document.
Section 5.8. Investment Company; Public Utility Holding Company.
Neither the Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 5.9. ERISA. The Borrower and each other member of its
Controlled Group has fulfilled its obligations under the minimum funding
standards of and is in compliance in all material respects with ERISA and the
Code to the extent applicable to it and has not incurred any liability to the
PBGC or a Plan under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA. Neither the Borrower nor any Subsidiary
has any contingent liabilities with respect to any post-retirement benefits
under a Welfare Plan, other than liability for continuation coverage described
in article 6 of Title I of ERISA.
Section 5.10. Compliance with Laws. The Borrower and its Subsidiaries
are in compliance with the requirements of all federal, state and local laws,
rules and regulations applicable to or pertaining to their Properties or
business operations (including, without limitation, the Occupational Safety and
Health Act of 1970, the Americans with Disabilities Act of 1990, and laws and
regulations establishing quality criteria and standards for air, water, land and
toxic or hazardous wastes and substances), non-compliance with which could have
a material adverse effect on the financial condition, Properties, business or
operations of the Borrower or any Subsidiary. Neither the Borrower nor any
Subsidiary has received notice to the effect that its operations are not in
compliance with any of the requirements of applicable federal, state or local
environmental, health and safety statutes and regulations or are the subject of
any governmental investigation evaluating whether any remedial action is needed
to respond to a release of any toxic or hazardous waste or substance into the
environment, which non-compliance or remedial action could have a material
adverse effect on the financial condition, Properties, business or operations of
the Borrower or any Subsidiary.
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Section 5.11. Other Agreements. Neither the Borrower nor any
Subsidiary is in default under the terms of any covenant, indenture or agreement
of or affecting the Borrower, any Subsidiary or any of their Properties, which
default if uncured would have a material adverse effect on the financial
condition, Properties, business or operations of the Borrower or any Subsidiary.
Section 6. Conditions Precedent.
The obligation of each Bank to advance, continue or convert any Loan (other
than the continuation of, or conversion into, a Domestic Rate Loan) or of the
Agent to issue, extend the expiration date (including by not giving notice of
non-renewal) of or increase the amount of any Letter of Credit under this
Agreement, shall be subject to the following conditions precedent:
Section 6.1. Initial Credit Event. Before or concurrently with the
initial Credit Event:
(a) the Agent shall have received for each Bank the favorable
written opinions of Freeborn & Peters, counsel to the Borrower, in
substantially the form attached hereto as Exhibit G;
(b) the Agent shall have received for each Bank copies of the
Borrower's Certificate of Incorporation and bylaws (or comparable
constituent documents) and any amendments thereto, certified in each
instance by its Secretary or Assistant Secretary;
(c) the Agent shall have received for each Bank copies of
resolutions of the Borrower's Board of Directors authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents to
which it is a party and the consummation of the transactions contemplated
hereby and thereby, together with specimen signatures of the persons
authorized to execute such documents on the Borrower's behalf, all
certified in each instance by its Secretary or Assistant Secretary;
(d) the Agent shall have received for each Bank copies of the
certificates of good standing for the Borrower (dated no earlier than 30
days prior to the date hereof) from the office of the secretary of the
state of its incorporation and of the States of California, Illinois,
Massachusetts and New York where it is qualified to do business as a
foreign corporation;
(e) the Agent shall have received for each Bank such Bank's duly
executed Notes of the Borrower dated the date hereof and otherwise in
compliance with the provisions of Section 1.17 hereof;
(f) the Agent shall have received for each Bank a list of the
Borrower's Authorized Representatives;
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(g) the Agent shall have received for itself and for the Banks the
initial fees called for by Section 2.1 hereof;
(h) the Agent shall have received from the Borrower evidence that the
Credit Agreement dated as of November 3, 1994 between the Borrower and
Harris Trust and Savings Bank has been terminated and, in the case of any
loans outstanding thereunder, all such loans have been or will be repaid in
full upon the initial Borrowing hereunder;
(i) the Agent shall have received for each Bank a copy of the
Headquarters Complex Lease; and
(j) all legal matters incident to the execution and delivery of the
Loan Documents shall be satisfactory to the Banks.
Section 6.2 All Credit Events. As of the time of each Credit Event
hereunder:
(a) in the case of a Borrowing, the Agent shall have received the
notice required by Section 1.5 hereof (including any deemed notice under
Section 1.5(c), in the case of a Committed Loan or Section 1.7, in the case
of a Bid Loan), in the case of the issuance of any Letter of Credit the
Agent shall have received a duly completed Application for such Letter of
Credit together with any fees called for by Section 2.1 hereof and, in the
case of an extension or increase in the amount of a Letter of Credit, a
written request therefor in a form acceptable to the Agent together with
fees called for by Section 2.1 hereof;
(b) each of the representations and warranties set forth in Section 5
hereof shall be and remain true and correct as of such time, except to the
extent that any such representation or warranty relates solely to an
earlier time;
(c) after giving effect to such Credit Event, the sum of the
aggregate principal amount of Loans and of L/C Obligations outstanding
hereunder shall not exceed the Revolving Credit Commitments in effect at
such time;
(d) the Borrower shall be in full compliance with all of the terms
and conditions hereof, and no Default or Event of Default shall have
occurred and be continuing hereunder or would occur as a result of such
Credit Event; and
(e) such Credit Event shall not violate any order, judgment or decree
of any court or other authority or any provision of law or regulation
applicable to any Bank (including, without limitation, Regulation U of the
Board of Governors of the Federal Reserve System).
Each request for a Borrowing hereunder and each request for the issuance
of, increase in the amount of, or extension of the expiration date of, a Letter
of Credit shall be deemed
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to be a representation and warranty by the Borrower on the date on such Credit
Event as to the facts specified in subsections (a) through (d), both inclusive,
this Section 6.2.
The Borrower agrees that, so long as any Note or any L/C Obligation is
outstanding or any Commitment is available to or in use by the Borrower
hereunder, except to the extent compliance in any case or cases is waived in
writing by the Required Banks:
Section 7. Covenants.
Section 7.1. Corporate Existence, Etc. The Borrower shall, and shall
cause each Subsidiary to, preserve and maintain its corporate existence.
The Borrower shall preserve and keep in force and effect, and cause each
Subsidiary to preserve and keep in force and effect, all licenses, permits
and franchises necessary to the proper conduct of its business.
Section 7.2. Maintenance of Properties. The Borrower shall maintain,
preserve and keep its property, plant and equipment in good repair, working
order and condition (ordinary wear and tear excepted) and shall from time
to time make all needful and proper repairs, renewals, replacements,
additions and betterments thereto so that at all times the efficiency
thereof shall be fully preserved and maintained, and the Borrower shall
cause each Subsidiary to do so in respect of Property owned or used by it.
Section 7.3. Taxes and Assessments. The Borrower shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all
taxes, rates, assessments, fees and governmental charges upon or against it
or its Properties, in each case before the same become delinquent and
before penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves are provided
therefor.
Section 7.4. Insurance. The Borrower shall insure and keep insured,
and shall cause each Subsidiary to insure and keep insured, with good and
responsible insurance companies, all insurable Property owned by it which
is of a character usually insured by Persons similarly situated and
operating like Properties against loss or damage from such hazards and
risks, and in such amounts, as are insured by Persons similarly situated
and operating like Properties; and the Borrower shall insure, and shall
cause each Subsidiary to insure, such other hazards and risks (including
employers' and public liability risks) with good and responsible insurance
companies as and to the extent usually insured by Persons similarly
situated and conducting similar businesses. The Borrower shall upon request
of the Agent furnish a certificate setting forth in summary form the nature
and extent of the insurance maintained pursuant to this Section 7.4.
Section 7.5. Financial Reports. The Borrower shall, and shall cause
each Domestic Subsidiary to independently or in consolidation with the
Borrower, maintain a standard system of accounting in accordance with GAAP
and the Borrower shall, and shall cause each Subsidiary to, furnish to the
Bank and its duly authorized representatives such information respecting
the business and financial condition of the Borrower and its Subsidiaries
as any Bank may reasonably request; and without any request, shall furnish
to each Bank:
(a) as soon as available, and in any event within fifty (50)
days (ninety-five (95) days in the case of the last quarter-annual
accounting period of the Borrower)
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after the close of each quarter-annual accounting period of the
Borrower, a copy of the consolidated balance sheet as of the last day
of such period and consolidated statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries for the
fiscal year-to-date period then ended, all in reasonable detail
showing in comparative form the figures for the corresponding date and
period in the previous fiscal year, prepared by the Borrower in
accordance with GAAP and certified to by the chief financial officer
of the Borrower;
(b) as soon as available, and in any event within ninety-five
(95) days after the close of each fiscal year of the Borrower, a copy
of the consolidated balance sheet of the Borrower and its Subsidiaries
as of the last day of such fiscal year and the consolidated statements
of income, retained earnings and cash flows of the Borrower and its
Subsidiaries for the fiscal year then ended, and accompanying notes
thereto, all in reasonable detail showing in comparative form the
figures for the previous fiscal year, accompanied by an unqualified
opinion thereon of Grant Thornton or another firm of independent
public accountants of recognized national standing, selected by the
Borrower and satisfactory to the Required Banks, to the effect that
the financial statements have been prepared in accordance with GAAP
and present fairly in accordance with GAAP the consolidated financial
condition of the Borrower and its Subsidiaries as of the close of such
fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance
with generally accepted auditing standards and, accordingly, such
examination included such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances;
(c) promptly after the sending or filing thereof, copies of each
financial statement, report, notice or proxy statement sent by the
Borrower to its stockholders, and copies of each regular, periodic or
special report, registration statement or prospectus filed by the
Borrower with any securities exchange or the Securities Exchange
Commission or any successor agency; and
(d) promptly after knowledge thereof shall have come to the
attention of any responsible officer of the Borrower, written notice
of any threatened or pending litigation or governmental proceeding or
labor controversy against the Borrower or any Subsidiary which, if
adversely determined, would materially adversely effect the financial
condition, Properties, business or operations of the Borrower or any
Subsidiary or of the occurrence of any Default or Event of Default
hereunder.
Each of the financial statements furnished to the Banks pursuant to clauses
(a) and (b) of this Section 7.5 shall be accompanied by a written
certificate in the form attached hereto as Schedule 7.5 signed by the chief
financial officer of the Borrower to the effect that to the best of the
chief financial officer's knowledge and belief no Default or Event of
Default has occurred during the period covered by such statements or, if
any such Default or Event of Default has occurred during such period,
setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Borrower to remedy the same.
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Such certificate shall also set forth the calculations supporting such
statements in respect of Sections 7.6, 7.7, 7.8 and 7.9 of this Agreement.
Section 7.6. Consolidated Tangible Net Worth. The Borrower shall,
as of the last day of each quarter-annual accounting period of the Borrower
ending during the periods specified below, maintain Consolidated Tangible Net
Worth of not less than:
Consolidated Tangible
From and To and Net Worth
Including Including Shall not Be less than:
The date hereof 12/30/96 $215,000,000
12/31/96 12/30/97 $225,000,000
12/31/97 and at all times thereafter $230,000,000
; provided that the minimum required amount of Consolidated Tangible Net Worth
set forth above shall be increased by 100% of the net proceeds received by the
Borrower from any offering of equity securities of the Borrower received at any
time after December 31, 1995 (other than proceeds received from the exercise of
stock options to purchase shares of the Borrower's common stock existing as of
the date of this Agreement).
Section 7.7. Leverage Ratio. The Borrower shall, as of the last day
of each quarter-annual accounting period of the Borrower ending during the
periods specified below, maintain a ratio of Consolidated Total Liabilities to
Consolidated Tangible Net Worth (the "Leverage Ratio") of not more than 0.75 to
1.0.
Section 7.8. Quick Ratio. The Borrower shall, as of the last day of
each quarter-annual accounting period of the Borrower, maintain a Consolidated
Quick Ratio of not less than 1.3 to 1.0.
Section 7.9. Cash Flow Coverage Ratio. The Borrower shall, as of
the last day of each quarter-annual accounting period of the Borrower ending
during the periods specified below, maintain the ratio of Consolidated Cash Flow
for the four fiscal quarters of the Borrower then ended to Consolidated Fixed
Charges for the same four fiscal quarters then ended (the "Cash Flow Coverage
Ratio") of not less than:
Cash Flow Coverage
From and To and Ratio shall not
Including Including be less than:
The date hereof 12/30/95 .70 to 1.0
12/31/95 12/30/96 .75 to 1.0
12/31/96 12/30/97 .80 to 1.0
12/31/97 and at all times thereafter 1.00 to 1.0
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Section 7.10. Indebtedness for Borrowed Money and Guarantees. The
Borrower shall not, nor shall it permit any Subsidiary to, issue, incur, assume,
create or have outstanding any Indebtedness for Borrowed Money 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; provided, however, that the foregoing provisions shall not restrict nor
operate to prevent:
(a) the Obligations of the Borrower owing to the Banks hereunder;
(b) purchase money indebtedness secured by Liens permitted by
Section 7.11(e) hereof in an aggregate amount not to exceed $5,000,000 at
any one time outstanding;
(c) Capitalized Lease Obligations to the extent permitted by
Section 7.12 hereof;
(d) indebtedness owing by Information Resources Japan Ltd. on one
or more revolving lines of credit in an aggregate principal amount not to
exceed JPY 1,000,000,000 at any one time outstanding;
(e) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business;
(f) the guarantee by the Borrower of the obligations of Information
Resources Japan Ltd., to the extent such obligations are permitted under
Section 7.10(d) hereof, provided that the obligations of the Borrower on
such guarantee shall not at any time exceed JPY 600,000,000; and
(g) other indebtedness and guarantees not to exceed $15,000,000 in
the aggregate at any one time outstanding.
Section 7.11. Liens. The Borrower shall not, nor shall it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Borrower or any Subsidiary; provided, however, that the
foregoing provisions shall not restrict nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts or
leases to which the Borrower or any Subsidiary is a party or other cash
deposits required to be made in the ordinary course of business, provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves have been established therefor;
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(b) mechanics', workmen's, materialmen's, landlords', carriers', or
other similar Liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith
by appropriate proceedings which prevent enforcement of the matter under
contest;
(c) the pledge of assets for the purpose of securing an appeal,
stay or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Borrower and its Subsidiaries
secured by a pledge of assets permitted under this clause, including
interest and penalties thereon, if any, shall not be in excess of $500,000
at any one time outstanding;
(d) liens, mortgages and security interests existing as of December
22, 1992 and disclosed in the financial statements referred to in Section
5.4 hereof; and
(e) Liens upon property of the Borrower or any of its Subsidiaries
created solely for the purpose of securing indebtedness permitted by
Section 7.10(b) hereof, representing or incurred to finance, refinance or
refund the purchase price of Property, provided that no such Lien shall
extend to or cover other property of the Borrower or such Subsidiary other
than the respective Property so acquired, and the principal amount of
indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such Property.
Section 7.12. Leases. The Borrower shall not, nor shall it permit
any Subsidiary to, enter into any operating lease or Capital Lease at any time
if, after giving effect thereto, the aggregate amount of rentals and other
consideration payable by the Borrower and its Subsidiaries under all such leases
or arrangements (which shall include the current portion of any Capitalized
Lease Obligation) would exceed $55,000,000 during any fiscal year of the
Borrower.
Section 7.13. Sales and Leasebacks. The Borrower shall not, nor
shall 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 Borrower or any Subsidiary of any Property theretofore owned by it and which
has been or is to be sold or transferred by such owner to such lender or
investor.
Section 7.14. Mergers, Consolidations and Sales. The Borrower shall
not, nor shall it permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any
substantial part of its Property (except for sales of inventory in the ordinary
course of business), or in any event sell or discount (with or without recourse)
any of its notes or accounts receivable; provided, however, that the foregoing
provisions shall not apply to nor operate to prevent:
(a) any Subsidiary from merging into the Borrower or any Wholly-
owned Domestic Subsidiary if the Borrower or such Domestic Subsidiary is
the surviving corporation;
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(b) any Subsidiary from selling, transferring or leasing all or any
part of its assets and properties to the Borrower or any Wholly-owned
Domestic Subsidiary; and
(c) leases of store equipment by the Borrower and leases or
licenses by the Borrower of converters, software, computer hardware and
other technology, in each case in the ordinary course of business.
The term "substantial" as used in this Section 7.14 shall mean the sale, lease
or other disposition of ten percent (10%) or more of the consolidated total
assets of the Borrower in any fiscal year.
Section 7.15. ERISA. The Borrower shall, and shall cause each
Subsidiary to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed might result
in the imposition of a Lien against any of its Properties. The Borrower shall,
and shall cause each Subsidiary to, promptly notify the Banks of (i) the
occurrence of any reportable event (as defined in ERISA) with respect to a Plan,
(ii) receipt of any notice from the PBGC of its intention to seek termination of
any Plan or appointment of a trustee therefor, (iii) its intention to terminate
or withdraw from any Plan, and (iv) the occurrence of any event with respect to
any Plan which would result in the incurrence by the Borrower or any Subsidiary
of any material liability, fine or penalty, or any material increase in the
contingent liability of the Borrower or any Subsidiary with respect to any post-
retirement Welfare Plan benefit.
Section 7.16. Compliance with Laws. The Borrower shall, and shall
cause each Subsidiary to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to the Properties or business operations of the
Borrower or any Subsidiary, non-compliance with which could have a material
adverse effect on the financial condition, Properties, business or operations of
the Borrower or any Subsidiary or could result in a Lien upon any of their
Property.
Section 8. Events of Default and Remedies.
Section 8.1. Events of Default. Any one or more of the following
shall constitute an "Event of Default" hereunder:
(a) default for the period of three (3) days in the payment when
due of all or any part of the principal of or interest on any Note (whether
at the stated maturity thereof or at any other time provided for in this
Agreement) or of any Reimbursement Obligation, fee or other amount payable
by the Borrower hereunder or under any other Loan Document; or
(b) default in the observance or performance of any covenant set
forth in Sections 7.5(e), 7.6, 7.7, 7.8, 7.9, 7.10, 7.13, or 7.14 hereof;
or
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(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within twenty
(20) days after written notice thereof to the Borrower by the Agent; or
(d) any representation or warranty made by the Borrower herein or
in any other Loan Document, or in any statement or certificate furnished by
it pursuant hereto or thereto, or in connection with any Loan made or
Letter of Credit issued hereunder, proves untrue in any material respect as
of the date of the issuance or making thereof, and any such breach which is
capable of being cured shall not be remedied within twenty (20) days after
the date of the issuance or making thereof; or
(e) default shall occur under any Indebtedness for Borrowed Money
aggregating more than $500,000 issued, assumed or guaranteed by the Company
or any Subsidiary or under any indenture, agreement or other instrument
under which the same may be issued and such default shall continue for a
period of time sufficient to permit the acceleration of the maturity of any
such Indebtedness for Borrowed Money (whether or not such maturity is in
fact accelerated), or any such Indebtedness for Borrowed Money shall not be
paid when due (whether by lapse of time, acceleration or otherwise); or
(f) any judgment or judgments, writ or writs, or warrant or
warrants of attachment, or any similar process or processes in an aggregate
amount in excess of $500,000 shall be entered or filed against the Borrower
or any of its Subsidiaries or against any of their Property and which
remains unvacated, unbonded, unstayed or unsatisfied for a period of thirty
(30) days; or
(g) the Borrower or any member of its Controlled Group shall fail
to pay when due an amount or amounts aggregating in excess $500,000 which
it shall have become liable to pay to the PBGC or to a Plan under Title IV
of ERISA; or notice of intent to terminate a Plan or Plans having aggregate
Unfunded Vested Liabilities in excess of $500,000 (collectively, a
"Material Plan") shall be filed under Title IV of ERISA by the Borrower or
any other member of its Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Borrower or any member of its
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within sixty (60) days thereafter;
or a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated; or
(h) more than 51% of the capital stock of the Borrower which is
entitled to vote for the election of directors is held, either legally or
beneficially, by any Person or group of Persons acting in concert with
respect to the business affairs of the Borrower (the fact that particular
Persons are directors, officers or employees of the Borrower shall not be
deemed indicative of the fact that they are acting in concert); or
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(i) any event of default (as defined in the Headquarters Complex
Lease) occurs under the Headquarters Complex Lease and the lessor exercises
or serves notice of its intention to exercise, any of its remedies under
the Headquarters Complex Lease; or
(j) the Borrower or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, or any other comparable bankruptcy or
insolvency law applicable to it, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of creditors, (iv) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial part of
its Property, (v) institute any proceeding seeking to have entered against
it an order for relief under the United States Bankruptcy Code, as amended,
or any other comparable bankruptcy or insolvency law applicable to it, to
adjudicate it insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, or (vi) fail
to contest in good faith any appointment or proceeding described in Section
8.1(k) hereof; or
(k) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any Subsidiary or any
substantial part of any of their Property, or a proceeding described in
Section 8.1(j)(v) shall be instituted against the Borrower or any
Subsidiary, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of ninety (90) days.
Section 8.2. Non-Bankruptcy Defaults. When any Event of Default
other than those described in subsections (j) or (k) of Section 8.1 hereof has
occurred and is continuing, the Agent shall, by written notice to the Borrower:
(a) if so directed by the Required Banks, terminate the remaining Commitments
and all other obligations of the Banks hereunder on the date stated in such
notice (which may be the date thereof); (b) if so directed by the Required
Banks, declare the principal of and the accrued interest on all outstanding
Notes to be forthwith due and payable and thereupon all outstanding Notes,
including both principal and interest thereon, shall be and become immediately
due and payable together with all other amounts payable under the Loan Documents
without further demand, presentment, protest or notice of any kind; and (c) if
so directed by the Required Banks, demand that the Borrower immediately pay to
the Agent the full amount then available for drawing under each or any Letter of
Credit, and the Borrower agrees to immediately make such payment and
acknowledges and agrees that the Banks would not have an adequate remedy at law
for failure by the Borrower to honor any such demand and that the Agent, for the
benefit of the Banks, shall have the right to require the Borrower to
specifically perform such undertaking whether or not any drawings or other
demands for payment have been made under any Letter of Credit. The Agent, after
giving notice to the Borrower pursuant to Section 8.1(c)
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or this Section 8.2, shall also promptly send a copy of such notice to the other
Banks, but the failure to do so shall not impair or annul the effect of such
notice.
Section 8.3. Bankruptcy Defaults. When any Event of Default
described in subsections (j) or (k) of Section 8.1 hereof has occurred and is
continuing, then all outstanding Notes shall immediately become due and payable
together with all other amounts payable under the Loan Documents without
presentment, demand, protest or notice of any kind, the obligation of the Banks
to extend further credit pursuant to any of the terms hereof shall immediately
terminate and the Borrower shall immediately pay to the Agent the full amount
then available for drawing under all outstanding Letters of Credit, the Borrower
acknowledging and agreeing that the Banks would not have an adequate remedy at
law for failure by the Borrower to honor any such demand and that the Banks, and
the Agent on their behalf, shall have the right to require the Borrower to
specifically perform such undertaking whether or not any draws or other demands
for payment have been made under any of the Letters of Credit.
Section 8.4. Collateral for Undrawn Letters of Credit. (a) If the
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 1.8(c) or under Section 8.2 or 8.3
above, the Borrower shall forthwith pay the amount required to be so prepaid, to
be held by the Agent as provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above shall be held
by the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "Account") as security for, and for
application by the Agent (to the extent available) to, the reimbursement of any
payment under any Letter of Credit then or thereafter made by the Agent, and to
the payment of the unpaid balance of any Loans and all other Obligations. The
Account shall be held in the name of and subject to the exclusive dominion and
control of the Agent for the benefit of the Agent and the Banks. If and when
requested by the Borrower, the Agent shall invest funds held in the Account from
time to time in direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America with a remaining maturity of one year or less, provided that the Agent
is irrevocably authorized to sell investments held in the Account when and as
required to make payments out of the Account for application to amounts due and
owing from the Borrower to the Agent or Banks; provided, however, that if (i)
the Borrower shall have made payment of all such obligations referred to in
subsection (a) above, (ii) all relevant preference or other disgorgement periods
relating to the receipt of such payments have passed, and (iii) no Letters of
Credit, Commitments, Loans or other Obligations remain outstanding hereunder,
then the Agent shall release to the Borrower any remaining amounts held in the
Account.
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Section 8.5. Notice of Default. The Agent shall give notice to the
Borrower under Section 8.1(c) hereof promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
Section 8.6. Expenses. The Borrower agrees to pay to the Agent and
each Bank, and any other holder of any Note outstanding hereunder, all expenses
reasonably incurred or paid by the Agent and such Bank or any such holder,
including reasonable attorneys' fees and court costs, in connection with any
Default or Event of Default by the Borrower hereunder or in connection with the
enforcement of any of the Loan Documents.
Section 9. Change in Circumstances.
Section 9.1. Change of Law. Notwithstanding any other provisions of
this Agreement or any Note, if at any time any change in applicable law or
regulation or in the interpretation thereof makes it unlawful for any Bank to
make or continue to maintain any Eurodollar Loans or to perform its obligations
as contemplated hereby, such Bank shall promptly give notice thereof to the
Borrower and the Agent and such Bank's obligations to make or maintain
Eurodollar Loans under this Agreement shall terminate until it is no longer
unlawful for such Bank to make or maintain Eurodollar Loans. The Borrower shall
prepay on demand the outstanding principal amount of any such affected
Eurodollar Loans, together with all interest accrued thereon and all other
amounts then due and payable to such Bank under this Agreement; provided,
however, subject to all of the terms and conditions of this Agreement, the
Borrower may then elect to borrow the principal amount of the affected
Eurodollar Loans from such Bank by means of Domestic Rate Loans from such Bank,
which Domestic Rate Loans shall not be made ratably by the Banks but only from
such affected Bank.
Section 9.2. Unavailability of Deposits or Inability to Ascertain,
or Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period
for any Borrowing of Eurodollar Loans:
(a) the Agent determines that deposits in U.S. Dollars (in the
applicable amounts) are not being offered to it in the interbank eurodollar
market for such Interest Period, or that by reason of circumstances
affecting the interbank eurodollar market adequate and reasonable means do
not exist for ascertaining the applicable LIBOR, or
(b) Banks having 50% or more of the aggregate amount of the
Revolving Credit Commitments advise the Agent that (i) LIBOR as determined
by the Agent will not adequately and fairly reflect the cost to such Banks
of funding their Eurodollar Loans for such Interest Period or (ii) that the
making or funding of Eurodollar Loans become impracticable,
then the Agent shall forthwith give notice thereof to the Borrower and the
Banks, whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such
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suspension no longer exist, the obligations of the Banks to make Eurodollar
Loans shall be suspended.
Section 9.3. Increased Cost and Reduced Return. (a) If, on or after
the date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such authority, central bank or comparable agency:
(i) shall subject any Bank (or its Lending Office) to any tax, duty
or other charge with respect to its Eurodollar Loans, its Notes, its
Letter(s) of Credit, or its participation in any thereof, any Reimbursement
Obligations owed to it or its obligation to make Eurodollar Loans, issue a
Letter of Credit, or to participate therein, or shall change the basis of
taxation of payments to any Bank (or its Lending Office) of the principal
of or interest on its Eurodollar Loans, Letter(s) of Credit, or
participations therein or any other amounts due under this Agreement or any
other Loan Document in respect of its Eurodollar Loans, Letter(s) of
Credit, any participation therein, any Reimbursement Obligations owed to
it, or its obligation to make Eurodollar Loans, or issue a Letter of
Credit, or acquire participations therein (except for changes in the rate
of tax on the overall net income of such Bank or its Lending Office imposed
by the jurisdiction in which such Bank's principal executive office or
Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding with respect to any Eurodollar Loans any such
requirement included in an applicable Eurodollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended
by, any Bank (or its Lending Office) or shall impose on any Bank (or its
Lending Office) or on the interbank market any other condition affecting
its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its
participation in any thereof, any Reimbursement Obligation owed to it, or
its obligation to make Eurodollar Loans, or to issue a Letter of Credit, or
to participate therein;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Eurodollar Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Bank (or its Lending Office)
under this Agreement or under any other Loan Document with respect thereto, by
an amount deemed by such Bank to be material, then, within fifteen (15) days
after demand by such Bank (with a copy to the Agent), the Borrower shall be
obligated to pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If, after the date hereof, any Bank or the Agent shall have
determined in good faith that the adoption of any applicable law, rule or
regulation regarding capital adequacy,
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or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Lending Office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital as a consequence of its obligations hereunder to a level
below that which such Bank could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within fifteen (15) days after demand by such Bank (with a copy to
the Agent), the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction.
(c) A certificate of a Bank claiming compensation under this Section 9.3
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, such Bank may use any reasonable averaging and attribution methods.
Section 9.4. Lending Offices. Each Bank may, at its option, elect
to make its Loans hereunder at the branch, office or affiliate specified on the
appropriate signature page hereof (each a "Lending Office") for each type of
Loan available hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a written notice to the
Borrower and the Agent.
Section 9.5. Discretion of Bank as to Manner of Funding.
Notwithstanding any other provision of this Agreement, each Bank shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder shall be made as if each Bank had
actually funded and maintained each Eurodollar Loan through the purchase of
deposits in the interbank eurodollar market having a maturity corresponding to
such Loan's Interest Period and bearing an interest rate equal to LIBOR for such
Interest Period.
Section 10. The Agent.
Section 10.1. Appointment and Authorization of Agent. Each Bank
hereby appoints Harris Trust and Savings Bank as the Agent under the Loan
Documents and hereby authorizes the Agent to take such action as Agent on its
behalf and to exercise such powers under the Loan Documents as are delegated to
the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto.
Section 10.2. Agent and its Affiliates. The Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
other Bank and may exercise or refrain from exercising the same as though it
were not the Agent, and the Agent and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Borrower or
any Affiliate of the Borrower as if it were not the Agent
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under the Loan Documents. The term "Bank" as used herein and in all other Loan
Documents, unless the context otherwise clearly requires, includes the Agent in
its individual capacity as a Bank. References in Section 1 hereof to the Agent's
Loans, or to the amount owing to the Agent for which an interest rate is being
determined, refer to the Agent in its individual capacity as a Bank.
Section 10.3. Action by Agent. If the Agent receives from the
Borrower a written notice of an Event of Default pursuant to Section 7.5(e)
hereof, the Agent shall promptly give each of the Banks written notice thereof.
The obligations of the Agent under the Loan Documents are only those expressly
set forth therein. Without limiting the generality of the foregoing, the Agent
shall not be required to take any action hereunder with respect to any Default
or Event of Default, except as expressly provided in Sections 8.2 and 8.5. In no
event, however, shall the Agent be required to take any action in violation of
applicable law or of any provision of any Loan Document, and the Agent shall in
all cases be fully justified in failing or refusing to act hereunder or under
any other Loan Document unless it shall be first indemnified to its reasonable
satisfaction by the Banks against any and all costs, expense, and liability
which may be incurred by it by reason of taking or continuing to take any such
action. The Agent shall be entitled to assume that no Default or Event of
Default exists unless notified to the contrary by a Bank or the Borrower. In all
cases in which this Agreement and the other Loan Documents do not require the
Agent to take certain actions, the Agent shall be fully justified in using its
discretion in failing to take or in taking any action hereunder and thereunder.
Section 10.4. Consultation with Experts. The Agent may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
Section 10.5. Liability of Agent; Credit Decision. Neither the Agent
nor any of its directors, officers, agents, or employees shall be liable for any
action taken or not taken by it in connection with the Loan Documents: (i) with
the consent or at the request of the Required Banks or (ii) in the absence of
its own gross negligence or willful misconduct. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify: (i) any statement, warranty or
representation made in connection with this Agreement, any other Loan Document
or any Credit Event; (ii) the performance or observance of any of the covenants
or agreements of the Borrower contained herein or in any other Loan Document;
(iii) the satisfaction of any condition specified in Section 6 hereof, except
receipt of items required to be delivered to the Agent; or (iv) the validity,
effectiveness, genuineness, enforceability, perfection, value, worth or
collectibility hereof or of any other Loan Document or of any other documents or
writing furnished in connection with any Loan Document; and the Agent makes no
representation of any kind or character with respect to any such matter
mentioned in this sentence. The Agent may execute any of its duties under any of
the Loan Documents by or through employees, agents, and attorneys-in-fact and
shall not be answerable to the Banks, the Borrower, or any other Person for the
default or misconduct of any such agents or attorneys-in-fact selected with
reasonable care. The Agent shall not incur any liability by
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acting in reliance upon any notice, consent, certificate, other document or
statement (whether written or oral) believed by it to be genuine or to be sent
by the proper party or parties. In particular and without limiting any of the
foregoing, the Agent shall have no responsibility for confirming the accuracy of
any borrowing base certificate, compliance certificate or other document or
instrument received by it under the Loan Documents and shall be entitled to rely
exclusively on borrowing base certificates prepared by the Borrower in computing
the Borrowing Base. The Agent may treat the payee of any Note as the holder
thereof until written notice of transfer shall have been filed with the Agent
signed by such payee in form satisfactory to the Agent. Each Bank acknowledges
that it has independently and without reliance on the Agent or any other Bank,
and based upon such information, investigations and inquiries as it deems
appropriate, made its own credit analysis and decision to extend credit to the
Borrower in the manner set forth in the Loan Documents. It shall be the
responsibility of each Bank to keep itself informed as to the creditworthiness
of the Borrower, and the Agent shall have no liability to any Bank with respect
thereto.
Section 10.6. Indemnity. The Banks shall ratably, in accordance
with their respective Percentages, indemnify and hold the Agent, and its
directors, officers, employees, agents and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it
under any Loan Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrower and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified. The obligations of the Banks
under this Section 10.6 shall survive termination of this Agreement.
Section 10.7. Resignation of Agent and Successor Agent. The Agent
may resign at any time by giving written notice thereof to the Banks and the
Borrower. Upon any such resignation of the Agent, the Required Banks shall have
the right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent's giving of notice of
resignation then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be any Bank hereunder or any commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $200,000,000. Upon the
acceptance of its appointment as the Agent hereunder, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent under the Loan Documents, and the retiring Agent shall be
discharged from its duties and obligations thereunder. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 10 and
all protective provisions of the other Loan Documents shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent.
Section 11. Miscellaneous.
Section 11.1. Withholding Taxes. (a) Payments Free of Withholding.
Except as otherwise required by law and subject to Section 11.1(b) hereof, each
payment by the Borrower under this Agreement or the other Loan Documents shall
be made without
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withholding for or on account of any present or future taxes (other than
overall net income taxes on the recipient) imposed by or within the jurisdiction
in which the Borrower is domiciled, any jurisdiction from which the Borrower
makes any payment, or (in each case) any political subdivision or taxing
authority thereof or therein. If any such withholding is so required, the
Borrower shall make the withholding, pay the amount withheld to the appropriate
governmental authority before penalties attach thereto or interest accrues
thereon and forthwith pay such additional amount as may be necessary to ensure
that the net amount actually received by each Bank and the Agent free and clear
of such taxes (including such taxes on such additional amount) is equal to the
amount which that Bank or the Agent (as the case may be) would have received had
such withholding not been made. If the Agent or any Bank pays any amount in
respect of any such taxes, penalties or interest, the Borrower shall reimburse
the Agent or such Bank for that payment on demand in the currency in which such
payment was made. If the Borrower pays any such taxes, penalties or interest,
it shall deliver official tax receipts evidencing that payment or certified
copies thereof to the Bank or Agent on whose account such withholding was made
(with a copy to the Agent if not the recipient of the original) on or before the
thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Bank that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the earlier of the date the
initial Borrowing is made hereunder and thirty (30) days after the date hereof,
two duly completed and signed copies of either Form 1001 (relating to such Bank
and entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Bank, including fees, pursuant to the Loan
Documents and the Loans) or Form 4224 (relating to all amounts to be received by
such Bank, including fees, pursuant to the Loan Documents and the Loans) of the
United States Internal Revenue Service. Thereafter and from time to time, each
Bank shall submit to the Borrower and the Agent such additional duly completed
and signed copies of one or the other of such Forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) as may be (i) requested by the Borrower in a written notice,
directly or through the Agent, to such Bank and (ii) required under then-current
United States law or regulations to avoid or reduce United States withholding
taxes on payments in respect of all amounts to be received by such Bank,
including fees, pursuant to the Loan Documents or the Loans.
(c) Inability of Bank to Submit Forms. If any Bank determines, as a
result of any change in applicable law, regulation or treaty, or in any official
application or interpretation thereof, that it is unable to submit to the
Borrower or the Agent any form or certificate that such Bank is obligated to
submit pursuant to subsection (b) of this Section 11.1 or that such Bank is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Bank shall promptly notify the Borrower and Agent of such fact and the Bank
shall to that extent not be obligated to provide any such form or certificate
and will be entitled to withdraw or cancel any affected form or certificate, as
applicable.
Section 11.2. No Waiver, Cumulative Remedies. No delay or failure on
the part of the Agent or any Bank or on the part of the holder or holders of any
of the Obligations in
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the exercise of any power or right under any Loan Document shall operate as a
waiver thereof or as an acquiescence in any default, nor shall any single or
partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right. The rights and remedies
hereunder of the Agent, the Banks and of the holder or holders of any of the
Obligations are cumulative to, and not exclusive of, any rights or remedies
which any of them would otherwise have.
Section 11.3. Non-Business Days. If any payment hereunder becomes
due and payable on a day which is not a Business Day, the due date of such
payment shall be extended to the next succeeding Business Day on which date such
payment shall be due and payable. In the case of any payment of principal
falling due on a day which is not a Business Day, interest on such principal
amount shall continue to accrue during such extension at the rate per annum then
in effect, which accrued amount shall be due and payable on the next scheduled
date for the payment of interest.
Section 11.4. Documentary Taxes. The Borrower agrees to pay on
demand any documentary, stamp or similar taxes payable in respect of this
Agreement or any other Loan Document, including interest and penalties, in the
event any such taxes are assessed, irrespective of when such assessment is made
and whether or not any credit is then in use or available hereunder.
Section 11.5. Survival of Representations. All representations and
warranties made herein or in any other Loan Document or in certificates given
pursuant hereto or thereto shall survive the execution and delivery of this
Agreement and the other Loan Documents, and shall continue in full force and
effect with respect to the date as of which they were made as long as any credit
is in use or available hereunder.
Section 11.6. Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the Banks of amounts sufficient to
protect the yield of the Banks with respect to the Loans and Letters of Credit,
including, but not limited to, Sections 1.11, 9.3 and 11.15 hereof, shall
survive the termination of this Agreement and the other Loan Documents and the
payment of the Obligations.
Section 11.7. Sharing of Set-Off. Each Bank agrees with each other
Bank a party hereto that if such Bank shall receive and retain any payment,
whether by set-off or application of deposit balances or otherwise ("Set-off"),
on any Borrowing or Reimbursement Obligations in excess of its ratable share of
payments on all Loans outstanding as part of such Borrowing or Reimbursement
Obligation then outstanding to the Banks, then such Bank shall purchase for cash
at face value, but without recourse, ratably from each of the other Banks such
amount of the Loans or Reimbursement Obligations, or participations therein,
held by each such other Banks (or interest therein) as shall be necessary to
cause such Bank to share such excess payment ratably with all the other Banks;
provided, however, that if any such purchase is made by any Bank, and if such
excess payment or part thereof is thereafter recovered from such purchasing
Bank, the related purchases from the other Banks shall be rescinded ratably and
the purchase price restored as to the portion of such excess payment so
recovered, but without interest. For purposes of
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this Section 11.7, amounts owed to or recovered by, the Agent in connection with
Reimbursement Obligations in which Banks have been required to fund their
participation shall be treated as amounts owed to or recovered by the Agent as a
Bank hereunder.
Section 11.8. Notices. Except as otherwise specified herein, all
notices hereunder and under the other Loan Documents shall be in writing
(including cable, telecopy or telex) and shall be given to the relevant party at
its address or telecopier number set forth below, or such other address or
telecopier number as such party may hereafter specify by notice to the Agent and
the Borrower given by courier, by United States certified or registered mail, by
telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices under the Loan Documents to the
Banks and the Agent shall be addressed to their respective addresses or
telecopier numbers set forth on the signature pages hereof, and to the Borrower
to:
Information Resources, Inc.
150 North Clinton Street
Chicago, Illinois 60606
Attention: Chief Financial Officer
Telephone: (312) 726-1221
Telecopy: (312) 726-0360
Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 11.8 or on the signature pages hereof and a
confirmation of such telecopy has been received by the sender, (ii) if given by
mail, five (5) days after such communication is deposited in the mail, certified
or registered with return receipt requested, addressed as aforesaid or (iii) if
given by any other means, when delivered at the addresses specified in this
Section 11.8 or on the signature pages hereof; provided that any notice given
pursuant to Section 1 hereof shall be effective only upon receipt.
Section 11.9. Counterparts. This Agreement may be executed in any
number of counterparts, and by the different parties hereto on separate
counterpart signature pages, and all such counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 11.10. Successors and Assigns. This Agreement shall be
binding upon the Borrower and its successors and assigns, and shall inure to the
benefit of the Agent and each of the Banks and the benefit of their respective
successors and assigns, including any subsequent holder of any of the
Obligations. The Borrower may not assign any of its rights or obligations under
any Loan Document without the written consent of all of the Banks.
Section 11.11. Participants. Each Bank shall have the right at its
own cost to grant participations (to be evidenced by one or more agreements or
certificates of participation) in the Loans made and Reimbursement Obligations
and/or Commitments held by such Bank at any time and from time to time to one or
more other Persons; provided that no such participation shall relieve any Bank
of any of its obligations under this Agreement, and,
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provided, further that no such participant shall have any rights under this
Agreement except as provided in this Section 11.11, and the Agent shall have no
obligation or responsibility to such participant. Any agreement pursuant to
which such participation is granted shall provide that the granting Bank shall
retain the sole right and responsibility to enforce the obligations of the
Borrower under this Agreement and the other Loan Documents including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of the Loan Documents, except that such agreement may provide that
such Bank will not agree to any modification, amendment or waiver of the Loan
Documents that would reduce the amount of or postpone any fixed date for payment
of any Obligation in which such participant has an interest. Any party to which
such a participation has been granted shall have the benefits of Section 1.18
and Section 9.3 hereof. The Borrower authorizes each Bank to disclose to any
participant or prospective participant under this Section 11.11 any financial or
other information pertaining to the Borrower, provided such purchaser or
prospective purchaser is advised of the duty of confidentiality contained in
Section 11.20 hereof.
Section 11.12. Assignment of Commitments by Banks. Each Bank shall
have the right at any time, with the prior consent of the Borrower and the
Agent, which shall not be unreasonably withheld, to sell, assign, transfer or
negotiate all or any part of its Commitments (including the same percentage of
its Note, outstanding Loans and Reimbursement Obligations owed to it) to one or
more commercial banks or other financial institutions, provided that such
assignment shall be of a fixed percentage (and not by its terms of varying
percentage) of the assigning Bank's Commitments; provided, however, that in
order to make any such assignment (i) the assigning Bank shall retain at least
$10,000,000 in Commitments, and (ii) the assignee bank shall have Commitments of
at least $5,000,000, (iii) each such assignment shall be evidenced by a written
agreement executed by such assigning Bank, such assignee bank or banks, the
Borrower and the Agent which agreement shall specify in each instance the
portion of the Obligations which are to be assigned to the assignee bank and the
portion of the Commitments of the assigning Bank to be assumed by the assignee
bank or banks, and (iv) the assigning Bank shall pay to the Agent a processing
fee of $5,000 and any out-of-pocket attorneys' fees and expenses incurred by the
Agent in connection with any such assignment agreement. Any such assignee shall
become a Bank for all purposes hereunder to the extent of the Commitments it
assumes and the assigning Bank shall be released from its obligations, and will
have released its rights, under the Loan Documents to the extent of such
assignment. The Borrower authorizes each Bank to disclose to any purchaser or
prospective purchaser of an interest in the Loans and Reimbursement Obligations
owed to it or its Commitments under this Section 11.12 any financial or other
information pertaining to the Borrower.
Section 11.13. Amendments. Any provision of this Agreement or the
other Loan Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) the Borrower, (b) the Required Banks,
and (c) if the rights or duties of the Agent are affected thereby, the Agent;
provided that:
(i) no amendment or waiver pursuant to this Section 11.13 shall (A)
increase any Commitment of any Bank without the consent of such Bank, (B)
reduce the
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amount of or postpone the date for payment of any principal of or interest
on any Loan or of any Reimbursement Obligation or of any fee payable
hereunder without the consent of the Bank to which such payment is owing or
which has committed to make such Loan or Letter of Credit (or participate
therein) hereunder or (C) change the definition of the Termination Date or
Section 2.2 without the consent of all the Banks; and
(ii) no amendment or waiver pursuant to this Section 11.13 shall,
unless signed by each Bank, change the provisions of this Section 11.13,
Section 6, Section 9, the definition of Required Banks, or affect the
number of Banks required to take any action hereunder or under any other
Loan Document.
Section 11.14. Headings. Section headings used in this Agreement are
for reference only and shall not affect the construction of this Agreement.
Section 11.15. Costs and Expenses. The Borrower agrees to pay all
costs and expenses of the Agent in connection with the preparation, negotiation,
and administration of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of Chapman and Cutler, counsel to the Agent,
in connection with the preparation and execution of the Loan Documents, and any
amendment, waiver or consent related thereto, whether or not the transactions
contemplated herein are consummated. The Borrower further agrees to indemnify
the Agent, each Bank, and their respective directors, officers and employees,
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor, whether or not the indemnified Person is a party thereto)
which any of them may pay or incur arising out of or relating to any Loan
Document or any of the transactions contemplated thereby or the direct or
indirect application or proposed application of the proceeds of any Loan or
Letter of Credit, other than those which arise from the gross negligence or
willful misconduct of the party claiming indemnification. The Borrower, upon
demand by the Agent or a Bank at any time, shall reimburse the Agent or such
Bank for any legal or other expenses incurred in connection with investigating
or defending against any of the foregoing except if the same is directly due to
the gross negligence or willful misconduct of the party to be indemnified. The
obligations of the Borrower under this Section 11.15 shall survive the
termination of this Agreement.
Section 11.16. Set-off. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of any Event of Default, each Bank and each subsequent
holder of any Obligation is hereby authorized by the Borrower at any time or
from time to time, without notice to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set-off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts, and in whatever currency denominated) and any
other indebtedness at any time held or owing by that Bank or that subsequent
holder to or for the credit or the account of the Borrower, whether or not
matured, against and on account of the obligations and liabilities of the
Borrower to that Bank or that subsequent holder under
-47-
<PAGE>
the Loan Documents, including, but not limited to, all claims of any nature or
description arising out of or connected with the Loan Documents, irrespective of
whether or not (a) that Bank or that subsequent holder shall have made any
demand hereunder or (b) the principal of or the interest on the Loans or Notes
and other amounts due hereunder shall have become due and payable pursuant to
Section 8 and although said obligations and liabilities, or any of them, may be
contingent or unmatured.
Section 11.17. Entire Agreement. The Loan Documents constitute the
entire understanding of the parties thereto with respect to the subject matter
thereof and any prior or contemporaneous agreements, whether written or oral,
with respect thereto are superseded hereby.
Section 11.18. Governing Law. This Agreement and the other Loan
Documents, and the rights and duties of the parties hereto, shall be construed
and determined in accordance with the internal laws of the State of Illinois.
Section 11.19. Severability of Provisions. Any provision of any Loan
Document which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.20. Confidentiality. The Agent and each Bank agrees to
hold any information designated as confidential by the Borrower which it may
receive from the Borrower pursuant to this Agreement in confidence, except for
information that becomes publicly available, and except for disclosures to (i)
other parties to the Agreement, (ii) legal counsel, accountants and other
professional advisors to the Agent or a Bank, (iii) as required by law,
regulation, or legal process, (iv) in connection with any legal proceeding to
which the Agent or a Bank is a party and (v) as permitted in accordance with
Section 11.11 hereof.
Section 11.21. Submission to Jurisdiction; Waiver of Jury Trial. The
Borrower hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum. THE BORROWER, THE AGENT AND EACH BANK HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
-48-
<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 November, 1995
Information Resources, Inc.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-49-
<PAGE>
Accepted and agreed to as of the day and year last above written.
Harris Trust and Savings Bank, in its
individual capacity as a Bank and as
Agent
Address and Amount of Commitments: By:
----------------------------------
Name:
------------------------------
Address: Title: Vice President
111 West Monroe Street
Chicago, Illinois 60603
Attention: Richard H. Robb
Telecopy: (312) 987-4856
Telephone: (312) 461-3539
Revolving Credit Commitment:
$25,000,000
Lending Offices:
Domestic Rate Loans:
111 West Monroe Street
Chicago, Illinois
Eurodollar Loans:
111 West Monroe Street
Chicago, Illinois
Bid Loans:
111 West Monroe Street
Chicago, Illinois
-50-
<PAGE>
Bank of America Illinois
Address and Amount of Commitments: By:
---------------------------------
Name:
---------------------------
Address: Title:
231 South LaSalle, 6th Floor --------------------------
Chicago, Illinois 60697
Attention: David A. Stang
Telecopy: (312) 828-1974
Telephone: (312) 828-5120
Revolving Credit Commitment:
$15,000,000
Lending Offices:
Domestic Rate Loans:
231 South LaSalle, 6th Floor
Chicago, Illinois 60697
Eurodollar Loans:
231 South LaSalle, 6th Floor
Chicago, Illinois 60697
Bid Loans:
231 South LaSalle, 6th Floor
Chicago, Illinois 60697
-51-
<PAGE>
Comerica Bank - Illinois
Address and Amount of Commitments: By:
---------------------------------
Name:
---------------------------
Address: Title:
4747 West Dempster Street --------------------------
Skokie, Illinois 60076
Attention: Harve C. Light
Telecopy: (708) 933-2209
Telephone: (708) 933-2203
Revolving Credit Commitment:
$10,000,000
Lending Offices:
Domestic Rate Loans:
4747 West Dempster Street
Skokie, Illinois 60076
Eurodollar Loans:
4747 West Dempster Street
Skokie, Illinois 60076
Bid Loans:
4747 West Dempster Street
Skokie, Illinois 60076
-52-
<PAGE>
EXHIBIT A
COMMITTED LOAN NOTE
U.S. $_________ ____________________, 19___
For Value Received, the undersigned, Information Resources, Inc., a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Bank") on the Termination Date of the hereinafter
defined Credit Agreement, at the principal office of Harris Trust and Savings
Bank, in Chicago, Illinois, in immediately available funds, the principal sum of
___________________ Dollars ($__________) or, if less, the aggregate unpaid
principal amount of all Committed Loans made by the Bank to the Borrower
pursuant to the Credit Agreement, together with interest on the principal amount
of each Committed 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 Committed 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
Committed Loan is a Domestic Rate Loan or a Eurodollar Loan, the interest rate
and Interest Period applicable thereto, provided that prior to the transfer of
this Note all such amounts shall be recorded on a schedule attached to this
Note. The record thereof, whether shown on such books or records or on a
schedule to this Note, shall be prima facie evidence of the same, provided,
however, that the failure of the Bank to record any of the foregoing or any
error in any such record shall not limit or otherwise affect the obligation of
the Borrower to repay all Committed Loans made to it pursuant to the Credit
Agreement together with accrued interest thereon.
This Note is one of the Notes referred to in the Credit Agreement dated as
of November 10, 1995, among Information Resources, Inc., Harris Trust and
Savings Bank, as Agent, and the Banks party thereto (as amended from time to
time, 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.
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 35,582
<SECURITIES> 0
<RECEIVABLES> 105,153
<ALLOWANCES> (5,096)
<INVENTORY> 0
<CURRENT-ASSETS> 155,281
<PP&E> 132,188
<DEPRECIATION> (73,231)
<TOTAL-ASSETS> 350,524
<CURRENT-LIABILITIES> 100,701
<BONDS> 0
<COMMON> 273
0
0
<OTHER-SE> 226,396
<TOTAL-LIABILITY-AND-EQUITY> 350,524
<SALES> 301,415
<TOTAL-REVENUES> 301,415
<CGS> 0
<TOTAL-COSTS> 291,689
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,632
<INCOME-PRETAX> (16,078)
<INCOME-TAX> 4,244
<INCOME-CONTINUING> (11,702)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,702
<EPS-PRIMARY> (.44)
<EPS-DILUTED> (.44)
</TABLE>
