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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
-----------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
-----------
Commission File No. 33-63838
NEODATA SERVICES, INC.
(a Delaware Corporation)
I.R.S. Employer Identification Number 75-2333190
833 W. South Boulder Road
Louisville, Colorado 80027
(303) 666-7000
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 requirement for the past 90 days. Yes X No
--- ---
As of May 14, 1997, the registrant had outstanding 1,173 shares of its
common stock, $.01 par value per share.
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Neodata Services, Inc.
Form 10-Q
Table of Contents
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets........................................................ 3
Consolidated Statements of Operations.............................................. 4
Consolidated Statements of Cash Flows.............................................. 5
Notes to Consolidated Financial Statements......................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................................... 12
SIGNATURE......................................................................................... 13
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NEODATA SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1997 AND JUNE 30, 1996
(IN THOUSANDS, EXCEPT SHARE INFORMATION)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
ASSETS 1997 1996
---------- ----------
<S> <C> <C>
Current assets:
Cash ........................................................................ $ 1,964 $ 1,304
Accounts receivable, net of allowance of $1,784 and $1,593 .................. 73,090 54,996
Prepaid expense and other ................................................... 12,363 7,052
---------- ----------
Total current assets ...................................................... 87,417 63,352
Property, plant and equipment, net of depreciation of $45,306 and $39,944 ...... 47,726 51,649
Computer software, net of amortization of $19,429 and $14,337 .................. 18,461 18,819
Intangibles and other assets, net .............................................. 16,847 5,717
---------- ----------
Total assets .............................................................. $ 170,451 $ 139,537
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable ............................................................ $ 31,190 $ 18,323
Accrued liabilities ......................................................... 37,811 22,062
Current maturities of long-term debt and capital lease obligations .......... 637 599
---------- ----------
Total current liabilities ................................................. 69,638 40,984
Long-term debt and capital lease obligations, net of current maturities ........ 188,676 184,651
Customer deposits .............................................................. 12,498 10,522
Other liabilities .............................................................. 4,072 5,757
---------- ----------
Total liabilities ......................................................... 274,884 241,914
---------- ----------
Commitments and contingencies
Stockholders' deficit:
Common stock, par value $.01 per share, 10,000 shares
authorized, 1,173 shares issued and outstanding ........................... -- --
Additional paid-in capital .................................................. 28,029 28,029
Contributed capital ......................................................... 55,719 56,522
Accumulated deficit ......................................................... (188,334) (187,018)
Cumulative translation adjustment ........................................... 153 90
---------- ----------
Total stockholders' deficit ............................................... (104,433) (102,377)
---------- ----------
Total liabilities and stockholders' deficit ............................... $ 170,451 $ 139,537
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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NEODATA SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31 MARCH 31
-------- --------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue ............................................... $ 67,803 $ 59,699 $ 196,488 $ 182,095
------------ ------------ ------------ ------------
Expenses:
Operating and production, excluding depreciation
and amortization shown below ...................... 47,140 41,575 135,363 132,911
Selling, general and administrative ................. 9,119 10,711 30,069 26,774
Restructuring charges (Note 4) ...................... 1,700 -- 1,700 1,667
Depreciation of property, plant and equipment ....... 2,181 2,210 6,606 7,115
Amortization of computer software ................... 1,841 1,274 5,271 3,932
------------ ------------ ------------ ------------
Income before interest expense ........................ 5,822 3,929 17,479 9,696
Interest expense ...................................... 6,194 5,786 18,482 17,681
------------ ------------ ------------ ------------
Net loss before extraordinary loss .................. (372) (1,857) (1,003) (7,985)
Extraordinary loss - early extinguishment of debt ..... (313) -- (313) --
------------ ------------ ------------ ------------
Net loss ............................................ $ (685) $ (1,857) $ (1,316) $ (7,985)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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NEODATA SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Net cash provided by operating activities ............................ $ 7,869 $ 24,819
----------- -----------
Cash flows from investing activities:
Purchases of property, plant and equipment ..................... (2,104) (1,981)
Proceeds from sales of property, plant, and equipment .......... 120 138
Payments for acquisitions, net of cash acquired ................ (8,394) --
Increase in restricted cash .................................... (3,000) --
Purchases and development of computer software ................. (4,736) (7,461)
----------- -----------
Net cash used in investing activities ...................... (18,114) (9,304)
----------- -----------
Cash flows from financing activities:
Change in book overdrafts ....................................... 9,205 (5,645)
Borrowings under long-term lines of credit ...................... 122,030 109,250
Payments on long-term lines of credit ........................... (117,500) (117,250)
Dividends to Holding for payments on Meredith Note .............. (1,213) --
Debt issue cost ................................................. (1,189) --
Other, net ...................................................... (490) (947)
----------- -----------
Net cash provided by (used in) financing activities ......... 10,843 (14,592)
----------- -----------
Effects of exchange rate changes on cash .................... 62 485
----------- -----------
Net change in cash ................................................... 660 1,408
Cash at beginning of period .......................................... 1,304 2,716
----------- -----------
Cash at end of period ................................................ $ 1,964 $ 4,124
=========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Total cash interest payments were $12,979,000 and $3,391,000 for the
nine months ended March 31, 1997 and 1996, respectively.
The accompanying notes are an integral part of these financial statements.
5
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NEODATA SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
by Neodata Services, Inc. (the "Company"), pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). The Company is a
wholly owned subsidiary of Neodata Corporation ("Holding"). Certain information
and footnote disclosures normally accompanying financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such SEC rules and regulations. In management's opinion,
all adjustments necessary for a fair presentation of the results of operations
for the periods presented have been made and are of a normal and recurring
nature.
These consolidated financial statements and accompanying notes should
be read in conjunction with the consolidated financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Report on Form
10-K for the period ended June 30, 1996, as filed with the SEC.
2. REVOLVING LINE OF CREDIT
On January 31, 1997, the Company entered into a new five year senior
revolving line of credit facility (the "Senior Credit Facility"), which
replaced its previous line of credit facility. The Senior Credit Facility, as
amended, provides a line of credit, calculated pursuant to a borrowing base
formula, of up to $40,000,000 in the event that certain financial thresholds
are met. At March 31, 1997, $230,000 was outstanding under the Senior Credit
Facility. No amounts were outstanding under the previous line of credit
facility as of June 30, 1996. Letters of credit outstanding against existing
line of credit facilities were $4,937,000 and $4,886,000 as of March 31, 1997
and June 30, 1996, respectively. Total remaining availability under existing
line of credit facilities was $33,730,000 and $25,114,000 as of March 31, 1997
and June 30, 1996, respectively.
Debt issue costs of $1,038,000 under the Senior Credit Facility will
be amortized using the straight-line method over the term of the agreement.
Unamortized debt issue costs of $313,000 related to the previous line of credit
facility were charged as an extraordinary loss.
3. ACQUISITION OF BUSINESS
On February 23, 1997, Neodata Creative Services, Inc. ("Creative
Services"), a wholly-owned subsidiary of the Company, acquired substantially
all of the business assets and assumed the associated liabilities of The Lacek
Group, Inc., as well as all of the outstanding stock of Lacek Systems and
Software, Inc., and Lacek Travel Services, Inc. (collectively, the "Lacek
Companies").
The acquisition of the Lacek Companies was funded from cash, in
addition to borrowings totaling $4,300,000 under a new line of credit agreement
entered into by Creative Services (the "Acquisition Credit Facility"). The
Acquisition Credit Facility provides for advances, subject to lender approval,
of up to $6,300,000, is collateralized by substantially all the assets of
Creative Services, and expires in August, 1998. The Acquisition Credit Facility
includes certain covenants that, among other things, prohibit Creative Services
from paying dividends to the Company, limit Creative Services' ability to incur
6
<PAGE> 7
additional debt, create liens, or make certain other payments, and which
require Creative Services to meet certain financial provisions on a quarterly
basis.
Pursuant to the terms of the acquisition of the Lacek Companies, the
Company deposited $3,000,000 into an escrow account as security for additional
consideration, all or part of which will be paid in fiscal 1998 contingent upon
the Lacek Companies achieving certain performance targets. The escrow deposit
was accounted for as restricted cash and is included in "Prepaid expense and
other" on the Company's consolidated balance sheet.
Results of operations of the Lacek Companies after the acquisition
date are included in the Company's Consolidated Statements of Operations. Pro
forma results of operations have not been presented as the effect of the
acquisition was not material on a consolidated basis.
4. RESTRUCTURING CHARGES
In March 1997, the Company adopted a plan to close its remaining
facilities in Ireland. The plan included separating approximately 110 employees
and disposing of substantially all of the Company's Ireland assets.
Accordingly, the Company incurred a charge to earnings of $1,700,000 during
March 1997 for the estimated net cost of the closure, which the Company expects
to be paid during the fourth quarter of fiscal 1997.
As a result of the closure of the Irish facilities, the Company will
be required to repay to the Industrial Development Agency of Ireland (the
"IDA") approximately $1,680,000 under development grant agreements. The amount
to be repaid was previously recorded as deferred income. The Company expects
the payment to the IDA to occur in fiscal 1998.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the Company's
unaudited consolidated financial statements and accompanying notes included
herein and the Company's Report on Form 10-K for the period ended June 30,
1996, as filed with the SEC.
RESULTS OF OPERATIONS
GENERAL
All references herein to "fiscal 1997" relate to the year ended June
30, 1997.
THREE MONTHS ENDED MARCH 31, 1997, COMPARED TO THREE MONTHS ENDED MARCH 31,
1996
Revenue. Revenue for the three months ended March 31, 1997 was $67.8
million, as compared to $59.7 million for the comparable period in 1996. The
$8.1 million, or 13.6% increase is due primarily to increased demand from
existing clients, revenue from new clients, and the addition of the Lacek
Companies, offset by decreased revenues resulting from the Company's decision
to downsize certain unprofitable telephone customer service operations, and
decreased revenues resulting from the sale by Meredith of its book club and
continuity business.
Operating and Production Expenses. Operating and production expenses
for the three months ended March 31, 1997 were $47.1 million, an increase of
$5.5 million, or 13.4%, from $41.6 million for the comparable period in 1996.
The increase in operating and production expenses is primarily due to the
increase in revenues offset by the downsizing of certain telephone customer
service operations. As a percentage of revenue, operating and production
expenses were comparable to 1996 at 69.5%.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended March 31, 1997 decreased
$1.6 million, or 14.9%, to $9.1 million, from $10.7 million during the
comparable period in 1996. As a percentage of revenue, selling, general and
administrative expenses decreased from 17.9% in 1996 to 13.4% in 1997, due
primarily to decreased general corporate expenses during the three month
period.
Restructuring Charges. In March 1997, the Company adopted a plan to
close its remaining facilities in Ireland. The plan included separating
approximately 110 employees and disposing of substantially all of the Company's
Ireland assets. Accordingly, the Company incurred a charge to earnings of $1.7
million during March 1997 for the estimated net cost of the closure.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses for the three months ended March 31, 1997 were $4.0 million, an
increase of 15.4%, or $0.5 million, from $3.5 million during the comparable
period in 1996. The increase is the result of increased amortization due to
additions to computer software, offset by decreased depreciation of plant,
property, and equipment as a result of certain assets reaching full
depreciation or amortization.
Interest Expense. Interest expense for the three months ended March
31, 1997 was $6.2 million, an increase of 7.0%, or $0.4 million, from $5.8
million during the comparable period in 1996. This increase is primarily the
result of increased interest expense under the Company's Senior Deferred Coupon
Notes ("the Notes") which reached their full accreted value during 1996.
8
<PAGE> 9
Net Loss Before Extraordinary Loss. The Company reported a net loss
before extraordinary loss of $0.4 million for the three months ended March 31,
1997, compared to $1.9 million for the similar period in 1996. The $1.5 million
decrease is primarily due to increased revenue at comparable operating margins
and lower selling, general and administrative expenses, offset by restructuring
charges, all as discussed above.
Extraordinary Loss. On January 31, 1997, the Company entered into a
new five year senior revolving line of credit facility (the "Senior Credit
Facility"), which replaced the Company's previous line of credit facility.
Unamortized debt issue costs of $0.3 million related to the previous line of
credit facility were charged as an extraordinary loss.
Net Loss. The Company reported a net loss of $0.7 million for the
three months ended March 31, 1997, compared to $1.9 million for the similar
period in 1996. The $1.2 million decrease is primarily due to increased revenue
at comparable operating margins and lower selling, general and administrative,
offset by restructuring charges and the extraordinary loss, all as discussed
above.
NINE MONTHS ENDED MARCH 31, 1997, COMPARED TO NINE MONTHS ENDED MARCH 31, 1996
Revenue. Revenue for the nine months ended March 31, 1997 was $196.5
million, as compared to $182.1 million for the comparable period in 1996. The
$14.4 million, or 7.9% increase is due primarily to increased demand from
existing clients, as well as revenue from new clients, offset by decreased
revenues resulting from the Company's decision to downsize certain unprofitable
telephone customer service operations, and decreased revenues resulting from
the sale by Meredith of its book club and continuity business.
Operating and Production Expenses. Operating and production expenses
for the nine months ended March 31, 1997 were $135.3 million, an increase of
$2.4 million, or 1.8%, from $132.9 million for the comparable period in 1996.
As a percentage of revenue, operating and production expenses decreased from
73.0% in 1996 to 68.9% in 1997. The decrease in operating and production
expenses as a percentage of revenue is primarily due to the downsizing of
certain telephone customer service operations and to continuing improvements in
the Company's production efficiency.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the nine months ended March 31, 1997 increased $3.3
million, or 12.3%, to $30.1 million, from $26.8 million during the comparable
period in 1996. As a percentage of revenue, selling, general and administrative
expenses increased from 14.7% in 1996 to 15.3% in 1997. This increase is
primarily due to increased general corporate expenses, an increase in certain
technology costs, and increased sales and marketing efforts.
Restructuring Charges. In March 1997, the Company adopted a plan to
close its remaining facilities in Ireland. The plan included separating
approximately 110 employees and disposing of substantially all of the Company's
Ireland assets. Accordingly, the Company incurred a charge to earnings of $1.7
million during March 1997 for the estimated net cost of the closure. In
December 1995, the Company incurred a charge to earnings of $1.7 million, which
was also related to the closure of certain facilities in Ireland.
9
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Depreciation and Amortization Expenses. Depreciation and amortization
expenses for the nine months ended March 31, 1997 were $11.9 million, an
increase of 7.5%, or $0.9 million, from $11.0 million during the comparable
period in 1996. The increase is the result of increased amortization due to
additions to computer software, offset by decreased depreciation of plant,
property, and equipment as a result of certain assets reaching full
depreciation or amortization.
Interest Expense. Interest expense for the nine months ended March 31,
1997 was $18.5 million, an increase of 4.5%, or $0.8 million, from $17.7
million during the comparable period in 1996. This increase is primarily the
result of increased interest expense under the Notes, which reached their full
accreted value during 1996.
Net Loss Before Extraordinary Loss. The Company reported a net loss
before extraordinary loss of $1.0 million for the nine months ended March 31,
1997, compared to $8.0 million for the similar period in 1996. The $7.0 million
decrease is primarily due to increased revenue at improved operating margins
offset by increased selling, general and administrative expenses and
depreciation and amortization, all as discussed above.
Extraordinary Loss. On January 31, 1997, the Company entered into the
Senior Credit Facility, which replaced the Company's previous line of credit
facility. Unamortized debt issue costs of $0.3 million related to the previous
line of credit facility were charged as an extraordinary loss.
Net Loss. The Company reported a net loss of $1.3 million for the nine
months ended March 31, 1997, compared to a net loss of $8.0 million for the
similar period in 1996. The $6.7 million decrease is primarily due to increased
revenue at improved operating margins, offset by increased selling, general and
administrative expenses, depreciation and amortization, and the extraordinary
loss, all as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Cash from Operations. Cash provided by operations
during the nine months ended March 31, 1997 was $7.9 million, a decrease of
$16.9 million from operating cash flow of $24.8 million during the comparable
period in 1996. The decrease in cash provided by operations is primarily due to
cash interest paid under the Notes of $9.8 million, in addition to increased
accounts receivable. Working capital at March 31, 1997 was $17.8 million, as
compared to $22.4 million at June 30, 1996.
Interest Expense. In accordance with the terms of the Notes, interest
expense at 12% was added to the balance of the Notes from issuance through
April 1996 and accrued for payment thereafter. Semi-annual interest payments on
the Notes of $9.8 million are due each November and May. On November 1, 1996
and May 1, 1997, respectively, the Company made its first two interest payments
as scheduled. The Notes mature on May 1, 2003, when the principal balance of
$163.0 million becomes due and payable.
Cash Used in Investing. Cash used in investing activities during the
nine months ended March 31, 1997 totaled $18.1 million, up $8.8 million from
the comparable period in 1996. The increase from 1996 is primarily due to the
purchase in February 1997 of the Lacek Companies (see Note 3) and the purchase
in July 1996 of the subscription fulfillment assets of International
Subscription Services Limited ("ISS"), a United Kingdom based subscription
fulfillment subsidiary of The Economist Newspaper Limited.
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The Company has a significant investment in property, plant, and equipment and
computer software utilized in providing service to its clients, which requires
annual routine capital expenditures. Management believes that cash flow from
operations will be sufficient to fund anticipated capital expenditures for the
remainder of fiscal 1997.
Credit Facilities. As of March 31, 1997, the Company had $0.2 million
outstanding under the Senior Credit Facility, $4.9 million outstanding under
letters of credit, and remaining availability of $33.7 million. The Company
anticipates that, due to seasonality and interest payments on the Notes,
utilization of the Company's Senior Credit Facility will be necessary at times
for the remainder of fiscal 1997. The Company also anticipates the Senior
Credit Facility will be used, to the extent permitted under the Senior Credit
Facility and the Notes, for acquisitions during fiscal 1997 and 1998.
The company was in compliance with all financial and technical requirements of
the Senior Credit Facility, the Centennial Building Capital Lease, and the
Notes as of March 31, 1997.
11
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
10.1 Certificate of Amendment to the Certificate of Incorporation of
Neodata Corporation
10.2 Credit Agreement, dated as of February 24, 1997, among Neodata
Corporation, Neodata Creative Services, Inc., Neodata Investment
Services, Inc. No. 1, Neodata Investment Services, Inc. No. 2, Various
Banks and Bankers Trust Company, as Agent
10.3 Agreement, dated as of December 11, 1996, between the Company and
Philip Morris Incorporated*
27 Financial Data Schedule
* Confidential treatment has been requested with respect to certain portions
of such agreement and the confidential portions have been filed separately
with the Commission pursuant to the confidential treatment request.
REPORTS ON FORM 8-K
None.
12
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
NEODATA SERVICES, INC.
Date: May 14, 1997 /s/ Nicholas J. Cuccaro
-------------------------------------------------
Nicholas J. Cuccaro
Senior Vice President and Chief Financial Officer
(principal financial and accounting officer of
the Company)
13
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
10.1 Certificate of Amendment to the Certificate of Incorporation of
Neodata Corporation
10.2 Credit Agreement, dated as of February 24, 1997, among Neodata
Corporation, Neodata Creative Services, Inc., Neodata Investment
Services, Inc. No. 1, Neodata Investment Services, Inc. No. 2, Various
Banks and Bankers Trust Company, as Agent
10.3 Agreement, dated as of December 11, 1996, between the Company and
Philip Morris Incorporated*
27 Financial Data Schedule
</TABLE>
* Confidential treatment has been requested with respect to certain portions
of such agreement and the confidential portions have been filed separately
with the Commission pursuant to the confidential treatment request.
<PAGE> 1
EXHIBIT 10.1
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF NEODATA CORPORATION
The undersigned, duly authorized officers of Neodata Corporation, a
Delaware corporation (the "Corporation"), do hereby certify that:
FIRST: The name of the Corporation is Neodata Corporation.
SECOND: The Certificate of Incorporation was filed with the Secretary
of State of the State of Delaware on June 18, 1990.
THIRD: Article FOURTH of the Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation") be, and it hereby is, amended
and restated to read in its entirety as set forth on Exhibit A attached hereto
and incorporated herein by reference.
FOURTH: The aforementioned amendment to the Certificate of
Incorporation was duly adopted in accordance with Section 242 of the General
Corporation Law of the State of Delaware (the "DGCL"). Written consent of the
Corporation's stockholders has been given in accordance with the provisions of
Section 228 of the DGCL and written notice has been given to nonconsenting
stockholders as provided in Section 228(d) of the DGCL.
<PAGE> 2
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed pursuant to Section 103(a)(2) of the DGCL by the
undersigned duly authorized officers of the Corporation as of this fourth day
of February, 1997.
NEODATA CORPORATION
By: /s/ A. LAURENCE JONES
-------------------------------
A. Laurence Jones
Chief Executive Officer and
President
2
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EXHIBIT A
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 87,090,000 shares,
consisting of 63,000,000 shares of a class designated Common Stock, par value
$0.01 per share ("Common Stock"), 3,000,000 shares of a class designated
Nonvoting Common Stock, par value $0.01 per share ("Nonvoting Common
Stock"), and 21,090,000 shares of a class designated Preferred Stock, par
value $0.01 per share ("Preferred Stock"), of which (i) 18,000,000 shares shall
be designated Class A Convertible Preferred Stock (the "Class A Preferred
Stock") (consisting of a series of preferred stock consisting of 9,000,000
shares to be designated Class A Convertible Preferred Stock - Series 1 (the
"Series 1 Preferred Stock") and a Convertible Preferred Stock - Series 2 (the
"Series 2 Preferred Stock")) and (ii) 3,090,000 shares shall be designated
Class B Junior Convertible Preferred Stock (the "Class B Preferred Stock");
A. Provisions Relating to the Class A Preferred Stock.
1. Ranking. The Class A Preferred Stock shall rank senior to
the Common Stock, the Nonvoting Common Stock, the Class B Preferred Stock, and
any other class or series of stock of the Corporation with respect to the
payment of dividends and the distribution of assets upon the liquidation,
dissolution, or winding up of the Corporation. The Series 1 Preferred Stock
and Series 2 Preferred Stock shall rank pari passu other than as expressly set
forth herein.
2. Dividends. a. The holders of Class A Preferred Stock shall
be entitled to receive cumulative cash dividends per annum per share as set
forth in Section A.2(b) below payable out of funds of the Corporation legally
available therefor, when, as, and if declared by the Board of Directors. Such
dividends shall be payable quarterly in arrears on the last day of March, June,
September, and December of each year (unless such day is not a business day, in
which event on the next succeeding business day) (each, a "Dividend Payment
Date"), commencing on the Dividend Payment Date in December 1994, to holders of
record as they appear in the register of the Corporation for Class A Preferred
Stock (the "Class A Preferred Stock Register") on the March 15, June 15,
September 15, and December 15 immediately preceding such Dividend Payment Date.
3
<PAGE> 4
b. Dividends on each share of Class A Preferred Stock
will cumulate on the Liquidation Preference (as hereinafter defined) of such
share on a quarterly basis at an annual rate equal to 10.0% of the Liquidation
Preference thereof (the "Class A Dividends") from and including November 21,
1994 (the "Closing Date"), irrespective of the date any such share is issued,
to and including the earlier of the date that (i) the Liquidation Preference
of such share is paid in full or the date that (ii) such share is converted
into Common Stock pursuant to Section A.5. Such dividends will cumulate
without interest whether or not they have been declared and whether or not
there are profits, surplus, or other funds of the Corporation legally available
for the payment of dividends. All cumulated dividends that are not paid when
due at the end of each quarter will cumulate without interest. Except as
otherwise set forth herein, any dividend payments made with respect to Class A
Preferred Stock shall be made in cash. As of any date and as to any share of
Class A Preferred Stock or Class B Preferred Stock, the term "Liquidation
Preference" shall mean $10.00; provided, however, in the case of the
liquidation or winding up of the Corporation, and only in such case, all
cumulated and unpaid dividends on any share of Class A Preferred Stock or Class
B Preferred Stock outstanding at the time of such liquidation or winding up
shall, immediately prior to such liquidation or winding up, be added to the
Liquidation Preference of such share. Absent a liquidation or winding up of
the Corporation, such cumulated and unpaid dividends shall be treated as
otherwise set forth herein.
c. No dividends or distributions in cash or other
property shall be paid or declared and set apart for payment on any date on or
in respect of the Common Stock, the Nonvoting Common Stock, the Class B
Preferred Stock, or any other class or series of stock issued by the
Corporation ranking junior to the Class A Preferred Stock in payment of
dividends or upon liquidation, dissolution, or winding-up of the Corporation
(collectively, the "Class A Junior Securities")(any such dividend or
distribution hereinafter referred to as a "Class A Junior Securities
Distribution"), unless all dividends cumulated and unpaid on the outstanding
shares of Class A Preferred Stock shall have been paid or contemporaneously are
declared and paid in cash to the date of payment of such Class A Junior
Securities Distribution; provided, however, that this sentence shall not apply
to the payment of Exercise Price Dividends (as hereinafter defined). In no
event will the Corporation be entitled to make a Class A Junior Securities
Distribution nor otherwise redeem, purchase, or otherwise acquire for value
any Class A Junior Securities while there are dividends cumulated and unpaid on
the Class A Preferred Stock. Other than Exercise Price Dividends, all dividends
and distributions declared or paid on Class A Preferred Stock must be declared
or paid, as the case may be,
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on the Series 1 Preferred Stock and the Series 2 Preferred Stock pro rate in
accordance with the respective Liquidation Preferences of such shares of series
1 Preferred Stock and Series 2 Preferred Stock at the time of such declaration.
d. In addition to Class A Dividends, holders of Series 2
Preferred Stock shall also be entitled to receive, in the form of additional
dividends, all amounts paid to the Corporation in satisfaction of amounts due
upon exercise or conversion of all options and warrants outstanding on the
Closing Date (and any options, rights, warrants or convertible securities into
which such options or warrants may hereafter be converted or exchanged, other
than options granted under the Company's Amended and Restated 1994 Stock Option
Plan and any options, rights, warrants or convertible securities into which
such options may hereafter be converted) (collectively with all options and
warrants outstanding on the Closing Date, the "Existing Warrants") and
exercisable for shares of Series 2 Preferred Stock and/or Common Stock out of
funds of the Corporation legally available therefor, when, as, and if declared
by the Board of Directors ("Exercise Price Dividends"). Such dividends will
cumulate without interest whether or not they have been declared and whether or
not there are profits, surplus, or other funds of the Corporation legally
available for the payment of dividends. Except as otherwise expressly provided,
Exercise Price Dividends shall be treated in the same manner as other dividends
accruing on the Series 2 Preferred Stock for all purposes. Notwithstanding the
prior provisions of this subparagraph (d) and any other provision hereof, in
the event that any such Existing Warrants are exercised by any holder or
holders thereof at any time prior to an "Exit Event", as hereinafter defined,
and the Board of Directors determines in good faith that, notwithstanding the
fact that the Corporation has legally available funds sufficient to declare an
Exercise Price Dividend in respect of such exercise in full, the retention of
the proceeds of such exercise of Existing Warrants is necessary for the
financial well-being of the Corporation, such Exercise Price Dividends shall
not be declared in cash but may, when,as, and if declared by the Board of
Directors, be declared by the issuance of one or more Junior Subordinated
Debentures of the Corporation issued in the form of Exhibit A1 attached hereto.
As used herein, the term "Exit Event" shall mean the following: (i) the
consummation of a Qualifying IPO, as hereinafter defined, (ii) the sale of all
or substantially all of the assets of the Corporation and (iii) the merger or
consolidation of the Corporation with or into another corporation or entity,
pursuant to which the holders of common equity of the Corporation immediately
prior to such event do not hold common equity in the surviving entity in
substantially the same proportions after such event.
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3. Preference on Liquidation, etc. The Class A Preferred Stock
shall rank as to rights to dividends and distribution of assets upon
dissolution, liquidation, or winding up of the Corporation senior to the Class
A Junior Securities. In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, before any payment or
distribution of the assets of the Corporation (whether capital or surplus), or
proceeds thereof, shall be made to or set apart for the holders of shares of
any Class A Junior Securities, the holders of shares of Class A Preferred Stock
shall be entitled to receive, to the extent legally permitted, payment of an
amount in cash equal to the Liquidation Preference per share held by them as of
the date fixed for payment or distribution plus all dividends cumulated and
unpaid thereon as of such date. If, upon any voluntary or involuntary
liquidation, dissolution, or winding-up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributed among the holders of shares of
Class A Preferred Stock shall be insufficient to pay in full the respective
preferential amounts on shares of Class A Preferred Stock (which preferential
amount shall include the Liquidation Preference of all Class A Preferred
Stock), then the entire assets, or the proceeds thereof, to be so distributed,
shall be distributed among the holders of the Class A Preferred Stock ratably
in accordance with the respective amounts which would be payable on such shares
if all amounts payable thereon were paid in full. After payment of the full
amount in cash of the Liquidation Preference to which the holders of Class A
Preferred Stock are entitled, such holders will not be entitled to any further
participation in any distribution of assets of the Corporation. For the
purposes of this Section A.3, none of the merger or the consolidation of the
Corporation into or with another corporation or entity, or the merger or
consolidation of any other corporation or entity into or with the Corporation,
or the voluntary sale, conveyance, exchange, transfer, or other disposition
(for cash, shares or stock, securities, or other consideration) of all or
substantially all the property or assets of the Corporation, shall be deemed to
be a voluntary or involuntary liquidation, dissolution, or winding-up of the
Corporation so long as all outstanding shares of the Class A Preferred Stock
are treated identically and all shares of the Class B Preferred Stock are
treated identically, with it being understood that any security into which
shares of Class B Preferred Stock are exchange or converted as a result of such
merger, consolidation, sale, conveyance, exchange, transfer or other
disposition, shall be and remain junior to any security into which the Class A
Preferred Stock are so exchanged or converted in right of payment of dividends
and distributions and upon the liquidation or winding up of the Corporation to
(and only to) the same extent set forth herein.
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4. Cancellation of Shares. Shares of Class A Preferred Stock that
have been issued and have been redeemed, repurchased, exchanged, converted, or
otherwise reacquired in any manner by the Corporation (i) shall be retired and
shall not be reissued as Class A Preferred Stock, and (ii) shall resume the
status of authorized but unissued and non-designated shares of preferred stock
of the Corporation.
5. Conversion.
a. Mandatory Conversion.
(1) IPO Conversion. Immediately prior to the consummation of
a Qualifying IPO (as hereinafter defined), each share of Class A
Preferred Stock outstanding as of the Conversion Time (as defined in
Section A.5(b)(3)) shall be converted (an "IPO Conversion") as of the
Conversion Time at the Conversion Rate (as hereinafter defined) then in
effect into fully paid and nonassessable shares of Common Stock. The
term "Conversion Rate" means (i) with respect to Series 1 Preferred
Stock, a number of shares of Common Stock per share of Series 1
Preferred Stock equal to the quotient obtained by dividing (1)
25,000,000 (adjusted appropriately to reflect stock splits, stock
dividends, redemptions and stock combinations) by (2) the number of
shares of Series 1 Preferred Stock outstanding on a fully-diluted basis
immediately prior to the Conversion Time, subject to adjustment from
time to time pursuant to Section A.5(c) or (ii) with respect to Series 2
Preferred Stock, a number of shares of Common Stock per share of Series
2 Preferred Stock equal to the quotient obtained by dividing (1) the
difference obtained by subtracting the number of shares of Qualifying
Common Stock (as hereinafter defined) outstanding on a fully diluted
basis immediately prior to the Conversion Time from 25,000,000 (adjusted
appropriately to reflect stock splits, stock dividends and stock
combinations) by (2) the number of shares of Series 2 Preferred Stock
outstanding on a fully diluted basis immediately prior to the Conversion
Time. As used herein, the term "Qualifying Common Stock" shall mean all
shares of Common Stock then outstanding on a fully diluted basis,
excluding for all purposes of such calculation and without duplication:
(A) all shares of Common Stock (other than shares of Common Stock issued
upon exercise of Existing Warrants) and securities convertible into or
exercisable for shares of Common Stock issued on or after June 26, 1996
and all shares of Common Stock issued or issuable upon conversion of any
shares of Nonvoting
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Common Stock after June 26, 1996 and (B) all shares of Common Stock
issued or issuable upon conversion of any shares of Class A Preferred
Stock and Class B Preferred Stock. The Conversion Rate with respect to
the Series 1 Preferred Stock shall be subject to adjustment from time to
time pursuant to Section A.5(c). The Conversion Rate with respect to the
Series 2 Preferred Stock shall not be adjustable except in the case of
(i) the subdivision by the Corporation of its outstanding shares of
Common Stock or Nonvoting Common Stock into a greater number of shares,
(ii) combination of its outstanding shares of Common Stock or Nonvoting
Common Stock into a smaller number of shares, or (iii) payment by the
Corporation of a dividend or distribution to all holders of Common Stock
or Nonvoting Common Stock that is paid or made in shares of Common Stock
or Nonvoting Common Stock, in each which case the Conversion Rate
applicable to the Series 2 Preferred Stock shall be adjusted by
multiplying the Conversion Rate immediately prior to such transaction by
a fraction, the numerator of which shall be the number of shares of
Common Stock and Nonvoting Common Stock outstanding immediately after
such event and the denominator of which shall be the number of shares of
Common Stock and Nonvoting Common Stock that were outstanding
immediately before such event. All cumulated and unpaid dividends on the
Class A Preferred Stock shall, immediately prior to the consummation of
a Qualifying IPO, be converted into a number of shares of Common stock
which shall be equal to the quotient obtained by dividing (1) the
aggregate dollar amount of such cumulated and unpaid dividends on such
Class A Preferred Stock by (2) the current market price (as determined
in accordance with Section B.5(e) hereof) as of the Conversion Time of
one share of Common Stock. The number of shares of Common Stock
determined in accordance with the prior sentence shall be distributed to
the holders of Class A Preferred Stock, pro rata as their interests
appear in the Class A Preferred Stock Register.
(2) Consent Conversion. Upon the consummation of a Consent
Conversion (as hereinafter defined), each share of Class A Preferred
Stock shall be converted as of the Conversion Time at the Conversion
Rate then in effect into fully paid and nonassessable shares of Common
Stock. Upon obtaining the affirmative vote or written consent of each of
(i) two-thirds of the Class A Preferred Stock voting as a class, (ii)
the holders of a majority of the Series 1 Preferred Stock, and (iii) the
holders of a majority of the Series 2 Preferred Stock expressly
approving the conversion of the Class A Preferred Stock into Common
Stock (a "Consent Conversion"), one
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<PAGE> 9
or more holders of shares of Class A Preferred Stock shall deliver an
irrevocable written notice (the "Consent Conversion Notice") to the Corporation
specifying the date as of which such conversion is to be effective (which date
shall not be less than 30 days nor more than 60 days following the date of such
notice) and any other terms of such Consent Conversion, certifying that the
conversion of such shares as of such date has been expressly approved as
required by this sentence. All cumulated and unpaid dividends on the Class A
Preferred Stock shall, immediately prior to the consummation of a Consent
Conversion, be converted into a number of shares of Common Stock which shall be
equal to the quotient obtained by dividing (1) the aggregate dollar amount of
such cumulated and unpaid dividends on the Class A Preferred Stock by (2) the
current market price (as determined in accordance with Section B.5(e) hereof)
as the Conversion Time of one share of Common Stock. The number of shares of
Common Stock determined in accordance with the prior sentence shall be
distributed to the holders of Class A Preferred Stock, pro rata as their
interests appear in the Class A Preferred Stock Register.
(3) Redemption Conversion. Each holder of Class A Preferred Stock
shall have the right, by delivery of written notice to the Corporation within 10
days after receiving a Class A Redemption Notice (as defined in Section A.6), to
convert (a "Redemption Conversion") any or all of such holder's shares of Class
A Preferred Stock at the Conversion Rate in effect as of the Class A Redemption
Date (as defined in Section A.6) into fully paid and nonassessable shares of
Common Stock. Such notice shall specify (i) the number of shares of Class A
Preferred Stock so to be converted and (ii) the name or names (with address) in
which a certificate or certificates evidencing shares of Common Stock are to be
issued. In conjunction with a Redemption Conversion, all cumulated and unpaid
dividends on each share of the Class A Preferred Stock to be so redeemed shall,
immediately prior to the consummation of a Redemption Conversion, be converted
into a number of shares of Common Stock which shall be equal to the quotient
obtained by dividing (1) the aggregate dollar amount of such cumulated and
unpaid dividends on such Class A Preferred Stock by (2) the current market price
(as determined in accordance with Section B.5(e) hereof) as of the Conversion
Time of one share of Common Stock. The number of shares of Common Stock
determined in accordance with the prior sentence shall be distributed to such
holder of Class A Preferred Stock who has elected a Redemption Conversion.
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b. Conversion Procedures.
(1) The Corporation shall deliver written notice (a "Conversion
Notice") to all holders of record of Class A Preferred Stock (as such holders
appear in the Class A Preferred Stock Register (i) as of the date chosen by the
Board of Directors as the record date for determining holders of Class A
Preferred Stock entitled to convert such shares in the IPO Conversion or (ii)
as of the date the Consent Conversion was approved, as applicable) as soon as
practicable after receipt by the Corporation of a notice meeting the
requirements imposed by Section A.5(a)(2) indicating that a Consent Conversion
has been approved or within 10 days prior to the consummation of a Qualifying
IPO, as applicable, requesting that each holder of Class A Preferred Stock
deliver such holder's certificate(s) representing all such shares to the
Corporation for conversion into shares of Common Stock in accordance with
Section A.5(a). Except as otherwise required by applicable law, the failure to
give any such notice, or any defect therein, shall not affect the validity of
such conversion.
(2) Not less than five days prior to the Conversion Time in respect
of the occurrence of an IPO Conversion, a Consent Conversion, or a Redemption
Conversion, each holder of shares of Class A Preferred Stock whose shares are
to be converted in connection with such event shall surrender the certificate
or certificates evidencing such shares at the office of the transfer agent for
the Class A Preferred Stock, which certificate or certificates shall be duly
endorsed to the Corporation or in blank, or accompanied by proper instruments
of transfer to the Corporation or in blank. Any such certificates that are not
so surrendered in accordance herewith shall be deemed, upon the Conversion Time
(as hereinafter defined), to represent only the right to receive such shares of
Common Stock into which such shares of Class A Preferred Stock are to convert
as of such time in accordance with Section A.5(a).
(3) The shares of Class A Preferred Stock shall be deemed to
convert into shares of Common Stock (i) immediately prior to the consummation
of a Qualifying IPO (in the case of an IPO Conversion), or (ii) as of the
effective date of conversion specified in the Consent Conversion Notice (in the
case of a Consent Conversion), or (iii) as of the Class A Redemption Date (in
the case of a Redemption Conversion) (each, a "Conversion Time"), as
applicable.
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(4) Notwithstanding any other provision hereof, immediately prior to
any conversion, all cumulated and unpaid Exercise Price Dividends shall be
declared and paid in cash to the holders of Series 2 Preferred Stock.
(5) The Corporation shall, as soon as practicable after surrender of
certificates evidencing shares of Class A Preferred Stock accompanied by or in
response to an applicable Conversion Notice relating to such shares and
compliance with any other conditions herein contained or reasonably required by
the Corporation, deliver at the office of the Corporation's transfer agent
(which may be the Secretary of the Corporation, if the Corporation so desires)
for transmittal to the Person (as hereinafter defined) for whose account such
shares of Class A Preferred Stock were so surrendered, or to the nominee or
nominees of such Person, certificates evidencing the number of full shares of
Common Stock to which such Person shall be entitled as aforesaid. Such
conversion shall be deemed to have been made as of the Conversion Time so that
the rights of the holder thereof as to the shares being converted shall cease
except for the right to receive shares of Common Stock in accordance herewith,
and the Person(s) entitled to receive the Common Stock shall be treated for all
purposes as the record holder or holders of such Common Stock on such date.
(6) Notwithstanding any other provision hereof, at the time of any
conversion of shares of Class A or Class B Preferred Stock, no fractional share
of Common Stock shall be issued to any holder of Class A or Class B Preferred
Stock, but, in lieu thereof, any such holder shall be paid by the Corporation,
in cash, an amount equal to the current market price of one share of Common
Stock, determined pursuant to Section A.5(c)(5) hereof, times the fraction
(which shall be less than one) representing such fractional share. For purposes
of this provision, all shares of Class A or Class B Preferred Stock registered
in the name of any holder shall be aggregated and whole shares of Common Stock
shall be delivered to such holder to the extent possible, with any fractional
remainder paid in accordance with the previous sentence.
c. Adjustment of Conversion Rate. The Conversion Rate applicable to
shares of Series 1 Preferred Stock shall be subject to adjustment from time to
time as follows:
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(1) In case the Corporation shall pay a dividend or make a
distribution to all holders of its Common Stock or Nonvoting Common Stock that
is paid or made in shares of Common Stock or Nonvoting Common Stock, (2)
subdivide its outstanding shares of Common Stock or Nonvoting Common Stock into
a greater number of shares, or (3) combine its outstanding shares of Common
Stock or Nonvoting Common Stock into a smaller number of shares, then in each
such case the Conversion Rate in effect immediately prior thereto shall be
adjusted by multiplying the Conversion Rate immediately prior to such
transaction by a fraction, the numerator of which shall be the number of shares
of Common Stock and Nonvoting Common Stock outstanding immediately after such
event and the denominator of which shall be number of shares of Common Stock
and Nonvoting Common Stock that were outstanding immediately before such event.
An adjustment made pursuant to this Section A.5(c)(1) shall become effective
(a) in the case of any such dividend or distribution, immediately after the
close of business on the record date for the determination of holders of shares
of Common Stock or Nonvoting Common Stock entitled to receive such dividend or
distribution or (b) in the case of any such subdivision, reclassification, or
combination, at the close of business on the day upon which such corporate
action becomes effective.
(2) In case the Corporation shall at any time or from time to time
issue shares of Common Stock or Nonvoting Common Stock (or rights, options, or
warrants to subscribe for or purchase, or securities convertible into, shares
of Common Stock or Nonvoting Common Stock) to any holders of Common Stock or
Nonvoting Common Stock at a price per share less than the then-current market
price per share (determined as provided below), then the Conversion Rate in
effect immediately prior to such issuance shall be increased by multiplying
such Conversion Rate by a fraction of which (A) the numerator shall be the sum
of (i) the number of shares of Common Stock and Nonvoting Common Stock
outstanding on such date plus (ii) the number of shares of Common Stock and
Nonvoting Common Stock issued (or into which the convertible securities issued
may convert or for which the rights, warrants, or options issued may be
exercised) and (B) the denominator shall be the sum of (i) the number of shares
of Common Stock and Nonvoting Common Stock outstanding on such date plus (ii)
the number of shares of Common Stock and Nonvoting Common Stock which the
aggregate consideration received or receivable by the Corporation for the total
number of shares so offered (or into which the convertible securities
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may convert or which may be issued upon exercise of such rights, options, or
warrants) would purchase at such then-current market price, such increase to
become effective immediately after the opening of business on the day following
the date of issuance; provided, however, that in the event that all the shares
of Common Stock or Nonvoting Common Stock offered are not delivered upon the
exercise of such rights, options, or warrants, or upon the conversion of such
convertible securities, then upon the expiration of such rights, options, or
warrants, or the right to convert such convertible securities, the Conversion
Rate shall be readjusted to the Conversion Rate which would have been in effect
had the numerator and the denominator of the foregoing fraction and the
resulting adjustment been made based upon the number of shares of Common Stock
and Nonvoting Common Stock actually delivered, and the consideration actually
received by the Corporation, upon the exercise of such rights, options, or
warrants, or upon the conversion of such convertible securities. For purposes
of this Section A.5(c)(2), the aggregate consideration received or receivable
by the Corporation in connection with the issuance of shares of Common Stock,
Nonvoting Common Stock or securities convertible into or evidencing the right
to purchase shares of Common Stock or Nonvoting Common Stock shall be equal to
the sum of the aggregate offering price (before deduction of underwriting
discounts and commissions, or similar placement costs and expenses) of all such
securities plus the minimum aggregate amount, if any, payable upon conversion
of such convertible securities into, or upon exercise of such rights, warrants,
or options for, shares of Common Stock or Nonvoting Common Stock.
(3) Notwithstanding anything herein to the contrary, the
following shall not be deemed to constitute an issuance of Common Stock or
Nonvoting Common Stock or rights, warrants, or options to purchase Common Stock
or Nonvoting Common Stock or convertible securities convertible into Common
Stock or Nonvoting Common Stock to which Section A.5(c)(2) above applies: (i)
the issuance after the Closing Date of options and/or rights (including as a
result of the conversion of Nonvoting Common Stock to Common Stock) exercisable
for an aggregate of up to 2,631,579 shares of Common Stock on a fully-diluted
basis (as such number may hereafter be adjusted as a result of any stock split,
stock dividend, reverse split or other capital adjustment generally applied to
all Common Stock) pursuant to any present or future stock option, stock
purchase, or other similar employee benefit plan, (ii) the issuance of any
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Series 2 Preferred Stock, Nonvoting Common Stock and/or Common Stock as a
result of the exercise or conversion of any options and rights issued pursuant
to clause (i) immediately above, (iii) the issuance of Common Stock and/or
Series 2 Preferred Stock upon exercise of any warrants, rights, and/or options,
or upon conversion of any convertible securities, outstanding as of the
Closing Date, and (iv) the issuance of Common Stock upon conversion of any
share of Class A Preferred Stock and/or Class B Preferred Stock authorized on
the date hereof.
(4) In case the Corporation shall, by dividend or otherwise,
distribute to all holder of its Common Stock or Nonvoting Common Stock
(including any distributions made in connection with a consolidation or merger
in which the Corporation is the surviving entity) evidences of its
indebtedness, cash (excluding ordinary cash dividends paid out of retained
earnings of the Corporation), other assets, or rights or warrants to subscribe
for or purchase any debt security (excluding those referred to in Section
A.5(c)(2) above), then in each such case the Conversion Rate shall be adjusted
upon such distribution so that the adjusted Conversion Rate shall equal the
rate determined by multiplying the Conversion Rate in effect immediately prior
to the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction of which the
numerator shall be the then-current market price per share (determined as
provided below) of the Common Stock on the date fixed for such determination
and the denominator shall be such current market price per share of the Common
Stock less the amount of cash and the then fair market value (as reasonably
determined by the Board of Directors in its good faith judgement, which
determination shall be described in a resolution of the Board of Directors) of
the portion of the assets, rights, or evidences of indebtedness so distributed
applicable to one share of Common Stock or Nonvoting Common Stock, such
adjustment to become effective immediately prior to the opening of business on
the day following the date fixed for the determination of stockholders
entitled to receive such distribution.
(5) For the purpose of any computation under Section A.5(b)(6),
A.5(c)(2) or A.5(c)(4) above, the current market price per share of Common
Stock on any date shall be deemed to be the average of the daily closing prices
for the 60 consecutive trading days before the day in question. The closing
price for each day shall be the last reported sale price,
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or, in case no such reported sale takes place on such day, the closing bid
price, in either case on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, on the Nasdaq National Market
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on the Nasdaq National Market, the fair market
value set of shares of Common Stock as established by the Board of Directors in
good faith. The term "trading day" means a day on which the national securities
exchange or the Nasdaq National Market used to determine the closing price is
open for the transaction of business or the reporting of trades.
(6) No adjustment in the Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at least 1% in such rate;
provided, however, that the Corporation may make any such adjustment at its
election; and provided, further, that any adjustments which by reason of this
Section A.5(c)(6) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section A.5(c) shall be made to the nearest .000000001 of a cent or to the
nearest .000000001 of a share, as the case may be.
(7) For purposes of any computation made under this Section A.5(c), the
value of any consideration (other than cash) to be received by the Corporation
upon the issuance of any Common Stock or Nonvoting Common Stock, or upon the
issuance of any rights, options, or warrants exercisable for, or convertible
securities convertible into, Common Stock or Nonvoting Common Stock (whether
any such rights, options, warrants, or convertible securities are issued
singularly or as a portion of any unit consisting of more than one kind of
security), and the value of any evidences of indebtedness or shares or assets,
shall be the fair market value thereof, reasonably determined in the good faith
judgement of the Board of Directors.
(8) Whenever the Conversion Rate is required to be adjusted as provided
in any provision of this Section A.5(c):
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(a) the Corporation shall compute the adjusted
Conversion Rate in accordance with this Section A.5(c) and shall
prepare a certificate signed by the principal financial officer
of the Corporation setting forth the adjusted Conversion Rate
and showing in reasonable detail the facts upon which such
adjustment is based and such certificate shall forthwith be
filed with transfer agent of the Class A Preferred Stock or, if
there is no transfer agent for the Class A Preferred Stock, the
secretary of the Corporation; and
(b) the Corporation shall prepare as promptly as
practicable after such adjustment, and shall mail, a notice
stating that the Conversion Rate has been adjusted and setting
forth the adjusted Conversion Rate to all record holders of
Class A Preferred Stock at their last addresses as they shall
appear in the Class A Preferred Stock Register.
(9) In the event that at any time, as a result of any
adjustment made pursuant to this Section A.5, the holder of any shares
of Class A Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of the Corporation other than
shares of Common Stock or to receive any other securities, the number of
such other shares or securities so receivable upon conversion of any
share of Class A Preferred Stock shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in this Section A.5 with respect
to the Common Stock.
d. Reclassification, Consolidation, Merger or Sale of
Assets. In case of any reclassification of the Common Stock, any consolidation
of the Corporation with, or merger of the Corporation into, any other Person,
any merger of another Person into the Corporation (other than in such a
consolidation or a merger in which the Corporation is the surviving or
continuing corporation and which does not result in any reclassification,
conversion, exchange, or cancellation of outstanding shares of Common Stock of
the Corporation), any sale, lease, exchange, or transfer of all or
substantially all the assets of the Corporation, then lawful provision shall be
made as part of the terms of such transaction whereby the holder of each share
of Class A Preferred Stock then outstanding shall have the right thereafter to
convert such share only into the kind and amount of securities, cash, and other
property receivable upon such reclassification, consolidation, merger, sale, or
transfer by a holder of the number of shares of Common Stock of
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the Corporation into which such share of Class A Preferred Stock might have
been converted immediately prior to such reclassification, consolidation,
merger, sale, or transfer. The Corporation, the Person formed by such
consolidation or resulting from such merger (if other than the Corporation), or
which acquires such assets or which acquires the Corporation's shares, as the
case may be, shall make provision in its certificate or articles of
incorporation or other constituent document to establish the right set forth in
the immediately preceding sentence. Such certificate or articles of
incorporation or other constituent document shall provide for adjustments
which, for events subsequent to the effective date of such certificate or
articles of incorporation or other constituent document, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section A.5. The above provisions shall similarly apply to successive
reclassifications, consolidations, mergers, sales, or transfers.
e. Reservation of Shares; Transfer Taxes; Etc. The
Corporation shall at all times reserve and keep available, out of its
authorized stock, solely for the purpose of effecting the conversion of the
Class A Preferred Stock, such number of shares of its Common Stock, free of
preemptive or similar rights, as shall from time to time be sufficient to
effect the conversion of all shares of Class A Preferred Stock from time to
time outstanding. The Corporation shall from time to time, in accordance with
the laws of the State of Delaware, increase the authorized number of shares of
Common Stock if at any time the number of authorized and unissued shares of
Common Stock shall not be sufficient to permit the conversion of all the then
outstanding shares of Class A Preferred Stock.
The Corporation shall pay any and all documentary stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of the Class A Preferred
Stock. The Corporation shall not, however, be required to pay any tax which may
be payable in respect of any transfer involved in the issue or delivery of
Common Stock (or other securities or assets) in a name other than that of the
record holder of the shares to be converted and no such issue or delivery shall
be made unless and until the Person requesting such issue or delivery has paid
to the Corporation the amount of such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
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f. Prior Notice of Certain Events. In case
(1) the Corporation shall take any action that would result
in an adjustment under Section A.5(c) hereof to the Conversion Rate; or
(2) the Corporation shall take any action described in
Section A.5(d) hereof; or
(3) of the voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation;
then the Corporation shall cause to be filed with the transfer agent for the
Class A Preferred Stock (or, if there is no transfer agent for the Class A
Preferred Stock at the time of such event, then the secretary of the
Corporation) and shall cause to be mailed to the holders of record of the Class
A Preferred Stock, at their last addresses as they shall appear in the Class A
Preferred Stock Register, at least 20 days prior to the applicable date
hereinafter specified, a notice stating (x) the date of the action to be taken
by the Corporation that would result in an adjustment to the Conversion Rate
pursuant to Section A-5(c) hereof, (y) the date on which a record (if any) is to
be taken for the purpose of determining the holders of Common Stock entitled to
any dividend, distribution, redemption, repurchase, or granting of rights,
options, or warrants or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to any dividend,
distribution, redemption, repurchase, or granting of rights, options, or
warrants are to be determined or (z) the date on which any reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation, or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities or other property deliverable upon any
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation, or winding up (but no failure to mail such notice or any defect
therein or in the mailing thereof shall affect the validity of the corporate
action required to be specified in such notice).
6. Optional Redemption. The Class A Preferred Stock is not subject
to mandatory redemption, sinking fund, or other similar provisions. All shares
of Class A Preferred Stock may be redeemed at the Corporation's option (to the
extent the Corporation lawfully may do so) at any time, in whole but not in
part, at a redemption price per share (the "Class A Redemption Price") equal to
the
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Liquidation Preference per share as of the Class A Redemption Date (as
hereinafter defined) plus all cumulated and unpaid dividends thereon as of such
date.
The Corporation shall cause to be mailed to each holders of Class A
Preferred Stock at his last address as it shall appear in the Class A Preferred
Stock Register, at least 20 days and not more than 30 days prior to the date of
such redemption, a notice (the "Class A Redemption Notice") stating the date on
which such redemption is expected to take place (the "Class A Redemption
Date"). Except as otherwise required by applicable law, the failure to give any
such notice, or any defect therein, shall not affect the validity of such
redemption.
On the Class A Redemption Date, each holder of shares of Class A
Preferred Stock shall surrender all certificates representing such shares to
the Corporation at its principal place of business or as otherwise specified in
the Class A Redemption Notice, and thereupon the Class A Redemption Price shall
be paid for each of such shares to the order of the Person whose name appears
on such certificate or certificates and each surrendered certificate shall be
canceled. Notice having been given as aforesaid, from and after the Class A
Redemption Date, unless there shall have been default in payment of the Class A
Redemption Price, all rights of the holders of shares of Class A Preferred
Stock, except the right to receive the Class A Redemption Price without
interest upon surrender of their certificate or certificates, shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or be deemed to be outstanding for any purpose
whatsoever. In addition, from and after the date the Corporation shall
irrevocably deposit an amount equal to the Class A Redemption Price of the
shares of Class A Preferred Stock to be redeemed in trust for the holders of
such shares with a bank having capital and surplus in excess of $100 million,
which bank shall be named in the Class A Redemption Notice, all rights of the
holders of shares of Class A Preferred Stock, except the right to receive such
Class A Redemption Price without interest upon surrender of their certificate
or certificates, shall cease with respect to such shares, and such shares
shall not thereafter be transferred on the books of the Corporation or be
deemed to outstanding for any purpose whatsoever.
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The Corporation will not, and will not permit any subsidiary of the
Corporation to, purchase or acquire any shares of Class A Preferred Stock
otherwise than pursuant to the terms of this Section A.6 or pursuant to an
offer made ratably (based on the respective Liquidation Preferences of the
Class A Preferred Stock) to all holders of the Class A Preferred Stock at the
time outstanding.
7. Voting.
a. General. The holders of Class A Preferred Stock will
not have any voting rights except as set forth in Sections A.5(a)(2), A.7(b),
A.8(a), A.9, and A.10(e), or as otherwise from time to time required by law. In
connection with any right to vote, each holder of Class A Preferred Stock will
have one vote for each share held. Any shares of Class A Preferred Stock held
by the Corporation or any entity controlled by the Corporation shall not have
voting rights hereunder and shall not be counted in determining the presence of
a quorum.
b. Advisory Director. The holders of Series 1 Preferred
Stock shall have the right, voting together as a class to the exclusion of any
other capital stock of the Corporation, to vote for and elect one advisory
director, who shall have the right to have notice of and attend all meetings of
the Board of Directors and the committees of the Board of Directors, but who
shall not have the right to vote on any matter before the Board of Directors or
any such committee.
8. Covenants.
a. No Senior or Pari Passu Stock. So long as any share of
Class A Preferred Stock is issued and outstanding, the Corporation shall not,
without the affirmative vote or written consent of each (i) two-thirds of the
Class A Preferred Stock voting as a class, (ii) the holders of a majority of
the Series 1 Preferred Stock, and (iii) the holders of a majority of the Series
2 Preferred Stock, authorize or issue any shares of preferred stock (either of
the same or of a different class as the Class A Preferred Stock) or of any
other class or series of capital stock, that has powers, preferences, or rights
superior or preferable to, or on a parity with, the powers, preferences, and
rights of the Class A Preferred Stock, whether with respect to dividend
payments, redemption rights, premiums or redemptions, sinking fund provisions,
conversion rights, liquidation rights, or otherwise, or any securities
convertible into or exchangeable or exercisable for any such superior,
preferred or pari passu securities. Notwithstanding the foregoing, the issuance
by the Corporation of an aggregate of 8,600,000 shares of Series 1
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<PAGE> 21
Preferred Stock and 8,600,000 shares of Series 2 Preferred Stock on the Closing
Date is expressly permitted.
b. Qualifying IPO Requirement. So long as any shares of
Series 1 Preferred Stock are issued and outstanding, the Corporation shall not,
without the prior written consent of the holders of a majority of the Series 1
Preferred Stock, consummate a public offering of equity securities or
securities exercisable for equity securities pursuant to an effective
registration statement on Form S-1, Form S-4, or equivalent form, under the
Securities Act of 1933, as amended (a "Public Offering"), of any class or
series of equity securities (or any securities convertible into any class or
series of equity securities), unless such Public Offering would constitute a
Qualifying IPO. The term "Qualifying IPO" means a Public Offering (i) resulting
in aggregate gross proceeds of at least $25 million, (ii) as a result of which,
the Company has shares of Common Stock that are qualified for trading on the
Nasdaq National Market System and (iii) immediately after which the value of
the shares of Common Stock issued or issuable upon conversion of the Series 1
Preferred Stock pursuant to and in accordance with Section A.5, as determined by
the price, before underwriting discounts and commissions, at which Common Stock
is sold in such Public Offering, is at least equal to the aggregate Liquidation
Preference (excluding cumulated dividends) of the Series 1 Preferred Stock and
the Class B Preferred Stock outstanding immediately prior to the Public
Offering, but after giving pro forma effect to any redemption of Series 1
Preferred Stock and/or Class B Preferred Stock to be redeemed for cash in
connection with or from the proceeds from such Public Offering and further
reduced, without duplication, by the amount of any prior redemptions of Series
1 Preferred Stock and Class B Preferred Stock. Immediately prior to the
consummation of a Qualifying IPO, all shares of Class A Preferred Stock then
issued and outstanding shall be converted into Common Stock pursuant to Section
A.5. In order to receive shares of Common Stock into which such Class A
Preferred Stock has been converted, Holders of Class A Preferred Stock must
comply with the provisions of Section A.5.
9. Amendments; Modifications; Repeal.
a. So long as any shares of Series 1 Preferred Stock are
issued and outstanding, the Corporation shall not, without the affirmative vote
or consent of the holders of at least a majority of the shares of Series 1
Preferred Stock at the time outstanding, voting as a separate class, amend,
modify, or repeal any provision of the Certificate of Incorporation relating to
the Series 1 Preferred Stock, or, if such amendment, modification, or repeal
would adversely affect the
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powers, preferences, or special rights of the shares of Series 1 Preferred
Stock, any other provision of the Certificate of Incorporation; provided,
however, that without the consent of each affected holder of a share of Series
1 Preferred Stock, no such amendment, modification, or repeal shall (i) reduce
the number of shares whose holders must consent to an amendment, modification,
or repeal; (ii) reduce the rate of or extend the time for payment of dividends
on any share or change the form of such payment; (iii) reduce the amount of any
redemption payment or extend the time for payment thereof; or (iv) waive any
arrearage in the payment of any dividend, any redemption payment, or the
Liquidation Preference of any share of Series 1 Preferred Stock, or reduce the
amount of the Liquidation Preference of the Series 1 Preferred Stock.
b. So long as any shares of Series 2 Preferred
Stock are issued and outstanding, the Corporation shall not, without the
affirmative vote or consent of the holders of at least a majority of the shares
of Series 2 Preferred Stock at the time outstanding, voting as a separate class,
amend, modify, or repeal any provision of the Certificate of Incorporation
relating to the Series 2 Preferred Stock or, if such amendment, modification, or
repeal would adversely affect the powers, preferences, or special rights of the
shares of Series 2 Preferred Stock, any other provision of the Certificate of
Incorporation; provided, however, that without the consent of each affected
holder of a share of Series 2 Preferred Stock, no such amendment, modification,
or repeal shall (i) reduce the number of shares whose holders must consent to an
amendment, modification, or repeal; (ii) reduce the rate of or extend the time
for payment of dividends on any share or change the form of such payment; (iii)
reduce the amount of any redemption payment or extend the time for payment
thereof; or (iv) waive any arrearage in the payment of any dividend, any
redemption payment, or the Liquidation Preference of any share of Series 2
Preferred Stock, or reduce the amount of the Liquidation Preference of the
Series 2 Preferred Stock.
10. General Provisions.
a. The term "Person" as used herein means any
corporation, partnership, trust, organization, association, other entity, or
individual.
b. The term "outstanding," when used with reference
to shares of stock, shall mean issued shares, excluding shares held by the
Corporation.
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c. The headings of the sections herein are for
convenience of reference only and shall not define, limit, or affect any of the
provisions hereof.
d. Each holder of Class A Preferred Stock, by
acceptance thereof, acknowledges and agrees that any and all payments of
dividends and distributions on, and redemption and repurchase of, such
securities by the Corporation shall at all times be subject to (i) any and all
restrictions, including restrictions resulting indirectly from financial
coverage limitations and ratios, contained in (A) the Credit Agreement, dated as
of May 5, 1993 (as amended, the "Credit Agreement"), among Neodata Services,
Inc., a Delaware corporation and wholly-owned subsidiary of the Corporation
("Services"), Heller Financial, Inc., and the Lenders named therein and (B) the
Indenture, dated as of May 5, 1993 (as amended, the "Senior Note Indenture"),
between Services and Ameritrust Texas National Association; and (ii) any and all
applicable state or federal laws (including, without limitation, 8 Del. C.
Sections 160, 170), rules, and regulations and any and all orders of any state
or federal governmental authority.
e. Without the affirmative vote or consent of the
holders of at least two-thirds of the shares of Class A Preferred Stock at the
time outstanding, voting as a separate class, the Corporation will not
voluntarily file any proceeding under Title 11 of the U.S. Code or any similar
successor statute.
11. Taxes. The Corporation shall pay any and all
documentary, stamp, or similar issue or transfer tax that may be payable in
respect of the redemption of any of the Class A Preferred Stock pursuant to
Section A.6 hereof; provided, however, that the Corporation shall not in any
event be required to pay any federal, state, or local income or other taxes of
any holder of Class A Preferred Stock or Common Stock resulting from such
redemption.
B. Provisions Relating to the Class B Preferred Stock.
1. Ranking. The Class B Preferred Stock shall rank senior
to the Common Stock, the Nonvoting Common Stock, and to any other class or
series of stock or equity securities of the Corporation, other than the Class A
Preferred Stock, with respect to the payment of dividends and the distribution
of assets upon the liquidation, dissolution, or winding up of the Corporation.
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2. Dividends. a. The holders of Class B Preferred Stock shall be
entitled to receive cumulative cash dividends per annum per share as set forth
in Section B.2(b) below payable out of funds of the Corporation legally
available therefor, when, as, and if declared by the Board of Directors. Such
dividends shall be payable quarterly in arrears on each Dividend Payment Date,
commencing on the Dividend Payment Date in December 1994 to holders of record as
they appear in the register of the Corporation for the Class B Preferred Stock
(the "Class B Preferred Stock Register") on the March 15, June 15, September 15,
and December 15 immediately preceding such Dividend Payment Date.
b. Dividends on each share of Class B Preferred Stock will
cumulate on the Liquidation Preference (as defined in Section A(2)(b)) of such
share on a quarterly basis at an annual rate equal to 10.0% from and including
the Closing Date to and including the earlier of the date that (i) the
Liquidation Preference of such share is paid in full or (ii) such share is
converted into Common Stock pursuant to Section B.5. Such dividends will
cumulate without interest whether or not they have been declared and whether or
not there are profits, surplus, or other funds of the Corporation legally
available for the payment of dividends. All cumulated dividends that are not
paid when due at the end of each quarter will cumulate without interest. Unless
otherwise expressly provided herein, any dividend payments made with respect to
Class B Preferred Stock shall be made in cash.
c. No dividends or distributions in cash or other property
shall be paid or declared and set apart for payment on any date on or in
respect of the Common Stock or the Nonvoting Common Stock, or on any other
class or series of stock issued by the Corporation ranking junior to the Class
B Preferred Stock in payment of dividends or upon liquidation, dissolution, or
winding-up of the Corporation (collectively, the "Class B Junior Securities")
(any such dividend or distribution hereinafter referred to as a "Class B Junior
Securities Distribution") unless all dividends cumulated and unpaid on the
outstanding shares of Class B Preferred Stock shall have been paid or
contemporaneously are declared and paid in cash through the last preceding
Dividend Payment Date. In no event will the Corporation be entitled to make a
Class B Junior Securities Distribution nor otherwise redeem, purchase, or
otherwise acquire for value any Class B Junior Securities while there are
dividends cumulated and unpaid on the Class B Preferred Stock. Nothing
contained herein shall in any way restrict the declaration, payment, or
distribution of dividends or other distributions in cash, shares of capital
stock, securities of the Corporation convertible into or exchangeable for any
capital stock,
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or other property for payment on any date or in respect of the Class A
Preferred Stock.
3. Preference on Liquidation, etc. The Class B Preferred Stock
shall rank as to rights to dividends and distribution of assets upon
dissolution, liquidation, or winding up of the Corporation (i) senior to the
Class B Junior Securities and (iii) junior to the Class A Preferred Stock. In
the event of any voluntary or involuntary liquidation, dissolution, or
winding-up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus), or proceeds thereof, shall be
made to or set apart for the holders of shares of any Class B Junior Securities,
the holders of shares of Class B Preferred Stock shall be entitled to receive,
to the extend legally permitted, payment of an amount in cash equal to the
Liquidation Preference per share held by them as of the date fixed for payment
or distribution. If, upon any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributed among the holders of shares of Class B Preferred Stock
shall be insufficient to pay in full the respective preferential amounts on
shares of Class B Preferred Stock (which preferential amount shall include the
Liquidation Preference of all Class B Preferred Stock) then the entire assets,
or the proceeds thereof, to be so distributed, shall be distributed among the
holders of the Class B Preferred Stock ratably in accordance with the respective
amounts which would be payable on such shares if all amounts payable thereon
were paid in full. After payment of the full amount in cash of the Liquidation
Preference to which the holders of Class B Preferred stock are entitled, such
holders will not be entitled to any further participation in any distribution of
assets of the Corporation. For the purposes of this Section B.3, none of the
merger or the consolidation of the Corporation into or with another corporation
or entity, or the merger or consolidation of any other corporation or entity
into or with the Corporation, or the voluntary sale, conveyance, exchange,
transfer, or other disposition (for cash, shares of stock, securities, or other
consideration) of all or substantially all the property or assets of the
Corporation,shall be deemed to be a voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation so long as all outstanding shares
of the Class A Preferred Stock are treated identically and all shares of the
Class B Preferred Stock are treated identically, with it being understood that
any security into which shares of Class B Preferred Stock are exchanged or
converted as a result of such merger, consolidation, sale, conveyance, exchange,
transfer or other disposition, shall be and remain junior to any security into
which the Class A Preferred Stock are so exchanged or converted in right of
payment of dividends and distributions and upon the liquidation or winding up of
the Corporation to (and only to) the same extent set forth herein.
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4. Cancellation of Shares. Shares of Class B Preferred Stock that
have been issued and have been redeemed, repurchased, exchanged, converted, or
otherwise reacquired in any manner by the Corporation (i) shall be retired and
shall not be reissued as Class B Preferred Stock, and (ii) shall resume the
status of authorized but unissued and non-designated shares of preferred stock
of the Corporation.
5. Conversion.
a. Mandatory Conversion. Unless the Class B Preferred Stock
has theretofore been called for redemption (except as limited by Section B.6
hereof), upon the conversion and/or redemption of all Class A Preferred Stock (a
"Conversion Event"), the Class B Preferred Stock shall be converted into a
number of shares of Common Stock equal to the quotient obtained by dividing (1)
the product obtained by multiplying (A) the number of shares of Class B
Preferred Stock outstanding as of the Conversion Event by (B) $10 by (2) the
greater of $3.43 and the current market price (as determined in accordance with
Section B.5(e) below) as of the date of the Conversion Event of one share of
Common Stock, subject to appropriate adjustment in the event of any stock split,
reverse stock split, or similar transaction with respect to the Class B
Preferred Stock (excluding all dividends cumulated and unpaid thereon). All
cumulated and unpaid dividends on the Class B Preferred Stock shall,
immediately prior to the consummation of a Conversion Event, be converted into
a number of shares of Common Stock which shall be equal to the quotient
obtained by dividing (1) the aggregate dollar amount of such cumulated and
unpaid dividends on the Class B Preferred Stock by (2) the greater of $3.43 and
the current market price (as determined in accordance with Section B.5(e)
hereof) as of the date of the Conversion Event of one share of Common Stock.
The number of shares of Common Stock determined in accordance with the prior
sentence shall be distributed to the holders of Class B Preferred Stock, pro
rata as their interests appear in the Class B Preferred Stock Register.
b. Conversion Procedures.
(1) Upon the occurrence of a Conversion Event, all holders
of shares of Class B Preferred Stock shall surrender the certificate or
certificates evidencing such shares of Class B Preferred Stock at the
office of the transfer agent for the Class B Preferred Stock, which
certificate or certificates, if the Corporation shall so require, shall
be duly endorsed to the
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Corporation or in blank, or accompanies by proper instruments of
transfer to the Corporation or in blank.
(2) The Corporation shall, as soon as practicable after such
surrender of certificates evidencing shares of Class B Preferred Stock
and compliance with any other conditions herein contained or reasonably
requested by the Corporation, deliver at the office of such transfer
agent for transmittal to the Person for whose account such shares of
Class B Preferred Stock were so surrendered, or to the nominee or
nominees of such Person, certificates evidencing the number of shares of
Common Stock (collectively, the "Conversion Instruments"). Subject to
the following provisions of this Section B,5(b)(2), such conversion
shall be deemed to have been made as of the date of the Conversion Event
so that the rights of the holder thereof as to the shares of Class B
Preferred Stock being converted shall cease except for the right to
receive one or more Conversion Instruments in accordance herewith, and
the Person(s) who are to receive any such Conversion Instruments shall
be treated for all purposes as the record holder or holders of any such
Conversion Instrument as of such date.
c. Reclassification, Consolidation, Merger or Sale of
Assets. In case of any reclassification of the Common Stock, any consolidation
of the Corporation with, or merger of the Corporation into, any other Person,
any merger of another Person into the Corporation (other than in such a
consolidation or a merger in which the Corporation is the surviving or
continuing corporation and which does not result in any reclassification,
conversion, exchange, or cancellation of outstanding shares of Common Stock of
the Corporation), any sale, lease, exchange, or transfer of all or substantially
all the assets of the Corporation, then lawful provision shall be made as part
of the terms of such transaction whereby the holder of each share of Class B
Preferred Stock then outstanding shall have the right thereafter, subject to
Section B.5(a), during the period such share of Class B Preferred Stock shall be
convertible, to convert such share only into the kind and amount of securities,
cash, and other property receivable upon such reclassification, consolidation,
merger, sale, or transfer by a holder of the number of shares of Common Stock of
the Corporation into which such share of Class B Preferred Stock might have been
converted immediately prior to such reclassification, consolidation, merger,
sale, or transfer. The Corporation, the Person formed by such consolidation or
resulting from such merger (if other than the Corporation), or which acquires
such assets or which acquires the Corporation's shares, as the case may be,
shall make provision in its certificate or articles of incorporation or other
constituent document to establish the right set
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forth in the immediately preceding sentence. Such certificate or articles of
incorporation or other constituent document shall provide for adjustments
which, for events subsequent to the effective date of such certificate or
articles of incorporation or other constituent document, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Section B,5. The above provisions shall similarly apply to successive
reclassifications, consolidations, mergers, sales, or transfers.
d. Transfer Taxes; Etc. The Corporation shall pay any and all
documentary stamp or similar issue or transfer taxes that may be payable in
respect of the issue or delivery of any shares of Common Stock on conversion of
the Class B Preferred Stock. The Corporation shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue or delivery of Common Stock (or other securities or assets) in a name
other than that of the record holder of the shares to be converted and no such
issue or delivery shall be made unless and until the Person requesting such
issue or delivery has paid to the Corporation the amount of such tax or has
established, to the satisfaction of the Corporation, that such tax has been
paid.
e. Current Market Price. For the purpose of any computation of
current market price hereunder, the current market price per share of Common
Stock on ay date shall be deemed to be the average of the daily closing prices
for the 60 consecutive trading days for the day in question. The closing price
for each day shall be the last reported sale price, or, in case no such
reported sale takes place on such day, the closing bid price, in either case on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq National Market or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on the Nasdaq National Market or, if such prices are not available, the fair
market value or a share of Common Stock as reasonably determined in the good
faith judgement of the Board of Directors.
6. Optional Redemption. The Class B Preferred Stock is not subject to
mandatory redemption, sinking fund, or other similar provisions.
Notwithstanding any other provision hereof (except for the provisions of this
Section 6), the Class B Preferred Stock may be redeemed at the Corporation's
option (to the extent the Corporation lawfully may do so) at any time, in whole
but not in part, at a redemption price per share equal to the Liquidation
Preference per share as of the date fixed for redemption (the "Class B
redemption Price");
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provided, that the Class B Preferred Stock may not be redeemed if, at the time
of such redemption, the Corporation has not declared and paid, or pays
contemporaneously therewith, to the holders of Class B Preferred Stock in cash
all dividends cumulated and unpaid thereon as of the date fixed for such
redemption. The Corporation shall cause to be mailed to each holder of Class B
Preferred Stock at his last address as it shall appear in the Class B Preferred
Stock Register, at least 30 days and not more than 60 days prior to the date of
such redemption, a notice (a "Class B Redemption Note") stating the date on
which such redemption is expected to take place (the "Class B Redemption
Date"). Except as otherwise required by applicable law, the failure to give any
such notice, or any defect therein, shall not affect the validity of such
redemption.
On the Class B Redemption Date, the holders of shares of Class B
Preferred Stock which have been redeemed shall surrender certificates
representing such shares to the Corporation at its principal place of business
or as otherwise specified in the Class B Redemption Notice, and thereupon the
Class B Redemption Price of such shares shall be paid to the order of the
Person whose name appears on such certificate or certificates and each
surrendered certificate shall be canceled. Notice having been given as
aforesaid, from and after the Class B Redemption Date, unless there shall have
been default in payment of the Class B Redemption Price, all rights of the
holders of such redeemed shares of Class B Preferred Stock, except the right to
receive the Class B Redemption Price without interest upon surrender of their
certificate or certificates, shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the Corporation or
be deemed to be outstanding for any purpose whatsoever. In addition, from and
after the date the Corporation shall irrevocably deposit with a bank having
capital and surplus in excess of $100 million, which bank shall be named in the
Class B Redemption Notice, an amount equal to the Class B Redemption Price of
the shares of Class B Preferred Stock to be redeemed in trust for the holders
of such shares of Class B Preferred Stock so called for redemption, except the
right to receive such Class B Redemption Price without interest upon surrender
of their certificate or certificates, shall cease with respect to such shares,
and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to outstanding for any purpose whatsoever. The
Corporation will not, and will not permit any subsidiary of the Corporation to,
purchase or acquire any shares of Class B Preferred Stock otherwise than
pursuant to the terms of this Section B.6 or pursuant to an offer made ratably
(based on the respective Liquidation Preferences of the Class B Preferred
Stock) to all holders of the Class B Preferred Stock at the time outstanding.
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Each holder of Class B Preferred Stock shall have the right, by
delivery of written notice to the Corporation within 20 days after receiving a
Class B Redemption Notice (as defined in Section B.6), to convert (a "Class B
Redemption Conversion") so many of such holder's shares of Class B Preferred
Stock as are permitted pursuant to this paragraph into fully-paid and
nonassessable shares of Common Stock at a conversion rate per share which shall
be equal to the quotient obtained by dividing (1) the Liquidation Preference by
(2) the greater of (X) the current market price (as determined in accordance
with Section B.5(e)) as of the date of the Conversion Event and (Y) $3.43. Such
notice shall specify (i) the number of shares of Class B Preferred Stock so to
be converted and (ii) the name or names (with address) in which a certificate
or certificates evidencing shares of Common Stock are to be issued.
Notwithstanding the other provisions of this paragraph, the outstanding Class B
Preferred Stock may be converted only into a number of shares of Common Stock
that, when aggregated with all shares of Common Stock into which the Series 1
Preferred Stock has been or may be converted, is equal to, but is not in excess
of, 50% of the Common Stock on a fully-diluted basis. Any shares of Class B
Preferred Stock not so converted shall be redeemed in accordance with the Class
B Redemption Notice. In conjunction with a Class B Redemption Conversion, all
cumulated and unpaid dividends on the Class B Preferred Stock to be so
converted shall be paid in cash.
7. Voting. The holders of Class B Preferred Stock will not have any
voting rights except as set forth in Sections B.8 and B.9, or as otherwise from
time to time required by law. In connection with any right to vote, each holder
of Class B Preferred Stock will have one vote for each share held. Any shares
of Class B Preferred Stock held by the Corporation or any entity controlled by
the Corporation shall not have voting rights hereunder and shall not be counted
in determining the presence of a quorum.
8. No Senior or Pari Passu Stock. So long as any share of Class B
Preferred Stock is issued and outstanding, the Corporation shall not, without
the prior written consent of holders of at least two-thirds of the issued and
outstanding shares of Class B Preferred Stock, authorize or issue any
additional shares of Class B Preferred Stock or of any other class or series of
capital stock, that has powers, preferences, or rights superior or preferable
to, or on a parity with, the powers, preferences, and rights of the Class B
Preferred Stock, whether with respect to dividend payments, redemption rights,
premium on redemption, sinking fund provisions, conversion rights, liquidation
rights, or otherwise, or any securities convertible into or exchangeable or
exercisable for any such superior, preferred, or pari passu securities.
Notwithstanding the foregoing, the issuance by
30
<PAGE> 31
the Corporation of an aggregate of 8,600,000 shares of Series 1 Preferred Stock
and 8,600,000 shares of Series 2 Preferred Stock on the Closing Date and any
additional shares of Series 1 and/or Series 2 as required by Section A,5 is
expressly permitted.
9. Amendments; Modifications; Repeal. So long as any shares of
Class B Preferred Stock are issued and outstanding, the Corporation shall not,
without the affirmative vote or consent of the holders of at least two-thirds
of the shares of Class B Preferred Stock at the time outstanding, voting as a
separate class, amend, modify, or repeal any provision of the Certificate of
Incorporation relating to the Class B Preferred Stock (including, without
limitation, provisions of this Certificate of Designations) or, if such
amendment, modification, or repeal would adversely affect the powers,
preferences, or special rights of the shares of Class B Preferred Stock, any
other provision of the Certificate of Incorporation; provided, however, that
without the consent of each affected holder of a share of Class B Preferred
Stock, no such amendment, modification, or repeal shall (i) reduce the number
of shares whose holders must consent to an amendment, modification, or repeal;
(ii) reduce the rate of or extend the time for payment of dividends on any
share or change the form of such payment; (iii) reduce the amount of any
redemption payment or extend the time for payment thereof; or (iv) waive any
arrearage in the payment of any dividend, any redemption payment or the
Liquidation Preference of any share, or reduce the amount of the Liquidation
Preference.
10. General Provisions.
a. The headings of the sections herein are for convenience
of reference only and shall not define, limit, or affect any of the provisions
hereof.
b. Each holder of Class B Preferred Stock, by acceptance
thereof, acknowledges and agrees that any and all payments of dividends and
distributions on, and redemption and repurchase of, such securities by the
Corporation shall at all times be subject to (i) any and all restrictions,
including restrictions resulting indirectly from financial coverage limitations
and ratios, contained in (A) the Credit Agreement and (B) the Senior Note
Indenture; and (ii) any and all applicable state or federal laws (including,
without limitation, 8 Del. C. Sections 160, 170), rules, and regulations and
any and all orders of any state or federal governmental authority.
31
<PAGE> 32
c. If, within 30 days of notice thereof, the holders of a majority
of either of the Series 1 Preferred Stock or the Class B Preferred Stock shall
object to any determination with respect to any of the Series 1 Preferred
Stock, the Series 2 Preferred Stock, or the Class B Preferred Stock by the
Board of Directors of the fair market value of any consideration other than cash
or of any assets, rights, evidence of indebtedness, or shares or other
securities and if the Corporation and representatives of such holders are
unable to agree on such fair market value, then the Corporation and such
holders shall, within 30 days following receipt of notice from such holders,
appoint a mutually agreeable investment banking firm of national standing to
determine the fair market value. If the Corporation and such holders cannot
agree upon such an investment banking firm within an additional 15 days, they
each shall appoint (and separately pay the fees of) an investment banking firm
of national standing to determine such fair market value, and, if such firms
cannot agree, they shall in turn appoint an investment banking firm of national
standing (whose fees shall be borne equally by the Corporation and such
holders) which shall independently determine such fair market value. The final
determination made pursuant to this paragraph shall be final and binding upon
the Corporation and all holders of Series 1 Preferred Stock and Class B
Preferred Stock, as the case may be.
11. Taxes. The Corporation shall pay any and all documentary,
stamp, or similar issue or transfer tax that may be payable in respect of the
redemption of any of the Class B Preferred Stock pursuant to Section B.6 hereof
or conversion of any Class B Preferred Stock pursuant to section B.5 hereof;
provided, however, that the Corporation shall not in any event be required to
pay any federal, state, or local income or other taxes of any holder of Class B
Preferred Stock or Common Stock resulting from such redemption, issuance or
conversion.
c. Provisions Relating to the Common Stock and Nonvoting Common
Stock.
1. Relative Rights. Common Stock and Nonvoting Common Stock shall
have identical rights and privileges in every respect, except as set forth in
Section C.3 below.
2. Allocation of Dividends. Subject to the prior rights and
preferences of any issued and outstanding shares of Preferred Stock, the
holders of shares of Common Stock and Nonvoting Common Stock shall be entitled
to receive such dividends, payable in cash, property, stock or otherwise, as
may be declared thereon by the Board of Directors of the Corporation at any
time and from
32
<PAGE> 33
time to time out of any funds of the Corporation legally available therefor;
provided, however, that (i) except as provided in clause (ii) below, all
dividends (including, without limitation, any grant or distribution of rights
to subscribe for or purchase shares of capital stock or securities or
indebtedness convertible into shares of capital stock of the Corporation) shall
be shared equally and ratably by holders of shares of Common Stock and
Nonvoting Common Stock as if all such shares were of a single class, and (ii)
dividends payable in shares of Common Stock (or rights to subscribe for or
purchase shares of Common Stock or securities or indebtedness convertible into
shares of Common Stock) may be paid only on shares of Common Stock and
dividends payable in shares of Nonvoting Common Stock (or rights to subscribe
for or purchase shares of Nonvoting Common Stock or securities or indebtedness
convertible into shares of Nonvoting Common Stock) may be paid only on shares
of Nonvoting Common Stock; provided, however, that the number of shares of
Common Stock (or rights to purchase shares of Common Stock or securities or
indebtedness convertible into shares of Common Stock) payable as a dividend in
respect of a share of Common Stock shall equal the number of shares of
Nonvoting Common Stock (or rights to purchase shares of Nonvoting Common Stock
or securities or indebtedness convertible into shares of Nonvoting Common
Stock) contemporaneously payable as a dividend in respect of a share of
Nonvoting Common Stock.
3. Voting Rights. The shares of Common Stock shall be fully
voting stock at the rate of one vote for each share of Common Stock held. The
holders of Nonvoting Common Stock shall not be entitled to vote on any matter
submitted to the stockholders of the Corporation except as otherwise expressly
required by law, in which case holders of Nonvoting Common Stock shall vote (at
the rate of one vote for each share of Nonvoting Common Stock held) with
holders of Common Stock as a single class on such matter unless otherwise
required by law.
4. Liquidation. After payment shall have been made in full to
the holders of Preferred Stock in the event of any liquidation, dissolution, or
winding up of the affairs of the Corporation, the remaining assets and funds of
the Corporation shall be distributed among the holders of the Common Stock and
Nonvoting Common Stock according to their respective shares. For the purposes
of this Section C.4 neither the merger nor the consolidation of the Corporation
into or with another corporation, or the merger or consolidation of any other
corporation into or with the Corporation, or the voluntary sale, conveyance,
exchange, transfer, or other disposition (for cash, shares of stock,
securities, or other consideration) of all or substantially all of the property
or assets of the
33
<PAGE> 34
Corporation, shall be deemed to be a voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation.
5. Conversion of Nonvoting Common Stock. Upon the occurrence of a
Qualifying IPO or a Consent Conversion, each share of Nonvoting Common Stock
shall be converted into one share of Common Stock, subject to appropriate
adjustment if there shall be any stock split, reverse stock split, stock
dividend declared to all holders of Common Stock or similar change in Common
Stock after the date hereof. Any such adjustment shall be determined by the
Board of Directors of the Corporation in its sole discretion. Upon or at any
time following the occurrence of a Redemption Conversion, the Board of
Directors of the Corporation may declare, by written notice directed to each
record holder of Nonvoting Common Stock, that each share of Nonvoting Common
Stock shall be converted into one share of Common Stock (subject to appropriate
adjustment in accordance with the first and second sentences hereof) effective
as of the date set forth in such notice. Any conversion of shares of Nonvoting
Common Stock into shares of Common Stock pursuant to this Section C.5 shall be
evidenced by the delivery to the Corporation at its principal executive office
of the duly endorsed certificates representing shares of Nonvoting Common
Stock to be converted. Shares of Nonvoting Common Stock may be converted into
shares of Common Stock only in accordance with this Section C.5. The
Corporation shall at all times reserve and keep available, out of its
authorized stock, solely for the purpose of effecting the conversion of the
Nonvoting Common Stock, such number of shares of its Common Stock, free of
preemptive or similar rights, as shall from time to time be sufficient to
effect the conversion of all shares of Nonvoting Common Stock from time to time
outstanding. The Corporation shall from time to time, in accordance with the
laws of the State of Delaware, increase the authorized number of shares of
Common Stock if at any time the number of authorized and unissued shares of
Common Stock shall not be sufficient to permit the conversion of all the then
outstanding shares of Nonvoting Common Stock.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]
34
<PAGE> 35
EXHIBIT A1
FORM OF 10% JUNIOR SUBORDINATED DEBENTURE
THIS 10% JUNIOR SUBORDINATED DEBENTURE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT OR ANY APPLICABLE STATE SECURITIES
LAWS OR THE RULES AND REGULATIONS THEREUNDER.
NEODATA CORPORATION
10% JUNIOR SUBORDINATED DEBENTURE
DUE MAY 1, 2004
$ , 19
------------- ------------ --
FOR VALUE RECEIVED, Neodata Corporation, a Delaware corporation
("Maker"), hereby promises to pay to ("Payee"),
---------------------------------
at or such other place as Payee
-----------------------------------------------
may designate from time to time in writing to Maker, the principal sum of
Dollars ($ ), in lawful money of
- - ---------------------------------- -----------
the United States of America in immediately available funds, on May 1, 2004
(the "Final Maturity Date"), together with interest on the principal balance
hereof at a rate of the lesser of (i) ten percent (10%) per annum or (ii) the
highest rate allowed by applicable law.
1. Payment of Principal and Interest. The principal of and interest upon
this Debenture shall be due and payable as follows:
(a) Interest on the unpaid principal balance hereof from time to
time outstanding shall accrue from the date hereof on a quarterly basis at the
annual rate set forth above and shall be payable in equal quarterly
installments on the last day of March, June, September, and December of each
year (unless such day is not a business day, in which event on the next
succeeding business day) (each, an
A1-1
<PAGE> 36
"Interest Payment Date"), commencing on the first Interest Payment Date
occurring after the date hereof, to Payee as of such Interest Payment Date.
(b) Subject to paragraph 2, the principal amount of this Debenture,
together with all accrued and unpaid interest thereon, shall become due and
payable in full upon the earliest to occur of (i) the dissolution, liquidation,
or winding up of Maker, (ii) the expiration of 365 days after the payment or
other discharge of Senior Notes (as hereinafter defined) representing more than
90% of the aggregate principal amount of all such Senior Notes outstanding as of
November 1, 1994, and (iii) the Final Maturity Date.
(c) Notwithstanding the foregoing, Maker may prepay this Debenture,
in whole or in part, without premium, penalty, or fee.
2. Subordination.
(a) Debenture Subordinated to Senior Debt. Maker, for itself and
its successors, and Payee, by its acceptance of this Debenture, agree that the
payment of the principal of and interest (including any post-petition interest
accrued following the filing of any action under a Debtor Relief Law (as
hereinafter defined)) on this Debenture by Maker is subordinated and subject in
right of payment, to the extent and in the manner provided herein, to the prior
payment of Senior Debt (as hereinafter defined). The term "Senior Debt" means
all the indebtedness and obligations of Maker including, without limitation,
Maker's senior indebtedness issued pursuant to the terms and conditions of any
senior bank facility and all other indebtedness for borrowed money, purchase
money indebtedness, or indebtedness under capitalized leases, whether now
existing or hereafter incurred, and any debt incurred in replacement,
refinancing, extension, or refunding thereof, in each case in respect of Maker
or any subsidiary thereof. The term "Debtor Relief Laws" means the Bankruptcy
Code of the United States, as amended, and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally.
This Debenture will constitute a continuing offer to all
persons who, in reliance upon its provisions, become holders of, or continue
to hold, Senior Debt, and such provisions are made for the benefit of the
holders of Senior Debt, and such holders are made obligees under this paragraph
2 of the Debenture and they and/or each of them may enforce the provisions of
this paragraph 2.
A1-2
<PAGE> 37
(b) No Cash Payment on Debenture in Certain Circumstances.
(i) No cash payment will be made on account of principal of
or interest on this Debenture, or to acquire this Debenture for cash,
securities, or property, or on account of the redemption or repayment of
this Debenture, (x) upon the maturity of any Senior Debt by lapse of
time, acceleration, or otherwise, unless and until all principal thereof
and interest thereon shall first be paid in full in cash, or such
payment duly provided for in cash, or (y) in the event that Maker
defaults in the payment of any principal of or interest on or any other
amounts payable on or due in connection with any Senior Debt when it
becomes due and payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise, unless and until such default
has been cured or waived in writing.
(ii) Upon the happening of an event of default (or if an event
of default would result upon any payment with respect to this Debenture)
with respect to any Senior Debt, as such event of default is defined in
the instrument evidencing such Senior Debt or under which it is
outstanding, or any related document, permitting the holder to
accelerate its maturity (if the default is other than a default in
payment of the principal of or interest on or other amount due in
connection with such Senior Debt), upon written notice of the event of
default given to Maker by the holders of any such Senior Debt, then,
unless and until such event of default has been cured or waived in
writing, no cash payment will be made by Maker with respect to the
principal of or interest on this Debenture or to acquire this Debenture
for cash, property, or securities.
(iii) If any cash payment or distribution of assets of Maker is
received by the Payee at a time when that payment or distribution should
not have been made because of subparagraphs (b)(i) or (b)(ii)
immediately above, such payment or distribution will be received and
held in trust for and will be paid over to the holders of Senior Debt
which is due and payable and remains unpaid or unprovided for (pro rata
as to each of such holders on the basis of the respective amounts of
Senior Debt which is due and payable held by them) until all such Senior
Debt has been paid in full or provided for in cash, after giving effect
to any concurrent payment or distribution or provision therefor to the
holders of such Senior Debt.
(c) Debenture Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation, or Reorganization. Upon any distribution of assets of
A1-3
<PAGE> 38
Maker upon any dissolution, winding up, liquidation, or reorganization of Maker
(whether in bankruptcy, insolvency, receivership, or similar proceeding related
to Maker or its property or upon an assignment for the benefit of creditors or
otherwise):
(i) the holders of all Senior Debt will first be entitled to
receive payment in full in cash of the principal of and interest due on
Senior Debt and other amounts due in connection with Senior Debt
(including interest accruing subsequent to the filing of a petition
under applicable bankruptcy, insolvency, or other similar law or the
appointment of a liquidator, custodian, receiver, assignee, trustee,
sequestrator (or similar official) of Maker or ordering of the winding
up or liquidation of the affairs of Maker) at the rate provided for in
the documents governing the Senior Debt, whether or not such interest is
an allowed claim enforceable against the debtor in a bankruptcy case
under Title 11 of the United States Code, before the Payee of this
Debenture is entitled to receive any payment on account of the principal
of or interest on this Debenture;
(ii) any payment or distributions of assets of Maker of any
kind or character, whether in cash, property, or securities, to which
the Payee of this Debenture would be entitled except for the provisions
of this Debenture will be paid by the liquidating trustee or agent or
other person making such a payment or distribution directly to the
holders of Senior Debt or their representatives to the extent necessary
to make payment in full in cash of all Senior Debt remaining unpaid,
after giving effect to any concurrent payment or distribution or
provision therefor to the holders of such Senior Debt; and
(iii) if, notwithstanding the foregoing, any payment or
distribution of assets of Maker of any kind or character, whether in
cash, property, or securities is received by the Payee on account of
principal of or interest on this Debenture before all Senior Debt is
paid in full or provided for in cash, such payment or distribution will
be received and held in trust for and will be paid over to the holders
of the Senior Debt remaining unpaid or unprovided for or their
representatives for application to the payment of such Senior Debt until
all such Senior Debt has been paid in full or provided for in cash,
after giving effect to any concurrent payment or distribution or
provision therefor to the holders of such Senior Debt.
A1-4
<PAGE> 39
Maker will give prompt written notice to the Payee of any
dissolution, winding up, liquidation, or reorganization of it or any assignment
for the benefit of its creditors and of any event of default in respect of
Senior Debt.
(d) Payee of Debenture to Be Subrogated to Rights of Payees of Senior
Debt. Following the payment in full in cash or provision for payment in full of
all Senior Debt, the Payee will be subrogated to the rights of the holders of
Senior Debt to receive payments or distributions of assets of Maker applicable
to the Senior Debt until all amounts owing on this Debenture shall be paid in
full; and, for the purpose of such subrogation, no such payments or
distributions to the holders of Senior Debt by or on behalf of Maker or by or
on behalf of the Payee by virtue of this Debenture which otherwise would have
been made to the Payee will, as between Maker and the Payee, be deemed to be a
payment by Maker to or on account of this Debenture, it being understood that
the provisions of this paragraph 2 are and are intended solely for the purpose
of defining the relative rights of the Payee, on the one hand, and the payees
of the Senior Debt, on the other hand.
(e) Obligations of Maker Unconditional. Nothing contained in this
Debenture or elsewhere is intended to or will impair, as between Maker and the
Payee, the obligations of Maker, which are absolute and unconditional, to pay
to the Payee the principal of and interest on this Debenture as and when they
become due and payable in accordance with their terms, or is intended to or
will affect the relative rights of the Payee and creditors of Maker other than
the holders of the Senior Debt, nor will anything herein or therein prevent the
Payee from exercising all remedies otherwise permitted by applicable law upon
default under this Debenture, subject to the rights, if any, under this
paragraph 2 of the holders of Senior Debt in respect of cash, property, or
securities of Maker received upon the exercise of any such remedy.
(f) Subordination Rights Not Impaired by Acts or Omissions of Maker or
Holders of Senior Debt. No right of any present or future holder of any Senior
Debt to enforce subordination as provided herein will at any time in any way be
prejudiced or impaired by any act or failure to act on the part of Maker or by
any act or failure to act by any such holder, or by any noncompliance by Maker
with the terms of this Debenture, regardless of any knowledge thereof which
any such holder may have or otherwise be charged with. The holders of Senior
Debt may extend, renew, modify, or amend the terms of the Senior Debt or any
note therefor and release, sell, or exchange such note and otherwise deal
freely with Maker all without affecting the liabilities and obligations of the
Payee. No amendment to
A1-5
<PAGE> 40
these provisions will be effective against the holders of any Senior Debt who
have not consented thereto in writing.
3. No Director, Officer, or Stockholder Liability. No recourse shall be
had for the payment of the principal of, or the interest on, this Debenture, or
for any claims based hereon or otherwise in respect hereof, against any past,
present, or future incorporator, stockholders, officer, or director of Maker;
such liability being, by acceptance and as a part of the consideration for the
issuance hereof, expressly released.
4. Compliance with Usury Laws. Any provision herein, or any other
document executed or delivered in connection herewith, or in any other agreement
or commitment, whether written or oral, expressed or implied, to the contrary
notwithstanding, Payee shall not in any event be entitled to receive or
collect, nor shall or may amounts received hereunder be credited, so that Payee
shall be paid, as interest, a sum greater than the maximum amount permitted by
applicable law to be charged to the person, partnership, firm, or corporation
primarily obligated to pay the Maker's obligations under this Debenture (the
"Obligations") at the time in question. If any construction of this
Debenture, or any other document executed or delivered in connection herewith,
indicates a different right given to Payee to ask for, demand, or receive any
larger sum as interest, such is a mistake in calculation or wording which this
clause shall override and control, it being the intention of Maker and Payee
that this Debenture and any other documents executed in connection herewith
conform strictly to applicable usury laws. In no event shall the amount treated
as the total interest exceed the maximum amount of interest which may be
lawfully contracted for, charged, taken, received, or reserved by Payee in
accordance with the applicable usury laws, taking into account all items which
are treated as interest under applicable law, computed in the aggregate over
the full term of the loan evidenced hereby. In the event that the aggregate of
all consideration which constitutes interest under applicable law that is taken,
reserved, contracted for, charged, or received under this Debenture and any
other documents executed in connection herewith shall ever exceed the maximum
nonusurious rate under applicable law, any sum in excess thereof shall be
applied to the reduction of the unpaid principal balance of the Maker's
Obligations and if the Maker's Obligations are paid in full, any remaining
excess shall be paid to Maker. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the maximum nonusurious
rate under applicable law, if any, Maker and Payee shall, to the maximum extent
permitted under applicable law, (a) characterize any nonprincipal amount as an
expense or fee rather than as interest, (b) exclude voluntary prepayments and
the effects
A1-6
<PAGE> 41
thereof, or (c) "spread" the total amount of interest throughout the entire
term of the Maker's Obligations so that the interest rate is uniform throughout
the entire term of the Maker's Obligations; provided, however, that if the
Maker's Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds the maximum nonusurious rate, if any, Payee shall
refund to Maker the amount of such excess.
5. Governing Law. This Debenture shall be deemed to be a contract made
under the laws of the State of Texas, and for all purposes shall be governed
by, and shall be construed in accordance with, the internal laws of such state,
without regard to the conflicts of law principles hereof.
6. Waiver. Maker and every guarantor and endorser hereof hereby waive
presentment, demand, notice of nonpayment, notice of dishonor, notice of intent
to accelerate, notice of acceleration, protest, and all other demands and
notices in connection with the delivery, acceptance, performance, and
enforcement of this Debenture. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed and delivered on its behalf by its officer thereunto duly authorized
as of the date first above written.
NEODATA CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
A1-7
<PAGE> 1
EXHIBIT 10.2
================================================================================
CREDIT AGREEMENT
among
NEODATA CORPORATION,
NEODATA CREATIVE SERVICES, INC.,
NEODATA INVESTMENT SERVICES, INC. NO. 1,
NEODATA INVESTMENT SERVICES, INC. NO. 2,
VARIOUS BANKS
and
BANKERS TRUST COMPANY,
as AGENT
---------------------------------------
Dated as of February 24, 1997
---------------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 The Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.09 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.12 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.13 Replacement of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2. Fees; Reductions of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.02 Mandatory Reduction of Term Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. Prepayments; Payments; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.02 Mandatory Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4. Conditions Precedent to Term Loans on the Initial Borrowing Date . . . . . . . . . . . . . . . . . . 18
4.01 Execution of Agreement; Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.02 Fees, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.03 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.04 Corporate Documents; Proceedings; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Collective Bargaining Agreements;
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Tax Allocation Agreements; Existing Debt Agreements . . . . . . . . . . . . . . . . . . . 20
4.06 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.07 Existing Credit Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.08 Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.09 Pledge Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.10 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.11 Consent Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.13 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.14 Solvency Certificate; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.15 Pro Forma Balance Sheet; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 5. Conditions Precedent to the Incurrence of Term Loans After
the Initial Borrowing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.01 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6. Conditions Precedent to all Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.01 No Default; Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.02 Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 7. Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.04 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.07 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.09 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.11 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.12 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.13 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.15 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.16 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.17 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.19 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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7.20 Patents, Licenses, Franchises and Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.21 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.22 Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.23 Representations and Warranties in Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.24 Special Purpose Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.02 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.05 Compliance with Statutes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.06 Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.07 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.09 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.12 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.13 Acknowledgment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.14 NSI Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. . . . . . . . . . . . . . . . . . . . . . . 49
9.03 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.04 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.05 Advances, Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.07 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.08 Minimum Consolidated Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.09 Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.10 Limitation on Modifications of Indebtedness and Payments of
Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Other Agreements;
etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.11 Limitation on Certain Restrictions on Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.12 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
9.13 Changes in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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9.14 Limitation on Creation of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 10. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.02 Representations,etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.04 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.07 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.08 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.09 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.10 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11. Definitions and Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.03 Lack of Reliance on the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.04 Certain Rights of the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.07 The Agent in its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.09 Resignation by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
13.01 Payment of Expenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
13.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
13.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
13.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
13.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
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13.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.12 Amendment or Waiver; etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.15 Limitation on Additional Amounts, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.17 Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
13.18 Post-Closing Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 14. Parents Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
14.01 The Parents Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
14.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
14.03 Nature of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
14.04 Independent Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
14.05 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
14.06 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
14.07 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
14.08 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
14.09 Nature of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
</TABLE>
SCHEDULE I List of Banks
SCHEDULE II Bank Addresses
SCHEDULE III Subsidiaries
SCHEDULE IV Existing Indebtedness
SCHEDULE V Insurance
SCHEDULE VI Existing Liens
SCHEDULE VII Existing Investments
EXHIBIT A Notice of Borrowing
EXHIBIT B Term Note
EXHIBIT C Section 3.04(b)(iii) Certificate
EXHIBIT D Opinion of Weil, Gotshal & Manges LLP, Special
Counsel to the Credit Parties
EXHIBIT E Officers' Certificate
EXHIBIT F Subsidiary Guaranty
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EXHIBIT G-1 Amended and Restated Neodata Pledge Agreement
EXHIBIT G-2 Holdings/Sub Pledge Agreement
EXHIBIT H Security Agreement
EXHIBIT I Consent Letter
EXHIBIT J Solvency Certificate
EXHIBIT K Assignment and Assumption Agreement
EXHIBIT L Acknowledgement Agreement
EXHIBIT M Subordination Provisions
(vi)
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CREDIT AGREEMENT, dated as of February 24, 1997, among NEODATA
CORPORATION, a Delaware corporation ("Neodata"), NEODATA CREATIVE SERVICES,
INC., a Delaware corporation ("Holdings"), NEODATA INVESTMENT SERVICES, INC.
NO. 1, a Delaware corporation ("NIS No.1"), NEODATA INVESTMENT SERVICES, INC.
NO. 2, a Delaware corporation ("NIS No. 2" and together with NIS No.1, the
"Acquisition Corps."), the Banks party hereto from time to time and BANKERS
TRUST COMPANY, as Agent (all capitalized terms used herein and defined in
Section 11 are used herein as therein defined).
WITNESSETH:
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Banks are willing to make available to the Borrowers the credit
facility provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitment. Subject to and upon the terms and conditions
set forth herein, each Bank severally agrees to make, (x) on the Initial
Borrowing Date and (y) on a single date occurring after the Initial Borrowing
Date and on or prior to the Term Loan Availability Termination Date (each date
upon which Term Loans are made, a "Term Loan Borrowing Date"), a term loan or
term loans (each, a "Term Loan" and, collectively, the "Term Loans") to the
Borrowers, which Term Loans (i) made on either Term Loan Borrowing Date, shall,
at the option of the Borrowers, be Base Rate Loans or Eurodollar Loans,
provided that except as otherwise specifically provided in Section 1.10(b), all
Term Loans comprising the same Borrowing shall at all times be of the same Type
and (ii) made on either Term Loan Borrowing Date, shall not exceed for any
Bank, in initial principal amount for the Term Loans being made by such Bank on
any such Term Loan Borrowing Date, that amount which equals the remaining Term
Loan Commitment, if any, of such Bank as in effect on such Term Loan Borrowing
Date (before giving effect to any reductions thereto on such date pursuant to
Section 2.02(b)(i) or (ii), but after giving effect to any reductions thereto
on or prior to such date pursuant to Section 2.02(b)(iii). Once repaid, Term
Loans incurred hereunder may not be reborrowed.
<PAGE> 9
1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing of Term Loans shall not be less than $200,000 (and, if
greater, shall be in an integral multiple of $50,000). More than one Borrowing
may occur on the same date, but at no time shall there be outstanding more than
six Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrowers desire to
incur a Borrowing hereunder, an Authorized Representative shall give the Agent
at its Notice Office on the date that a Base Rate Loan is to be made prior
written notice (or telephonic notice promptly confirmed in writing) of each
Base Rate Loan and at least three Business Days' prior written (or telephonic
notice promptly confirmed in writing) notice of each Eurodollar Loan to be made
hereunder, provided that any such notice shall be deemed to have been given on
a certain day only if given before 12:00 Noon (New York time) on such day. Each
such written notice or written confirmation of telephonic notice (each a
"Notice of Borrowing"), except as otherwise expressly provided in Section 1.10,
shall be irrevocable and shall be given by the Borrowers in the form of Exhibit
A, appropriately completed to specify the aggregate principal amount of the
Term Loans to be incurred pursuant to such Borrowing, the date of such
Borrowing (which shall be a Business Day) and whether the Term Loans being
incurred pursuant to such Borrowing are to be initially maintained as Base Rate
Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest Period
to be applicable thereto. The Agent shall promptly give each Bank notice of the
proposed Borrowing, of such Bank's proportionate share thereof and of the other
matters required by the immediately preceding sentence to be specified in the
Notice of Borrowing.
(b) Without in any way limiting the obligation of the Borrowers to
confirm in writing any telephonic notice permitted to be given hereunder, the
Agent may act without liability upon the basis of telephonic notice of such
Borrowing, believed by the Agent in good faith to be from an Authorized
Representative prior to receipt of written confirmation. In each such case,
each Borrower hereby waives the right to dispute the Agent's record of the
terms of such telephonic notice.
1.04 Disbursement of Funds. No later than 2:00 P.M. (New York time)
on the date specified in each Notice of Borrowing, each Bank will make
available its pro rata portion of each such Borrowing requested to be made on
such date in the manner provided below. All such amounts shall be made
available in Dollars and in immediately available funds at the Payment Office
of the Agent, and the Agent will make available to the Borrowers at the Payment
Office the aggregate of the amounts so made available by the Banks (prior to
3:00 P.M. on such day, to the extent of funds actually received by the Agent
prior to 2:00 P.M. on such day). Unless the Agent shall have been notified by
any Bank prior to the date of Borrowing that such Bank does not
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intend to make available to the Agent such Bank's portion of any Borrowing to
be made on such date, the Agent may assume that such Bank has made such amount
available to the Agent on such date of Borrowing and the Agent may, in reliance
upon such assumption, make available to the Borrowers a corresponding amount.
If such corresponding amount is not in fact made available to the Agent by such
Bank and the Agent has made available the same to the Borrowers, the Agent
shall be entitled to recover such corresponding amount on demand from such
Bank. If such Bank does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent shall promptly notify the Borrowers and the
Borrowers shall immediately pay such corresponding amount to the Agent. The
Agent shall also be entitled to recover on demand from such Bank or the
Borrowers, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Agent to the Borrowers until the date such corresponding amount is recovered by
the Agent, at a rate per annum equal to (i) if recovered from such Bank, at the
overnight Federal Funds Rate and (ii) if recovered from the Borrowers, the rate
of interest applicable to the respective Borrowing, as determined pursuant to
Section 1.08. Nothing in this Section 1.04 shall be deemed to relieve any Bank
from its obligation to make Term Loans hereunder or to prejudice any rights
which the Borrowers may have against any Bank as a result of any failure by
such Bank to make Term Loans hereunder.
1.05 Notes. (a) The Borrowers' obligation to pay the principal of,
and interest on, the Term Loans made by each Bank shall be evidenced by a
promissory note duly executed and delivered by the Borrowers substantially in
the form of Exhibit B, with blanks appropriately completed in conformity
herewith (each, a "Term Note" and, collectively, the "Term Notes").
(b) The Term Note issued to each Bank shall (i) be executed by the
Borrowers, (ii) be payable to the order of such Bank or its registered assigns
and be dated the Initial Borrowing Date, (iii) be in a stated principal amount
equal to the Term Loan Commitment of such Bank as in effect on the Initial
Borrowing Date (before giving effect to any reductions thereto as a result of
the making of Term Loans by such Bank on such date) and be payable in the
principal amount of the Term Loans evidenced thereby, (iv) mature on the Final
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.08 in respect of the Base Rate Loans and Eurodollar Loans, as the
case may be, evidenced thereby, (vi) be subject to voluntary prepayment as
provided in Section 3.01, and mandatory repayment as provided in Section 3.02
and (vii) be entitled to the benefits of this Agreement and the other Credit
Documents.
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(c) Each Bank will note on its internal records the amount of each
Term Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Term Notes endorse on the reverse side thereof the
outstanding principal amount of Term Loans evidenced thereby. Failure to make
any such notation or endorsement or any error in any such notation or
endorsement shall not affect the Borrowers' obligations in respect of such Term
Loans.
1.06 Conversations. The Borrowers shall have the option to convert,
on any Business Day occurring after the Initial Borrowing Date, all or a
portion equal to at least $200,000 (and, if greater, in an integral multiple of
$50,000) of the outstanding principal amount of Term Loans made pursuant to one
or more Borrowings of one or more Types of Term Loans into a Borrowing of
another Type of Term Loan, provided that (i) except as otherwise provided in
Section 1.10(b), Eurodollar Loans may be converted into Base Rate Loans only on
the last day of an Interest Period applicable to the Term Loans being converted
and no such partial conversion of Eurodollar Loans shall reduce the outstanding
principal amount of such Eurodollar Loans made pursuant to a single Borrowing
to less than $200,000, (ii) Base Rate Loans may only be converted into
Eurodollar Loans if no Default or Event of Default is in existence on the date
of the conversion and (iii) no conversion pursuant to this Section 1.06 shall
result in a greater number of Eurodollar Borrowings than is permitted under
Section 1.02. Each such conversion shall be effected by the Borrowers by giving
the Agent at its Notice Office prior to 1:00 P.M. (New York time) at least
three Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) (each a "Notice of Conversion") specifying the Term Loans
to be so converted, the Borrowing or Borrowings pursuant to which such Term
Loans were made and, if to be converted into Eurodollar Loans, the Interest
Period to be initially applicable thereto. The Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its Term Loans.
1.07 Pro Rata Borrowings. All Borrowings of Term Loans under this
Agreement shall be incurred from the Banks pro rata on the basis of their Term
Loan Commitments. It is understood that no Bank shall be responsible for any
default by any other Bank of its obligation to make Term Loans hereunder and
that each Bank shall be obligated to make the Term Loans provided to be made by
it hereunder, regardless of the failure of any other Bank to make its Term
Loans hereunder.
1.08 Interest. (a) The Borrowers jointly and severally agree to pay
interest in respect of the unpaid principal amount of each Base Rate Loan from
the date the proceeds thereof are made available to the Borrowers until the
earlier of (i) the maturity (whether by acceleration or otherwise) of such Base
Rate Loan and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan
pursuant to Section 1.06, at
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a rate per annum which shall be equal to the sum of the Applicable Margin plus
the Base Rate in effect from time to time.
(b) The Borrowers jointly and severally agree to pay interest in
respect of the unpaid principal amount of each Eurodollar Loan from the date
the proceeds thereof are made available to the Borrowers until the earlier of
(i) the maturity (whether by acceleration or otherwise) of such Eurodollar Loan
and (ii) the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to
Section 1.06, 1.09 or 1.10, as applicable, at a rate per annum which shall,
during each Interest Period applicable thereto, be equal to the sum of the
Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Term Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to the
greater of (x) 2% per annum in excess of the rate otherwise applicable to Base
Rate Loans from time to time and (y) the rate which is 2% in excess of the rate
then borne by such Term Loans, in each case with such interest to be payable on
demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on (x) the date of any
conversion into a Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10(b), as
applicable (on the amount converted) and (y) the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each Term Loan, on any
repayment or prepayment (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Agent shall
determine the Eurodollar Rate for each Interest Period applicable to Eurodollar
Loans and shall promptly notify the Borrowers and the Banks thereof. Each such
determination shall, absent manifest error, be final and conclusive and binding
on all parties hereto.
1.09 Interest Periods. At the time it gives any Notice of Borrowing
or any Notice of Conversion in respect of the making of, or conversion into, a
Borrowing of Eurodollar Loans (in the case of the initial Interest Period
applicable thereto) or on the third Business Day prior to the expiration of an
Interest Period applicable to a Borrowing of Eurodollar Loans (in the case of
any subsequent Interest Period), the Borrowers shall have the right to elect,
by giving the Agent written notice (or telephonic notice promptly confirmed in
writing) thereof, the interest period (each an
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"Interest Period") applicable to such Eurodollar Loan, which Interest Period
shall, at the option of the Borrowers, be a one, two, three or six-month
period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at
all times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan
shall commence on the date of Borrowing of such Eurodollar Loan
(including the date of any conversion thereto from a Term Loan of a
different Type) and each Interest Period occurring thereafter in
respect of such Eurodollar Loan shall commence on the day on which the
next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan
begins on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period, such Interest
Period shall end on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day; provided, however, that if any
Interest Period for a Eurodollar Loan would otherwise expire on a day
which is not a Business Day but is a day of the month after which no
further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(v) no Interest Period may be selected at any time when a
Default or Event of Default is then in existence;
(vi) no Interest Period shall be selected which extends
beyond the Final Maturity Date; and
(vii) no Interest Period shall be selected which extends
beyond any Scheduled Repayment Date, if, after giving effect to the
selection of such Interest Period, the aggregate principal amount of
Term Loans maintained as Eurodollar Loans with Interest Periods ending
after such date would exceed the aggregate principal amount of Term
Loans permitted to be outstanding immediately after such Scheduled
Repayment Date.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrowers have failed to elect, or are not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the
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<PAGE> 14
Borrowers shall be deemed to have elected to convert such Eurodollar Loans into
Base Rate Loans effective as of the expiration date of such current Interest
Period.
1.10 Increased Costs, Illegality, etc, (a) In the event that any
Bank shall have determined (which determination shall, absent manifest error,
be final and conclusive and binding upon all parties hereto but, with respect
to clause (i) below, may be made only by the Agent):
(i) on any Interest Determination Date that, by reason of
any changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased
costs or reductions in the amounts received or receivable hereunder
with respect to any Eurodollar Loan because of (x) any change since
the date of this Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or not having the
force of law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, order, guideline or request, including, but not limited
to: (A) a change in the basis of taxation of payment to any Bank of
the principal of or interest on such Eurodollar Loan or any other
amounts payable hereunder (except for changes in the rate of tax on,
or determined by reference to, the net income or profits of such Bank,
or any franchise tax based on the net income or profits of such Bank,
in either case pursuant to the laws of the United States of America,
the jurisdiction in which it is organized or in which its principal
office or applicable lending office is located or any subdivision
thereof or therein), but without duplication of any amounts payable in
respect of Taxes pursuant to Section 3.04(a), or (B) a change in
official reserve requirements, but, in all events, excluding reserves
required under Regulation D to the extent included in the computation
of the Eurodollar Rate and/or (y) other circumstances since the date
of this Agreement affecting such Bank or the interbank Eurodollar
market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental
rule, regulation or order, (y) impossible by compliance by any Bank in
good faith with any governmental request (whether or not having force
of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely
affects the interbank Eurodollar market;
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<PAGE> 15
then, and in any such event, such Bank (or the Agent, in the case of clause (i)
above) shall promptly give notice (by telephone confirmed in writing) to the
Borrowers and, except in the case of clause (i) above, to the Agent of such
determination (which notice the Agent shall promptly transmit to each of the
other Banks). Thereafter (x) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the Agent notifies the
Borrowers and the Banks that the circumstances giving rise to such notice by
the Agent no longer exist, and any Notice of Borrowing or Notice of Conversion
given by the Borrowers with respect to Eurodollar Loans which have not yet been
incurred (including by way of conversion), shall be deemed rescinded by the
Borrowers, (y) in the case of clause (ii) above, the Borrowers jointly and
severally agree, subject to the provisions of Section 13.15 (to the extent
applicable), to pay to such Bank, upon written demand therefor, such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Bank in its sole discretion shall
determine) as shall be required to compensate such Bank for such increased
costs or reductions in amounts received or receivable hereunder (a written
notice as to the additional amounts owed to such Bank, showing the basis for
the calculation thereof, submitted to the Borrowers by such Bank in good faith
shall, absent manifest error, be final and conclusive and binding on all the
parties hereto) and (z) in the case of clause (iii) above, the Borrowers shall
take one of the actions specified in Section 1.10(b) as promptly as possible
and, in any event, within the time period required by law. Each of the Agent
and each Bank agrees that if it gives notice to the Borrowers of any of the
events described in clause (i) or (iii) above, it shall promptly notify the
Borrowers and, in the case of any such Bank, the Agent, if such event ceases to
exist. If any such event described in clause (iii) above ceases to exist as to
a Bank, the obligations of such Bank to make Eurodollar Loans and to convert
Base Rate Loans into Eurodollar Loans on the terms and conditions contained
herein shall be reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrowers may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Agent telephonic notice (confirmed in writing) on the
same date that the Borrowers were notified by the affected Bank or the Agent
pursuant to Section 1.10(a)(ii) or (iii) or (y) if the affected Eurodollar
Loan is then outstanding, upon at least three Business Days' written notice to
the Agent, require the affected Bank to convert such Eurodollar Loan into a
Base Rate Loan, provided that, if more than one Bank is affected at any time,
then all affected Banks must be treated the same pursuant to this Section
1.10(b).
(c) If at any time after the date of this Agreement any Bank
determines that the introduction of or any change in any applicable law or
governmental
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<PAGE> 16
rule, regulation, order, guideline, directive or request (whether or not having
the force of law) concerning capital adequacy, or any change in interpretation
or administration thereof by any governmental authority, central bank or
comparable agency, will have the effect of increasing the amount of capital
required or expected to be maintained by such Bank or any corporation
controlling such Bank based on the existence of such Bank's Term Loan
Commitment hereunder or its obligations hereunder, then the Borrowers jointly
and severally agree, subject to the provisions of Section 13.15 (to the extent
applicable), to pay to such Bank, upon its written demand therefor, such
additional amounts as shall be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such other corporation or
the reduction in the rate of return to such Bank or such other corporation as a
result of such increase of capital. In determining such additional amounts,
each Bank will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable, provided that such Bank's reasonable
good faith determination of compensation owing under this Section 1.10(c)
shall, absent manifest error, be final and conclusive and binding on all the
parties hereto. Each Bank, upon determining that any additional amounts will be
payable pursuant to this Section 1.10(c), will give prompt written notice
thereof to the Borrowers, which notice shall show the basis for calculation of
such additional amounts.
1.11 Compensation. The Borrowers jointly and severally agree,
subject to the provisions of Section 13.15 (to the extent applicable), to
compensate each Bank, upon its written request (which request shall set forth
the basis for requesting such compensation), for all reasonable losses,
expenses and liabilities (including, without limitation, any loss, expense or
liability incurred by reason of the liquidation or reemployment of deposits or
other funds required by such Bank to fund its Eurodollar Loans but excluding
any loss of anticipated profit) which such Bank may sustain: (i) if for any
reason (other than a default by such Bank or the Agent) a Borrowing of, or
conversion from or into, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether or not
withdrawn by the Borrowers or deemed withdrawn pursuant to Section 1.10(a));
(ii) if any repayment (including any repayment made pursuant to Section 3.01 or
3.02 or as a result of an acceleration of the Term Loans pursuant to Section
10) or conversion of any of its Eurodollar Loans occurs on a date which is not
the last day of an Interest Period with respect thereto; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date specified in
a notice of prepayment given by the Borrowers; or (iv) as a consequence of (x)
any other default by the Borrowers to repay the Term Loans when required by the
terms of this Agreement or any Term Note held by such Bank or (y) any election
made pursuant to Section 1.10(b).
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<PAGE> 17
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c) or Section 3.04 with respect to such Bank, it will, if
requested by the Borrowers, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any Term
Loans affected by such event, provided that such designation is made on such
terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of such Section. Nothing in this Section
1.12 shall affect or postpone any of the obligations of the Borrowers or the
right of any Bank provided in Sections 1.10 and 3.04.
1.13 Replacement of Banks. (x) Upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c)
or Section 3.04 with respect to any Bank which results in such Bank charging to
the Borrowers increased costs in excess of those being generally charged by the
other Banks or (y) as provided in Section 13.12(b) in the case of certain
refusals by a Bank to consent to certain proposed changes, waivers, discharges
or terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrowers shall have the right, if no Default or Event of
Default will exist immediately after giving effect to the respective
replacement, to replace such Bank (the "Replaced Bank") with one or more other
Eligible Transferee or Transferees (collectively, the "Replacement Bank")
reasonably acceptable to the Agent, provided that (i) at the time of any
replacement pursuant to this Section 1.13, the Replacement Bank shall enter
into one or more Assignment and Assumption Agreements pursuant to Section
13.04(b) (and with all fees payable pursuant to said Section 13.04(b) to be
paid by the Replacement Bank) pursuant to which the Replacement Bank shall
acquire the Term Loan Commitment and outstanding Term Loans of the Replaced
Bank and, in connection therewith, shall pay to the Replaced Bank in respect
thereof an amount equal to the sum of (A) an amount equal to the principal of,
and all accrued interest on, all outstanding Term Loans of the Replaced Bank
and (B) an amount equal to all accrued, but theretofore unpaid, Fees owing to
the Replaced Bank pursuant to Section 2.01, and (ii) all obligations of the
Borrowers owing to the Replaced Bank (other than those specifically described
in clause (i) above in respect of which the assignment purchase price has been,
or is concurrently being, paid) shall be paid in full to such Replaced Bank
concurrently with such replacement. Upon the execution of the respective
Assignment and Assumption Agreements, the payment of amounts referred to in
clauses (i) and (ii) above, the recordation of the assignment on the Register
by the Agent pursuant to Section 13.17 and, if so requested by the Replacement
Bank, delivery to the Replacement Bank of the appropriate Term Note or Term
Notes executed by the Borrowers, the Replacement Bank shall become a Bank
hereunder and the Replaced Bank shall cease to constitute a Bank hereunder,
except with respect to indemnification provisions under this Agreement
(including, with-
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<PAGE> 18
out limitation, Sections 1.10, 1.11, 3.04, 12.06 and 13.01), which shall
survive as to such Replaced Bank.
SECTION 2. Fees; Reductions of Commitment.
2.01 Fees. (a) The Borrowers jointly and severally agree to pay to
the Agent for distribution to each Bank a commitment commission (the
"Commitment Commission") for the period from the Effective Date to and
including the Term Loan Availability Termination Date (or such earlier date as
the Total Term Loan Commitment shall have been terminated), computed at a rate
for each day equal to 1/2 of 1% per annum on the daily average Unutilized Term
Loan Commitment of such Bank. Accrued Commitment Commission shall be due and
payable quarterly in arrears on each Quarterly Payment Date and on the Term
Loan Availability Termination Date or such earlier date upon which the Total
Term Loan Commitment is terminated.
(b) The Borrowers jointly and severally agree to pay to the Agent,
for its own account, such fees as have been agreed to in writing by the
Borrowers and the Agent.
2.02 Mandatory Reduction of Term Loan Commitments. (a) The Total
Term Loan Commitment (and the Term Loan Commitment of each Bank) shall
terminate in its entirety on February 28, 1997 unless the Initial Borrowing
Date shall have occurred on or prior to such date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 2.02, the Total Term Loan Commitment (and the Term
Loan Commitment of each Bank) shall (i) be reduced on each Term Loan Borrowing
Date (after giving effect to the incurrence of the Term Loans on such date), in
an amount equal to the aggregate principal amount of Term Loans incurred on
such date, (ii) terminate in its entirety on the Term Loan Availability
Termination Date (after giving effect to the making of Term Loans on or prior
to such date) and (iii) prior to the termination of the Total Term Loan
Commitment as provided above, be reduced from time to time to the extent
required by Section 3.02.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 2.02, on each date after the Effective Date upon which
a mandatory repayment of Term Loans pursuant to Section 3.02 is required (and
exceeds in amount the aggregate principal amount of Term Loans then
outstanding) or would be required if Term Loans were then outstanding, the
Total Term Loan Commitment shall be permanently reduced by the amount, if any,
by which the amount required to be applied pursuant to said Section (determined
as if an unlimited amount of Term Loans were
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<PAGE> 19
actually outstanding) exceeds the aggregate principal amount of Term Loans then
outstanding.
SECTION 3. Prepayments; Payments; Taxes.
3.01 Voluntary Prepayments. The Borrowers shall have the
right to prepay the Term Loans, without premium or penalty, in whole or in part
at any time and from time to time on the following terms and conditions: (i) an
Authorized Representative of the Borrowers shall give the Agent prior to 12:00
Noon (New York time) at its Notice Office (x) on the date that a prepayment of
Base Rate Loans is to be made prior written notice (or telephonic notice
promptly confirmed in writing) of the Borrowers' intent to prepay Base Rate
Loans and (y) at least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of the Borrowers' intent to prepay
Eurodollar Loans, the amount of such prepayment and the Types of Term Loans to
be prepaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice the Agent shall promptly
transmit to each of the Banks; (ii) each prepayment shall be in an aggregate
principal amount of at least $50,000, provided that if any partial prepayment
of Eurodollar Loans made pursuant to any Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount less than
$200,000, then such Borrowing may not be continued as a Borrowing of Eurodollar
Loans and any election of an Interest Period with respect thereto given by the
Borrowers shall have no force or effect; (iii) prepayments of Eurodollar Loans
made pursuant to this Section 3.01 on any day other than the last day of an
Interest Period applicable thereto shall be accompanied by the amounts required
under Section 1.11; (iv) each prepayment in respect of any Term Loans made
pursuant to a Borrowing shall, except as set forth in clause (v) below, be
applied pro rata among such Term Loans; and (v) in the event of certain
refusals by a Bank as provided in Section 13.12(b) to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks, the Borrowers may,
upon 5 Business Days' written notice by an Authorized Representative of the
Borrowers to the Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks) repay all Term Loans, together with
accrued and unpaid interest, Fees, and other amounts owing to such Bank in
accordance with said Section 13.12(b) so long as the consents required by
Section 13.12(b) in connection with the repayment pursuant to this clause (v)
have been obtained.
3.02 Mandatory Repayments. (a) In addition to any other mandatory
repayments or commitment reductions pursuant to this Section 3.02, on each date
on or after the Effective Date on which Holdings or any of its Subsidiaries
receives proceeds from any sale of assets (including capital stock and
securities held thereby, but
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<PAGE> 20
excluding (i) sales or transfers of inventory in the ordinary course of
business, (ii) the sale or other disposition of obsolete equipment, (iii) the
sale of overdue receivables in the ordinary course of business, (iv) the
licensing of general intangibles in the ordinary course of business and (v) the
first $50,000 in Net Sale Proceeds from sales of other assets after the
Effective Date), an amount equal to 100% of the Net Sale Proceeds therefrom
shall be applied as a mandatory repayment and/or commitment reduction in
accordance with the requirements of Section 3.02(d); provided that up to an
aggregate of $100,000 of Net Sale Proceeds in any Fiscal Year shall not be
required to be applied as a mandatory repayment on such date to the extent the
Borrowers elect, as hereinafter provided, to cause such Net Sale Proceeds to be
reinvested in Reinvestment Assets (a "Reinvestment Election"). The Borrowers
may exercise their Reinvestment Election (within the parameters specified in
the preceding sentence) with respect to a sale of assets if (x) no Default or
Event of Default then exists and (y) an Authorized Representative of the
Borrowers delivers a Reinvestment Notice to the Agent within 15 days following
the date of the consummation of the respective sale of assets, with such
Reinvestment Election being effective with respect to the Net Sale Proceeds of
such sale of assets equal to the Anticipated Reinvestment Amount specified in
such Reinvestment Notice.
(b) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 3.02, within 10 days following each date on
or after the Effective Date on which Holdings or any of its Subsidiaries
receives any proceeds from any Recovery Event, an amount equal to 100% of such
proceeds of such Recovery Event (net of reasonable costs, including, without
limitation, legal costs and expenses, and taxes incurred in connection with
such Recovery Event and other than the proceeds of business interruption
insurance) shall be applied as a mandatory repayment and/or commitment
reduction in accordance with the requirements of Section 3.02(d); provided that
(x) so long as no Default or Event of Default then exists and such proceeds do
not exceed $100,000, such proceeds shall not be required to be so applied on
such date to the extent that an Authorized Representative of the Borrowers has
delivered a certificate to the Agent on or prior to such date stating that such
proceeds shall be used or shall be committed to be used to replace or restore
any properties or assets in respect of which such proceeds were paid within one
year following the date of such Recovery Event (which certificate shall set
forth the estimates of the proceeds to be so expended) and (y) so long as no
Default or Event of Default then exists and to the extent that (a) the amount
of such proceeds exceeds $100,000, (b) the amount of such proceeds, together
with other cash available to the Borrowers and permitted to be spent by it on
Capital Expenditures during the relevant period pursuant to Section 9.07
(without regard to Section 9.07(c)(i) in the case of such other cash), equals
100% of the cost of replacement or restoration of the properties or assets in
respect of which such proceeds were paid as determined by the Borrowers and as
supported by such estimates or bids
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<PAGE> 21
from contractors or subcontractors or such other supporting information as the
Agent may reasonably request, (c) an Authorized Representative of the Borrowers
has delivered to the Agent a certificate on or prior to the date the
application would otherwise be required pursuant to this Section 3.02(b) in the
form described in clause (x) above and also certifying its determination as
required by preceding clause (b) and certifying the sufficiency of business
interruption insurance as required by succeeding clause (d), and (d) an
Authorized Representative of the Borrowers has delivered to the Agent such
evidence as the Agent may reasonably request in form and substance reasonably
satisfactory to the Agent establishing that the Borrowers have sufficient
business interruption insurance and that the Borrowers will be receiving
regular payments thereunder in such amounts and at such times as are necessary
to satisfy all obligations and expenses of the Borrowers (including, without
limitation, all debt service requirements, including pursuant to this
Agreement) without any delay or extension thereof, for the period from the date
of the respective casualty, condemnation or other event giving rise to the
Recovery Event and continuing through the completion of the replacement or
restoration of respective properties or assets, then the entire amount of the
proceeds of such Recovery Event and not just the portion in excess of $ 100,000
shall be deposited with the Agent pursuant to a cash collateral arrangement
reasonably satisfactory to the Agent whereby such proceeds shall be disbursed
to the Borrowers from time to time as needed to pay actual costs incurred by it
in connection with the replacement or restoration of the respective properties
or assets (pursuant to such certification requirements as may reasonably be
established by the Agent), provided further, that at any time while an Event of
Default has occurred and is continuing (other than an Event of Default existing
solely as a result of the violation of any or all of Sections 9.08 through
9.10, inclusive, but in each case only if, and to the extent, that the
violation of said covenant has occurred as a result of the underlying event
giving rise to the Recovery Event), the Required Banks may direct the Agent (in
which case the Agent shall, and is hereby authorized by the Borrower to, follow
said directions) to apply any or all proceeds then on deposit in such
collateral account to the repayment of Obligations hereunder in the same manner
as proceeds would be applied pursuant to the Security Agreement, provided
further, that if all or any portion of such proceeds not required to be applied
as a mandatory repayment and/or commitment reduction pursuant to the second
preceding proviso (whether pursuant to clause (x) or (y) thereof) are either
(A) not so used or committed to be so used within one year after the date of
the respective Recovery Event or (B) if committed to be used within one year
after the date of receipt of such proceeds and not so used within 18 months
after the date of the respective Recovery Event then, in either such case, such
remaining portion not used or committed to be used in the case of preceding
clause (A) and not used in the case of preceding clause (B) shall be applied on
the date which is the first anniversary of the date of the respective Recovery
Event in the case of clause (A) above or the date occurring 18 months after the
date of the respective Recovery Event in the case of clause (B)
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<PAGE> 22
above as a mandatory repayment and/or commitment reduction in accordance with
the requirements of Section 3.02(d).
(c) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, an amount equal to the Reinvestment Prepayment Amount,
if any, for such Reinvestment Election shall be applied as a mandatory
repayment and/or commitment reduction in accordance with the requirements of
Section 3.02(d).
(d) With respect to each repayment of Term Loans required by this
Section 3.02, the Borrowers may designate the Types of Term @s which are to be
repaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, provided that: (i) repayments of Eurodollar
Loans pursuant to this Section 3.02 may only be made on the last day of an
Interest Period applicable thereto unless all Eurodollar Loans with Interest
Periods ending on such date of required repayment and all Base Rate Loans have
been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than $200,000, such Borrowing shall be
converted at the end of the then current Interest Period into a Borrowing of
Base Rate Loans; and (iii) each repayment of any Term Loans made pursuant to a
Borrowing shall be applied pro rata among such Term Loans. In the absence of a
designation by the Borrowers as described in the preceding sentence, the Agent
shall, subject to the above, make such designation in its sole discretion with
a view, but no obligation, to minimize breakage costs owing under Section 1.11.
Notwithstanding the foregoing provisions of this Section 3.02, if any time the
mandatory prepayment of Term Loans pursuant to Sections 3.02(a) through (c)
above would result, after giving effect to the procedures set forth above, in
the Borrowers incurring breakage costs under Section 1.11 as a result of
Eurodollar Loans being prepaid other than on the last day of an Interest Period
applicable thereto (the "Affected Eurodollar Loans"), then the Borrowers may,
in their sole discretion, initially deposit a portion (up to 100%) of the
amounts that otherwise would have been paid in respect of the Affected
Eurodollar Loans with the Agent (which deposit must be equal in amount to the
amount of Affected Eurodollar Loans not immediately prepaid) to be held as
security for the obligations of the Borrowers hereunder pursuant to a cash
collateral agreement to be entered into in form and substance satisfactory to
the Agent, with such cash collateral to be directly applied upon the first
occurrence (or occurrences) thereafter of the last day of an Interest Period
applicable to the relevant Term Loans that are Eurodollar Loans (or such
earlier date or dates as shall be requested by the Borrowers), to repay an
aggregate principal amount of such Term Loans equal to the Affected Eurodollar
Loans not initially repaid pursuant to this sentence. Notwithstanding anything
to the contrary contained in the immediately preceding sentence, all amounts
deposited as cash collateral pursuant to the immediately preceding sentence
shall be held for the sole
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<PAGE> 23
benefit of the Banks whose Term Loans would otherwise have been immediately
repaid with the amounts deposited and upon the taking of any action by the
Agent or the Banks pursuant to the remedial provisions of Section 8, any
amounts held as cash collateral pursuant to this Section 3.02(d) shall, subject
to the requirements of applicable law, be immediately applied to the Term
Loans.
(e) Notwithstanding anything to the contrary contained elsewhere
in this Agreement, all then outstanding Term Loans shall be repaid in full on
the Final Maturity Date.
3.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or any Term Note shall be
made to the Agent for the account of the Bank or Banks entitled thereto not
later than 1:00 P.M. (New York time) on the date when due and shall be made in
Dollars in immediately available funds at the Payment Office of the Agent.
Whenever any payment to be made hereunder or under any Term Note shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable at the applicable rate during
such extension.
3.04 Net Payments. (a) All payments made by the Borrowers hereunder
or under any Term Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 3.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any
political subdivision or taxing authority thereof or therein with respect to
such payments (but excluding, except as provided in the second succeeding
sentence, any tax imposed on or measured by the net income or profits of a
Bank, or any franchise tax based on the net income or profits of a Bank, in
either case pursuant to the laws of the United States of America, the
jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imports,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any such Taxes are so levied or imposed, the Borrowers jointly and
severally agree to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any Term Note, after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein or
in such Term Note. If any amounts are payable in respect of Taxes pursuant to
the preceding sentence, the Borrowers jointly and severally agree to reimburse
each Bank, upon the written request of such Bank, for
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<PAGE> 24
taxes imposed on or measured by the net income or profits of such Bank, or any
franchise tax based on the net income or profits of such Bank, in either case
pursuant to the laws of the jurisdiction in which such Bank is organized or in
which the principal office or applicable lending office of such Bank is located
or under the laws of any political subdivision or taxing authority of any such
jurisdiction in which such Bank is organized or in which the principal office
or applicable lending office of such Bank is located and for any withholding of
taxes as such Bank shall reasonably determine are payable by, or withheld from,
such Bank in respect of such amounts so paid to or on behalf of such Bank
pursuant to the preceding sentence and in respect of any amounts paid to or on
behalf of such Bank pursuant to this sentence. The Borrowers will furnish to
the Agent within 60 days after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrowers. The Borrowers jointly and severally agree to
indemnify and hold harmless each Bank, and reimburse such Bank upon its written
request, for the amount of any Taxes so levied or imposed and paid by such
Bank.
(b) Each Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes agrees (i) in the case of any such Bank that is a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and which constitutes a Bank
hereunder on the Effective Date, to provide to the Borrowers and the Agent on
or prior to the Effective Date two original signed copies of Internal Revenue
Service Form 4224 or Form 1001 certifying to such Bank's entitlement to an
exemption from United States withholding tax with respect to payments to be
made under this Agreement and under any Term Note, (ii) in the case of any such
Bank that is a "bank" within the meaning of Section 881(c)(3)(A) of the Code,
that, to the extent legally entitled to do so, (x) with respect to a Bank that
is an assignee or transferee of an interest under this Agreement pursuant to
Section 1.13 or 13.04 (unless the respective Bank was already a Bank hereunder
immediately prior to such assignment or transfer), upon the date of such
assignment or transfer to such Bank, and (y) with respect to any such Bank,
from time to time upon the reasonable written request of the Borrowers or the
Agent after the Effective Date, such Bank will provide to the Borrowers and the
Agent two original signed copies of Internal Revenue Service Form 4224 or Form
1001 (or any successor forms) certifying to such Bank's entitlement to an
exemption from, or reduction in, United States withholding tax with respect to
payments to be made under this Agreement and under any Term Note, (iii) in the
case of any such Bank (other than a Bank described in clause (i) or (ii) above)
which constitutes a Bank hereunder on the Effective Date, to provide to the
Borrowers and the Agent, on or prior to the Effective Date (x) a certificate
substantially in the form of Exhibit C (any such certificate, a "Section
3.04(b)(iii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8, certifying to such Bank's
entitlement at the date of such certificate
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<PAGE> 25
(assuming compliance by the Borrowers with Section 13.17) to an exemption from
U.S. withholding tax under the provisions of Section 881(c) of the Code with
respect to payments to be made under this Agreement and under any Term Note and
(iv) in the case of any such Bank (other than a Bank described in clause (i) or
(ii) above), to the extent legally entitled to do so, (x) with respect to a Bank
that is an assignee or transferee of an interest under this Agreement pursuant
to Section 1.13 or 13.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), upon the date of
such assignment or transfer to such Bank, and (y) with respect to any such
Bank, from time to time upon the reasonable written request of the Borrowers or
the Agent after the Effective Date, to provide to the Borrowers and the Agent
such other forms as may be required in order to establish the entitlement of
such Bank to an exemption from withholding with respect to payments under this
Agreement and under any Term Note. Notwithstanding anything to the contrary
contained in Section 3.04(a), but subject to the immediately succeeding
sentence, the Borrowers shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder (without any obligation
to pay the respective Bank additional amounts with respect thereto) for the
account of any Bank which is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes and which has not provided to the Borrowers such forms required to be
provided to the Borrowers pursuant to the first sentence of this Section
3.04(b) (or to the extent such forms do not establish a complete exemption from
such withholding). Notwithstanding anything to the contrary contained in the
preceding sentence or elsewhere in this Section 3.04 and except as set forth in
Section 13.04(b), the Borrowers jointly and severally agree to indemnify each
Bank in the manner set forth in Section 3.04(a) (without regard to the identity
of the jurisdiction requiring the deduction or withholding) in respect of any
amounts deducted or withheld by it as described in the immediately preceding
sentence as a result of any changes after the Effective Date in any applicable
law, treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of income or
similar Taxes.
(c) The provisions of this Section 3.04 are subject to the
provisions of Section 13.15 (to the extent applicable).
SECTION 4. Conditions Precedent to Term Loans on the Initial
Borrowing Date. The obligation of each Bank to make Term Loans on the Initial
Borrowing Date is subject to the satisfaction of the following conditions:
4.01 Execution of Agreement; Notes. On or prior to the Initial
Borrowing Date (i) the Effective Date shall have occurred and (ii) there shall
have been deliv-
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<PAGE> 26
ered to the Agent for the account of each of the Banks the appropriate Term
Note executed by the Borrowers, in each case in the amount, maturity and as
otherwise provided herein.
4.02 Fees, etc. On the Initial Borrowing Date, the Borrowers shall
have paid to the Agent and the Banks all costs, fees and expenses (including,
without limitation, legal fees and expenses) payable to the Agent and the Banks
to the extent then due.
4.03 Opinions of Counsel. On the Initial Borrowing Date, the Agent
shall have received (i) from Weil, Gotshal & Manges LLP, counsel to the Credit
Parties, an opinion addressed to the Agent and each of the Banks and dated the
Initial Borrowing Date covering the matters set forth in Exhibit D and (ii)
from local counsel reasonably satisfactory to the Agent, opinions each of which
shall be in form and substance reasonably satisfactory to the Agent and the
Required Banks and shall cover the perfection of the security interests granted
pursuant to the Security Agreement and such other matters incident to the
transactions contemplated herein as the Agent may reasonably request.
4.04 Corporate Documents; Proceedings: etc. (a) On the Initial
Borrowing Date, the Agent shall have received from each Credit Party a
certificate, dated the Initial Borrowing Date, signed by the Chairman of the
Board, the President, any Vice President or the Treasurer of such Credit Party
and attested to by the Secretary or any Assistant Secretary of such Credit
Party, in the form of Exhibit E with appropriate insertions, together with
copies of the Certificate of Incorporation and ByLaws of such Credit Party and
the resolutions of such Credit Party referred to in such certificate, and the
foregoing shall be reasonably acceptable to the Agent.
(b) On the Initial Borrowing Date, all corporate and legal
proceedings and all instruments and agreements in connection with the
transactions contemplated by this Agreement and the other Credit Documents
shall be reasonably satisfactory in form and substance to the Agent and the
Required Banks, and the Agent shall have received all information and copies of
all documents and papers, including records of corporate proceedings,
governmental approvals, good standing certificates and bring-down telegrams or
facsimiles, if any, which the Agent reasonably may have requested in connection
therewith, such documents and papers where appropriate to be certified by
proper corporate or governmental authorities.
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<PAGE> 27
4.05 Employee Benefit Plans; Shareholders' Agreements;
Management Agreements; Collective Bargaining Agreements; Tax Allocation
Agreements; Existing Debt Agreements. On the Initial Borrowing Date, there
shall have been delivered to the Agent true and correct copies, certified as
true and complete by an appropriate officer of NIS No. I or NIS No. 2 of (i)
all Plans (and for each Plan that is required to file an annual report on
Internal Revenue Service Form 5500-series, a copy of the most recent such
report (including, to the extent required, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information), and for each Plan that is a "single-employer plan,"
as defined in Section 4001(a)(15) of ERISA, the most recently prepared
actuarial valuation therefor) and any other "employee benefit plans," as
defined in Section 3(3) of ERISA, and any other material agreements, plans or
arrangements, with or for the benefit of current or former employees of
Holdings or any of its Subsidiaries or any ERISA Affiliate (provided that the
foregoing shall apply in the case of any multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, only to the extent that any document described
therein is in the possession of Holdings or any Subsidiary of Holdings or any
ERISA Affiliate or reasonably available thereto from the sponsor or trustee of
any such plan) (collectively, the "Employee Benefit Plans"), (ii) all
agreements entered into by Holdings or any of its Subsidiaries governing the
terms and relative rights of its capital stock and any agreements entered into
by shareholders relating to any such entity with respect to its capital stock
(collectively, the "Shareholders' Agreements"), (iii) all agreements with
members of, or with respect to, the management of Holdings or any of its
Subsidiaries (collectively, the "Management Agreements"), (iv) all collective
bargaining agreements applying or relating to any employee of Holdings or any
of its Subsidiaries (collectively, the "Collective Bargaining Agreements"), (v)
any tax sharing or tax allocation agreements entered into by Holdings or any of
its Subsidiaries (collectively, the "Tax Allocation Agreements"), and (vi) all
agreements evidencing or relating to Existing Indebtedness of Holdings or any
of its Subsidiaries (collectively, the "Existing Debt Agreements"); all of
which Employee Benefit Plans, Shareholders' Agreements, Management Agreements,
Collective Bargaining Agreements, Tax Allocation Agreements and Existing Debt
Agreements shall be in form and substance reasonably satisfactory to the Agent
and the Required Banks and shall be in full force and effect on the Initial
Borrowing Date.
4.06 Acquisitions. On or prior to the Initial Borrowing
Date, (i) the Acquisitions shall have been consummated in accordance with the
terms and conditions of the Acquisition Documents and all applicable laws and
(ii) the Banks shall have received true and correct copies of the Acquisition
Documents, which shall be in form and substance reasonably satisfactory to the
Agent and the Required Banks. All conditions precedent to the consummation of
the Acquisitions as set forth in the respective
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<PAGE> 28
Acquisition Agreement and the other Acquisition Documents shall have been
satisfied and not waived, except with the consent of the Agent, to the
satisfaction of the Agent.
4.07 Existing Credit Agreements. (a) On or prior to
the Initial Borrowing Date or concurrently with the incurrence of Term Loans
hereunder, the total commitments under the Existing Credit Agreements shall
have been terminated, and all loans and notes issued thereunder shall have been
repaid in full, together with interest thereon, all letters of credit issued
thereunder shall have been terminated, and all other amounts owing pursuant to
the Existing Credit Agreements shall have been repaid in full and the Existing
Credit Agreements shall have been terminated and be of no further force or
effect except for continuing indemnification obligations described therein. The
Agent shall have received evidence in form, scope and substance reasonably
satisfactory to it that the matters set forth in this Section 4.07(a) have been
satisfied on such date.
(b) On or prior to the Initial Borrowing Date or
concurrently with the incurrence of Term Loans hereunder, the creditors under
the Existing Credit Agreements shall have terminated and released all security
interests and Liens on the assets owned or to be owned by the Borrowers or any
of their Subsidiaries granted in connection with the Existing Credit
Agreements. The Agent shall have received such releases of security interests
in and Liens on the assets owned or to be owned by the Borrowers as may have
been reasonably requested by the Agent, which releases shall be in form and
substance reasonably satisfactory to the Agent. Without limiting the foregoing,
there shall have been delivered (i) proper termination statements (Form UCC-3
or the appropriate equivalent) for filing under the UCC of each jurisdiction
where a financing statement (Form UCC-I or the appropriate equivalent) was
filed with respect to the Borrowers or any of their Subsidiaries, or their
respective predecessors in interest, in connection with the security interests
created with respect to the Existing Credit Agreements and the documentation
related thereto, (ii) terminations or assignments of any security interest in,
or Lien on, any patents, trademarks, copyrights, or similar interests of the
Borrowers or any of their Subsidiaries, on which filings have been made and
(iii) terminations of all mortgages, leasehold mortgages and deeds of trust
created with respect to property of the Borrowers or any of their Subsidiaries,
or their respective predecessors in interest, in each case to secure the
obligations under the Existing Credit Agreements, all of which shall be in form
and substance reasonably satisfactory to the Agent.
4.08 Subsidiary Guaranty. On the Initial Borrowing Date,
each Subsidiary Guarantor shall have duly authorized, executed and delivered
the Subsidiary Guaranty in the form of Exhibit F hereto (as modified,
supplemented or amended from time to time, the "Subsidiary Guaranty") and the
Subsidiary Guaranty shall be in full force and effect.
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<PAGE> 29
4.09 Pledge Agreements. (a) On the Initial Borrowing Date,
Neodata shall have duly authorized, executed and delivered an Amended and
Restated Neodata Pledge Agreement in the form of Exhibit G-1 hereto (as
modified, supplemented or amended from time to time, the "Amended and Restated
Neodata Pledge Agreement") and shall have delivered to the Collateral Agent, as
pledgee, all the Pledged Stock, if any, referred to therein then owned by
Neodata, together with executed and undated stock powers, and the Amended and
Restated Neodata Pledge Agreement shall be in full force and effect.
(b) On the Initial Borrowing Date, Holdings and each
Subsidiary Guarantor shall have duly authorized, executed and delivered a
Pledge Agreement in the form of Exhibit G-2 (as modified, supplemented or
amended from time to time, the "Holdings/Sub Pledge Agreement") and shall have
delivered to the Collateral Agent, as pledgee, all the Pledged Securities, if
any, referred to therein then owned by Holdings and each Subsidiary Guarantor,
(x) endorsed in blank in the case of promissory notes constituting Pledged
Securities and (y) together with executed and undated stock powers, in the case
of capital stock constituting Pledged Securities, and the Holdings/Sub Pledge
Agreement shall be in full force and effect.
4.10 Security Agreement. On the Initial Borrowing Date,
Holdings, the Borrowers and each Subsidiary Guarantor shall have duly
authorized, executed and delivered a Security Agreement in the form of Exhibit
H (as modified, supplemented or amended from time to time, the "Security
Agreement") covering all of Holdings', the Borrowers' and each Subsidiary
Guarantor's present and future Security Agreement Collateral, together with:
(a) proper Financing Statements (Form UCC-1) fully
executed for filing under the UCC in the appropriate filing offices of
each jurisdiction as may be necessary or, in the reasonable opinion of
the Collateral Agent, desirable to perfect the security interests
purported to be created by the Security Agreement;
(b) certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, listing all effective
financing statements that name any Credit Party, or any of their
predecessors in interest as debtor and that are filed in the
jurisdictions referred to in clause (a) above, together with copies of
such other financing statements (none of which shall cover the
Collateral except to the extent evidencing Permitted Liens or in
respect of which the Collateral Agent shall have received termination
statements (Form UCC-3) or such other termination statements as shall
be required by local law) fully executed for filing;
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<PAGE> 30
(c) evidence of the completion of all other recordings
and filings of, or with respect to, the Security Agreement as may be
necessary or, in the reasonable opinion of the Collateral Agent,
desirable to perfect the security interests intended to be created by
the Security Agreement; and
(d) evidence that all other actions necessary or, in the
reasonable opinion of the Collateral Agent, desirable to perfect and
protect the security interests purported to be created by the Security
Agreement have been taken;
and the Security Agreement shall be in full force and effect.
4.11 Consent Letter. On the Initial Borrowing Date, the
Agent shall have received a letter from CT Corporation System, presently
located at 1633 Broadway, New York, New York 10019, substantially in the form
of Exhibit I, indicating its consent to its appointment by each Credit Party as
its agent to receive service of process as specified in Section 13.08.
4.12 Adverse Change, etc. (a) On the Initial Borrowing
Date, nothing shall have occurred (and the Banks shall have become aware of no
facts, conditions or other information not previously known) which the Agent or
the Required Banks reasonably believe could have a material adverse effect on
the rights or remedies of the Agent or the Banks, or on the ability of the
Credit Parties to perform their respective obligations to the Agent and the
Banks hereunder or under any other Credit Document or which the Agent or the
Required Banks reasonably believe would have a material adverse effect on the
Transaction or the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrowers taken as a
whole or Holdings and its Subsidiaries taken as a whole.
(b) On or prior to the Initial Borrowing Date, all
necessary and material governmental (domestic and foreign) and third party
approvals in connection with the Transaction and the transactions contemplated
by the Credit Documents and otherwise referred to herein or therein shall have
been obtained and remain in effect, and all applicable waiting periods shall
have expired without any action being taken by any competent authority which
restrains, prevents or imposes materially adverse conditions upon the
consummation of the Transaction and the transactions contemplated by this
Agreement. Additionally, there shall not exist any judgment, order, injunction
or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Transaction or the transactions
contemplated by this Agreement.
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<PAGE> 31
4.13 Litigation. On the Initial Borrowing Date, no
litigation by any entity (private or governmental) shall be pending or, to the
knowledge of Holdings or the Borrowers, threatened (a) with respect to this
Agreement or any other Credit Document or (b) which the Agent or the Required
Banks shall determine could reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrowers taken as a whole or
Holdings and its Subsidiaries taken as a whole.
4.14 Solvency Certificate; Insurance. On or prior to the
Initial Borrowing Date, the Borrowers shall cause to be delivered to the Agent:
(i) a certificate in the form of Exhibit J, addressed to the Agent and each of
the Banks and dated the Initial Borrowing Date, from the chief financial
officer of Holdings, providing the opinion of such chief financial officer as
to the solvency of the Borrowers taken as a whole and Holdings and its
Subsidiaries taken as a whole and (ii) evidence of insurance complying with the
requirements of Section 8.03 for the business and properties of Holdings and
its Subsidiaries, in scope, form and substance reasonably satisfactory to the
Agent and the Required Banks and naming the Collateral Agent as an additional
insured and/or loss payee, and stating that such insurance shall not be
cancelled or materially revised without 30 days prior written notice by the
insurer to the Collateral Agent.
4.15 Pro Forma Balance Sheet: etc. (a) On or prior to the
Initial Borrowing Date, there shall have been delivered to the Agent, an
unaudited pro forma consolidated balance sheet of Holdings and its Subsidiaries
as at December 31, 1996, after giving effect to the Transaction and prepared in
accordance with GAAP, together with a related funds flow memorandum which pro
forma balance sheet and funds flow memorandum shall be satisfactory in form and
substance to the Agent and the Required Banks.
(b) On or prior to the Initial Borrowing Date, the Banks
shall have received the financial statements referred to in Section 7.05(a).
(c) On the Initial Borrowing Date, the Banks shall have
received the Projections described in Section 7.05(d), which Projections shall
be in form and substance reasonably satisfactory to the Agent and the Required
Banks.
SECTION 5. Conditions Precedent to the Incurrence of Term
Loans After the Initial Borrowing Date. The obligation of each Bank to make
Term Loans after the Initial Borrowing Date is subject to the satisfaction of
the following condition:
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5.01 Certificate. On the second Term Loan Borrowing Date,
the Borrowers shall have delivered a certificate of an Authorized
Representative of the Borrowers, dated the second Term Loan Borrowing Date, (w)
setting forth the calculations to determine the amount of the earn-out payment
required by the Acquisition Agreement, (x) demonstrating that the Leverage
Ratio at such time is equal to or less than 4.20:1.00, (y) no Default or Event
of Default has occurred and is continuing under any Credit Document or would
result from the incurrence of Term Loans on such date or from the application
of proceeds thereof and (z) all representations and warranties contained herein
and in the other Credit Documents are true and correct in all material respects
with the same effect as though such representations and warranties had been
made on such second Term Loan Borrowing Date.
SECTION 6. Conditions Precedent to all Term Loans. The
obligation of each Bank to make Term Loans (including Term Loans made on the
Initial Borrowing Date) is subject to the satisfaction of the following
conditions:
6.01 No Default: Representations and Warranties. At the
time of each Term Loan and after giving effect thereto, (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties
contained herein and in any other Credit Document shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of the making of such Term Loans (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).
6.02 Notice of Borrowing. Prior to the making of each Term
Loan, the Agent shall have received the notice required by Section 1.03(a).
The acceptance of the benefits of each Term Loan shall
constitute a representation and warranty by each Credit Party to the Agent and
each of the Banks that all the conditions specified in Section 4, Section 5 and
this Section 6 exist as of that time (except to the extent that any of the
conditions specified in Section 4, Section 5 or Section 6 are required to be
satisfactory to or determined by any Bank, the Required Banks and/or the
Agent). All of the Term Notes, certificates, legal opinions and other documents
and papers referred to in Section 4, Section 5 and this Section 6, unless
otherwise specified, shall be delivered to the Agent at the Notice Office for
the account of each of the Banks and, except for the Term Notes, in sufficient
counterparts or copies for each of the Banks and shall be in form and substance
reasonably satisfactory to the Banks.
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SECTION 7. Representations, Warranties and Agreements. In
order to induce the Banks to enter into this Agreement and to make the Term
Loans, each of Neodata, Holdings and each of the Borrowers makes the following
representations, warranties and agreements, in each case after giving effect to
the Transaction consummated on the Initial Borrowing Date, all of which shall
survive the execution and delivery of this Agreement and the Term Notes and the
making of the Term Loans, with the making of the Term Loans being deemed to
constitute a representation and warranty that the matters specified in this
Section 7 are true and correct in all material respects on and as of the
Initial Borrowing Date (it being understood and agreed that any representation
or warranty which by its terms is made as of a specified date shall be required
to be true and correct in all material respects only as of such specified
date).
7.01 Corporate Status. Each of Neodata and each of its
Subsidiaries (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority to own its property and assets and to transact
the business in which it is engaged and presently proposes to engage and (iii)
is duly qualified and is authorized to do business and is in good standing in
each jurisdiction where the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrowers taken as a whole or of
Holdings and its Subsidiaries taken as a whole.
7.02 Corporate Power and Authority. Each Credit Party has
the corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Credit Documents to which it is party and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of each of such Credit Documents. Each Credit Party has duly
executed and delivered each of the Credit Documents to which it is party, and
each of such Credit Documents constitutes the legal, valid and binding
obligation of such Credit Party enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Credit Documents to which it is a party,
nor compliance by it with the terms and provisions thereof, (i) will contravene
any provision of any applicable law, statute, rule or regulation or any
applicable order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict with or result in any
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breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents) upon any of the properties or assets of Neodata or any of its
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
credit agreement or loan agreement, or any other material agreement, contract
or instrument, to which Neodata or any of its Subsidiaries is a party or by
which it or any of its property or assets is bound or to which it may be
subject or (iii) will violate any provision of the Certificate of Incorporation
or By-Laws of Neodata or any of its Subsidiaries.
7.04 Governmental Approvals. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made prior to each of the Initial
Borrowing Date and the second Term Loan Borrowing Date), or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Credit Document or (ii) the legality, validity,
binding effect or enforceability of any such Credit Document, except where the
failure to so obtain would not reasonably be expected to have a material
adverse effect on the Transaction or the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrowers taken as a whole or of Holdings and its Subsidiaries taken as a
whole.
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc. (a) The statements of financial
condition of each of The Lacek Group and Lacek Systems and its Subsidiaries at
December 31, 1995 and December 31, 1996, and the related statements of income
and cash flow and shareholders' equity of each of The Lacek Group and Lacek
Systems and its Subsidiaries for the Fiscal Years ended on such dates, and
furnished to the Banks prior to the Effective Date, present fairly the
financial condition of each of The Lacek Group and Lacek Systems and its
Subsidiaries at the date of such statements of financial condition and the
results of the operations of each of The Lacek Group and Lacek Systems and its
Subsidiaries for such Fiscal Years. All such financial statements have been
prepared in accordance with generally accepted accounting principles and
practices consistently applied except to the extent provided in the notes to
said financial statements. After giving effect to the Transaction, since
December 31, 1996, there has been no material adverse change in the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrowers taken as a whole or of Holdings and its
Subsidiaries taken as a whole.
(b) (i) On and as of each of the Initial Borrowing Date
and the second Term Loan Borrowing Date, after giving effect to the Transaction
and to all Indebtedness (including the Term Loans) being incurred or assumed
and Liens created
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by Holdings and its Subsidiaries in connection therewith, (a) the sum of the
assets, at a fair valuation, of each Borrower, individually, and Holdings and
its Subsidiaries taken as a whole, will exceed its or their debts; (b) each
Borrower, individually, and Holdings and its Subsidiaries taken as a whole,
have not incurred and does not intend to incur, and does not believe that it
will incur, debts beyond its or their ability to pay such debts as such debts
mature; and (c) each Borrower, individually, and Holdings and its Subsidiaries
taken as a whole, will have sufficient capital with which to conduct its
businesses. For purposes of this Section 5.05(b), "debt" means any liability on
a claim, and "claim" means (i) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or
(ii) right to an equitable remedy for breach of performance if such breach
gives rise to a payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements
delivered pursuant to Section 7.05(a), there were as of the Initial Borrowing
Date no liabilities or obligations with respect to Holdings or any of its
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to the Borrowers taken as a whole or to Holdings and its
Subsidiaries taken as a whole. As of the Initial Borrowing Date, neither
Holdings nor the Borrowers know of any basis for the assertion against it or
any of its Subsidiaries of any liability or obligation of any nature whatsoever
that is not fully disclosed in the financial statements delivered pursuant to
Section 7.05(a) which, either individually or in the aggregate, could be
material to the Borrowers taken as a whole or Holdings and its Subsidiaries
taken as a whole.
(d) On and as of the Initial Borrowing Date, the
financial projections (the "Projections") previously delivered to the Agent and
the Banks have been prepared on a basis consistent with the financial
statements referred to in Section 7.05(a) (other than as set forth or presented
in such Projections), and there are no statements or conclusions in any of the
Projections which are based upon or include information known to Holdings or
the Borrowers to be misleading in any material respect or which fail to take
into account material information regarding the matters reported therein. On
the Initial Borrowing Date, the Borrowers believed that the Projections were
reasonable and attainable.
7.06 Litigation. There are no actions, suits or
proceedings pending or, to the best knowledge of Holdings or the Borrowers,
threatened (i) with respect to any Document or (ii) that could reasonably be
expected to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise)
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<PAGE> 36
or prospects of the Borrowers taken as a whole or of Holdings and its
Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual information
(taken as a whole) furnished by or on behalf of Holdings or any of its
Subsidiaries in writing to the Agent or any Bank (including, without
limitation, all information contained in the Documents) for purposes of or in
connection with this Agreement, the other Credit Documents or any transaction
contemplated herein or therein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of Holdings or any of
its Subsidiaries in writing to the Agent or any Bank will be, true and accurate
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.
7.08 Use of Proceeds; Margin Regulations. (a) The proceeds
of the Term Loans shall be used by the Borrowers (x) on the Initial Borrowing
Date, (i) to consummate the Transaction and (ii) to pay fees and expenses
related to the Transaction and (y) on the second Term Loan Borrowing Date, to
make the earn-out payment required by the Acquisition Agreement.
(b) No part of the proceeds of any Term Loan will be used
to purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Term Loan
nor the use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System.
7.09 Tax Returns and Payments. Holdings and each of its
Subsidiaries have timely filed or caused to be timely filed, on the due dates
thereof or within applicable grace periods, with the appropriate taxing
authority, all Federal and all material state and other returns, statements,
forms and reports for taxes (the "Returns") required to be filed by or with
respect to the income, properties or operations of Holdings and/or any of its
Subsidiaries. The Returns accurately reflect in all material respects all
liability for taxes of Holdings and its Subsidiaries for the periods covered
thereby. Holdings and each of its Subsidiaries have paid all material taxes
payable by them other than taxes which are not delinquent, and other than those
contested in good faith and for which adequate reserves have been established
in accordance with generally accepted accounting principles. Except as
disclosed in the financial statements referred to in Section 7.05(a), there is
no material action, suit, proceeding, investigation, audit, or claim now
pending or, to the best knowledge of Holdings or the Borrowers, threatened by
any authority regarding any taxes relating to Holdings or any of its
Subsidiaries.
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As of the Initial Borrowing Date, neither Holdings nor any of its Subsidiaries
has entered into an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating to the
payment or collection of taxes of Holdings or any of its Subsidiaries, or is
aware of any circumstances that would cause the taxable years or other taxable
periods of Holdings or any of its Subsidiaries not to be subject to the
normally applicable statute of limitations. Neither Holdings nor any of its
Subsidiaries has incurred, or will incur, any material tax liability in
connection with the consummation of the Transaction and the other transactions
contemplated hereby.
7.10 Compliance with ERISA. (a) Each Plan (other than a
multiemployer plan (as defined in Section 4001(a)(13) of ERISA)) is in
substantial compliance with its terms and with all applicable laws, including,
without limitation, ERISA and the Code; no Reportable Event has occurred with
respect to a Plan (other than a multiemployer plan (as defined in Section 4001
(a)(13) of ERISA)); no Plan is insolvent or in reorganization; no Plan other
than a multiemployer plan (as defined in Section 4001(a)(13) of ERISA) has an
Unfunded Current Liability; no Plan which is subject to Section 412 of the Code
or Section 302 of ERISA has an accumulated funding deficiency with the meaning
of such Sections of the Code or ERISA, or has applied for or received a waiver
of an accumulated funding deficiency or an extension of any amortization period
within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA;
all contributions required to be made by Holdings, any of its Subsidiaries or
any ERISA Affiliate with respect to a Plan have been timely made; none of
Holdings, any of its Subsidiaries nor any ERISA Affiliate has incurred any
material liability (including any indirect, contingent or secondary liability)
to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975
or 4980 of the Code or reasonably expects to incur any material liability under
any of the foregoing Sections with respect to any Plan; no proceedings have
been instituted to terminate or appoint a trustee to administer any Plan which
is subject to Title IV of ERISA; no condition exists which presents a material
risk to Holdings or any of its Subsidiaries or any ERISA Affiliate of incurring
a liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the annual aggregate
liability of Holdings, its Subsidiaries and its ERISA Affiliates to all Plans
which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in
the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Plan ended prior to the most recent incurrence
of Term Loans, would not exceed $50,000; no lien imposed under the Code or
ERISA on the assets of Holdings or any of its Subsidiaries or any ERISA
Affiliate exists or is likely to arise on account of any Plan; and Holdings and
its Subsidiaries do not maintain or contribute to any employee welfare benefit
plan
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(as defined in Section 3(1) of ERISA) which provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any employee pension benefit plan (as defined in Section 3(2) of
ERISA) the obligations with respect to which could reasonably be expected to
have a material adverse effect on the ability of Holdings or any of its
Subsidiaries to perform their respective obligations under the Credit Documents
to which they are a party.
(b) Each Foreign Pension Plan has been maintained in
substantial compliance with its terms and with the requirements of any and all
applicable laws, statutes, rules, regulations and orders and has been
maintained, where required, in good standing with applicable regulatory
authorities. All contributions required to be made with respect to a Foreign
Pension Plan have been timely made. Neither Holdings nor any of its
Subsidiaries has incurred any obligation in connection with the termination of
or withdrawal from any Foreign Pension Plan. The present value of the accrued
benefit liabilities (whether or not vested) under each Foreign Pension Plan,
determined as of the end of Holdings' most recently ended fiscal year on the
basis of actuarial assumptions, each of which is reasonable, did not exceed the
current value of the assets of such Foreign Pension Plan allocable to such
benefit liabilities.
7.11 Security Documents. (a) The provisions of the
Security Agreement are effective to create in favor of the Collateral Agent for
the benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of Holdings and its Subsidiaries in
the Security Agreement Collateral described therein, and the Security
Agreement, upon the filing of Form UCC-1 financing statements or the
appropriate equivalent (which filings, if this representation is being made
more than 10 days after the Initial Borrowing Date, have been made), create a
fully perfected first lien on, and security interest in, all right, title and
interest in all of the Security Agreement Collateral described therein, subject
to no other Liens other than Permitted Liens. The recordation of the Assignment
of Security Interest in U.S. Patents and Trademarks in the form attached to the
Security Agreement in the United States Patent and Trademark Office together
with filings on Form UCC-1 made pursuant to the Security Agreement will be
effective, under applicable law, to perfect the security interest granted to
the Collateral Agent in the trademarks and patents covered by the Security
Agreement and the recordation of the Assignment of Security Interest in U.S.
Copyrights in the form attached to the Security Agreement with the United
States Copyright Office together with filings on Form UCC-1 made pursuant to
the Security Agreement will be effective under federal law to perfect the
security interest granted to the Collateral Agent in the copyrights covered by
the Security Agreement. Holdings and its Subsidiaries have good and valid
title to all Security Agreement Collateral described therein, free and clear of
all Liens except those described above in this clause (a).
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(b) The security interests created in favor of the
Collateral Agent, as pledgee, for the benefit of the Secured Creditors under
the Pledge Agreements constitute first priority perfected security interests in
the Pledged Stock or Pledged Securities, as the case may be, described in the
respective Pledge Agreement, subject to no security interests of any other
Person. No filings or recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests created in the Pledged
Stock or the Pledged Securities and the proceeds thereof under the Pledge
Agreements.
7.12 Properties. Holdings and each of its Subsidiaries
have good and valid title to all properties owned by them, including all
property reflected in the balance sheets referred to in Section 7.05(a) and in
the pro forma balance sheet referred to in Section 4.15 (except as sold or
otherwise disposed of since the date of such balance sheet in the ordinary
course of business or in accordance with the terms of this Agreement), free and
clear of all Liens, other than (i) as referred to in the balance sheet or in
the notes thereto or in the pro forma balance sheet or (ii) Permitted Liens
otherwise permitted by Section 9.01.
7.13 Capitalization. (a) On the Initial Borrowing Date and
after giving effect to the Transaction and the other transactions contemplated
hereby, the authorized capital stock of Neodata shall consist of (i) 63,000,000
shares of common stock, $.01 par value per share, of which 388,395 shares shall
be issued and outstanding, (ii) 3,000,000 shares of nonvoting common stock,
$.01 par value per share, of which no shares shall be issued and outstanding,
(iii) 18,000,000 shares of Class A Convertible Preferred Stock, $.01 par value
per share, of which (x) 9,000,000 shares are designated Class A Convertible
Preferred Stock - Series 1, and 8,600,000 shares of which are issued and
outstanding and (y) 9,000,000 shares are designated Class A Convertible
Preferred Stock - Series 2, and 6,680,394 shares of which are issued and
outstanding, and (iv) 3,090,000 shares of Class B Junior Convertible Preferred
Stock, $.01 par value per share, all of which shares are issued and
outstanding. All such outstanding shares of capital stock have been duly and
validly issued, are fully paid and non-assessable and have been issued free of
preemptive rights. As of the Initial Borrowing Date and after giving effect to
the Transaction and the other transactions contemplated hereby, Neodata does
not have outstanding any securities convertible into or exchangeable for its
capital stock or outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreement providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock, other than (i) the nonvoting common
stock, (ii) the Class A Convertible Preferred Stock - Series 1, (iii) the Class
A Convertible Preferred Stock - Series 2, (iv) the Class B Junior Convertible
Preferred Stock, (v) the options issued pursuant to the Neodata Corporation
Amended and Restated 1994 Stock Option Plan, (vi) the options issued
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pursuant to the Neodata Corporation Amended and Restated 1990 Employee
Incentive Plan, (vii) the performance options, as amended, granted by Neodata
in December 1990 to executive officers of the Borrower and (viii) the warrants
issued (x) in August 1990 and (y) in connection with various shareholders'
agreements to which Neodata is a party.
(b) On the Initial Borrowing Date and after giving effect
to the Transaction and the other transactions contemplated hereby, the
authorized capital stock Holdings shall consist of 1,000 shares of common
stock, $.01 par value per share, all of which shall be issued and outstanding,
and owned by NIS. All such outstanding shares of common stock have been duly
and validly issued, are fully paid and nonassessable and are free of preemptive
rights. As of the Initial Borrowing Date, Holdings does not have outstanding
any securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating
to, its capital stock.
(c) On the Initial Borrowing Date and after giving effect
to the Transaction and the other transactions contemplated hereby, the
authorized capital stock of NIS No. 1 shall consist of 1,000 shares of common
stock, $.01 par value per share, all of which shall be issued and outstanding,
owned by Holdings and delivered for pledge pursuant to the Holdings/Sub Pledge
Agreement. All such outstanding shares of common stock have been duly and
validly issued, are fully paid and nonassessable and are free of pre-emptive
rights. As of the Initial Borrowing Date, NIS No. 1 does not have outstanding
any securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating
to, its capital stock.
(d) On the Initial Borrowing Date and after giving effect
to the Transaction and the other transactions contemplated hereby, the
authorized capital stock of NIS No. 2 shall consist of 1,000 shares of common
stock, $.01 par value per share, all of which shall be issued and outstanding,
owned by Holdings, and delivered for Pledge pursuant to the Holdings/Sub Pledge
Agreement. All such outstanding shares of common stock have been duly and
validly issued, are fully paid and nonassessable and are free of preemptive
rights. As of the Initial Borrowing Date, NIS No. 2 does not have outstanding
any securities convertible into or exchangeable for its capital stock or
outstanding any rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating
to, its capital stock.
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7.14 Subsidiaries. After the consummation of the
Transaction, Holdings has no Subsidiaries other than the Borrowers and their
respective Subsidiaries and the Borrowers have no Subsidiaries other than those
Subsidiaries listed on Annex III. Annex III correctly sets forth, as of the
Initial Borrowing Date and after giving effect to the Transaction, the
percentage ownership (direct and indirect) of Holdings in each class of capital
stock of each its Subsidiaries and also identifies the direct owner thereof.
7.15 Compliance with Statutes, etc. Each of Holdings and
each of its Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrowers taken as a whole or Holdings and its
Subsidiaries taken as a whole.
7.16 Investment Company Act. Neither Holdings nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
7.17 Public Utility Holding Company Act. Neither Holdings
nor any of its Subsidiaries is a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.18 Environmental Matters. (a) Each of Holdings and each
of its Subsidiaries has complied with all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws. There are no
pending or, to the best knowledge of Holdings or the Borrowers after due
inquiry, threatened Environmental Claims against Holdings or any of its
Subsidiaries or any Real Property owned or operated by Holdings or any of its
Subsidiaries. There are no facts, circumstances, conditions or occurrences on
any Real Property owned or operated by Holdings or any of its Subsidiaries or,
to the best knowledge of Holdings or the Borrowers, after due inquiry, on any
property adjoining or in the vicinity of any such Real Property that, to the
best knowledge of Holdings or the Borrowers, after due inquiry, could
reasonably be expected (i) to form the basis of an Environmental Claim against
the Borrower or any of its Subsidiaries or any such Real Property, or (ii) to
cause any such Real Property to be subject to any restrictions on the
ownership, occupancy, use or transfer-
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<PAGE> 42
ability of such Real Property by Holdings or any of its Subsidiaries under any
applicable Environmental Law.
(b) Hazardous Materials have not at any time been
generated, used, treated or stored on, or transported to or from, any Real
Property owned or operated by Holdings or any of its Subsidiaries where such
generation, use, treatment, storage or transportation has violated or could
reasonably be expected to violate any Environmental Law or give rise to an
Environmental Claim. Hazardous Materials have not at any time been Released on
or from any Real Property owned or operated by Holdings or any of its
Subsidiaries where such Release has violated or could reasonably be expected to
violate any applicable Environmental Law or give rise to an Environmental
Claim. There are not now any underground storage tanks located on any Real
Property owned or operated by Holdings or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this
Section 7.18, the representations made in this Section 7.18 shall only be
untrue if the aggregate effect of all failures and noncompliances of the types
described above could reasonably be expected to have a material adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrowers taken as a whole or of
Holdings and its Subsidiaries taken as a whole.
7.19 Labor Relations. Neither Holdings nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on the Borrowers taken as a whole or
on Holdings and its Subsidiaries taken as a whole. There is (i) no unfair labor
practice complaint pending against Holdings or any of its Subsidiaries or, to
the best knowledge of Holdings or the Borrowers, threatened against Holdings or
any of its Subsidiaries, before the National Labor Relations Board, and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against Holdings or any of its Subsidiaries
or, to the best knowledge of Holdings or the Borrowers, threatened against
Holdings or any of its Subsidiaries, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings or any of its Subsidiaries or, to the best
knowledge of Holdings or the Borrowers, threatened against Holdings or any of
its Subsidiaries and (iii) to the best knowledge of Holdings or the Borrowers,
no union representation proceeding is pending with respect to the employees of
Holdings or any of its Subsidiaries, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either individually or in the
aggregate) such as could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrowers taken as a whole or of
Holdings and its Subsidiaries taken as a whole.
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7.20 Patents, Licenses, Franchises and Formulas. Each of
Holdings and each of its Subsidiaries owns all material patents, trademarks,
permits, service marks, trade names, copyrights, licenses, franchises and
formulas, or rights with respect to the foregoing, and has obtained assignments
of all leases and other rights of whatever nature, reasonably necessary for the
present conduct of its business, without any known conflict with the rights of
others which, or the failure to obtain which, as the case may be, would result
in a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrowers
taken as a whole or of Holdings and its Subsidiaries taken as a whole.
7.21 Existing Indebtedness. Schedule IV sets forth a true
and complete list of all Indebtedness for borrowed money of Holdings and its
Subsidiaries as of the Initial Borrowing Date and which is to remain
outstanding after giving effect thereto (excluding the Indebtedness hereunder)
(the "Existing Indebtedness"), in each case showing the aggregate principal
amount thereof and the name of the respective borrower and any other entity
which directly or indirectly guaranteed such debt, all of which shall be
evidenced by the Existing Debt Agreements.
7.22 Transaction. At the time of consummation thereof, the
Transaction shall have been consummated in all material respects in accordance
with the terms of the respective Documents and all applicable laws. At the time
of consummation of the Transaction, all consents and approvals of, and filings
and registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to make or
consummate the Transaction will have been obtained, given, filed or taken and
are or will be in full force and effect (or effective judicial relief with
respect thereto has been obtained), except where the failure to so obtain,
give, file or take would not have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrowers taken as a whole or Holdings and its Subsidiaries
taken as whole. All applicable waiting periods with respect thereto have or,
prior to the time when required, will have, expired without, in all such cases,
any action being taken by any competent authority which restrains, prevents, or
imposes material adverse conditions upon the Transaction. Additionally, there
does not exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the Transaction, or the incurrence of the Term
Loans or the performance by the Credit Parties of their obligations under the
respective Documents. All actions taken by the Credit Parties pursuant to or in
furtherance of the Transaction have been taken in material compliance with the
respective Documents and all applicable laws.
7.23 Representations and Warranties in Documents. All
representations and warranties set forth in the Documents (other than the
Credit Documents) were
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true and correct in all material respects at the time as of which such
representations and warranties were made (or deemed made). Notwithstanding
anything to the contrary contained in the immediately preceding sentence, it
shall not be a misrepresentation pursuant to this Section 7.23 if a
representation or warranty made by a Person other than a Credit Party pursuant
to a Document (other than a Credit Document) is not true and correct in all
material respects, but only if (A) (i) the damages to Holdings and its
Subsidiaries as a result of the incorrectness of such representation or
warranty are fully covered (to the extent in excess of $150,000 in the
aggregate for all incorrect representations and warranties) by (x) the escrow
of cash or Cash Equivalents pursuant to an escrow arrangement established for
the benefit of Holdings and its Subsidiaries or (y) a guaranty or indemnity
issued by a solvent guarantor or indemnitor (with such solvency to be determined
after giving effect to the required guaranty or indemnity in respect of the
incorrectness of such representations and warranties) and (ii) Holdings or any
Borrower, as the case may be, is proceeding in good faith to collect the
amounts owing pursuant to the respective escrow arrangement, guaranty or
indemnity as a result of the incorrectness of the respective representation or
warranty (which action shall be required to include, at such time, if any, as
the respective escrow monies are not made available in accordance with the
terms of the respective escrow arrangement or the respective guarantor or
indemnitor has resisted requests for payment, contesting in good faith and by
appropriate proceedings the amounts owing to Holdings and its Subsidiaries) or
(B) (i) the period of time expressly provided in such Document for the survival
of such representation or warranty has expired, (ii) such representation or
warranty is made by a Person other than a Credit Party and (iii) the damages
resulting from the incorrectness of such representation or warranty could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrowers taken as a whole or Holdings and its Subsidiaries
taken as a whole.
7.24 Special Purpose Corporation. Holdings engages in no
business activities and has no significant assets (other than the capital stock
of the Borrowers) or liabilities (other than its guaranty pursuant to Section
14).
SECTION 8. Affirmative Covenants. Neodata, Holdings and each
of the Borrowers hereby covenant and agree that as of the Effective Date, and
thereafter so long as this Agreement is in effect and until no Term Notes are
outstanding and the Term Loans, together with interest, Fees and all other
obligations are paid in full:
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8.01 Information Covenants. Holdings and/or the
Borrowers will furnish to each Bank:
(a) Monthly Reports. Within 45 days after the end of each
fiscal month of Holdings, the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such month and the related consolidated
statements of income and retained earnings and of cash flows for such month and
for the elapsed portion of the Fiscal Year ended with the last day of such
month, in each case setting forth comparative figures for the corresponding
month in the prior Fiscal Year and the budgeted figures for such month as set
forth in the respective budget delivered pursuant to Section 8.01(e).
(b) Quarterly Financial Statements. Within 45 days after
the close of the first three quarterly accounting periods in each Fiscal Year
of the Holdings, the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such quarterly accounting period and the related
consolidated statements of income and retained earnings and of cash flows for
such quarterly accounting period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly accounting period; all of which shall
be in reasonable detail and certified by the chief financial officer or other
Authorized Representative of Holdings that they fairly present the financial
condition of Holdings and its Subsidiaries as of the dates indicated and the
results of their operations and changes in their cash flows for the periods
indicated, subject to normal year-end audit adjustments.
(c) Annual Financial Statements. Within 90 days after the
close of each Fiscal Year of Holdings, the consolidated balance sheets of
Holdings and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
such fiscal year and setting forth comparative consolidated figures for the
preceding fiscal year and comparable budgeted figures for such fiscal year and
certified by Coopers & Lybrand L.L.P. or such other independent certified
public accountants of recognized national standing as shall be reasonably
acceptable to the Agent, in each case to the effect that such statements fairly
present the financial condition of Holdings and its Subsidiaries as of the
dates indicated and the results of their operations and changes, together with
a certificate of such accounting firm stating that in the course of its regular
audit of the business of Holdings and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, no Default
or Event of Default under Sections 9.02, 9.04, 9.05 or 9.07 through 9.09
inclusive which has occurred and is continuing has come to their attention or,
if such a Default or an Event of Default under Sections 9.02, 9.04, 9.05 or
9.07 through 9.09 inclusive has occurred and is continuing and has come to
their attention, a statement as to the nature thereof.
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(d) Management Letters. Promptly after the receipt
thereof by Holdings or any of its Subsidiaries, a copy of any final "management
letter" received by Holdings or such Subsidiary from its certified public
accountants and the management's responses thereto.
(e) Budgets. No later than 90 days following the
commencement of the first day of each Fiscal Year (beginning with Fiscal Year
1998), a budget in form reasonably satisfactory to the Agent (including
budgeted statements of income and cash flow and balance sheets) prepared by
Holdings for (x) each of the twelve months of such Fiscal Year prepared in
detail and (y) each of the five years immediately following such Fiscal Year
prepared in summary form, in such case of Holdings and its Subsidiaries,
accompanied by the statement of an Authorized Representative of Holdings to the
effect that, to the best of his knowledge, the budget is a reasonable estimate
for the period covered thereby.
(f) Officer's Certificates. At the time of the delivery
of the financial statements provided for in Sections 8.01(b) and (c), a
certificate of an Authorized Representative of Holdings to the effect that, to
the best of such officer's knowledge, no Default or Event of Default has
occurred and is continuing or, if any Default or Event of Default has occurred
and is continuing, specifying the nature and extent thereof, which certificate
shall, in the case of any such financial statements delivered in respect of a
period ending on the last day of a fiscal quarter or year of Holdings, set
forth the calculations required to establish whether Holdings was in compliance
with the provisions of Sections 3.02(b), 9.03, 9.04, 9.05 and 9.07 through
9.09, inclusive, at the end of such fiscal quarter or year, as the case may be.
(g) Notice of Default or Litigation. Promptly, and in any
event within three Business Days after an officer of Holdings or any Borrower
obtains knowledge thereof, notice of (i) the occurrence of any event which
constitutes a Default or Event of Default and (ii) any litigation or
governmental investigation or proceeding pending (x) against Holdings or any of
its Subsidiaries which could reasonably be expected to materially and adversely
affect the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole, (y) with respect to any material Indebtedness of
the Borrower and its Subsidiaries taken as a whole or (z) with respect to any
Document.
(h) Other Reports and Filings. Promptly, copies of all
financial information, proxy materials and other information and reports, if
any, which Holdings or any of its Subsidiaries shall file with the Securities
and Exchange Commission or any successor thereto (the "SEC") or deliver to
holders of its Indebtedness pursuant to the
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terms of the documentation governing such Indebtedness (or any trustee, agent
or other representative therefor).
(i) Environmental Matters. Promptly upon, and in any
event within ten (10) Business Days after, an officer of Holdings or any of its
Subsidiaries obtains knowledge thereof, notice of one or more of the following
environmental matters, unless such environmental matters could not,
individually or when aggregated with all other such environmental matters, be
reasonably expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or otherwise)
or prospects of the Borrowers taken as a whole or of Holdings and its
Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim against
Holdings or any of its Subsidiaries or any Real Property owned or
operated by Holdings or any of its Subsidiaries;
(ii) any condition or occurrence on or arising from any
Real Property owned or operated by Holdings or any of its Subsidiaries
that (x) results in noncompliance by Holdings or any of its
Subsidiaries with any applicable Environmental Law or (y) could
reasonably be expected to form the basis of an Environmental Claim
against Holdings or any of its Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property
owned or operated by Holdings or any of its Subsidiaries that could
reasonably be expected to cause such Real Property to be subject to
any restrictions on the ownership, occupancy, use or transferability
by Holdings or any of its Subsidiaries of such Real Property under any
Environmental Law; and
(iv) the taking of any removal or remedial action in
response to the actual or alleged presence of any Hazardous Material
on any Real Property owned or operated by Holdings or any of its
Subsidiaries as required by any Environmental Law or any governmental
or other administrative agency; provided that in any event Holdings
and the Borrowers shall deliver to each Bank all material notices
received by it or any of their respective Subsidiaries from any
government or governmental agency under, or pursuant to, CERCLA.
AU such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and
Holdings', the Borrowers' or such Subsidiary's response thereto. In addition,
Holdings and/or the Borrowers will provide the Banks with copies of all
material communications with any
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government or governmental agency relating to Environmental Laws, all
communications with any Person (other than its attorneys) relating to any
Environmental Claim of which notice is required to be given pursuant to this
Section 8.01(i), and such detailed reports of any such Environmental Claim as
may reasonably be requested by the Banks.
(j) Annual Meetings with Banks. At the request of Agent,
Holdings shall within 120 days after the close of each Fiscal Year hold a
meeting at a time and place selected by Holdings and reasonably acceptable to
the Agent with all of the Banks at which meeting shall be reviewed the
financial results of the previous Fiscal Year and the financial condition of
Holdings and its Subsidiaries and the budgets presented for the current Fiscal
Year.
(k) Other Information. From time to time, such other
information or documents (financial or otherwise) with respect to Holdings or
its Subsidiaries as any Bank may reasonably request in writing.
8.02 Books, Records and Inspections. Holdings will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities. Holdings will, and
will cause each of its Subsidiaries to, permit officers and designated
representatives of the Agent or any Bank to visit and inspect, during regular
business hours and under guidance of officers of Holdings or such Subsidiary,
any of the properties of Holdings or such Subsidiary, and to examine the books
of account of Holdings or such Subsidiary and discuss the affairs, finances and
accounts of Holdings or such Subsidiary with, and be advised as to the same by,
its and their officers and independent accountants, all at such reasonable
times and intervals and to such reasonable extent as the Agent or such Bank may
request.
8.03 Maintenance of Property; Insurance. (a) Schedule V
sets forth a true and complete listing of all insurance maintained by Holdings
and its Subsidiaries as of the Initial Borrowing Date. Holdings will, and will
cause each of its Subsidiaries to, (i) keep all property necessary in its
business in good working order and condition (ordinary wear and tear excepted),
(ii) maintain insurance on all its property in at least such amounts and
against at least such risks as is consistent and in accordance with industry
practice and (iii) furnish to each Bank, upon written request, full information
as to the insurance carried. In addition to the requirements of the immediately
preceding sentence, Holdings and the Borrowers will at all times cause
insurance of the types described in Schedule V to be maintained (with the same
scope of coverage as that described in Schedule V) at levels which are at least
as great as the respective amount
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described opposite the respective type of insurance on Schedule V under the
column headed "Maximum Amount Required to be Maintained."
(b) If Holdings or any of its Subsidiaries shall fail to
maintain all insurance in accordance with this Section 8.03, or if Holdings or
any of its Subsidiaries shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Agent and/or the Collateral Agent shall
have the right (but shall be under no obligation) to procure such insurance and
the Borrowers jointly and severally agree to reimburse the Agent or the
Collateral Agent, as the case may be, for all costs and expenses of procuring
such insurance.
8.04 Corporate Franchises. Holdings will, and will cause
each of its Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that nothing in
this Section 8.04 shall prevent (i) sales of assets by Holdings or any of its
Subsidiaries in accordance with Section 9.02 or (ii) the withdrawal by Holdings
or any of its Subsidiaries of their qualification as a foreign corporation in
any jurisdiction where such withdrawal could not reasonably be expected to have
a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrowers
taken as a whole or of Holdings and its Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. Holdings will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such noncompliances as could
not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrowers
taken as a whole or of Holdings and its Subsidiaries taken as a whole.
8.06 Compliance with Environmental Laws. (a) Holdings will
comply, and will cause each of its Subsidiaries to comply, in all material
respects with all Environmental Laws applicable to the ownership or use of its
Real Property now or hereafter owned or operated by Holdings or any of its
Subsidiaries, will within a reasonable time-period pay or cause to be paid all
costs and expenses incurred in connection with such compliance, and will keep
or cause to be kept all such Real Property free and clear of any Liens imposed
pursuant to such Environmental Laws. Neither Holdings nor any of its
Subsidiaries will generate, use, treat, store, release or dispose of, or permit
the generation, use, treatment, storage, release or disposal of Hazardous
Materials on any Real Property now or hereafter owned or operated by
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Holdings or any of its Subsidiaries, or transport or permit the transportation
of Hazardous Materials to or from any such Real Property except for Hazardous
Materials used or stored at any such Real Properties in material compliance
with all applicable Environmental Laws and reasonably required in connection
with the operation, use and maintenance of any such Real Property.
(b) At the written request of the Agent or the Required
Banks, which request shall specify in reasonable detail the basis therefor, at
any time and from time to time, the Borrowers will provide, at the Borrowers'
joint and several cost and expense, an environmental site assessment report
concerning any Real Property now or hereafter owned or operated by Holdings or
any of its Subsidiaries, prepared by an environmental consulting firm approved
by the Agent, indicating the presence or absence of Hazardous Materials and the
potential cost of any removal or remedial action in connection with any
Hazardous Materials on such Real Property, provided that such request may be
made only if (i) there has occurred and is continuing an Event of Default, (ii)
the Agent reasonably believes that Holdings or any of its Subsidiaries or any
such Real Property is not in material compliance with Environmental Law, or
(iii) circumstances exist that reasonably could be expected to form the basis
of a material Environmental Claim against Holdings or any of its Subsidiaries
or any such Real Property. If the Borrowers fail to provide the same within 90
days after such request was made, the Agent may order the same, and the
Borrowers shall grant and hereby grants to the Agent and the Banks and their
agents access to such Real Property and specifically grants the Agent and the
Banks an irrevocable non-exclusive license, subject to the rights of tenants,
to undertake such an assessment, all at the Borrowers' joint and several
expense.
8.07 ERISA. As soon as possible and, in any event, within
20 days after Holdings or any of its Subsidiaries or any ERISA Affiliate knows
or has reason to know of the occurrence of any of the following, Holdings or
the Borrowers will deliver to each of the Banks a certificate of an Authorized
Representative of the Borrowers setting forth details as to such occurrence and
the action, if any, that Holdings, the Borrowers, such Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any notices required
or proposed to be given to or filed with or by Holdings, the Borrowers, such
Subsidiary, the ERISA Affiliate, the PBGC, or a Plan participant or the Plan
administrator with respect thereto: that a Reportable Event has occurred
(except to the extent that Holdings or the Borrowers have previously delivered
to the Banks a certificate and notices (if any) concerning such event pursuant
to the next clause hereof); that a contributing sponsor (as defined in Section
4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the
advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to subparagraph (b)(1) thereof), and an event described in
subsection .62, .63, .64, .65, .66, .67 or. 68
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of PBGC Regulation Section 4043 is reasonably expected to occur with respect to
such Plan within the following 30 days; that an accumulated funding deficiency,
within the meaning of Section 412 of the Code or Section 302 of ERISA, has been
incurred or an application is likely to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code or Section 303 or 304 of
ERISA with respect to a Plan; that a contribution required to be made to a Plan
or Foreign Pension Plan has not been timely made; that a Plan has been or is
reasonably expected to be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that a Plan has an Unfunded Current
Liability giving rise to a lien under ERISA or the Code; that proceedings are
likely to be or have been instituted or notice has been given to terminate or
appoint a trustee to administer a Plan which is subject to Title IV of ERISA;
that a proceeding has been instituted pursuant to Section 515 of ERISA to
collect a delinquent contribution to a Plan; that Holdings, any of its
Subsidiaries or any ERISA Affiliate will or is reasonably expected to incur any
liability (including any indirect, contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062,
4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect to a Plan under
Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409 or 502(i) or
502(l) of ERISA; or that Holdings or any Subsidiary is reasonably expected to
incur any material liability pursuant to any employee welfare benefit plan (as
defined in Section 3(l) of ERISA) that provides benefits to retired employees
or other former employees (other than as required by Section 601 of ERISA) or
any Plan or Foreign Pension Plan. Upon request, the Borrowers will deliver to
each of the Banks a complete copy of the annual report (Form 5500) of each Plan
required to be filed with the Internal Revenue Service. In addition to any
certificates or notices delivered to the Banks pursuant to the first sentence
hereof, copies of annual reports and any material notices received by Holdings
or any of its Subsidiaries or any ERISA Affiliate with respect to any Plan or
Foreign Pension Plan shall be delivered to the Banks no later than 20 days
after the date such report has been filed with the Internal Revenue Service or
such notice has been received by Holdings, the Subsidiary or the ERISA
Affiliate, as applicable.
8.08 End of Fiscal Years: Fiscal Quarters. Holdings shall
cause (i) each of its, and each of its Subsidiaries', Fiscal Years to end on
June 30 and (ii) each of its, and each of its Subsidiaries', fiscal quarters to
end in a manner consistent therewith.
8.09 Performance of Obligations. Holdings will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement and other debt instrument
by which it is bound, except such non-performances as could not, individually
or in the aggregate, reasonably be expected to have a material adverse effect
on the business, operations, property, assets,
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liabilities, condition (financial or otherwise) or prospects of the Borrowers
taken as a whole or of Holdings and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. Holdings will pay and discharge or
cause to be paid and discharged, and will cause each of its Subsidiaries to pay
and discharge, all material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any material
properties belonging to it, in each case on a timely basis, and all lawful
claims which, if unpaid, might become a lien or charge upon any properties of
Holdings or any of its Subsidiaries; provided that neither Holdings nor any of
its Subsidiaries shall be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by proper proceedings
if it has maintained adequate reserves with respect thereto in accordance with
generally accepted accounting principles.
8.11 Further Assurances. (a) Holdings will, and will cause
each of its Subsidiaries to, at the joint and several expense of the Borrowers,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral
Agent from time to time such vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers
of attorney, certificates, reports, and other assurances or instruments and
take such further steps relating to the Collateral covered by any of the
Security Documents as the Collateral Agent may reasonably require pursuant to
this Section 8.11. Furthermore, the Borrowers shall cause to be delivered to
the Collateral Agent such opinions of counsel and other related documents as
may be requested by the Collateral Agent to assure itself that this Section
8.11 has been complied with.
(b) Holdings and the Borrowers agree that each action
required above by Section 8.11 (a) shall be completed as soon as possible, but
in no event later than 60 days after such action is requested to be taken by
the Agent or the Required Banks.
8.12 Ownership of Subsidiaries. Holdings shall at all
times own 100% of the outstanding capital stock of the Borrowers, and the
Borrowers shall directly own at least a majority of the outstanding capital
stock of each of their respective Subsidiaries as described on Schedule III
hereof and which may be created after the Initial Borrowing Date in accordance
with Section 9.14.
8.13 Acknowledgment Agreement. On the Initial Borrowing
Date and immediately after giving effect to the Transaction, Lacek Systems (as
successor by merger to NIS No. 2) shall execute and deliver an Acknowledgment
Agreement in the form of Exhibit L hereto.
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8.14 NSI Credit Agreement. Neodata hereby agrees to comply
with each of the covenants contained in Sections 8.01 through 8.13 of the NSI
Credit Agreement and Sections 9.01 through 9.14 of the NSI Credit Agreement,
which Sections, together with all definitions in the NSI Credit Agreement
applicable to such Sections, are hereby incorporated by reference as if set
forth herein as they relate to Neodata.
SECTION 9. Negative Covenants. Holdings and the Borrowers
covenant and agree that on and after the Effective Date and thereafter so long
as this Agreement is in effect and until no Term Notes are outstanding and the
Term Loans, together with interest, Fees and all other Obligations incurred
hereunder and thereunder, are paid in full:
9.01 Liens. Holdings will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets (including sales of accounts receivable with recourse to Holdings or
any of its Subsidiaries), or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute; provided that the provisions
of this Section 9.01 shall not prevent the creation, incurrence, assumption or
existence of the following (Liens described below are herein referred to as
"Permitted Liens"):
(i) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due and payable or Liens for taxes,
assessments or governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves have
been established in accordance with generally accepted accounting
principles in the United States;
(ii) Liens in respect of property or assets of the
Borrowers or any of their respective Subsidiaries imposed by law,
which were incurred in the ordinary course of business and do not
secure Indebtedness for borrowed money, such as carriers',
warehousemen's, materialmen's and mechanics' liens and other similar
Liens arising in the ordinary course of business, and (x) which do not
in the aggregate materially detract from the value of the Borrowers'
or such Subsidiary's property or assets or materially impair the use
thereof in the operation of the business of the Borrowers or such
Subsidiary or (y) which are being contested in good faith by
appropriate proceedings, which proceedings
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have the effect of preventing the forfeiture or sale of the property
or assets subject to any such Lien;
(iii) Liens in existence on the Effective Date which are
listed, and the property subject thereto described, in Schedule VI,
but only to the respective date, if any, set forth in such Schedule VI
for the removal and termination of any such Liens, plus renewals,
replacements and extensions of such Liens to the extent set forth on
Schedule VI, provided that (x) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens does not increase from
that amount outstanding at the time of any such renewal or extension
and (y) any such renewal or extension does not encumber any additional
assets or properties of Holdings or any of its Subsidiaries;
(iv) Liens created pursuant to the Security Documents;
(v) licenses, leases or subleases granted to other
Persons in the ordinary course of business not materially interfering
with the conduct of the business of Holdings or any of its
Subsidiaries taken as a whole;
(vi) Liens upon assets subject to Capitalized Lease
Obligations to the extent permitted by Section 9.04, provided that (x)
such Liens only serve to secure the payment of Indebtedness arising
under such Capitalized Lease Obligation and (y) the Lien encumbering
the asset giving rise to the Capitalized Lease Obligation does not
encumber any other asset of the Borrowers or any Subsidiary of the
Borrowers;
(vii) Liens placed upon equipment or machinery used in the
ordinary course of business of the Borrowers or any of their
Subsidiaries at the time of acquisition thereof by the Borrowers or
any such Subsidiaries or within 150 days thereafter to secure
Indebtedness incurred to pay all or a portion of the purchase price
thereof, and all renewals, replacements and extensions thereof,
provided that (x) the aggregate outstanding principal amount of all
Indebtedness secured by Liens permitted by this clause (vii) shall not
at any time exceed $100,000 at any time outstanding and (y) in all
events, the Lien encumbering the equipment or machinery so acquired
does not encumber any other asset of the Borrowers or such Subsidiary;
(viii) easements, rights-of-way, restrictions (including
zoning restrictions), encroachments, protrusions and other similar
charges or encumbrances, and minor title deficiencies, in each case
whether now or hereafter in existence,
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not securing Indebtedness and not materially interfering with the
conduct of the business of the Borrowers or any of their respective
Subsidiaries;
(ix) Liens arising from precautionary UCC financing
statement filings regarding operating leases entered into by the
Borrowers or any of their Subsidiaries in the ordinary course of
business;
(x) Liens arising out of the existence of judgments or
awards not constituting an Event of Default under Section 10.09,
provided that no cash or property is deposited or delivered to secure
the respective judgment or award (or any appeal bond in respect
thereof, except as permitted by following clause (xii));
(xi) statutory and contractual landlords' liens under
leases to which the Borrowers or any of their Subsidiaries is a party;
(xii) Liens (other than any Lien imposed by ERISA) (x)
incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and
other types of social security or (y) to secure the performance of
tenders, statutory obligations (other than excise taxes), surety,
stay, customs and appeal bonds, statutory bonds, bids, leases,
government contracts, trade contracts, performance and return of money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money) and (z) deposits made in the ordinary
course of business to secure liability for premiums to insurance
carriers, provided that the aggregate amount of deposits at any time
pursuant to clauses (y) and (z) shall not exceed $100,000 in the
aggregate;
(xiii) any interest or title of a lessor, sublessor,
licensee or licensor under any lease or license agreement permitted by
this Agreement;
(xiv) Liens in favor of a banking institution arising as
matter of law encumbering the deposits (including the right of setoff)
held by such banking institution incurred in the ordinary course of
business and which are within the general parameters customary in the
banking industry; and
(xv) Liens in favor of customs and revenue authorities
arising as a matter of law to secure the payment of customs duties in
connection with the importation of goods;
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<PAGE> 56
(xvi) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered
into by the Borrowers or any of their Subsidiaries in the ordinary
course of business in accordance with the past practices of the
Borrowers and their Subsidiaries prior to the Initial Borrowing Date;
(xvii) deposits made to secure statutory obligations in
the form of excise taxes;
(xviii) Liens arising out of barter transactions or
arrangements for the sale or purchase of goods or services entered
into by the Borrowers or any of their Subsidiaries in the ordinary
course of business in accordance with the past practices of the
Borrowers and their Subsidiaries prior to the Initial Borrowing Date;
and
(xix) Liens not otherwise permitted by the foregoing clauses
(i) through (xviii) to the extent attaching to properties and assets
with an aggregate fair value not in excess of, and securing
liabilities not in excess of, $100,000 in the aggregate at any time
outstanding.
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.
Holdings will not, and will not permit any of its Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any time prior to the Final Maturity Date except with
the Agent's prior written consent) all or any part of its property or assets,
or enter into any sale-leaseback transactions, or purchase or otherwise acquire
(in one or a series of related transactions) any part of the property or assets
(other than purchases or other acquisitions of inventory, materials, equipment
and intangible assets in the ordinary course of business) of any Person, except
that:
(i) Capital Expenditures by the Borrowers and their
respective Subsidiaries shall be permitted to the extent not in
violation of Section 9.07;
(ii) each of the Borrowers and their respective Subsidiaries
may (x) in the ordinary course of business, sell, lease or otherwise
dispose of any assets which, in the reasonable judgment of such
Person, are obsolete, worn out or otherwise no longer useful in the
conduct of such Person's business and (y) sell, lease or otherwise
dispose of any other assets, provided that the aggregate Net Sale
Proceeds of all assets subject to sales or other dispositions
pursuant to this clause (ii) which are not reinvested to acquire
Reinvestment Assets in accordance with Section 3.02(b) shall not
exceed $50,000 in any Fiscal Year;
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<PAGE> 57
(iii) sales of assets the Net Sale Proceeds of which are used to
acquire Reinvestment Assets in accordance with Section 3.02(b);
(iv) investments may be made to the extent permitted by Section
9.05;
(v) each of the Borrowers and their Subsidiaries may lease (as
lessee) real or personal property in the ordinary course of business
(so long as any such lease does not create a Capitalized Lease
Obligation except to the extent permitted by Section 9.04);
(vi) each of the Borrowers and their Subsidiaries may make
sales or transfers of inventory in the ordinary course of business
and consistent with past practices;
(vii) each of the Borrowers and their Subsidiaries may sell or
discount, in each case without recourse and in the ordinary course of
business, accounts receivable arising in the ordinary course of
business (x) which are overdue or (y) which the Borrowers may
reasonably determine are difficult to collect, but only in connection
with the compromise or collection thereof consistent with customary
industry practice (and not as part of any bulk sale or financing of
receivables);
(viii) transfers of condemned property to the respective
governmental authority or agency that have condemned same (whether by
deed in lieu of condemnation or otherwise), and transfers of
properties that have been subject to a casualty to the respective
insurer of such property as part of an insurance settlement, so long
as the proceeds thereof are applied as required by Section 3.02(c);
(ix) license or sublicenses by the Borrowers and their
Subsidiaries of software, trademarks and other intellectual property
in the ordinary course of business and which do not materially
interfere with the business of the Borrowers or any Subsidiary;
(x) any Domestic Subsidiary of the Borrowers may transfer
assets to either Borrower or to any Domestic Wholly-Owned Subsidiary
of the Borrowers so long as the security interests granted to the
Collateral Agent for the benefit of the Secured Creditors pursuant to
the Security Documents in the assets so transferred shall remain in
full force and effect and protected (to at least the same extent as
in effect immediately prior to such transfer);
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(xi) any Domestic Subsidiary of the Borrowers may merge with
and into, or be dissolved or liquidated into, either Borrower or any
Domestic Wholly-Owned Subsidiary of the Borrowers so long as (i) such
Borrower or Domestic Wholly-Owned Subsidiary is the surviving
corporation of such merger, dissolution or liquidation and (ii) the
security interests granted to the Collateral Agent for the benefit of
the Secured Creditors pursuant to the Security Documents in the
assets of such Domestic Subsidiary shall remain in full force and
effect and perfected (to at least the same extent as in effect
immediately prior to such merger);
(xii) the assets of any Foreign Subsidiary may be transferred to
the Borrowers or any of their respective Domestic Wholly-Owned
Subsidiaries, and any Foreign Subsidiary may be merged with and into,
or be dissolved or liquidated into the Borrowers or any of their
respective Domestic Wholly-Owned Subsidiaries so long as such
Borrower or Domestic Wholly-Owned Subsidiary is the surviving
corporation of any such merger, dissolution or liquidation; and
(xiii) any Foreign Subsidiary may be merged with and into, or be
dissolved or liquidated into, or transfer any of its assets to, any
Foreign Wholly-Owned Subsidiary so long as in each case at least 65%
of the total combined voting power of all classes of capital stock
of all first-tier Foreign Subsidiaries are pledged pursuant to the
Holdings/Sub Pledge Agreement.
To the extent the Required Banks waive the provisions of this Section 9.02
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 9.02, such Collateral (unless sold to either
Borrower or any of their respective Subsidiaries) shall be sold free and
clear of the Liens created by the Security Documents, and the Agent and
Collateral Agent shall be authorized to take any actions deemed appropriate
in order to effect the foregoing.
9.03 Dividends. Holdings shall not, and shall not permit any of
its Subsidiaries to, authorize, declare or pay any Dividends with respect to
Holdings or any of its Subsidiaries, except that:
(i) any Subsidiary of any Borrower may pay Dividends to such
Borrower or any Wholly-Owned Subsidiary of the Borrowers; and
(ii) the Borrowers may pay cash Dividends to Holdings for the
purpose of paying, so long as all proceeds thereof are promptly used
by Holdings to pay, (x) taxes (excluding taxes covered by the Neodata
Tax Allocation Agreement) required to be paid directly by Holdings
and (y) its
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operating expenses incurred in the ordinary course of business and
other corporate overhead costs and expenses (including, without
limitation, legal and accounting expenses and similar expenses),
provided that the aggregate amount of cash Dividends paid pursuant to
this clause (ii) shall not exceed $30,000 during any Fiscal Year.
9.04 Indebtedness. Holdings will not, and will not permit any
of its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Existing Indebtedness shall be permitted to the extent the
same is listed on Schedule IV, without giving effect to any
subsequent extension, renewal or refinancing thereof;
(iii) accrued expenses and current trade accounts payable
incurred in the ordinary course of business;
(iv) Indebtedness under Interest Rate Protection Agreements and
Other Hedging Agreements on terms acceptable to the Agent;
(v) Indebtedness evidenced by Capitalized Lease Obligations to
the extent permitted pursuant to Section 9.07;
(vi) Indebtedness subject to liens permitted under Section
9.01(vii);
(vii) Contingent Obligations of the Borrowers or any of their
Subsidiaries as a guarantor of the lessee under any lease pursuant to
which the Borrowers or a Subsidiary of the Borrowers is the lessee so
long as such lease is otherwise permitted hereunder;
(viii) additional unsecured and subordinated Indebtedness of the
Borrowers owing to NSI in an aggregate principal amount not to exceed
$500,000 outstanding at any time, provided that (A) such Indebtedness
shall contain the subordination provisions set forth on Exhibit M and
(B) in no event shall any payments of principal, interest or other
amounts be required to be made on such Indebtedness at any time that
any Loans or Notes remain outstanding, the Commitment has not been
terminated or any other Obligations remain outstanding;
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(ix) Indebtedness of the Borrowers permitted by Sections
9.05(ix);
(x) accounts payable, arising from time to time after the
Initial Borrowing Date, incurred by the Borrowers as a result of
services rendered by Lacek Korea or Lacek Australia, as the case may
be, to the extent permitted by Section 9.06(vi), which accounts
payable, at the time of the creation thereof, do not exceed the costs
(determined on any reasonable basis) incurred by Lacek Korea or Lacek
Australia, as the case may be, in providing the respective services
to such Borrower; provided that the proceeds from any payments
received by Lacek Korea or Lacek Australia, as the case may be, are
promptly used within ten Business Days by Lacek Korea or Lacek
Australia, as the case may be, to pay its operating expenses incurred
in the ordinary course of business and other corporate overhead costs
and expenses; and
(xi) additional unsecured Indebtedness of the Borrowers or any
of their respective Subsidiaries not to exceed $250,000 in aggregate
principal amount outstanding at any one time.
9.05 Advances, Investments and Loans. Holdings will not, and
will not permit any of its Subsidiaries to, directly or indirectly, lend money
or credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash or Cash Equivalents, except that the following shall be permitted:
(i) the Borrowers and their Subsidiaries may acquire and hold
accounts receivables owing to any of them, if created or acquired in
the ordinary course of business and payable or dischargeable in
accordance with customary terms;
(ii) the Borrowers and their Subsidiaries may acquire and hold
cash and Cash Equivalents;
(iii) the Borrowers may enter into Interest Rate Protection
Agreements and Other Hedging Agreements to the extent permitted by
Section 9.04(iv);
(iv) the Borrowers may establish Subsidiaries to the extent
permitted by Section 9.14;
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(v) promissory notes and other similar non-cash consideration
received by the Borrowers or any of their Subsidiaries in connection
with dispositions permitted by Section 9.02 so long as the aggregate
principal amount thereof does not exceed $75,000 at any one time
outstanding;
(vi) the Borrowers and their Subsidiaries may acquire and own
investments (including debt obligations) received in connection with
the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(vii) advances, loans and investments in existence on the
Effective Date and set forth on Schedule VII without giving effect to
any additions thereto or replacements thereof, shall be permitted;
and
(viii) the Borrowers and their Subsidiaries may make loans and
advances to its officers, employees and directors for moving,
entertainment, travel and other similar expenses, in each case
incurred in the ordinary course of business, in an aggregate
outstanding principal amount not to exceed $75,000 at any time; and
(ix) advances, investments or loans by the Borrowers to or in
any Domestic Wholly-Owned Subsidiary of such Borrower.
9.06 Transactions with Affiliates. Holdings will not, and will
not permit any of its Subsidiaries to, enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of Holdings or any of its Subsidiaries, other than in the
ordinary course of business and on terms and conditions substantially as
favorable to Holdings or such Subsidiary as would reasonably be obtained by
Holdings or such Subsidiary at that time in a comparable arm's-length
transaction with a Person other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in Section
9.03;
(ii) customary fees may be paid to non-officer directors of the
Borrowers and their Subsidiaries;
(iii) the Borrowers and their Subsidiaries may enter into
employment arrangements with respect to the procurement of services
of their respective officers and employees in the ordinary course of
business;
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(iv) the Borrowers and their Subsidiaries may make payments
under the Neodata Tax Allocation Agreement;
(v) transactions between or among the Borrowers and NSI to the
extent such transactions are otherwise permitted under this
Agreement;
(vi) the Borrowers may make payments to Lacek Korea and Lacek
Australia in respect of services rendered by Lacek Korea and Lacek
Australia; and
(viii) Holdings and/or the Borrowers may make payments required
by the Acquisition Document.
Except as specifically provided above, no management or similar fees
shall be paid or payable by Holdings or any of its Subsidiaries to any Person.
9.07 Capital Expenditures. (a) Holdings will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures, except that
during any Fiscal Year the Borrowers and their Subsidiaries may make Capital
Expenditures so long as the aggregate amount of such Capital Expenditures made
under this Section 9.07(a) does not exceed in any Fiscal Year set forth below
the amount set forth opposite such Fiscal Year:
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
June 30, 1997 $ 60,000
June 30, 1998 $120,000
June 30, 1999 $ 20,000
</TABLE>
(b) Notwithstanding anything to the contrary contained in
clause (a) above, to the extent that the aggregate amount of Capital
Expenditures made by the Borrowers and their Subsidiaries (excluding only those
Capital Expenditures made pursuant to clause (c)) in any Fiscal Year are less
than the amount set forth above with respect to such Fiscal Year, up to 50% of
the amount of such difference may be carried forward and used to make Capital
Expenditures in the immediately succeeding Fiscal Year.
(c) In addition to the Capital Expenditures permitted pursuant
to preceding clauses (a) and (b), the Borrowers and their Subsidiaries may make
additional Capital Expenditures as follows: (i) Capital Expenditures consisting
of the reinvestment
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of Net Sale Proceeds of asset sales not required to repay the Term Loans
pursuant to Section 3.02(a) as a result of (x) clause (ii) of the first
parenthetical phrase contained therein and (y) the acquisition of Reinvestment
Assets pursuant to the proviso thereto and (ii) the reinvestment of proceeds of
Recovery Events not required to repay the Term Loans pursuant to Section
3.02(b).
9.08 Minimum Consolidated Interest Coverage Ratio. Holdings and
the Borrowers will not permit the Consolidated Interest Coverage Ratio for any
Test Period (taken as one accounting period) ended on the last day of a fiscal
quarter of the Borrowers described below to be less than the amount set forth
opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended
Closest
to the Last Day In Ratio
------------------ -----
<S> <C>
March, 1997 25.50:1.0
June, 1997 6.25:1.0
September, 1997 3.75:1.0
December, 1997 2.70:1.0
March, 1998 2.50:1.0
June, 1998 2.50:1.0
and thereafter
</TABLE>
9.09 Minimum Consolidated EBITDA. Holdings and the Borrowers
will not permit Consolidated EBITDA for any Test Period, in each case taken as
one accounting period, ended on the last day of a fiscal quarter of the
Borrowers set forth below to be less than the amount set forth opposite such
fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended
Closest
to the Last Day In Amount
------------------ ------
<S> <C>
March, 1997 $850,000
June, 1997 $850,000
September, 1997 $900,000
December, 1997 $900,000
March, 1998 $950,000
June, 1998 $1,000,000
and thereafter
</TABLE>
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9.10 Limitation on Modifications of Indebtedness and Payments of
Indebtedness: Modifications of Certificate of Incorporation, By-Laws and
Certain Other Agreements: etc., Holdings will not, and will not permit any of
its Subsidiaries to (i) amend or modify, or permit the amendment or
modification of, any provision of the Existing Indebtedness, any Tax Allocation
Agreement, the Acquisition Documents or of any agreement (including, without
limitation, any purchase agreement, indenture, loan agreement or security
agreement) relating thereto other than any amendments or modifications to the
Existing Indebtedness or the Acquisition Documents which do not in any way
materially adversely affect the interests of the Banks, (ii) make (or give any
notice in respect of) any voluntary or optional payment or prepayment on or
redemption or acquisition for value of, or any prepayment or redemption as a
result of any asset sale, change of control or similar event of, any Existing
Indebtedness, (iii) make (or give any notice in respect of) any payment or
prepayment in respect of any principal, interest or other amounts owing in
respect of any Indebtedness permitted pursuant to Section 9.04(viii); or (iv)
amend, modify or change its Certificate of Incorporation (including, without
limitation, by the filing or modification of any certificate of designation) or
By-Laws, or any agreement entered into by it, with respect to its capital stock
(including any Shareholders' Agreement), or enter into any new agreement with
respect to its capital stock, other than any amendments, modifications or
changes pursuant to this clause (iv) or any such new agreements pursuant to
this clause (iv) which do not in any way materially adversely affect the
interests of the Banks.
9.11 Limitation on Certain Restrictions on Subsidiaries.
Holdings will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or other-wise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by Holdings or any Subsidiary of
Holdings, or pay any Indebtedness owed to Holdings or a Subsidiary of Holdings,
(b) make loans or advances to Holdings or any Subsidiary of Holdings or (c)
transfer any of its properties or assets to Holdings or any other Subsidiary,
except for such encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Agreement and the other Credit Documents, (iii)
customary provisions restricting subletting or assignment of any lease
governing a lease-hold interest of the Borrowers or a Subsidiary of the
Borrowers and (iv) customary provisions restricting assignment of any licensing
agreement entered into by the Borrowers or a Subsidiary of the Borrowers in the
ordinary course of business.
9.12 Limitation on Issuance of Capital Stock. Holdings shall not
issue, or permit any of its Subsidiaries to issue (i) any preferred stock or
(ii) any redeemable
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common stock unless, in either case, all terms thereof are satisfactory to the
Required Banks in their sole discretion, provided that Subsidiaries formed
after the Effective Date pursuant to Section 9.14 may issue capital stock to
the Borrowers or the respective Subsidiary of the Borrowers which is to own
such stock. All capital stock issued in accordance with the proviso in the
preceding sentence shall, to the extent required by the Holdings/Sub Pledge
Agreement, be delivered to the Collateral Agent for pledge pursuant to the
Holdings/Sub Pledge Agreement.
9.13 Changes in Business. (a) The Borrowers and their
Subsidiaries will not engage in any business other than the business engaged in
by them as of the Effective Date and activities directly related thereto, and
businesses complementary to the business or similar or related businesses.
(b) Holdings will engage in no business other than its
ownership of the capital stock of the Borrowers.
9.14 Limitation on Creation of Subsidiaries. Holdings will not,
and will not permit any its Subsidiaries to, establish, create or acquire any
Subsidiaries; provided that with the prior written consent of the Required
Banks, the Borrowers and their Wholly-Owned Subsidiaries may create, establish
or acquire Domestic Wholly-Owned Subsidiaries so long as (x) at least 15 days'
prior written notice thereof is given to the Agent, (y) 100% of the capital
stock of such new Subsidiary is pledged pursuant to the Holdings/Sub Pledge
Agreement and the certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the Collateral Agent and (z)
such new Subsidiary executes a counterpart of the Subsidiary Guaranty, the
Holdings/Sub Pledge Agreement and the Security Agreement. In addition, each new
Subsidiary shall execute and deliver, or cause to be executed and delivered,
all other relevant documentation of the type described in Section 4 as such new
Subsidiary would have had to deliver if such new Subsidiary were a Credit Party
on the Initial Borrowing Date.
SECTION 10. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
10.01 Payments. The Borrowers shall (i) default in the payment
when due of any principal of any Term Loan or any Term Note or (ii) default,
and such default shall continue unremedied for three or more Business Days, in
the payment when due of any interest on any Term Loan or Term Note, or any Fees
or any other amounts owing hereunder or thereunder; or
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10.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto shall prove to be untrue
in any material respect on the date as of which made or deemed made; or
10.03 Covenants. Holdings or the Borrowers shall (i) default in
the due performance or observance by it of any term, covenant or agreement
contained in Section 8.01(g)(i), 8.08, 8.12, Section 9 or Section 13.18 or (ii)
default in the due performance or observance by it of any other term, covenant
or agreement contained in this Agreement and such default shall continue
unremedied for a period of 30 days after written notice to the Borrowers by the
Agent or any Bank; or
10.04 Default Under Other Agreements. Neodata or any of its
Subsidiaries shall (i) default in any payment of any Indebtedness (other than
the Obligations) beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (ii) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Obligations) or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause
(determined without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity, or (iii) any
Indebtedness (other than the Obligations) of Neodata or any of its Subsidiaries
shall be declared to be due and payable, or required to be prepaid other than
by a regularly scheduled required prepayment, prior to the stated maturity
thereof, provided that it shall not be a Default or Event of Default under this
Section 10.04 unless the aggregate principal amount of all Indebtedness as
described in preceding clauses (i) through (iii), inclusive, is at least
$100,000; or
10.05 Bankruptcy, etc. Neodata or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against Neodata or any of its Subsidiaries and the petition is not controverted
within 10 days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of Neodata or any of
its Subsidiaries, or Neodata or any of its Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Neodata or any of
its Subsidiaries, or there is commenced against Neodata or any of its
Subsidiaries any such
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proceeding which remains undismissed for a period of 60 days, or Neodata or any
of its Subsidiaries is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or
Neodata or any of its Subsidiaries suffers any appointment of any custodian or
the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or Neodata or any of its
Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by Neodata or any of its Subsidiaries for the purpose
of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum
funding standard required for any plan year or part thereof or a waiver of such
standard or extension of any amortization period is sought or granted under
Section 412 of the Code, any Plan shall have had or, in the reasonable opinion
of the Required Banks, is reasonably expected to have a trustee appointed to
administer such Plan, any Plan is, shall have been or is reasonably expected to
be terminated or to be the subject of termination proceedings under ERISA, any
Plan shall have an Unfunded Current Liability, a contribution required to be
made to a Plan or a Foreign Pension Plan has not been made, Holdings or any of
its Subsidiaries or any ERISA Affiliate has incurred or is reasonably expected
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971, 4975 or 4980 of the Code, or Holdings or any of its
Subsidiaries has incurred or is reasonably expected to incur liabilities
pursuant to one or more employee welfare benefit plans (as defined in Section
3(1) of ERISA) which provide benefits to retired employees or other former
employees (other than as required by Section 601 of ERISA) or Plans or Foreign
Pension Plans; (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and in each case in clauses (a) and (b)
above, such lien, security interest or liability, in the reasonable opinion of
the Required Banks, will have a material adverse effect upon the business,
operations, property, assets, liabilities or condition (financial or otherwise)
of the Borrowers taken as a whole or of Holdings and its Subsidiaries taken as
a whole; or
10.07 Security Documents. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease in any material respect to give the Collateral Agent
for the benefit of the Secured Creditors the Liens, rights, powers and
privileges purported to be created thereby (including, without limitation, a
perfected security interest in, and Lien on, all of the Collateral), in favor
of the Collateral Agent, superior to and prior to the rights of all third
Persons (except as permitted by Section 9.01), and subject to no other Liens
(except as permitted by Section 9.01), or any Credit Party shall default in the
due performance or observance of any term, covenant or agreement on its part to
be performed
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or observed pursuant to any of the Security Documents and such default shall
continue beyond any grace period specifically applicable thereto pursuant to
the terms of such Security Document; or
10.08 Guaranties. Any Guaranty or any provision thereof shall
cease to be in full force or effect, or any Guarantor or any Person acting by
or on behalf of such Guarantor shall deny or disaffirm such Guarantor's
obligations under any Guaranty, or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be
entered against Holdings or any of its Subsidiaries involving in the aggregate
for Holdings and its Subsidiaries a liability (not paid or fully covered by a
reputable and solvent insurance company) and such judgments and decrees either
shall be final and non-appealable or shall not be vacated, discharged or
stayed or bonded pending appeal for any period of 60 consecutive days, and the
aggregate amount of all such judgments exceeds $100,000; or
10.10 Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent, upon the written request of the Required
Banks, shall by written notice to the Borrowers, take any or all of the
following actions, without prejudice to the rights of the Agent, any Bank or the
holder of any Term Note to enforce its claims against any Credit Party (provided
that, if an Event of Default specified in Section 10.05 shall occur with respect
to the Borrowers, the result which would occur upon the giving of written notice
by the Agent to the Borrowers as specified in clauses (i) and (ii) below shall
occur automatically without the giving of any such notice): (i) declare the
Total Term Loan Commitment terminated, whereupon the Term Loan Commitments of
each Bank shall forthwith terminate immediately and any Fees shall forthwith
become due and payable without any other notice of any kind; (ii) declare the
principal of and any accrued interest in respect of all Term Loans and the Term
Notes and all Obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit Party; (iii) enforce, as Collateral Agent, all of the Liens and security
interests created pursuant to the Security Documents; and (iv) apply any cash
collateral as provided in Section 3.02.
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SECTION II. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Acknowledgement Agreement" shall mean the Acknowledgement
Agreement substantially in the form of Exhibit L.
"Acquisitions" shall mean the Lacek Group Acquisition and the
Lacek Systems Acquisition.
"Acquisition Agreement" shall mean the Agreement and Plan of
Merger, Asset Purchase Agreement and Stock Purchase Agreement, dated February
21, 1997, by and among Mark A. Lacek, The Lacek Group, Lacek Systems, Lacek
Travel, Holdings, NIS No. 1 and NIS No. 2, as in effect on the Initial
Borrowing Date and as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof and hereof.
"Acquisition Corps." shall have the meaning provided in the
first paragraph of this Agreement.
"Acquisition Documents" shall mean the Acquisition Agreement and
the other documents entered into to consummate the Acquisitions.
"Adjusted Certificate of Deposit Rate" shall mean, on any day,
the sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by
dividing (x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market as
published in the most recent Federal Reserve System publication entitled
"Select Interest Rates," published weekly on Form H.15 as of the date hereof,
or if such publication or a substitute containing the foregoing rate
information shall not be published by the Federal Reserve System for any week,
the weekly average offering rate determined by the Agent on the basis of
quotations for such certificates received by it from three certificate of
deposit dealers in New York of recognized standing or, if such quotations are
unavailable, then on the basis of other sources reasonably selected by the
Agent, by (y) a percentage equal to 100% minus the stated maximum rate of all
reserve requirements as specified in Regulation D applicable on such day to a
three-month certificate of deposit of a member bank of the Federal Reserve
System in excess of $100,000 (including, without limitation, any marginal,
emergency, supplemental, special or other reserves), plus (2) the then daily
net annual assessment rate as estimated by the Agent for determining the
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current annual assessment payable by the Agent to the Federal Deposit Insurance
Corporation for insuring three-month certificates of deposit.
"Adjusted Consolidated Net Income" for any period shall mean
Consolidated Net Income for such period plus, without duplication, the sum of
the amount of (i) all net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense and non-cash interest expense,
but excluding any net non-cash charges reflected in Adjusted Consolidated
Working Capital) and (ii) net non-cash losses (including net non-cash losses
from the sale of assets) which were included in arriving at Consolidated Net
Income for such period.
"Affiliate" shall mean, with respect to any Person, any other
Person (including, for purposes of Section 9.06 only, all directors, officers
and partners of such Person) directly or indirectly controlling, controlled by,
or under direct or indirect common control with, such Person; provided,
however, that for purposes of Section 9.06, an Affiliate of Holdings shall
include any Person that directly or indirectly owns more than 5% of any class
of the capital stock of Holdings and any officer or director of Holdings or any
such Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" shall mean Bankers Trust Company, in its capacity as
Agent for the Banks hereunder, and shall include any successor to the Agent
appointed pursuant to Section 12.09.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated, extended, renewed or replaced from time to
time.
"Amended and Restated Neodata Pledge Agreement" shall have the
meaning provided in Section 4.09(a).
"Anticipated Reinvestment Amount" shall mean, with respect to
any Reinvestment Election, the amount specified in the Reinvestment Notice
delivered by an Authorized Representative of the Borrowers in connection
therewith as the amount that the Borrowers intend to use to purchase, construct
or otherwise acquire Reinvestment Assets.
"Applicable Margin" shall mean a percentage per annum equal to
(x) in the case of Base Rate Loans, 1.25% and (y) in the case of Eurodollar
Loans, 2.50%.
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"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit K (appropriately
completed).
"Authorized Representative" shall mean, with respect to (i)
delivering the Notice of Borrowing, Notices of Conversion and similar notices,
any person or persons that has or have been authorized by the respective boards
of the Borrowers to deliver such notices pursuant to this Agreement and that
has or have appropriate signature cards on file with the Agent and BTCo; (ii)
delivering financial information and officer's certificates pursuant to this
Agreement, any financial officer of Holdings; and (iii) any other matter in
connection with this Agreement or any other Credit Document, any officer (or a
person or persons so designated by any two officers) of Holdings.
"Bank" shall mean each financial institution listed on Schedule
I, as well as any Person which becomes a "Bank" hereunder pursuant to Section
13.04(b).
"Bankruptcy Code" shall have the meaning provided in Section
10.05.
"Base Rate" at any time shall mean the higher of (i) 1/2 of 1%
in excess of the Adjusted Certificate of Deposit Rate and (ii) the Prime
Lending Rate.
"Base Rate Loan" shall mean each Term Loan designated or deemed
designated as such by the Borrowers at the time of the incurrence thereof or
conversion thereto.
"Borrowers" shall mean (i) prior to the consummation of the
Acquisitions, Acquisition Corps. and (ii) after the consummation of the
Acquisitions, (x) NIS No. 1 (which will be renamed "The Lacek Group, Inc.")
and (y) Lacek Systems, as the surviving corporation of the merger with and into
NIS No. 2.
"Borrowing" shall mean the borrowing of one Type of Term Loan
from all the Banks on a given date (or resulting from a conversion or
conversions on such date) having in the case of Eurodollar Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section 1.
10(b) shall be considered part of the related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day which
shall be in New York City a legal holiday or a day on which banking
institutions are authorized or
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required by law or other government action to close and (ii) with respect to
all notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day which is a Business Day described in
clause (i) above and which is also a day for trading by and between banks in
the New York interbank Euro-dollar market.
"Capital Expenditures" shall mean, with respect to any Person,
all expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with
generally accepted accounting principles) and the amount of Capitalized Lease
Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations which, under generally accepted accounting principles, are
or will be required to be capitalized on the books of such Person, in each case
taken at the amount thereof accounted for as indebtedness in accordance with
such principles.
"Cash Equivalents" shall mean, as to any Person, (i) securities
issued or directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) time deposits and certificates
of deposit of any commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the laws of the United
States, any State thereof, the District of Columbia or any foreign jurisdiction
having capital, surplus and undivided profits aggregating in excess of
$200,000,000, with maturities of not more than one year from the date of
acquisition by such Person, (iii) repurchase obligations with a term of not
more than 90 days for underlying securities of the types described in clause
(i) above entered into with any bank meeting the qualifications specified in
clause (ii) above, (iv) commercial paper issued by any Person incorporated in
the United States rated at least A-1 or the equivalent thereof by Standard &
Poor's Rating Group or at least P-1 or the equivalent thereof by Moody's
Investors Service, Inc. and in each case maturing not more than one year after
the date of acquisition by such Person, (v) investments in money market funds
substantially all of whose assets are comprised of securities of the types
described in clauses (i) through (iv) above and (vi) deposit accounts
maintained in the ordinary course of business not in excess of $100,000 at any
single institution.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time
to time, 42 U.S.C. Section 9601 et seq.
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"Change of Control" shall mean (i) Holdings shall at any time
cease to own 100% of the capital stock of the Borrowers; (ii) NSI shall at any
time cease to own 100% of the capital stock of Holdings; (iii) Neodata shall at
any time cease to own 100% of the capital stock of NSI; (iv) at any time, and
for any reason whatsoever, (x) HM Group shall not have the right to elect, or
shall for any reason not have elected, a majority of the directors of Neodata
or (y) HM Group shall own less than a majority of the outstanding common stock
of Neodata, provided that a failure to meet the foregoing test set forth in
this sub-clause (y) shall not constitute a "Change of Control" if, and only if,
at all times when the foregoing test is not met each of the following three
tests are met: (1) HM Group shall own at least 15% of the outstanding common
stock of Neodata, (2) HM Group shall own at least 75% of the number of shares
(adjusted for stock splits, stock dividends and other similar events on an
equitable basis) of common stock of Neodata that it owned on the Initial
Borrowing Date and after giving effect thereto; or (v) at any time a "Change of
Control" under and as defined in the Senior Note Indenture shall have occurred.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date of this Agreement, and to any subsequent provision of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property with respect to which any
security interests have been granted (or purported to be granted) pursuant to
any Security Document, including, without limitation, all Pledge Agreement
Collateral, all Security Agreement Collateral and all cash and Cash Equivalents
delivered as collateral pursuant to Section 3.02 or 10 hereof.
"Collateral Agent" shall mean the Agent acting as collateral
agent for the Secured Creditors pursuant to the Security Documents.
"Collective Bargaining Agreements" shall have the meaning
provided in Section 4.05.
"Commitment Commission" shall have the meaning provided in
Section 2.01(a).
"Consolidated EBIT" shall mean, for any period, the Consolidated
Net Income of Holdings and its Consolidated Subsidiaries, before interest
expense and provision for taxes and without giving effect to any extraordinary
gains or losses or
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gains or losses from sales of assets other than inventory sold in the ordinary
course of business.
"Consolidated EBITDA" shall mean, for any period, Consolidated
EBIT, adjusted by adding thereto the amount of all amortization of intangibles
and depreciation that were deducted in arriving at Consolidated EBIT for such
period.
"Consolidated Indebtedness" shall mean, at any time, the sum of
the aggregate principal amount of all Indebtedness for borrowed money, and the
principal component of Capitalized Lease Obligations of Holdings and its
Consolidated Subsidiaries determined on a consolidated basis in accordance with
GAAP.
"Consolidated Interest Coverage Ratio" for any period shall mean
the ratio of Consolidated EBITDA to Consolidated Net Cash Interest Expense for
such period.
"Consolidated Net Cash Interest Expense" shall mean, for any
period, without duplication total cash interest expense (including that
attributable to Capitalized Lease Obligations in accordance with GAAP) of
Holdings and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of Holdings and its Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges paid with
respect to letters of credit and bankers' acceptance financing and net costs
under Interest Rate Protection Agreements, but excluding the amortization of
any deferred financing costs incurred in connection with this Agreement net of
the total consolidated cash interest income of Holdings and its Consolidated
Subsidiaries for such period.
"Consolidated Net Income" shall mean, for any period, the
consolidated net after tax income of Holdings and its Consolidated Subsidiaries
determined in accordance with GAAP.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to
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advance or supply funds (x) for the purchase or payment of any such primary
obligation or (y) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made (or, if less, the maximum amount of such primary obligation for which
such Person may be liable pursuant to the terms of the instrument evidencing
such Contingent Obligation) or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Term Note, the Subsidiary Guaranty and each Security Document.
"Credit Party" shall mean Neodata, Holdings, the Borrowers and
each Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Dividend" with respect to any Person shall mean that such
Person has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or delivery
of property (other than common stock of such Person) or cash to its
stockholders as such, or redeemed, retired, purchased or otherwise acquired,
directly or indirectly, for a consideration any shares of any class of its
capital stock outstanding on or after the Effective Date (or any options or
warrants issued by such Person with respect to its capital stock), or set aside
any funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding on or after the
Effective Date (or any options or warrants issued by such Person with respect
to its capital stock). Without limiting the foregoing, "Dividends" with respect
to any Person shall also include all payments made or required to be made by
such Person with respect to any stock
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appreciation rights, plans, equity incentive or achievement plans or any
similar plans or setting aside of any funds for the foregoing purposes.
"Documents" shall mean the Credit Documents and the Acquisition
Documents.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Domestic Subsidiary" with respect to any Person shall mean any
Subsidiary of such Person incorporated or organized under the laws of the
United States or any State or territory thereof.
"Domestic Wholly-Owned Subsidiary" of any Person shall mean each
Wholly-Owned Subsidiary of such Person which is also a Domestic Subsidiary.
"Effective Date" shall have the meaning provided in Section
13.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation
D of the Securities Act).
"Employee Benefit Plans" shall have the meaning provided in
Section 4.05.
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment
due to the presence of Hazardous Materials.
"Environmental Law" means any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule of
common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation
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thereof, including any judicial or administrative order, consent decree or
judgment, to the extent binding on the Borrower or any of its Subsidiaries,
relating to the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et
seq.; the Safe Drinking Water Act, 42 U.S.C. Section 3803 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; the Emergency Planning
and the Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.;
the Hazardous Material Transportation Act, 49 U.S.C. Section 1801 et seq.; and
the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq. (to the
extent it regulates occupational exposure to Hazardous Materials); and any
state and local or foreign counterparts or equivalents, in each case as amended
from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Holdings or any Subsidiary of Holdings would
be deemed to be a "single employer" (i) within the meaning of Section 414(b),
(c), (m) or (o) of the Code or (ii) as a result of Holdings or a Subsidiary of
Holdings being or having been a general partner of such person.
"Eurodollar Loan" shall mean each Term Loan designated as such
by the Borrowers at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to
first-class banks in the New York interbank Eurodollar market by BTCo for
Dollar deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Eurodollar Loan of BTCo with maturities
comparable to the Interest Period applicable to such Eurodollar Loan commencing
two Business Days thereafter as of 10:00 A.M. (New York time) on the date which
is two Business Days prior to the commencement of such Interest Period, divided
(and rounded off to the nearest 1/16 of 1%) by (b) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves required by applicable law) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
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"Event of Default" shall have the meaning provided in Section
10.
"Existing Credit Agreements" shall mean and include each of (i)
the Secured Loan Agreement, dated November 1, 1996, between The Lacek Group,
Inc. and David R. Ruch, as in effect on the Effective Date, (ii) the Secured
Loan Agreement, dated November 1, 1996, between Lacek Systems and Software,
Inc. and David R. Ruch, as in effect on the Effective Date, and (iii) the
Installment Promissory Note, dated August 21, 1996, between Lacek Travel
Services, Inc. and Norwest Bank Minnesota, National Association, as in effect
on the Effective Date.
"Existing Debt Agreements" shall have the meaning provided in
Section 4.05.
"Existing Indebtedness" shall have the meaning provided in
Section 7.2 1.
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fees" shall mean all amounts payable pursuant to or referred to
in Section 2.01.
"Final Maturity Date" shall mean August 24, 1998.
"Fiscal Year" shall mean any fiscal year of Holdings or the
Borrowers, as the case may be.
"Foreign Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by Holdings or
any one or more of its Subsidiaries primarily for the benefit of employees of
Holdings or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA or
the Code.
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"Foreign Subsidiary" with respect to any Person shall mean a
Subsidiary of such Person other than a Domestic Subsidiary.
"Foreign Wholly-Owned Subsidiary" shall mean each Wholly-Owned
Subsidiary of such Person which is also a Foreign Subsidiary.
"GAAP" shall have the meaning provided in Section 13.07(a).
"Guaranteed Obligations" shall mean all obligations of the
Borrowers (i) to each Bank for the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of the principal and
interest on each Term Note issued by the Borrowers to such Bank, and Term Loans
made, under this Agreement, together with all the other obligations and
liabilities (including, without limitation, indemnities, Fees and interest
thereon) of the Borrowers to such Bank now existing or hereafter incurred
under, arising out of or in connection with this Agreement or any other Credit
Document and the due performance and compliance with all the terms, conditions
and agreements contained in the Credit Documents by the Borrowers and (ii) to
each Bank and each Affiliate of a Bank which enters into an Interest Rate
Protection Agreement and/or Other Hedging Agreement with the Borrowers, which
by its express terms are entitled to the benefit of the Parents Guaranty
pursuant to Section 14 with the written consent of the Parents, the full and
prompt payment when due (whether by acceleration or otherwise) of all
obligations of the Borrowers owing under any such Interest Rate Protection
Agreement and/or Other Hedging Agreement, whether now in existence or hereafter
arising, and the due performance and compliance with all terms, conditions and
agreements contained therein.
"Guaranty" shall mean and include each of the Parents Guaranty
and the Subsidiary Guaranty.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, friable asbestos, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million, and radon gas; (b) any chemicals, materials or substances defined as
or included in the definition of "hazardous substances," "hazardous waste,"
"hazardous materials," "extremely hazardous substances," "restricted hazardous
waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority under
Environmental Laws.
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"HM Group" shall mean, collectively, (i) Hicks, Muse, Tate &
Furst Incorporated and its Affiliates (including, without limitation, HMEF),
(ii) so long as Hicks, Muse, Tate & Furst Incorporated and its Affiliates
possess sole voting right with respect to the capital stock held by each such
individual, such individuals who are or were employees, officers, directors or
partners of Hicks, Muse, Tate & Furst Incorporated or such Affiliate and the
family members of such individuals or trusts created for the sole benefit of
such family members and (iii) so long as Hicks, Muse, Tate & Furst Incorporated
and its Affiliates possess sole voting right with respect to the capital stock
held by each such Person, any Person not otherwise described by clause (i) and
(ii) above, provided that the aggregate number of shares held by all such
Persons in accordance with this clause (iii) at any time shall not exceed 5.0%
of the aggregate number of shares held by the Persons described in clause (i)
and (ii) above at such time.
"HMEF" shall mean Hicks, Muse, Tate & Furst Equity Fund I, L.P.,
a Delaware limited partnership.
"Holdings" shall have the meaning provided in the first
paragraph of this Agreement.
"Holdings/Sub Pledge Agreement" shall have the meaning provided
in Section 4.09(b).
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase price
of property or services, (ii) the maximum amount available to be drawn under
all letters of credit issued for the account of such Person and all unpaid
drawings in respect of such letters of credit, (iii) all Indebtedness of the
types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Lien on any property owned by such Person, whether or
not such Indebtedness has been assumed by such Person (to the extent of the
value of the respective property), (iv) the aggregate amount required to be
capitalized under leases under which such Person is the lessee, (v) all
obligations of such person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e. take-or-pay and similar
obligations, (vi) all Contingent Obligations of such Person and (vii) all
obligations under any Interest Rate Protection Agreement and Other Hedging
Agreements or under any similar type of agreement.
"Initial Borrowing Date" shall mean the date occurring on or
after the Effective Date on which the initial Borrowing of Term Loans hereunder
occurs.
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"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest collar agreement,
interest rate hedging agreement, interest rate floor agreement or other similar
agreement or arrangement.
"Lacek Australia" shall mean The Lacek Group PTY Limited, an
Australian corporation.
"Lacek Group Acquisition" shall mean the acquisition by NIS No.
1 of all of the assets, properties and rights of The Lacek Group and 100% of
the outstanding capital stock of Lacek Travel, and immediately thereafter, NIS
No. 1 will change its legal corporate name to "The Lacek Group, Inc.", all in
accordance with the terms and provisions of the Acquisition Documents.
"Lacek Korea" shall mean The Lacek Group, Inc. - Korea, a Korean
corporation.
"Lacek Systems" shall mean Lacek Systems and Software, Inc., a
Minnesota corporation.
"Lacek Systems Acquisition" shall mean the acquisition by NIS
No. 2 of 100% of the outstanding capital stock of Lacek Systems, followed
immediately by the merger of NIS No. 2 with and into Lacek Systems, with Lacek
Systems the surviving corporation of such merger, all in accordance with the
Acquisition Documents.
"Lacek Travel" shall mean Lacek Travel Services, Inc., a
Minnesota corporation.
"Leaseholds" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Leverage Ratio" shall mean on the date of determination thereof
the ratio of Consolidated Indebtedness at such time to Consolidated EBITDA for
the Test Period then last ended.
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"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Management Agreements" shall have the meaning provided in
Section 4.05.
"Margin Stock" shall have the meaning provided in Regulation U.
"Neodata" shall have the meaning provided in the first paragraph
of this Agreement.
"Neodata Tax Allocation Agreement" shall mean the Tax Sharing
Agreement, dated as of May 5, 1993, among Neodata, NSI and certain Subsidiaries
of Neodata listed on the signature pages thereto, in the form delivered to the
Banks on the Initial Borrowing Date and as the same may be amended, modified or
supplemented from time to time pursuant to the terms thereof and hereof.
"Net Sale Proceeds" shall mean for any sale of assets, the gross
cash proceeds (including any cash received by way of deferred payment pursuant
to a promissory note, receivable or otherwise, but only as and when received)
received from any sale of assets, net of reasonable transaction costs
(including, without limitation, any underwriting, brokerage or other customary
selling commissions and reasonable legal, advisory and other fees and expenses,
including title and recording expenses, associated therewith) and payments of
unassumed liabilities relating to the assets sold at the time of, or within 30
days after, the date of such sale, the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness of the
Banks pursuant to this Agreement) which is secured by the respective assets
which were sold, and the estimated marginal increase in income taxes which will
be payable by the Holdings' consolidated group with respect to the fiscal year
in which the sale occurs as a result of such sale; but excluding any portion of
any such gross cash proceeds which Holdings determines in good faith should be
reserved for post-closing adjustments (to the extent Holdings delivers to the
Banks a certificate signed by its chief financial officer, controller or chief
accounting officer as to such determination), it being understood and agreed
that on the day that all such post-closing adjustments have been determined,
(which shall not be later than six months following the date of the respective
asset sale), the amount (if any) by which the reserved amount in respect of
such sale or disposition exceeds the actual post-closing adjustments payable by
Holdings
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or any of its Subsidiaries shall constitute Net Sale Proceeds on such date
received by Holdings and/or any of its Subsidiaries from such sale, lease,
transfer or other disposition.
"NIS No.1 " shall have the meaning provided in the first
paragraph of this Agreement.
"NIS No. 2" shall have the meaning provided in the first
paragraph of this Agreement.
"Notice of Borrowing" shall have the meaning provided in
Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Agent located at
130 Liberty Street, New York, New York 10006, Attention: Jennifer Quinn, or
such other office as the Agent may hereafter designate in writing as such to
the other parties hereto.
"NSI" shall mean Neodata Services, Inc., a Delaware
Corporation.
"NSI Banks" shall mean the lenders from time to time party to
the NSI Credit Agreement.
"NSI Credit Agreement" shall mean the Credit Agreement, dated
as January 31, 1997, among Neodata, NSI, the NSI Banks and BTCo, as agent, as
amended, modified or supplemented from time to time in accordance with the
terms thereof and hereof.
"Obligations" shall mean all amounts owing to the Agent, the
Collateral Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.
"Other Hedging Agreement" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values.
"Parents Guaranty" shall mean the guaranty issued pursuant to
Section 14 herein.
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"Parent Guarantors" shall mean and include each of Neodata and
Holdings.
"Payment Office" shall mean the office of the Agent located at
One Bankers Trust Plaza, New York, New York 10006, or such other office as the
Agent may hereafter designate in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Liens" shall have the meaning provided in Section
9.01.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any pension plan, as defined in Section 3(2)
of ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of), Holdings or a Subsidiary of Holdings or an ERISA
Affiliate, and each such plan for the five year period immediately following
the latest date on which Holdings, a Subsidiary of Holdings or an ERISA
Affiliate maintained, contributed or had an obligation to contribute to such
plan.
"Pledge Agreement Collateral" shall mean all "Collateral" as
defined in each of the Pledge Agreements.
"Pledge Agreements" shall mean the Amended and Restated
Neodata Pledge Agreement and the Holdings/Sub Pledge Agreement.
"Pledged Securities" shall have the meaning provided in the
Holdings/Sub Pledge Agreement.
"Pledged Stock" shall have the meaning provided in the Amended
and Restated Neodata Pledge Agreement.
"Prime Lending Rate" shall mean the rate which BTCo announces
from time to time as its prime lending rate, the Prime Lending Rate to change
when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. BTCo may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending Rate.
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"Projections" shall have the meaning provided in Section
7.05(d).
"Quarterly Payment Date" shall mean the last Business Day of
each March, June, September and December occurring after the Initial Borrowing
Date.
"RCRA" shall mean the Resource Conservation and Recovery Act,
as the same may be amended from time to time, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Recovery Event" shall mean the receipt by Holdings or any of
its Subsidiaries of any cash insurance proceeds or condemnation award payable
(i) by reason of theft, loss, physical destruction or damage or any other
similar event with respect to any property or assets of Holdings or any of its
Subsidiaries and (ii) under any policy of insurance required to be maintained
under Section 8.03.
"Register" shall have the meaning provided in Section 13.17.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Reinvestment Assets" shall mean any assets to be employed in
the business of the Borrower and its Subsidiaries in compliance with this
Agreement.
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"Reinvestment Election" shall have the meaning provided in
Section 3.02(a).
"Reinvestment Notice" shall mean a written notice signed by an
Authorized Representative of the Borrowers stating that the Borrowers, in good
faith, intend and expect to use all or a specified portion of Net Sale Proceeds
of asset sales to purchase, construct or otherwise acquire Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to
any Reinvestment Election, the amount, if any, on the Reinvestment Prepayment
Date relating thereto by which (a) the Anticipated Reinvestment Amount in
respect of such Reinvestment Election exceeds (b) the aggregate amount thereof
expended by the Borrowers and their Subsidiaries to acquire Reinvestment
Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Agent, on behalf of the Required Banks, shall have delivered a written
termination notice to the Borrowers, provided that such notice may only be
given while an Event of Default exists, (ii) the date occurring one year after
such Reinvestment Election and (iii) the date on which the Borrowers shall have
determined not to, or shall have otherwise ceased to, proceed with the
purchase, construction or other acquisition of Reinvestment Assets with the
related Anticipated Reinvestment Amount.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migration into the environment.
"Replaced Bank" shall have the meaning provided in Section
1.13.
"Replacement Bank" shall have the meaning provided in Section
1.13.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA
other than those events as to which the 30-day notice period is waived under
subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
"Required Banks" shall mean Banks, the sum of whose Term Loan
Commitments represent an amount greater than 50% of the Total Term Loan
Commitment (or after the termination thereof, the then total outstanding Term
Loans at such time).
"Returns" shall have the meaning provided in Section 7.09.
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"SEC" shall have the meaning provided in Section 8.01(h).
"Section 3.04(b)(iii) Certificate" shall have the meaning
provided in Section 3.04(b)(iii).
"Secured Creditors" shall have the meaning assigned that term
in the Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Security Agreement" shall have the meaning provided in
Section 4.10.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean the Pledge Agreements and the
Security Agreement.
"Senior Note Indenture" shall mean the Indenture, dated as of
May 5, 1993, between NMSI and Ameritrust Texas National Association, as trustee
thereunder, as in effect on the Initial Borrowing Date and as the same may be
amended, modified or supplemented from time to time in accordance with the
terms thereof.
"Senior Notes" shall mean NMSI's 12% Senior Deferred Coupon
Notes due 2003, as in effect on the Initial Borrowing Date and as the same may
be amended, modified or supplemented from time to time in accordance with the
terms thereof.
"Shareholders' Agreements" shall have the meaning provided in
Section 4.05.
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person and/or
one or more Subsidiaries of such Person and (ii) any partnership, association,
joint venture or other entity in which such Person and/or one or more
Subsidiaries of such Person has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Subsidiary of the
Borrowers that is or becomes a party to the Subsidiary Guaranty.
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"Subsidiary Guaranty" shall have the meaning provided in
Section 4.08.
"Supermajority Banks" shall mean those Banks which would
constitute Required Banks under, and as defined in, this Agreement if the
percentage "50%" contained therein was changed to "66-2/3%".
"Syndication Date" shall mean that date upon which the Agent
determines in its sole discretion (and notifies the Borrowers) that the primary
syndication (and resultant addition of institutions as Banks pursuant to
Section 13.04) has been completed.
"Tax Allocation Agreements" shall have the meaning provided in
Section 4.05.
"Taxes" shall have the meaning provided in Section 3.04(a).
"Term Loan" shall have the meaning provided in Section 1.01.
"Term Loan Availability Termination Date" shall mean August
24, 1998.
"Term Loan Borrowing Date" shall have the meaning provided in
Section 1.01.
"Term Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule 1.
"Term Note" shall have the meaning provided in Section
1.05(a).
"Test Period" shall mean, for any determination, the four
consecutive fiscal quarters then last ended (taken as one accounting period).
"The Lacek Group" shall mean The Lacek Group, Inc., a
Minnesota corporation.
"Total Term Loan Commitment" shall mean, at any time, the sum
of the Term Loan Commitments of each of the Banks.
"Transaction" shall mean, collectively, (i) the consummation
of the Acquisitions, (ii) the repayment of all amounts owing under the Existing
Credit Agreements, (iii) the incurrence of Term Loans hereunder on the Initial
Borrowing Date and (iv) the payment of fees and expenses in connection with
the foregoing.
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"Type" shall mean the type of Term Loan determined with regard
to the interest option applicable thereto, i.e., whether a Base Rate
Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the
amount, if any, by which the actuarial present value of the accumulated
benefits under the Plan as of the close of its most recent plan year,
determined in accordance with actuarial assumptions at such time consistent
with Statement of Financial Accounting Standards No. 87, exceeds the fair
market value of the assets allocable thereto.
"United States" and "U.S." shall each mean the United States
of America.
"Unutilized Term Loan Commitment" with respect to any Bank, at
any time, shall mean such Banks Term Loan Commitment at such time.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i)
any corporation 100% of whose capital stock (other than directors qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
SECTION 12. The Agent.
12.01 Appointment. Each Bank hereby irrevocably designates
and appoints BTCo as Agent of such Bank (for purposes of this Section 12, the
term "Agent" shall include BTCo in its capacity as Collateral Agent pursuant to
the Security Documents) to act as specified herein and in the other Credit
Documents. Each Bank hereby irrevocably authorizes, and each holder of any Term
Note by the acceptance of such Term Note shall be deemed irrevocably to
authorize, the Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof and such other powers
as are reasonably incidental thereto. The Agent may perform any of its duties
hereunder by or through its respective officers, directors, agents, employees
or affiliates.
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12.02 Nature of Duties. The Agent shall not have any duties
or responsibilities except those expressly set forth in this Agreement and the
other Credit Documents. Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable for any action taken
or omitted by it or them hereunder or under any other Credit Document or in
connection herewith or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have by reason of this
Agreement or any other Credit Document a fiduciary relationship in respect of
any Bank or the holder of any Term Note; and nothing in this Agreement or any
other Credit Document, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.
12.03 Lack of Reliance on the Agent. Independently and
without reliance upon the Agent, each Bank and the holder of each Term Note, to
the extent it deems appropriate, has made and shall continue to make (i) its
own independent investigation of the financial condition and affairs of
Holdings and its Subsidiaries in connection with the making and the continuance
of the Term Loans and the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of Holdings and its
Subsidiaries and, except as expressly provided in this Agreement, the Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Term Note with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Term Loans or at any time or times thereafter. The
Agent shall not be responsible to any Bank or the holder of any Term Note for
any recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection herewith
or for the execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this Agreement or any
other Credit Document or the financial condition of Holdings and its
Subsidiaries or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any other Credit Document, or the financial condition of Holdings
and its Subsidiaries or the existence or possible existence of any Default or
Event of Default.
12.04 Certain Rights of the Agent. If the Agent shall
request instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other
Credit Document, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions from
the Required Banks; and the Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Bank or the holder
of any Term Note shall have any right of action whatsoever against
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the Agent as a result of the Agent acting or refraining from acting hereunder
or under any other Credit Document in accordance with the instructions of the
Required Banks.
12.05 Reliance. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon advice of counsel
selected by the Agent (which may be counsel for the Credit Parties).
12.06 Indemnification. To the extent the Agent is not
reimbursed and indemnified by Holdings or any of its Subsidiaries, the Banks
will reimburse and indemnify the Agent, in proportion to their respective
"percentages" as used in determining the Required Banks, for and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Agent in performing its
respective duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document,
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent"s gross negligence or
willful misconduct.
12.07 The Agent in its Individual Capacity. With
respect to its obligation to make Term Loans under this Agreement, the Agent
shall have the rights and powers specified herein for a "Bank" and may exercise
the same rights and powers as though it were not performing the duties
specified herein; and the term "Banks," "Required Banks," "holders of Term
Notes" or any similar terms shall, unless the context clearly otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of banking,
trust or other business with any Credit Party or any Affiliate of any Credit
Party as if they were not performing the duties specified herein, and may
accept fees and other consideration from the Borrowers or any other Credit
Party for services in connection with this Agreement and otherwise without
having to account for the same to the Banks.
12.08 Holders. The Agent may deem and treat the payee of
any Term Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Agent. Any request, authority or consent
of any Person who, at the time of making such request or giving such authority
or consent, is the holder of any Term
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Note shall be conclusive and binding on any subsequent holder, transferee,
assignee or endorsee, as the case may be, of such Term Note or of any Term Note
or Term Notes issued in exchange therefor.
12.09 Resignation by the Agent. (a) The Agent may resign
from the performance of all its functions and duties hereunder and/or under the
other Credit Documents at any time by giving 15 Business Days" prior written
notice to the Borrowers and the Banks. Such resignation shall take effect upon
the appointment of a successor Agent pursuant to clauses (b) and (c) below or
as otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall
appoint a successor Agent hereunder or thereunder who shall be a commercial
bank or trust company reasonably acceptable to the Borrowers.
(c) If a successor Agent shall not have been so appointed
within such 15 Business Day period, the Agent, with the consent of the
Borrowers, shall then appoint a commercial bank or trust company with capital
and surplus of not less than $500,000,000 as successor Agent who shall serve as
Agent hereunder or thereunder until such time, if any, as the Banks appoint a
successor Agent as provided above.
(d) If no successor Agent has been appointed pursuant to
clause (b) or (c) above by the 20th Business Day after the date such notice of
resignation was given by the Agent, the Agent"s resignation shall become
effective and the Required Banks shall thereafter perform all the duties of the
Agent hereunder and/or under any other Credit Document until such time, if any,
as the Banks appoint a successor Agent as provided above.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrowers jointly and
severally shall: (i) whether or not the transactions herein contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the Agent
(including, without limitation, the reasonable fees and disbursements of White
& Case and local counsel) in connection with the preparation, execution and
delivery of this Agreement and the other Credit Documents and the documents and
instruments referred to herein and therein and any amendment, waiver or consent
relating hereto or thereto, of the Agent in connection with its syndication
efforts with respect to this Agreement and of the Agent and, following and
during the continuation of an Event of Default, each of the Banks in connection
with the enforcement of this Agreement and the other Credit Documents and the
documents and instruments referred to herein and therein (including, without
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limitation, the reasonable fees and disbursements of counsel for the Agent and,
following and during the continuation of an Event of Default, for each of the
Banks); (ii) pay and hold each of the Banks harmless from and against any and
all present and future stamp, excise and other similar taxes with respect to
the foregoing matters and save each of the Banks harmless from and against any
and all liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to such Bank) to pay such taxes; and
(iii) indemnify the Agent and each Bank, and each of their respective officers,
directors, employees, representatives and agents from and hold each of them
harmless against any and all liabilities, obligations (including removal or
remedial actions), losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses and disbursements (including reasonable attorneys" and
consultants" fees and disbursements) incurred by, imposed on or assessed
against any of them as a result of, or arising out of, or in any way related
to, or by reason of, (a) any investigation, litigation or other proceeding
(whether or not the Agent or any Bank is a party thereto) related to the
entering into and/or performance of this Agreement or any other Credit Document
or the use of the proceeds of any Term Loans hereunder or the consummation of
any transactions contemplated herein (including, without limitation, the
Transaction) or in any other Credit Document or the exercise of any of their
rights or remedies provided herein or in the other Credit Documents, or (b) the
actual or alleged presence of Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real Property owned or at
any time operated by Holdings or any of its Subsidiaries, the generation,
storage, transportation, handling or disposal of Hazardous Materials at any
location, whether or not owned or operated by Holdings or any of its
Subsidiaries, the non- compliance of any Real Property with foreign, federal,
state and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental Claim
asserted against Holdings, any of its Subsidiaries or any Real Property owned
or at any time operated by Holdings or any of its Subsidiaries, including, in
each case, without limitation, the reasonable fees and disbursements of counsel
and other consultants incurred in connection with any such investigation,
litigation or other proceeding (but excluding any losses, liabilities, claims,
damages or expenses to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified). To the extent that the
undertaking to indemnify, pay or hold harmless the Agent or any Bank set forth
in the preceding sentence may be unenforceable because it is violative of any
law or public policy, the Borrowers shall make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
13.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, each
Bank is hereby authorized at any time
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or from time to time, without presentment, demand, protest or other notice of
any kind to Holdings or any of its Subsidiaries or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Bank (including, without limitation, by branches
and agencies of such Bank wherever located) to or for the credit or the account
of any Credit Party against and on account of the Obligations and liabilities
of all Credit Parties to such Bank under this Agreement or under any of the
other Credit Documents, including, without limitation, all interests in
Obligations purchased by such Bank pursuant to Section 13.06(b), and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such
Bank shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telegraphic, telex, telecopier or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or delivered: if to any Credit
Party, at the address specified opposite its signature below or in the other
relevant Credit Documents; if to any Bank, at its address specified opposite
its name on Schedule II below; and if to the Agent, at its Notice Office; or,
as to any Credit Party or the Agent, at such other address as shall be
designated by such party in a written notice to the other parties hereto and,
as to each Bank, at such other address as shall be designated by such Bank in a
written notice to the Borrowers and the Agent. All such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, or cabled
or sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier, except that notices and
communications to the Agent and the Borrowers shall not be effective until
received by the Agent or the Borrowers, as the case may be.
13.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided, however, no Borrower
may assign or transfer any of its rights, obligations or interest hereunder
without the prior written consent of the Banks and, provided further, that,
although any Bank may transfer, assign or grant participations in its rights
hereunder, such Bank shall remain a "Bank" for all purposes hereunder (and may
not transfer or assign all or any portion of its Term Loan Commitment and/or
outstanding Term Loans hereunder except as provided in Section 13.04(b)) and
the transferee, assignee or participant, as the case may be, shall not
constitute a "Bank" hereunder and, provided further, that no Bank shall
transfer or grant any participation under which the participant shall have
rights to approve any
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amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Term Loan or Term Note in which such participant is
participating, or reduce the rate or extend the time of payment of interest or
Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction of Total Term Loan Commitment shall not constitute
a change in the terms of such participation, and that an increase in any Term
Loan Commitment or Loan and an increase in the available portion of any Term
Loan Commitment of any Bank shall be permitted without the consent of any
participant if the participant's participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by the Borrowers of any of
their respective rights and obligations under this Agreement or (iii) release
all or substantially all of the Collateral under all of the Security Documents
(except as expressly provided in the Credit Documents) supporting the Term
Loans hereunder in which such participant is participating. In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights
against such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrowers hereunder shall be determined as if
such Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank
together with one or more other Banks) may (x) assign all or a portion of its
Term Loan Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans to its parent company and/or any affiliate of such Bank
which is at least 50% owned by such Bank or its parent company or to one or
more Banks or (y) assign all, or if less than all, a portion equal to at least
$1,000,000 in the aggregate for the assigning Bank or assigning Banks, of such
Term Loan Commitment and/or outstanding principal amount of Term Loans (and
related outstanding Obligations hereunder) to one or more Eligible Transferees,
each of which assignees shall become a party to this Agreement as a Bank by
execution of an Assignment and Assumption Agreement, provided that, (i) at such
time Schedule I shall be deemed modified to reflect the outstanding Term Loan
Commitments (and/or outstanding Term Loans, as the case may be) of such new
Bank and of the existing Banks, (ii) new Notes will be issued, at the
Borrowers' expense, to such new Bank and to the assigning Bank upon the request
of such new Bank or assigning Bank, such new Notes to be in conformity with the
requirements of Section 1.05 (with appropriate modifications) to the extent
needed to reflect the revised outstanding Term Loan Commitments (and/or
outstanding Term Loans, as the case may be), (iii) the consent of BTCo shall be
required in connection with any such assignment
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pursuant to clause (y) of this Section 13.04(b) (which consent shall not be
unreasonably withheld) and (iv) the Agent shall receive at the time of each
such assignment, from the assigning or assignee Bank, the payment of a
non-refundable assignment fee of $3,500 and, provided further, that such
transfer or assignment will not be effective until recorded by the Agent on the
Register pursuant to Section 13.17. To the extent of any assignment pursuant to
this Section 13.04(b), the assigning Bank shall be relieved of its obligations
hereunder with respect to its assigned Term Loans. At the time of each
assignment pursuant to this Section 13.04(b) to a Person which is not already a
Bank hereunder and which is not a United States person (as such term is defined
in Section 7701 (a) (30) of the Code) for Federal income tax purposes, the
respective assignee Bank shall, to the extent legally entitled to do so,
provide to the Borrowers in the case of a Bank described in clause (ii) or (iv)
of Section 3.04(b), the forms described in such clause (ii) or (iv), as the
case may be. To the extent that an assignment of all or any portion of a Bank's
Term Loan Commitment and related outstanding Obligations pursuant to Section
1.13 or this Section 13.04(b) would, at the time of such assignment, result in
increased costs under Section 1.10, 1.11 or 3.04 from those being charged by
the respective assigning Bank prior to such assignment, then the Borrowers
shall not be obligated to pay such increased costs (although the Borrowers
shall be obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit
any Bank from pledging its Term Loans and Term Notes hereunder to a Federal
Reserve Bank in support of borrowings made by such Bank from such Federal
Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay
on the part of the Agent or any Bank or any holder of any Term Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrowers or any other Credit
Party and the Agent or any Bank or the holder of any Term Note shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Agent or any Bank or the holder of any Term
Note would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the Agent
or any Bank or the holder of any Term Note to any other or further action in any
circumstances without notice or demand.
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13.06 Payments Pro Rata. (a) Except as otherwise provided
in this Agreement, the Agent agrees that promptly after its receipt of each
payment from or on behalf of the Borrowers in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
pro rata based upon their respective shares, if any, of the Obligations with
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive
any amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the Credit
Documents, or otherwise), which is applicable to the payment of the principal
of, or interest on, the Term Loans or Fees of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the
Obligations of the respective Credit Party to such Banks in such amount as
shall result in a proportional participation by all the Banks in such amount;
provided that if all or any portion of such excess amount is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
13.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved (except as
set forth in the notes thereto or as otherwise disclosed in writing by the
Borrowers to the Banks); provided that, except as otherwise specifically
provided herein, all computations determining compliance with Sections 9.07
through 9.10, inclusive, shall utilize accounting principles and policies in
conformity with those used to prepare the historical financial statements
delivered to the Banks pursuant to Section 7.05(a) (with the foregoing
generally accepted accounting principles, subject to the preceding proviso,
herein called "GAAP").
(b) All computations of interest and Fees hereunder shall
be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest or Fees are payable.
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13.08 GOVERNING LAW. SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF HOLDINGS AND EACH OF THE BORROWERS HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF HOLDINGS AND
EACH OF THE BORROWERS HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK,
NEW YORK 10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED
IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE
AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH OF HOLDINGS AND EACH
OF THE BORROWERS AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW
YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO
THE AGENT UNDER THIS AGREEMENT. EACH OF HOLDINGS AND EACH OF THE BORROWERS
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY CREDIT PARTY
AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE AGENT UNDER THIS AGREEMENT, ANY BANK OR THE HOLDER OF ANY TERM NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER
JURISDICTION.
(b) EACH OF HOLDINGS AND EACH OF THE BORROWERS HEREBY
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
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OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND
HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY THEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrowers and the Agent.
13.10 Effectiveness. This Agreement shall become effective
on the date (the "Effective Date") on which Neodata, Holdings, each Borrower
and each of the Banks shall have signed a counterpart hereof (whether the same
or different counterparts) and shall have delivered the same to the Agent at
its Notice Office or, in the case of the Banks, shall have given to the Agent
telephonic (confirmed in writing), written or telex notice (actually received)
at such office that the same has been signed and mailed to it. The Agent will
give the Borrowers and each Bank prompt written notice of the occurrence of the
Effective Date.
13.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.
13.12 Amendment or Waiver: etc. (a) Neither this Agreement
nor any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the respective Credit Parties party thereto
and the Required Banks, provided that no such change, waiver, discharge or
termination shall, without the consent of each Bank directly affected thereby,
(i) extend the final scheduled maturity of any Term Loan or Term Note or reduce
the rate or extend the time of payment of
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interest or Fees thereon (except in connection with a waiver of applicability
of any post-default increase in interest rates), or reduce the principal amount
thereof (except to the extent repaid in cash), (ii) release all or
substantially all of the Collateral (except as expressly provided in the Credit
Documents) under all the Security Documents, (iii) amend, modify or waive any
provision of this Section 13.12, (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of the
Required Banks, additional extensions of credit pursuant to this Agreement may
be included in the determination of Required Banks on substantially the same
basis as the extensions of Term Loans are included on the Effective Date) or
(v) consent to the assignment or transfer by the Borrowers of any of their
rights and obligations under this Agreement; provided further, that no such
change, waiver, discharge or termination shall (w) increase the Term Loan
Commitment of any Bank over the amount thereof then in effect without the
consent of such Bank (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default or of a
mandatory reduction in the Total Term Loan Commitment shall not constitute an
increase of the Term Loan Commitment of any Bank, and that an increase in the
available portion of the Term Loan Commitment of any Bank shall not constitute
an increase in the Term Loan Commitment of such Bank), (x) without the consent
the Agent, amend, modify or waive any provision of Section 12 as same applies
to such Agent or any other provision as same relates to the rights or
obligations of the Agent, (y) without the consent of the Collateral Agent,
amend, modify or waive any provision relating to the rights or obligations of
the Collateral Agent or (z) without the consent of the Supermajority Banks,
amend, modify or waive any Scheduled Repayment or the definition of
Supermajority Banks.
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through (v), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrowers shall have the right, so long as all non-consenting Banks
whose individual consent is required are treated as described in either clause
(A) or (B) below, to either (A) replace each such non-consenting Bank or Banks
with one or more Replacement Banks pursuant to Section 1.13 so long as at the
time of such replacement, each such Replacement Bank consents to the proposed
change, waiver, discharge or termination or (B) repay all outstanding Term
Loans of such Bank in accordance with Section 3.01(v), provided that, unless
the Term Loans repaid pursuant to preceding clause (B) are immediately replaced
in full at such time through the addition of new Banks or the increase of the
outstanding Term Loans of existing Banks (who in each case must specifically
consent thereto), then in the case of any action pursuant to preceding clause
(B) the Required Banks (determined before giving effect to the proposed action)
shall specifically consent thereto, provided further,
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that in any event the Borrowers shall not have the right to replace a Bank or
repay its Term Loans solely as a result of the exercise of such Bank's rights
(and the withholding of any required consent by such Bank) pursuant to the
second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 3.04, 12.06 and 13.01 shall,
subject to Section 13.15 (to the extent applicable), survive the execution,
delivery and termination of this Agreement and the Term Notes and the making
and repayment of the Term Loans.
13.14 Domicile of Loans. Each Bank may transfer and carry
its Term Loans at, to or for the account of any office, Subsidiary or Affiliate
of such Bank. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Term Loans pursuant to this Section 13.14 would, at
the time of such transfer, result in increased costs under Section 1.10, 1.11
or 3.04 from those being charged by the respective Bank prior to such transfer,
then the Borrowers shall not be obligated to pay such increased costs (although
the Borrowers shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
13.15 Limitation on Additional Amounts, etc.
Notwithstanding anything to the contrary contained in Section 1.10, 1.11 or
3.04 of this Agreement, unless a Bank gives notice to the Borrowers that it is
obligated to pay an amount under any such Section within one year after the
later of (x) the date the Bank incurs the respective increased costs, Taxes,
loss, expense or liability, reduction in amounts received or receivable or
reduction in return on capital or (y) the date such Bank has actual knowledge
of its incurrence of the respective increased costs, Taxes, loss, expense or
liability, reductions in amounts received or receivable or reduction in return
on capital, then such Bank shall only be entitled to be compensated for such
amount by the Borrowers pursuant to said Section 1.10, 1.11 or 3.04, as the
case may be, to the extent the costs, Taxes, loss, expense or liability,
reduction in amounts received or receivable or reduction in return on capital
are incurred or suffered on or after the date which occurs one year prior to
such Bank giving notice to the Borrowers that it is obligated to pay the
respective amounts pursuant to said Section 1.10, 1.11 or 3.04, as the case may
be. This Section 13.15 shall have no applicability to any Section of this
Agreement other than said Sections 1.10, 1.11 and 3.04.
13.16 Confidentiality. (a) Subject to the provisions of
clause (b) of this Section 13.16, each Bank agrees that it will use its best
efforts not to disclose without the prior consent of Holdings or the Borrowers
(other than to its employees, auditors, advisors or counsel or to another Bank
if the Bank or such Bank's holding or parent
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company in its sole discretion determines that any such party should have
access to such information, provided such Persons shall be subject to the
provisions of this Section 13.16 to the same extent as such Bank) any
information with respect to Holdings or any of its Subsidiaries which is now or
in the future furnished pursuant to this Agreement or any other Credit Document
and which is designated by Holdings to the Banks in writing as confidential,
provided that any Bank may disclose any such information (a) as has become
generally available to the public, (b) as may be required or appropriate in any
report, statement or testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction over such Bank or to
the Federal Reserve Board or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Bank, (e) to the Agent or
the Collateral Agent and (f) to any prospective or actual transferee or
participant in connection with any contemplated transfer or participation of
any of the Term Notes or any interest therein by such Bank, provided, that such
prospective transferee agrees to be bound by the provisions of this Section
13.16.
(b) Each of Holdings and each of the Borrowers hereby
acknowledges and agrees that each Bank may share with any of its affiliates any
information related to Holdings or any of its Subsidiaries (including, without
limitation, any nonpublic customer information regarding the creditworthiness
of Holdings and its Subsidiaries, provided such Persons shall be subject to the
provisions of this Section 13.16 to the same extent as such Bank).
13.17 Register. The Borrowers hereby designate the Agent to
serve as the Borrowers' agent, solely for purposes of this Section 13.17, to
maintain a register (the "Register") on which it will record the Term Loans
made by each of the Banks and each repayment in respect of the principal amount
of the Term Loans of each Bank. Failure to make any such recordation, or any
error in such recordation shall not affect the Borrowers' obligations in
respect of such Term Loans. With respect to any Bank, the transfer of the
rights to the principal of, and interest on, any Term Loan shall not be
effective until such transfer is recorded on the Register maintained by the
Agent with respect to ownership of such Term Loans and prior to such
recordation all amounts owing to the transferor with respect to such Term Loans
shall remain owing to the transferor. The registration of assignment or
transfer of all or part of any Term Loans shall be recorded by the Agent on the
Register only upon the acceptance by the Agent of a properly executed and
delivered Assignment and Assumption Agreement pursuant to Section 13.04(b).
Coincident with the delivery of such an Assignment and Assumption Agreement to
the Agent for acceptance and registration of assignment or
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transfer of all or part of a Term Loan, or as soon thereafter as practicable,
the assigning or transferor Bank shall surrender the Term Note evidencing such
Term Loan, and thereupon one or more new Term Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrowers jointly and severally agree to indemnify the Agent from
and against any and all losses, claims, damages and liabilities of whatsoever
nature which may be imposed on, asserted against or incurred by the Agent in
performing its duties under this Section 13.17.
13.18 Post-Closing Actions. Notwithstanding anything to the
contrary contained in this Agreement or the other Credit Documents, the parties
hereto acknowledge and agree that:
(a) The Borrowers have failed to deliver the Pledged
Securities to the Collateral Agent on the Initial Borrowing Date as required by
Section 4.09(b) and the Borrowers jointly and severally agree that they will
take all necessary action to deliver the Pledged Securities, together with
executed and undated stock powers, to the Collateral Agent no later than six
Business Days after the Initial Borrowing Date. Each of the Borrowers further
agrees that failure to deliver such Pledged Securities within the period of
time specified above shall immediately constitute an Event of Default.
(b) The Borrowers have failed to satisfy the conditions
precedent set forth in Sections 4.06 and 4.07 on the Initial Borrowing Date and
the Borrowers jointly and severally agree to take all necessary action to
satisfy the conditions precedent set forth in Sections 4.06 and 4.07 by 4:00
p.m. on Wednesday, February 26, 1997. The Borrowers hereby jointly and
severally agree that at such time and if the aforementioned conditions
precedent are not satisfied, they shall immediately repay the principal,
interest and all other amounts then owing under this Agreement and terminate
the Total Term Loan Commitment. Notwithstanding anything to the contrary
contained in this Agreement, at such time and if the aforementioned conditions
precedent are not satisfied, the parties hereto hereby agree that the principal
of and accrued interest on all Term Loans and all other Obligations owing
hereunder shall immediately become due and payable and the Total Term Loan
Commitment shall be terminated.
All conditions precedent and representations contained in this
Agreement and the other Credit Documents shall be deemed modified to the extent
necessary to effect the foregoing (and to permit the taking of the actions
described above within the time periods required above, rather than as
elsewhere provided in the Credit Documents); provided, that (x) to the extent
any representation and warranty would not be true because the foregoing actions
were not taken on the Initial Borrowing Date, the respective representation and
warranty shall be required to be true and correct in all
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material respects at the time the respective action is taken (or was required
to be taken) in accordance with the foregoing provisions of Section 13.18 and
(y) all representations and warranties relating to the Security Documents shall
be required to be true immediately after the actions required to be taken by
Section 13.18 have been taken (or were required to be taken). The acceptance of
the benefits of the Term Loans shall constitute a representation, warranty and
covenant by the Borrowers to each of the Banks that the actions required
pursuant to this Section 13.18 will be taken within the relevant time periods
referred to in this Section 13.18 and that, at such time, all representations
and warranties contained in this Agreement and the other Credit Documents shall
then be true and correct without any modification pursuant to this Section
13.18.
SECTION 14. Parents Guaranty.
14.01 The Parents Guaranty. In order to induce the Banks to
enter into this Agreement and to extend credit hereunder and in recognition of
the direct benefits to be received by each Parent Guarantor from the proceeds
of the Term Loans and to induce the Banks or any of their respective Affiliates
to enter into Interest Rate Protection and Other Hedging Agreements, each
Parent Guarantor hereby jointly and severally agrees with the Banks as follows:
each Parent Guarantor hereby jointly and severally, unconditionally and
irrevocably guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise,
of any and all of the Guaranteed Obligations of the Borrowers to the Secured
Creditors. If any or all of the Guaranteed Obligations of the Borrowers to the
Secured Creditors becomes due and payable hereunder, each Parent Guarantor
unconditionally, jointly and severally, promises to pay such indebtedness to
the Secured Creditors, on order, or demand, together with any and all
reasonable expenses which may be incurred by the Agent or the Secured Creditors
in collecting any of the Guaranteed Obligations.
14.02 Bankruptcy. Additionally, each Parent Guarantor,
jointly and severally, unconditionally and irrevocably guarantees the payment
of any and all of the Guaranteed Obligations of the Borrowers to the Secured
Creditors whether or not then due or payable by the Borrowers upon the
occurrence in respect of the Borrowers of any of the events specified in
Section 10.05, and unconditionally and irrevocably, jointly and severally,
promises to pay such Guaranteed Obligations to the Secured Creditors, on order,
or demand, in lawful money of the United States.
14.03 Nature of Liability. (a) The liability of each Parent
Guarantor hereunder is exclusive and independent of any security for or other
guaranty of the Guaranteed Obligations of the Borrowers whether executed by
such Parent Guarantor,
-97-
<PAGE> 105
any other Guarantor or by any other party, and the liability of each Parent
Guarantor hereunder shall not be affected or impaired by (a) any direction as
to application of payment by the Borrowers or by any other party, or (b) any
other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations of the
Borrowers, or (c) any payment on or in reduction of any such other guaranty or
undertaking, or (d) any dissolution, termination or increase, decrease or
change in personnel by the Borrowers, or (e) any payment made to the Agent or
the Secured Creditors on the indebtedness which the Agent or such Secured
Creditors repay the Borrowers pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Parent Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
(b) If claim is ever made upon any Secured Creditor for
repayment or recovery of any amount or amounts received in payment or on
account of any of the Guaranteed Obligations and any of the aforesaid payees
repays all or part of said amount by reason of (i) any judgment, decree or
order of any court or administrative body having jurisdiction over such payee
or any of its property or (ii) any settlement or compromise of any such claim
effected by such payee with any such claimant (including the Borrowers), then
and in such event each Parent Guarantor agrees that any such judgment, decree,
order, settlement or compromise shall be binding upon such Parent Guarantor,
notwithstanding any revocation hereof or other instrument evidencing any
liability of the Borrowers, and such Parent Guarantor shall be and remain
liable to the aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such payee.
14.04 Independent Obligation. The obligations of each
Parent Guarantor hereunder are independent of the obligations of any other
guarantor or the Borrowers, and a separate action or actions may be brought and
prosecuted against each Parent Guarantor whether or not action is brought
against any other guarantor or the Borrowers and whether or not any other
guarantor or the Borrowers be joined in any such action or actions. Each Parent
Guarantor waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrowers or other circumstance which operates to
toll any statute of limitations as to the Borrowers shall operate to toll the
statute of limitations as to each Parent Guarantor. This Guaranty is a
continuing one and all liabilities to which it applies or may apply under the
terms hereof shall be conclusively presumed to have been created in reliance
hereon.
14.05 Authorization. Each Parent Guarantor authorizes the
Agent and the Secured Creditors without notice or demand (except as shall be
required by
-98-
<PAGE> 106
applicable statute and cannot be waived), and without affecting or impairing
its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of,
and/or change or extend the time of payment of, renew, increase, accelerate or
alter, any of the Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Parents Guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended, renewed or
altered;
(b) take and hold security for the payment of the
Guaranteed Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever
at any time pledged or mortgaged to secure, or howsoever securing, the
Guaranteed Obligations or any liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights
against the Borrowers or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, the Borrowers or other obligors;
(e) settle or compromise any of the Guaranteed
Obligations, any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or hereof, and
may subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrowers to its creditors other than the
Banks;
(f) apply any sums by whomsoever paid or howsoever
realized to any liability or liabilities of the Borrowers to the Secured
Creditors regardless of what liability or liabilities of the Borrowers remain
unpaid;
(g) consent to or waive any breach of, or any act,
omission or default under, this Agreement or any of the instruments or
agreements referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of any Parent Guarantor from its liabilities under this Section 14.
-99-
<PAGE> 107
14.06 Reliance. It is not necessary for the Agent or the
Secured Creditors to inquire into the capacity or powers of the Borrowers or
the officers, directors, partners or agents acting or purporting to act on its
behalf, and any Guaranteed Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
14.07 Subordination. Any of the indebtedness of the
Borrowers now or hereafter owing to any Parent Guarantor is hereby subordinated
to the Guaranteed Obligations of the Borrowers owing to the Agent and the
Secured Creditors; and if the Agent so requests at a time when an Event of
Default exists, all such indebtedness of the Borrowers to any Parent Guarantor
shall be collected, enforced and received by such Parent Guarantor for the
benefit of the Secured Creditors and be paid over to the Agent on behalf of the
Secured Creditors on account of the Guaranteed Obligations of the Borrowers to
the Secured Creditors, but without affecting or impairing in any manner the
liability of such Parent Guarantor under the other provisions of this Parents
Guaranty. Prior to the transfer by any Parent Guarantor of any note or
negotiable instrument evidencing any of the indebtedness of the Borrowers to
such Parent Guarantor, such Parent Guarantor shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination.
Without limiting the generality of the foregoing, each Parent Guarantor hereby
agrees with the Secured Creditors that it will not exercise any right of
subrogation which it may at any time otherwise have as a result of this Parents
Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or
otherwise) until all Guaranteed Obligations have been irrevocably paid in full
in cash.
14.08 Waiver. (a) Each Parent Guarantor waives any right
(except as shall be required by applicable statute and cannot be waived) to
require the Agent or the Secured Creditors to (i) proceed against the
Borrowers, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrowers, any other guarantor or any other
party or (iii) pursue any other remedy in the Agent's or the Secured Creditors'
power whatsoever. Each Parent Guarantor waives any defense based on or arising
out of any defense of the Borrowers, any other guarantor or any other party,
other than payment in full of the Guaranteed Obligations, based on or arising
out of the disability of the Borrowers, any other guarantor or any other party,
or the unenforceability of the Guaranteed Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of the Borrowers
other than payment in full of the Guaranteed Obligations. The Agent and the
Secured Creditors may, at their election, foreclose on any security held by the
Agent, the Collateral Agent or the Secured Creditors by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or
exercise any other right or remedy the Agent and the
-100-
<PAGE> 108
Secured Creditors may have against the Borrowers or any other party, or any
security, without affecting or impairing in any way the liability of any Parent
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid. Each Parent Guarantor waives any defense arising out of any such
election by the Agent and the Secured Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of such Parent Guarantor against any Borrowers or any
other party or any security.
(b) Each Parent Guarantor waives all presentments,
demands for performance, protests and notices, including, without limitation,
notices of nonperformance, notices of protest, notices of dishonor, notices of
acceptance of this Parents Guaranty, and notices of the existence, creation or
incurring of new or additional Guaranteed Obligations. Each Parent Guarantor
assumes all responsibility for being and keeping itself informed of the
Borrowers' financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks which such Parent Guarantor assumes and
incurs hereunder, and agrees that the Agent and the Secured Creditors shall
have no duty to advise any Parent Guarantor of information known to them
regarding such circumstances or risks.
14.09 Nature of Liability. It is the desire and intent of
each Parent Guarantor and the Secured Creditors that this Parents Guaranty
shall be enforced against such Parent Guarantor to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If, however, and to the extent that, the
obligations of any Parent Guarantor under this Parents Guaranty shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the amount of the Guaranteed
Obligations of such Parent Guarantor shall be deemed to be reduced and such
Parent Guarantor shall pay the maximum amount of the Guaranteed Obligations
which would be permissible under applicable law.
-101-
<PAGE> 109
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
833 West South Boulder Road NEODATA CORPORATION
Louisville, CO 80027
Attn: Chief Financial Officer
Telephone: (303) 666-7000 By: /s/ NICHOLAS J. CUCCARO
Telecopy: (303) 666-7007 ---------------------------------
Name: Nicholas J. Cuccaro
Title: Chief Financial Officer
with a copy to: and Senior Vice President
Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attn: Thomas 0. Hicks,
John R. Muse
Jack D. Furst and
Lawrence D. Stuart, Jr.
Telephone: (214) 740-7300
Telecopy: (214) 740-7313
and
Hicks, Muse, Tate & Furst
Incorporated
1325 Avenue of the Americas
25th Floor
New York, New York 10019
Attn: Charles W. Tate
Telephone: (212) 424-1400
Telecopy: (212) 424-1450
<PAGE> 110
833 West South Boulder Road NEODATA CREATIVE SERVICES, INC
Louisville, CO 80027
Attn: Chief Financial Officer By: /s/ NICHOLAS J. CUCCARO
Telephone: (303) 666-7000 --------------------------------
Telecopy: (303) 666-7007 Name: Nicholas J. Cuccaro
Title: Chief Financial Officer
and Senior Vice President
833 West South Boulder Road NEODATA INVESTMENT
Louisville, CO 80027 SERVICES, INC. NO. 1
Attn: Chief Financial Officer
Telephone: (303) 666-7000 By: /s/ NICHOLAS J. CUCCARO
Telecopy: (303) 666-7007 --------------------------------
Name: Nicholas J. Cuccaro
Title: Chief Financial Officer
and Senior Vice President
NEODATA INVESTMENT SERVICES,
833 West South Boulder Road INC. NO. 2
Louisville, CO 80027
Attn: Chief Financial Officer By: /s/ NICHOLAS J. CUCCARO
Telephone: (303) 666-7000 --------------------------------
Telecopy: (303) 666-7007 Name: Nicholas J. Cuccaro
Title: Chief Financial Officer
and Senior Vice President
<PAGE> 111
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ MARY KAY CAYLE
---------------------------
Name:
Title:
<PAGE> 112
SCHEDULE I
LIST OF BANKS
Term
Loan
Bank Commitment
Bankers Trust Company $6,300,000
Total $6,300,000
<PAGE> 113
SCHEDULE II
BANK ADDRESSES
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Telephone No.: (212) 250-4886
Telecopier No.: (212) 250-7218
Attention: Anthony Logrippo
<PAGE> 114
SCHEDULE III
Subsidiaries
Neodata Corporation
Neodata Services, Inc. 100%
Neodata Creative Services, Inc.
The Lacek Group, Inc. 100%
Lacek Systems and Software, Inc. 100%
The Lacek Group, Inc.
Lacek Travel Services, Inc. 100%
World Class Travel Assoc. Inc. 100%
The Lacek Group, Inc. - Korea 50%
The Lacek Group PTY Limited, 100%
an Australian corporation
Lacek Systems and Software, Inc.
The Lacek Group, Inc. - Korea 50%
Schedule III to Credit Agreement Page 1 of 1
<PAGE> 115
SCHEDULE IV
EXISTING INDEBTEDNESS
1. Promissory Note payable to Julie Buchanan and Robert Buchanan by Lacek
Travel Services, Inc. in the original principal amount of $69,782.25,
dated August 14, 1996.
2. Indebtedness relating to, in connection with, or arising under the
Acquisitions and the Acquisition Documents.
3. Letter of Credit issued by Norwest Bank, N.A. on behalf of Lacek
Travel Services, Inc. in the amount of $24,500 (in connection with the
ARC License).
Schedule IV to Credit Agreement Page 1 of 1
<PAGE> 116
SCHEDULE V
Insurance
[ATTACHED]
<PAGE> 117
<TABLE>
<S> <C>
- - -----------------------------------------------------------------------------------------------------------------------------------
ACORD. CERTIFICATE OF INSURANCE ISSUE DATE (MM/DD/YY)
2/21/97
- - -----------------------------------------------------------------------------------------------------------------------------------
PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND
CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE
Aon Risk Services of MO. DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE
8182 Maryland Avenue POLICIES BELOW.
St. Louis, MO 53105 ----------------------------------------------------------------
Contact: Mark Smith COMPANIES AFFORDING COVERAGE
314-721-5100 ----------------------------------------------------------------
COMPANY LETTER A Federal Insurance Company
----------------------------------------------------------------
- - ------------------------------------------------------------------- COMPANY LETTER B Westchester Fire Ins. Co.
INSURED ----------------------------------------------------------------
COMPANY LETTER C Aetna Casualty & Surety Co.
Neodata Corporation ----------------------------------------------------------------
Attn: Diana Craig COMPANY LETTER D Hartford Steam Boiler
833 West South Boulder Road ----------------------------------------------------------------
Louisville COMPANY
CO 80027 LETTER E
- - -----------------------------------------------------------------------------------------------------------------------------------
COVERAGES
- - -----------------------------------------------------------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD
INDICATED, NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS
CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS,
EXCLUSIONS AND CONDITIONS OR SUCH POLICIES, LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
- - -----------------------------------------------------------------------------------------------------------------------------------
CO. TYPE OF INSURANCE POLICY NUMBER POLICY EFFECTIVE POLICY EXPIRATION LIMITS
LTR DATE (MM/DD/YY) DATE (MM/DD/YY)
- - -----------------------------------------------------------------------------------------------------------------------------------
GENERAL LIABILITY GENERAL AGGREGATE $2,000,000
------------------------------------
A X COMMERCIAL GENERAL 73224368 4/01/95 4/01/97 PRODUCTS-COMP/DP AGG. $1,000,000
--- LIABILITY ------------------------------------
PERSONAL & ADV. INJURY $1,000,000
CLAIMS MADE X OCCUR ------------------------------------
--- --- --- EACH OCCURRENCE $1,000,000
------------------------------------
OWNER'S & CONTRACTOR'S FIRE DAMAGE $1,000,000
--- PORT. (Any one fire)
------------------------------------
--- ------------------------- MED. EXPENSE $ 10,000
(Any one person)
- - -----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY
COMBINED SINGLE LIMIT $1,000,000
A X ANY AUTO 73224367 4/01/96 4/01/97
--- ------------------------------------
ALL OWNED AUTOS
--- BODILY INJURY $
SCHEDULED AUTOS 73224374 (VA) 4/01/96 4/01/97 (Per Period)
---
X HIRED AUTOS ------------------------------------
---
X NON-OWNED AUTOS COMP. - $500 DEDUCT. BODILY INJURY $
--- (PER ACCIDENT)
GARAGE LIABILITY
--- ------------------------------------
COLL. - $500 DEDUCT.
--- PROPERTY DAMAGE $
- - -----------------------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY EACH OCCURRENCE $10,000,000
------------------------------------
B X UMBRELLA FORM CUA1027170 4/01/95 4/01/97 AGGREGATE $10,000,000
--- ------------------------------------
OTHER THAN UMBRELLA FORM
---
- - -----------------------------------------------------------------------------------------------------------------------------------
X STATUTORY LIMITS
WORKER'S COMPENSATION ------------------------------------
EACH ACCIDENT $1,000,000
A AND 71632587 (DED) 4/01/95 4/01/97 ------------------------------------
A 71632588 (DIVIDEND) 4/01/95 4/01/97 DISEASE-POLICY LIMIT $1,000,000
EMPLOYERS' LIABILITY ------------------------------------
DISEASE-EACH EMPLOYEE $1,000,000
- - -----------------------------------------------------------------------------------------------------------------------------------
OTHER
A Excess Liability 79402066 4/01/96 4/01/97 $ 25,000,000 Limit
C Excess Liability 08XN25441583SCA 4/01/95 4/01/97 $ 25,000,000 Limit
D Boiler & Machinery BMINY621326500 4/01/95 4/01/97 $100,000,000 Limit
- - -----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/OPTIONAL ITEMS
Certificate Holder is Additional Insured and Loss Payee as Respects General Liability.
Waiver of Subrogation in favor of Bankers Trust Co. and Secured Creditors. Coverage applies
to Neodata Creative Services, Inc. and all subsidiaries.
- - -----------------------------------------------------------------------------------------------------------------------------------
CERTIFICATE HOLDER CANCELLATION
Bankers Trust Company, SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
as Collateral Agent EXPIRATION DATE THEREOF, THE ISSUING COMPANY WILL MAIL 30 DAYS
130 Liberty Street WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT.
New York, NY 10005
------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE
730080006
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 118
- - --------------------------------------------------------------------------------
ACORD(R) EVIDENCE OF PROPERTY INSURANCE DATE (MM/DD/YY)
/ / 2/21/97
- - --------------------------------------------------------------------------------
THIS IS EVIDENCE THAT INSURANCE AS IDENTIFIED BELOW HAS BEEN ISSUED, IS IN
FORCE, AND CONVEYS ALL THE RIGHTS AND PRIVILEGES AFFORDED UNDER THE POLICY.
- - --------------------------------------------------------------------------------
PROVIDER COMPANY
AON Risk Services of MO Lexington Insurance Company
8182 Maryland Avenue
St. Louis, MO 63105
Contact: Mark Smith
314-721-5100
CODE SUB-CODE
- - --------------------------------------------------------------------------------
INSURED LOAN NUMBER POLICY NUMBER
Neodata Corporation 8791305
Attn: Diana Craig ----------------------------------------
833 West South Boulder Road EFFECTIVE DATE EXPIRATION CONT. UNTIL
Louisville (MM/DD/YY) DATE TERMINATED
CO 80027 4/01/96 (MM/DD/YY) IF CHECKED
4/01/97 / /
----------------------------------------
THIS REPLACES PRIOR EVIDENCE DATED:
- - --------------------------------------------------------------------------------
PROPERTY INFORMATION
- - --------------------------------------------------------------------------------
LOCATION DESCRIPTION
- - --------------------------------------------------------------------------------
COVERAGE INFORMATION
- - --------------------------------------------------------------------------------
COVERAGE/PERILS FORMS AMOUNT OF INSURANCE DEDUCTIBLE
- - --------------------------------------------------------------------------------
Combined: 200,000,000 25,000
Building/Personal Property/
Business Interruption
- All Risk Incl. Theft
- Subject to policy terms,
conditions and exclusions
- - --------------------------------------------------------------------------------
REMARKS (including Special Conditions)
- - --------------------------------------------------------------------------------
Certificate Holder is Additional Insured and Loss Payee as respects the
Property. Waiver of Subrogation in favor of Bankers Trust Co. and Secured
Creditors. Coverage applies to Neodata Creative Services, Inc. and all
subsidiaries. (See Attached Addendum for Additional Property Coverage Limits)
- - --------------------------------------------------------------------------------
CANCELLATION
- - --------------------------------------------------------------------------------
THE POLICY IS SUBJECT TO THE PREMIUMS, FORMS, AND RULES IN EFFECT FOR EACH
POLICY PERIOD. SHOULD THE POLICY BE TERMINATED, THE COMPANY WILL GIVE THE
ADDITIONAL INTEREST IDENTIFIED BELOW 30 DAYS WRITTEN NOTICE, AND WILL SEND
NOTIFICATION OF ANY CHANGES TO THE POLICY THAT WOULD AFFECT THAT INTEREST,
IN ACCORDANCE WITH THE POLICY PROVISIONS OR AS REQUIRED BY LAW.
- - --------------------------------------------------------------------------------
ADDITIONAL INTEREST
- - --------------------------------------------------------------------------------
NAME AND ADDRESS NATURE OF INTEREST
/ / MORTGAGEE /X/ ADDITIONAL INSURED
Bankers Trust Company
as Collateral Agent /X/ LOSS PAYEE / / (OTHER) __________
130 Liberty Street ----------------------------------------
New York NY 10008 SIGNATURE OF AUTHORIZED AGENT OF COMPANY
/s/ [ILLEGIBLE]
730080 5
- - --------------------------------------------------------------------------------
ACORD 27 (2/88) (C) ACORD CORPORATION 1989
- - --------------------------------------------------------------------------------
<PAGE> 119
Hicks, Muse, Tate & Furst Incorporated Master Property Program
Addendum to Certificate
Neodata Corporation
<TABLE>
<CAPTION>
Company Layer Participation Policy #
_________________________ ________________ __________________ ______________
<S> <C> <C> <C>
Lexington Insurance Company Primary 100% or $3,500,000 8791305
$3.5MM
____________________________________________________________________________________________________________
GAN North America Insurance $1.5MM x/o 100% or $1,500,000 PTY 9600079
Company $3.5MM
____________________________________________________________________________________________________________
Commonwealth Insurance $12.5 x/o $5MM 30% or $3,750,000 US1045
Company
____________________________________________________________________________________________________________
St. Paul Fire & Marine $12.5 x/o $5MM 60% or $7,500,000 144SP0131
____________________________________________________________________________________________________________
Security Insurance Company of $12.5 x/o $5MM 10% or $1,250,000 CC1PW01469
Hartford
____________________________________________________________________________________________________________
Pacific Insurance Company $5MM x/o 100% or $5,000,000 ZG006203
$17.5MM
____________________________________________________________________________________________________________
Agricultural Insurance $14MM x/o 36% or $5,000,000 CPP8781012
Company $22.5MM
____________________________________________________________________________________________________________
Westchester Fire $14MM x/o 36% or $5,000,000 IXS481754
$22.5MM
____________________________________________________________________________________________________________
American Empire $14MM x/o 10% or $1,500,000 6MP23038
$22.5MM
____________________________________________________________________________________________________________
Essex $14MM x/o 18% or $2,500,000 MSP1085
$22.5MM
____________________________________________________________________________________________________________
Gerling $3.5 x/o 100% or $3,500,000 3001097
$36.5MM
____________________________________________________________________________________________________________
Royal Surplus Insurance $10MM x/o $1,000,000 CA EQ KHD 306874
Company $40MM
____________________________________________________________________________________________________________
Western Re (United Casualty, Undrs. $10MM x/o $9,000,000 CA EQ REP960113
at Lloyd's London Contract) $40MM
____________________________________________________________________________________________________________
Travelers $10MM x/o $10,000,000 (All Risk KTXJ-CMB
$40MM excluding CA EQ) 256T697-A-96
$50MM x/o $25MM p/o $50MM x/o
$50MM $50MM
____________________________________________________________________________________________________________
American Protection Insurance $50MM x/o $25MM p/o $50MM x/o 3ZF005580-00
Company $50MM $50MM (All Risk
excluding CA EQ)
____________________________________________________________________________________________________________
Travelers $100MM x/o $50MM p/o KTXJ-CMB
$100MM $100MM x/o $100MM (All 256T697-A-96
Risk excluding CA EQ)
____________________________________________________________________________________________________________
Royal Surplus Insurance $100MM x/o $50MM p/o $100MM x/o KHD 306875
Company $100MM $100MM (All Risk
excluding CA EQ)
____________________________________________________________________________________________________________
</TABLE>
Property Coverage Provided Through Hicks, Muse, Tate & Furst Incorporated Master
Property Program. Total Property Limits of $200,000,000.
<PAGE> 120
NEODATA CORPORATION
SCHEDULE V: INSURANCE
---------------------
As of February 21, 1997
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
Minimum to be
Coverage Carrier/Policy # Effective Dates Limits Maintained
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AUTO LIABILITY/PHYSICAL
DAMAGE
ALL OTHER STATES Federal Insurance Co. 4/01/96 - 4/01/97 $ 1,000,000 CSL $1,000,000
VIRGINIA 73224367 4/01/96 - 4/01/97 $ 10,000 Medical Payments Combined Single Limit
73224374 $ 1,000,000 Uninsured/
Underinsured Motorist
$ Included Non-Owned & Hired
Car Liability
$ 50,000 Hired Car Physical
Damage
$ 500 Collision Deductible
$ 500 Comprehensive Deductible
BOILER & MACHINERY Hartford Steam Boiler 4/01/96 - 4/01/97 $100,000,000 Combined PD/BI/EE Replacement Cost
BMINY621326500 $ 2,000,000 Utility Interruption
(All Services)
$ 2,000,000 Ammonia Contamination
$ 2,000,000 Water Damage
$ 2,000,000 Consequential Damage
$ 1,000,000 Expediting Expense
$ 500,000 Hazardous Substance
$ 25,000 Deductible
24 Hours BI/EE
12 Hours Utility Interruption
EDP PROFESSIONAL Columbia Casualty Co. 9/30/96 - 9/30/97 $ 5,000,000 Aggregate $1,000,000
LIABILITY MPL00323395241 $ 5,000,000 Each Claim Each Occurrence
$ 50,000 Deductible
</TABLE>
1
<PAGE> 121
NEODATA CORPORATION
SCHEDULE V: INSURANCE
-----------------------
As of February 21, 1997
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Minimum to be
Coverage Carrier/Policy# Effective Dates Limits Maintained
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EXECUTIVE RISK COVERAGE Federal Insurance Co. 7/01/96 - 7/01/97 CRIME:
81343715 $5,000,000 Employee Theft Coverage $1,000,000
$5,000,000 Premises Coverage Each Occurrence
$5,000,000 Transit Coverage
$5,000,000 Depositors Forgery
$ 50,000 Deductible
KIDNAP & RANSOM:
$1,000,000 Kidnap, Ransom, & Extortion $1,000,000
$1,000,000 Delivery Coverage Each Occurrence
$1,000,000 Expense Coverage
$1,000,000 Legal Liability Coverage
$1,000,000 Political Threat Coverage
$ 0 Deductible
FIDUCIARY LIABILITY American Int'l Specialty 7/01/96 - 7/01/97 $1,000,000 Limit of Liability $1,000,000
TBD $ 15,000 Retention Each Occurrence
FOREIGN GENERAL LIABILITY Insurance Co. of the 7/01/96 - 7/01/97 $1,000,000 Aggregate $1,000,000
AND AUTO LIABILITY State of PA $1,000,000 Each Occurrence Each Occurrence
GENERAL LIABILITY Federal Insurance Co. 4/01/96 - 4/01/97 $2,000,000 General Aggregate $1,000,000
73224368 $1,000,000 Products/Completed Each Occurrence
Operations Aggregate
$1,000,000 Personal & Advertising Injury
$1,000,000 Fire Damage
$ 10,000 Medical Expense
</TABLE>
2
<PAGE> 122
NEODATA CORPORATION
SCHEDULE V: INSURANCE
-----------------------
AS OF FEBRUARY 21, 1997
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Minimum to be
Coverage Carrier/Policy # Effective Dates Limits Maintained
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NON-OWNED AIRCRAFT USAIG 4/01/96 - 4/01/97 $ 30,000,000 Combined Single Limit $5,000,000
360AC248103 Combined Single Limit
PROPERTY Lexington Insurance Co. 4/01/96 - 4/01/97 $200,000,000 "All Risk" Including Replacement Cost
(Primary $3,500,000) Business Interruption
87911305 Loss Limit Per Occurrence
Sublimits Are Per
Occurrence unless
Otherwise Stated
$200,000,000 Earthquake - Annual
Aggregate (Outside CA)
$ 50,000,000 Earthquake - Annual
Aggregate (CA)
$200,000,000 Flood - Annual Aggregate
$ 25,000 Deductible Except:
$ 5,000 Transit
$ 50,000 Flood
5% Earthquake - Per Unit of
Insurance
$ 100,000 Earthquake Minimum -
CA Only
$ 50,000 Earthquake Minimum -
All Other States
2% Wind - Tier 1 Locations
$ 100,000 Wind - Minimum
UMBRELLA Westchester Fire Ins. Co. 4/01/96 - 4/01/97 $ 20,000,000 Per Occurrence $20,000,000
CUA1027170 $ 20,000,000 Aggregate Each Occurrence
$ 10,000 Self-Insured Retention
EXCESS LIABILITY Federal Insurance Co. 4/01/96 - 4/01/97 $ 25,000,000 Per Occurrence Excess $5,000,000
79402066 of $20,000,000 Each Occurrence
$ 25,000,000 Aggregate
EXCESS LIABILITY Aetna Casualty & Surety 4/01/96 - 4/01/97 $ 25,000,000 Per Occurrence Excess
08XN25441683SCA of $45,000,000
$ 25,000,000 Aggregate
</TABLE>
3
<PAGE> 123
NEODATA CORPORATION
SCHEDULE V: INSURANCE
-----------------------
AS OF FEBRUARY 21, 1997
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------------------------
Minimum to be
Coverage Carrier/Policy # Effective Dates Limits Maintained
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
WORKERS' COMPENSATION Great Northern Ins. Co. 4/01/96 - 4/01/97 Statutory Statutory
71632587 EMPLOYERS' LIABILITY:
$250,000 Deductible $ 1,000,000 Each Accident
(All Other States) $ 1,000,000 Disease-Policy Limit
4/01/96 - 4/01/97 $ 1,000,000 Disease-Each Employee
71632588
(AZ, MA and KS)
</TABLE>
4
<PAGE> 124
SCHEDULE VI
EXISTING LIENS
The Lacek Group, Inc.
<TABLE>
<CAPTION>
Jurisdiction File Number Filing Date Secured Party
- - -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minnesota SOS 1629653 11-12-93 North Star Bank
- - -------------------------------------------------------------------------------------------------
1660594 3-25-94 North Star Bank
- - -------------------------------------------------------------------------------------------------
1681381 6-14-94 North Star Bank
- - -------------------------------------------------------------------------------------------------
1731541 1-19-95 GE Capital
- - -------------------------------------------------------------------------------------------------
1782661 8-14-95 The First National Bank of
Bertha-Verndale
- - -------------------------------------------------------------------------------------------------
1791627 9-25-95 The First National Bank of
Bertha-Verndale
- - -------------------------------------------------------------------------------------------------
1810416 12-15-95 The First National Bank of
Bertha-Verndale
- - -------------------------------------------------------------------------------------------------
1847412 5-09-96 Citizens Independent Bank
- - -------------------------------------------------------------------------------------------------
1849327 5-16-96 Citizens Independent Bank
- - -------------------------------------------------------------------------------------------------
1849328 5-16-96 Citizens Independent Bank
- - -------------------------------------------------------------------------------------------------
1849329 5-16-96 Citizens Independent Bank
- - -------------------------------------------------------------------------------------------------
1854362 6-04-96 Citizens Independent Bank
- - -------------------------------------------------------------------------------------------------
1869958 8-12-96 Citizens Independent Bank
- - -------------------------------------------------------------------------------------------------
1895866 11-22-96 Citizens Independent Bank
- - -------------------------------------------------------------------------------------------------
1911546 1-27-97 First Commercial Capital Corp.
- - -------------------------------------------------------------------------------------------------
Fulton County, Georgia 060199609563 5-17-96 Citizens Independent Bank
- - -------------------------------------------------------------------------------------------------
060199604139 2-29-96 The First National Bank of
Bertha-Verndale
=================================================================================================
</TABLE>
Schedule VI to Credit Agreement Page 1 of 1
<PAGE> 125
SCHEDULE VII
EXISTING INVESTMENTS
Investments relating to, in connection with, or arising under the Acquisitions
and Acquisition Documents.
Schedule VII to Credit Agreement Page 1 of 1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,964
<SECURITIES> 0
<RECEIVABLES> 74,874
<ALLOWANCES> 1,784
<INVENTORY> 0
<CURRENT-ASSETS> 87,417
<PP&E> 93,032
<DEPRECIATION> 45,306
<TOTAL-ASSETS> 170,451
<CURRENT-LIABILITIES> 69,638
<BONDS> 188,676
0
0
<COMMON> 0
<OTHER-SE> (104,433)
<TOTAL-LIABILITY-AND-EQUITY> 170,451
<SALES> 0
<TOTAL-REVENUES> 67,803
<CGS> 0
<TOTAL-COSTS> 47,140
<OTHER-EXPENSES> 14,348
<LOSS-PROVISION> 493
<INTEREST-EXPENSE> 6,194
<INCOME-PRETAX> (372)
<INCOME-TAX> 0
<INCOME-CONTINUING> (372)
<DISCONTINUED> 0
<EXTRAORDINARY> (313)
<CHANGES> 0
<NET-INCOME> (685)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
