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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
Commission file number: 33-45417
THE BISYS GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3532663
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 CLOVE ROAD
LITTLE FALLS, NEW JERSEY 07424
(Address of principal executive offices) (Zip Code)
973-812-8600
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
(Title of Class)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.02 PAR VALUE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Rule
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. [ ]
State the aggregate market value of voting stock held by nonaffiliates of
the Registrant as of September 18, 1997: $834,273,910.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of September 18, 1997: 26,123,069
DOCUMENTS INCORPORATED BY REFERENCE: List the following documents if
incorporated by reference and the part of the Form 10-K into which the document
is incorporated: (1) Any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.
FISCAL 1997 ANNUAL REPORT to Shareholders--Part II and IV; PROXY STATEMENT for
November 13, 1997 Annual Meeting--Part III
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THE BISYS GROUP, INC.
FORM 10-K
JUNE 30, 1997
PAGE
Part I
Item 1. Business...................................................... 1
Item 2. Properties.................................................... 9
Item 3. Legal Proceedings............................................. 10
Item 4. Submission of Matters to a Vote of Security Holders............10
Part II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters............................................10
Item 6. Selected Financial Data........................................10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.....10
Item 8. Financial Statements and Supplementary Data....................11
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.......................................11
Part III
Item 10. Directors and Executive Officers of the Registrant.............11
Item 11. Executive Compensation.........................................11
Item 12. Security Ownership of Certain Beneficial Owners and
Management...................................................11
Item 13. Certain Relationships and Related Transactions.................11
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K............................................11
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PART I
ITEM I. BUSINESS.
The BISYS-Registered Trademark- Group, Inc. and its wholly-owned
subsidiaries ("BISYS" or the "Company") provide information and investment
outsourcing solutions to and through more than 6,000 financial organizations and
corporate clients. BISYS believes that it provides one of the financial
services industry's most technologically advanced family of image and financial
information outsourcing solutions and pricing analysis for account, item and
loan application processing, competitive product pricing research and marketing
services, and growth-enabling loan-by-phone and internet solutions. BISYS
provides network planning, design and implementation along with round-the-clock
network monitoring for multi-vendor local and wide area network environments.
BISYS is an industry leader in the design, administration and distribution of
proprietary mutual funds. It also provides 401(k) administration services to
some of the nation's leading bank and investment management companies; and
provides outsourcing services for the distribution of insurance services.
BISYS seeks to be the single source of all relevant outsourcing solutions
for its clients in order to improve their performance, profitability and
competitive position. BISYS endeavors to expand the scope of its services
through focused account management, emphasizing services with recurring revenues
and long-term contracts. It increases its business base through (i) direct
sales to new clients, (ii) sales of additional products and services to existing
clients, and (iii) acquisitions of businesses that provide complementary
outsourcing solutions to financial organizations.
BISYS was organized in August 1989 to acquire certain banking and thrift
data processing operations of Automatic Data Processing, Inc. ("ADP"). Its
traditional business was established in 1966 by United Data Processing, Inc.,
the predecessor of the banking and thrift data processing operations of ADP.
Together with its predecessors, BISYS has been providing outsourcing solutions
to the financial services industry for more than 30 years. BISYS is
incorporated under the laws of Delaware and has its principal executive office
at 150 Clove Road, Little Falls, New Jersey 07424 (telephone 973-812-8600).
Since its founding in 1989, BISYS has completed a number of acquisitions
and mergers as part of its strategic growth plan. Over the past five fiscal
years and through September 1997, BISYS acquired or merged with the following
businesses:
July 1993 -- The Barclay Group, Inc., now part of BISYS Plan Services,
provides 401(k) marketing, administrative support and participant
recordkeeping to client companies;
September 1993 -- Assets and certain liabilities of the Meyer Interest Rate
Survey, now part of BISYS Research Services, gathers specific information
on deposit and loan products offered by banking institutions and markets
such information to clients;
October 1993 -- The Winsbury Companies, now part of BISYS Fund Services,
creates, markets, and administers proprietary mutual funds, primarily for
banks;
March 1994 -- SunTrust Data Systems, Inc., now part of BISYS
TOTALPLUS-Registered Trademark- business, provides information services for
correspondent community banks of SunTrust Banks, Inc.;
March 1995 -- Concord Holding Corporation ("Concord"), now part of BISYS
Fund Services, creates, markets and administers proprietary mutual funds,
primarily for banks;
May 1995 -- Document Solutions, Inc. ("DSI"), now known as BISYS Document
Solutions, offers check and document imaging solutions to banks;
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April 1996 -- Strategic Solutions Group, Inc. ("SSG"), now known as BISYS
Creative Solutions, designs, develops and provides automated telephone and
internet based business generation solutions to financial organizations,
including the automated processing of consumer loan requests and
prequalification of home buyers for mortgage loans;
June 1996 -- T.U.G., Inc. ("TUG"), now part of BISYS Insurance Services,
provides insurance distribution services to the financial services
industry;
August 1997 -- Charter Systems, Inc. ("Charter"), an enterprise-wide
network services company which provides network planning, design,
implementation and 24-hour monitoring and performance analysis for
multi-vendor local and wide area network environments (see "Recent
Developments");
August 1997-- Dascit/White & Winston, Inc. and affiliated companies
("DWW"), an outsourcer of group health care and life insurance services,
now part of BISYS Insurance Services (see "Recent Developments"); and
September 1997-- Benefit Services, Inc. ("BSI"), an outsourcer of long-term
health care insurance services, now part of BISYS Insurance Services (see
"Recent Developments").
RECENT DEVELOPMENTS
In July 1997, BISYS was advised by the Board of Directors of the Pacific
Horizon Funds, managed by Bank of America, that BISYS' contract for mutual fund
administration and distribution services would be terminated in September 1997.
No specific reasons were given for the termination although BISYS understands
that Bank of America will serve as the new administrator. For fiscal year 1997,
revenues related to the agreements accounted for approximately $15 million. See
Item 7. "Management's Discussion and Analysis of Financial Condition and Results
of Operations".
On August 15, 1997, BISYS acquired Charter through the merger of a
wholly-owned acquisition subsidiary of BISYS with and into Charter. The
transaction was completed through the issuance of 588,945 shares of BISYS common
stock, $0.02 par value ("Common Stock"), and exchange of 258,605 BISYS
equivalent stock options for all the outstanding shares and stock options of
Charter.
Effective August 22, 1997, BISYS entered into a strategic alliance with
Open Solutions, Inc. ("OSI"), provider of THE COMPLETE BANKING SOLUTION-TM-, a
client/server-based suite of integrated banking applications. Under the terms
of the agreement, BISYS became the exclusive national outsourcing provider of
OSI's client/server-based product line, and OSI has the right to integrate
BISYS' value-added products with its turnkey product offering. As part of the
agreement, BISYS also made an equity investment in OSI and is represented on the
OSI board of directors.
On August 29, 1997, BISYS acquired DWW through the merger of three separate
wholly-owned subsidiaries of BISYS with and into the three separate legal
entities comprising the DWW business: Dascit/White & Winston, Inc., Group Plan
Administrators, Inc., and Krauss & Trapani Co., Ltd. The transaction was
completed through the issuance of 134,396 shares of Common Stock in exchange for
all the outstanding shares of the three DWW companies.
On September 16, 1997, BISYS acquired BSI through the merger of a
wholly-owned acquisition subsidiary of BISYS with and into BSI. The transaction
was completed through the issuance of 71,448 shares of Common Stock, in exchange
for all the outstanding shares of BSI.
Although the acquisitions of Charter, DWW and BSI have been accounted for
as poolings of interests, historical financial statements will not be restated,
since the financial statement impact is not material.
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COMPANY STRATEGY
Financial organizations today are consistently challenged to compete more
effectively, improve productivity and maximize profits during periods of both
economic growth and decline. BISYS provides viable alternatives for automating
critical tasks and functions and provides specific expertise and experience to
financial organizations. BISYS outsourcing solutions deliver to its clients
operational and bottom line benefits as well as the resources to generate
incremental revenues. At the same time, BISYS realizes certain economies of
scale in providing client service, operations support and product development
for its diverse client base.
BISYS objectives are to increase its client base and to expand the services
it offers to them. The BISYS mission is to be the premier, full-service
outsourcing business partner focused on enhancing its clients' growth, profits
and performance, and to build shareholder value by consistently increasing both
revenues and earnings per share, through a combination of internal growth, new
sales and strategic acquisitions. Six key principles have guided BISYS since
its formation and continue to shape its business growth plan:
FOCUS ON SERVING CLIENTS. BISYS seeks to strengthen business relationships
with clients by offering new products and services designed to be
technologically advanced solutions for improving client performance, growth
and competitive position in a changing market.
GROW INTERNALLY AND SELL AGGRESSIVELY. BISYS seeks to grow internally by
aggressively selling services to new clients and cross-selling additional
services to existing clients through focused sales in growth markets.
BISYS also seeks to develop and sell new services to clients that help them
retain existing customers, and attract additional customers from new
markets. BISYS seeks to grow with and profit from its clients as a
growth-focused business partner.
EXPLOIT BUSINESS AND PRODUCT SYNERGY. BISYS seeks to capitalize on the
synergies among its business units and to acquire complementary companies
that support its client relationships and long-term business objectives.
MANAGE CONTEMPORARY ACQUISITION STRATEGY. Strategic acquisitions represent
an important growth tool for BISYS. To enhance shareholder value, BISYS
seeks to combine conservative valuation discipline and transition
experience to achieve market synergies and operating leverage.
LEVERAGE TECHNOLOGICAL ADVANCEMENTS. BISYS seeks to maintain its
leadership position in providing competitive, value-added outsourcing
solutions through investment in new technology and the further integration
of BISYS system capabilities.
OPTIMIZE HUMAN RESOURCES. BISYS seeks to attract and retain executives,
technical staff and financial services professionals with the expertise
required to enable BISYS to explore and develop new opportunities that will
sustain its growth and market leadership position.
BISYS provides outsourcing solutions for information processing to banking
institutions through an integrated family of services and products offered under
the registered service mark TOTALPLUS. Although the TOTALPLUS family of
services and products are adaptable to financial institutions of any size, BISYS
believes that its primary market consists of banks with $250 million to $10
billion in assets.
Using integrated central and client site solutions, the TOTALPLUS product
line supports most aspects of a banking institution's automation requirements.
TOTALPLUS is a comprehensive system, providing bank-wide automation which
enables community banks to compete with super regionals, banks serving a
national marketplace, and non-bank competitors. The TOTALPLUS family of
products and services provides bank-wide automation, integrating
mainframe-based, central site and PC-based, client site
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applications. The recent strategic alliance with OSI provides an evolutionary
path to a client/server platform utilizing network computing technologies. The
TOTALPLUS solution provides diverse financial organizations with the ability to
customize each application to meet unique processing requirements and
priorities.
BISYS currently has two major data processing centers located in the
Chicago, Illinois and Philadelphia, Pennsylvania metropolitan areas. These
regional service centers are uniformly automated with multi-tasking IBM (or
equivalent) mainframe computer systems on which all TOTALPLUS host computer
functions and client data are resident. Each client's individual operating
parameters and data are maintained separately, and extensive precautions are in
place to ensure data security and privacy of communications between the client
and the host. Both internal and external backup resources are maintained and
regularly tested for BISYS own disaster recovery purposes.
BISYS is a leader in providing image-based technology software to financial
institutions, including sophisticated Internet-based delivery and access
solutions. These imaging solutions convert traditional paper-based checks and
other documents into digital images that can be accessed electronically. More
than 650 banks, credit unions and service bureaus are using BISYS image-based
technology software representing approximately 70% of all bank check imaging
systems in the country for the community bank market. This software product,
designed to provide a fully integrated image environment, uses microcomputer
technology and supports the majority of image enabled transports available
today. This product family includes image capture and archive, image
statements, image proof of deposit, return item/image processing, image
signature verification, courtesy amount recognition, CD-ROM image delivery,
customer financial analysis and full internet access.
BISYS provides a complete package of enterprise-wide network management
solutions including planning, design and implementation of multi-vendor network
environments. Its services include its Inframax-Registered Trademark- remote
network monitoring and management system which supervises the network and the
operating system and related software that resides on the network. This
automated round-the-clock service provides monitoring, fault identification and
anticipation and overall network performance reporting.
BISYS provides automated business generation solutions to approximately 400
financial organizations across the United States. BISYS provides low-cost
automated telephone and internet-based business generation solutions to its
clients in an unattended service bureau environment on a seven day, 24 hour
basis, from its offices in Atlanta, Georgia. These services include Loan
Connection-TM-, which processes consumer loan requests, and Mortgage
Connection-TM-, which helps to prequalify home buyers for mortgage loans. Using
a client specific toll-free number and any touch-tone phone or a client's
Internet web site, prospective borrowers enter basic personal and financial
information in response to voice or screen prompts. Based on this input, BISYS
retrieves credit bureau information and applies the individual financial
organization's underwriting parameters and credit scoring criteria to provide
qualifying information to the financial organization and the prospective
borrower.
BISYS gathers information on deposit and loan products offered by more than
5,000 banks, thrifts and credit unions on a daily, weekly, or monthly basis.
BISYS markets and transmits this survey information in various formats and
frequencies to over 1,650 client institutions, including 23 of the nation's top
25 commercial banks. This data is used by both money center and community banks
to support their daily pricing decisions.
BISYS provides distribution, administration, fund accounting and transfer
agency services to over 60 mutual fund complexes encompassing more than 700
individual portfolios with a market value exceeding $170 billion in assets.
BISYS also provides 401(k) plan marketing support, administration and
recordkeeping services to 30 of the nation's leading bank and investment
management companies.
BISYS is a leader in distributing and administering proprietary open-end
"mutual funds" registered under the Investment Company Act (the "Investment
Company Act"), primarily for the bank managed mutual fund sector, a rapidly
growing sector in the mutual fund industry. BISYS provides distribution
services,
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including the development of joint and external sales and marketing programs and
administrative services, including responsibility for administration, transfer
agency, shareholder services, compliance and fund accounting. BISYS also
provides distribution services through its various wholly-owned broker/dealer
subsidiaries. In order to assist its clients' mutual fund sales efforts, BISYS
maintains a distribution sales force to raise additional assets for its clients'
funds. The banking institution, or a subsidiary or affiliate thereof, typically
acts as investment advisor and custodian to the fund.
BISYS integrates its banking and mutual fund expertise to provide a wide
array of specialized services. More than a traditional administrator and
distributor, BISYS takes a consultative approach to its client relationships,
offering innovative, fee-generating and cost-effective solutions to expand and
manage the banking institution's mutual fund business. BISYS offers its clients
a complete turnkey outsourcing solution for mutual fund operations which
includes comprehensive marketing, institutional sales, retail sales,
telemarketing, development of new products and markets and institutional and
retail shareholder servicing centers. BISYS designs, plans and implements
strategies to help mutual funds attain critical mass, reach new prospects and
markets and add value in an increasingly competitive market.
BISYS, one of the nation's leading providers of 401(k) plan services for
small- and medium-sized companies, provides outsourcing solutions to financial
organizations and corporate clients for marketing and sales support and
administration and participant recordkeeping services for corporate sponsored
401(k) plans. BISYS maintains partnerships with financial organizations
including banks and investment and insurance companies and provides marketing
and proposal support for their sale of their 401(k) plan investment products.
BISYS markets to and builds systems linkage with these investment manager
partners and enables them to concentrate on selling 401(k) plans while BISYS
provides the administrative and recordkeeping functions for a sponsoring
company. On an ongoing basis, BISYS performs 401(k) participant recordkeeping
and other services including daily valuation of participant balances,
administering 401(k) loans, discrimination testing, participant statements and
participant communications. Targeted at companies with fewer than 500 employees
- -- one of the fastest growing segments of the retirement plan market -- BISYS
services more than 5,000 corporate-sponsored retirement plans covering nearly
three-quarters of a million employee participants.
BISYS outsources life, group health and long-term care insurance services
to the financial services industry. BISYS is a full-service distributor and
administrator of insurance services and employs strategic alliances with major
insurance companies and national producer groups to provide outsourcing services
for insurance product distribution. BISYS services a network of, and markets
products and services through, more than 30,000 insurance agents and brokers
nationwide. BISYS offers a full-service, single source solution to support
banks' initiatives to offer insurance services to their customer bases. BISYS
allows clients to use their various distribution channels to offer insurance
products and services, ranging from annuities and commodity term products to
estate planning products. In addition to product solutions, BISYS provides
clients with the systems necessary to support their sale of insurance products,
including licensing management, marketing and proposal support, application
processing and advanced underwriting and commission accounting and processing.
CONTRACTS
Services are provided to BISYS clients, for the most part, on the basis of
a contract which renews for successive terms, unless terminated by either party.
BISYS management has pursued a policy of obtaining renewal terms equal to or
exceeding the original contract terms.
Contracts for distribution services to mutual funds, as required by the
Investment Company Act, provide that such contracts may continue for a period
longer than two years only if such continuance is specifically approved at least
annually by both a majority of the disinterested directors and either the other
members of the board of directors or the holders of a majority of the
outstanding shares of the fund.
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BISYS fee structure for data processing clients is based primarily on
number of accounts, loans, participants and/or transactions handled for each
service, in some cases, subject to minimum charges, plus additional charges for
special options, services and features. BISYS fee structure for mutual fund
services clients is based primarily on the average daily net asset value of the
fund, in some cases, subject to minimum charges. BISYS 401(k) fee structure is
based upon the number of eligible participants in a plan subject to certain
minimums. BISYS check imaging software is licensed subject to a one-time fee
with recurring maintenance fees. BISYS telephone loan support services are
provided based on a one-time implementation fee plus a per-transaction fee.
BISYS fee structure for networking services is based on an annual fee for remote
monitoring, a one-time fee for project services, and recurring maintenance fees.
Contracts with insurance carriers providing products for BISYS customers provide
for compensation based on a percentage of premiums paid and transaction charges
and are generally cancelable at the discretion of the parties.
Although contract terminations and non-renewals have an adverse affect on
recurring revenues, BISYS believes that the contractual nature of its
businesses, combined with its historical renewal experience, provides a high
level of recurring revenues.
CLIENT BASE
BISYS clients are located in all 50 states. BISYS provides outsourcing
solutions to commercial banks, mutual savings institutions, thrift
organizations, mutual funds, insurance companies, insurance producer groups,
corporate clients and other financial organizations including investment
counselors and brokerage firms.
DISASTER RECOVERY SYSTEMS
Where appropriate, BISYS has implemented a disaster recovery system for its
various businesses. The key restoration services include off-site storage and
rotation of critical files, availability of a third-party "hot site" and
telecommunications recovery capability. BISYS believes that its single product
and consistent platform approach to data processing and communications and other
operating procedures enable it to achieve greater efficiencies in maintaining
and enhancing its disaster recovery systems, the capabilities of which are
routinely tested by BISYS with the cooperation of its clients. BISYS has also
developed and markets a microcomputer-based client site disaster recovery
planning product that is specifically designed to meet the compliance needs of
its financial institution clients.
SALES, MARKETING AND CLIENT SUPPORT
BISYS sells its services directly to potential clients or supports
insurance agents and companies, brokerage firms and other entities in their
endeavors to gain new clients. In addition to direct sales, BISYS utilizes
reseller/distributors to sell its software. BISYS has a number of sales offices
throughout the United States, including California, Florida, Georgia,
Massachusetts, Michigan, New York, Ohio, Pennsylvania, Texas and Virginia.
BISYS utilizes an account executive staff which provides client account
management and support. In accordance with BISYS strategy of providing a single
source solution to its clients, the account executive staff also markets and
sells additional services to existing clients and manages the contract renewal
process. Using centralized resources, BISYS provides its direct sales staff and
account executives with marketplace data, presentation materials and
telemarketing data. BISYS maintains client support staff at its principal
locations, which is responsible for day-to-day interaction with clients and also
markets BISYS products and services to existing clients.
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COMPETITION
BISYS believes the market for its services is highly competitive. BISYS
remains competitive due to several factors, including BISYS overall company
strategy and commitment, product quality, reliability of service, a
comprehensive and integrated product line, timely introduction of new products
and services, and competitive pricing. BISYS believes that, by virtue of its
range of product and service offerings and its overall commitment to client
service and relationships, it competes favorably in these categories. In
addition, BISYS believes that it has a competitive advantage as a result of its
position as an independent vendor, rather than as a cooperative, an affiliate of
a financial institution, a hardware vendor or competitor to its clients.
BISYS principal competitors are independent vendors of computer software
and services, in-house departments, affiliates of financial institutions or
large computer hardware manufacturers, processing centers owned and operated as
user cooperatives, insurance companies, third party administration firms, mutual
funds companies and brokerage firms. No single competitor offers the full range
of products and services that are offered by BISYS. Specific competitors
include Fiserv, M&I Data Services, Systematics, Federated Investors and SEI
Corporation, among others.
RESEARCH AND DEVELOPMENT
In order to meet the changing needs of the financial organizations that it
serves, BISYS continually evaluates, develops, maintains and enhances various
application software and other technology used in its business. During fiscal
1995, 1996, and 1997, BISYS spent approximately $9.4 million, $10.2 million,
and $10.4 million, respectively, on research and development, primarily focused
on its proprietary systems. Most of BISYS central site application software has
been developed internally, and a majority of the client site application
software is licensed from third parties and integrated with BISYS existing
systems.
PROPRIETARY RIGHTS
BISYS regards certain of its software as proprietary and relies upon trade
secret law, internal nondisclosure guidelines and contractual provisions for
protection. BISYS does not hold any registered patents or registered copyrights
on its software. BISYS believes that legal protection of its software is less
significant than the knowledge and experience of BISYS management and personnel
and their ability to develop, enhance and market new products and services.
BISYS believes that it holds all proprietary rights necessary for the conduct of
its business.
Application software similar to that licensed by BISYS is generally
available from alternate vendors, and in instances where BISYS believes that
additional protection is required, the applicable license agreement provides
BISYS with the right to obtain the software source code upon the occurrence of
certain events.
GOVERNMENT REGULATION
Certain BISYS subsidiaries are registered as broker/dealers with the
Securities and Exchange Commission (the "SEC"). Much of the federal regulation
of broker/dealers has been delegated to self-regulatory organizations,
principally the National Association of Securities Dealers, Inc. (the "NASD")
and the national securities exchanges. Broker/dealers are subject to regulation
which covers all aspects of the securities business, including sales methods,
trading practices, use and safekeeping of customers' funds and securities,
capital structure, recordkeeping and the conduct of directors, officers and
employees. Additional legislation, changes in rules and regulations promulgated
by the SEC, the Municipal Securities Rulemaking Board, the Office of the
Comptroller of the Currency ("OCC"), the Federal Deposit Insurance Corporation
("FDIC"), the Federal Reserve Board (the "FRB") and the self-regulatory
organizations or changes in the interpretation of enforcement of existing laws,
rules and regulations, may also directly affect the mode of
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operations and profitability of broker/dealers. The SEC, the FRB, the
self-regulatory organizations, state securities law administrators, the OCC and
the FDIC may conduct regulatory proceedings for violations of applicable laws,
rules and regulations. Such violations can result in disciplinary actions (such
as censure, the imposition of fines, the issuance of cease-and-desist orders or
the suspension or revocation of registrations, memberships or licenses of a
broker/dealer or its officers, directors or employees), as well as civil and
criminal penalties. The principal purpose of such regulations generally is the
protection of the investing public and the integrity of securities markets,
rather than protection of securities firms or their creditors or stockholders.
In addition, BISYS broker/dealer subsidiaries are subject to SEC Rule
15c3-1 (commonly known as the "Net Capital Rule"). The Net Capital Rule, which
specifies the minimum amount of net capital required to be maintained by
broker/dealers, is designed to measure the general financial integrity and
liquidity of broker/dealers and requires that a certain part of broker/dealers'
assets be kept in relatively liquid form. Failure to maintain the required
minimum amount of net capital may subject a broker/dealer to suspension or
revocation of licenses, registration or membership with the New York Stock
Exchange, Inc., the SEC, the NASD, and various state securities law
administrators and may ultimately require liquidation of the broker/dealer.
Under certain circumstances, the Net Capital Rule also prohibits payment of cash
dividends, redemption or repurchase of stock, distribution of capital and
prepayment of subordinated indebtedness. Thus, compliance with the Net Capital
Rule could restrict BISYS ability to withdraw capital from its broker/dealer
subsidiaries. At June 30, 1997, BISYS broker/dealer subsidiaries had net
capital of approximately $15.3 million, which exceeded the requirements of the
Net Capital Rule by approximately $13.9 million.
Under the Investment Company Act, the distribution agreements between each
mutual fund and a BISYS subsidiary terminate automatically upon assignment of
the agreement. The term "assignment" includes direct assignments by BISYS as
well as assignments which may be deemed to occur, under certain circumstances,
upon the transfer, directly or indirectly, of a controlling block of BISYS
voting securities. The Investment Company Act presumes that any transfer of
more than 25% of the voting securities of any person represents a transfer of a
controlling block of voting securities.
As a provider of services to banking institutions, BISYS is not directly
subject to federal or state banking regulations. However, BISYS may be subject
to review from time to time by the FDIC, the National Credit Union Association,
the Office of Thrift Supervision, the OCC and various state regulatory
authorities. These regulators make certain recommendations to BISYS regarding
various aspects of its operations. In addition, BISYS processing operations are
reviewed annually by an independent auditing firm.
Banks and other depository institutions doing business with BISYS are
subject to extensive regulation at the federal and state levels under laws,
regulations and other requirements specifically applicable to regulated
financial institutions, and are subject to extensive examination and oversight
by federal and state regulatory agencies. As a result, the activities of BISYS
client banks are subject to comprehensive regulation and examination, including
those activities specifically relating to the sale by or through them of mutual
funds and other investment products. BISYS is not presently aware of any facts
which would lead it to believe that any of its bank clients are not in
compliance with applicable federal and state laws, regulations and other
requirements concerning the administration and distribution of bank managed
mutual funds.
In this regard, the Glass-Steagall Act has been applied to prohibit banks
from engaging in the organization, sponsorship, underwriting and principal
distribution of mutual funds, but not to prohibit banks from providing
investment advisory, administrative, selling and other related services for, to
or with respect to the sale of mutual funds shares to their customers. Other
depository institutions laws, regulations and requirements do not impose
substantive limitations of a material nature on the activities which BISYS
client banks now perform with respect to their proprietary and other mutual
funds, but regulate in various respects the manner in which such activities may
be performed. Nevertheless, future changes in the application or the
interpretation of the Glass-Steagall Act or other banking laws and regulations,
or future legislative
8
<PAGE>
changes in existing banking laws, may have a material and adverse impact on the
ability of BISYS client banks to engage in mutual fund activities, and
consequently on the business relationships between BISYS and its client banks.
BISYS is not presently aware of any pending regulatory developments, which, if
approved, would adversely affect the ability of its client banks to engage in
mutual fund activities. In addition, future changes in the Glass-Steagall Act
may remove the existing prohibition on banks engaging in the organization,
sponsorship, underwriting and principal distribution of mutual funds, permitting
banks to perform certain functions now required to be performed by third parties
such as BISYS. Any such change could affect BISYS in its provision of
distribution services through clients choosing to perform distribution functions
independently.
Federal regulatory agencies have promulgated guidelines or other
requirements which apply to depository institutions subject to their respective
supervisory jurisdiction with respect to the sale of mutual funds and other
non-FDIC insured investment products to retail customers. These requirements
apply to, among other things, sales of investment products on bank premises by
or through the use of third-party service providers. These requirements
generally require banking institutions which contract to sell investment
products through the use of third-party service providers to implement
appropriate measures to ensure that such activities are being conducted in
accordance with applicable bank and securities regulatory requirements
(including the agencies' retail sales guidelines), and may in some instances
impose certain "due diligence" obligations on regulated depository institutions
with respect to the nature and the quality of services provided by such
third-party service providers. Such regulatory requirements may increase the
extent of oversight which federal regulatory agencies may require BISYS client
banks to exercise over the activities of BISYS.
Federal and state banking laws grant state and federal regulatory agencies
broad authority to take administrative enforcement and other adverse supervisory
actions against banks and other regulated depository institutions where there is
a determination that unsafe and unsound banking practices, violations of laws
and regulations, failures to comply with or breaches of written agreements,
commitments or undertakings entered into by such banks with their regulatory
agencies, or breaches of fiduciary and other duties exist. Banks engaged in,
among other things, mutual fund-related activities may be subject to such
regulatory enforcement and other adverse actions to the extent that such
activities are determined to be unlawful, unsound or otherwise actionable.
Certain operations of BISYS are subject to regulation by the insurance
departments of the states in which BISYS sells insurance products. Certain
BISYS employees are required to be licensed as insurance producers in certain
states.
EMPLOYEES
As of June 30, 1997, BISYS employed approximately 2,000 employees. None of
its employees is represented by a union and there have been no work stoppages,
strikes or organization attempts. BISYS believes that its relations with its
employees are good.
The service nature of BISYS makes its employees an important corporate
asset. Most employees are not subject to employment agreements; however, a
limited number of BISYS employees have such agreements.
ITEM 2. PROPERTIES.
All principal properties of the Company are leased. The following table
provides certain summary information with respect to such principal properties
as of June 30, 1997:
9
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LOCATION FUNCTION SQ. FEET EXPIRATION DATE
Little Falls, NJ Corporate headquarters 8,459 2000
Houston, TX Service Center 58,568 2001
Cherry Hill, NJ Data processing center 31,350 2000
Lombard, IL Data processing center 25,240 2000
Columbus, OH Mutual fund service center 126,686 2005
Ambler, PA Data processing center 53,605 2002
Birmingham, AL Service center 22,104 1999
In addition to the principal facilities listed above, BISYS also leases
certain other office and data processing facilities with leases expiring
periodically over the next five years.
BISYS owns or leases central processors and associated peripheral equipment
used in its data and item processing operations and communications network,
401(k) business and electronic banking business.
BISYS believes that its existing facilities and equipment, together with
expansion in the ordinary course of business, are adequate for its present and
foreseeable needs.
ITEM 3. LEGAL PROCEEDINGS.
BISYS is involved in litigation arising in the ordinary course of business.
Management believes that BISYS has adequate defenses and/or insurance coverage
against such litigation and that the outcome of these proceedings, individually
or in the aggregate, will not have a material adverse effect upon BISYS
financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders of the Company during
the fourth quarter of fiscal 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Certain of the information required in Item 5 is incorporated herein by
reference to page 32 of the Company's 1997 Annual Report to Shareholders (the
"Annual Report") under the heading "Market Price Information" and Note 4 to the
Company's consolidated financial statements included therein. The Company has
not paid or declared any cash dividends during its most recent two fiscal years.
Portions of the Annual Report incorporated by reference in this report are
included in this report as Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA.
The information requested in Item 6 is incorporated herein by reference to
page 17 of the Annual Report, included in this report as Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required in Item 7 is incorporated herein by reference to
pages 18 through 20 of the Annual Report, included in this report as Exhibit 13.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required in Item 8 is incorporated herein by reference to
pages 21 through 31 of the Annual Report, included in this report as Exhibit 13.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS IN ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
Pursuant to Instruction G(3) to Form 10-K, the information required in
Items 10 through 13 is incorporated by reference from the Company's definitive
proxy statement, which is expected to be filed pursuant to Regulation 14A within
120 days after the end of the Registrant's fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements
The consolidated financial statements of the Company as of June 30, 1997
and 1996 and for each of the three years in the period ended June 30, 1997,
together with the report of Coopers & Lybrand L.L.P. dated August 15, 1997, are
incorporated herein by reference to pages 17 through 31 of the Annual Report,
included in this report as Exhibit 13.
(a)(2) Financial Statement Schedules
All financial statement schedules are omitted for the reason that they are
either not applicable or not required or because the information required is
contained in the consolidated financial statements or notes thereto.
(a)(3) Reports on Form 8-K
The Company filed a report on Form 8-K with the SEC on May 8, 1997
with respect to the adoption of a Shareholder Rights Plan.
(b) Exhibits:
2.1 -- Agreement and Plan of Merger dated as of December 9, 1994 among
the Registrant, BICON Acquisition Corp. and Concord Holding
Corporation. (Incorporated by reference to Exhibit 2.1 to the
Registrant's Registration Statement No. 33-87474.)
2.2 -- Amendment No. 1 to Agreement and Plan of Merger dated as of
February 14, 1995 among the Registrant, BICON Acquisition Corp.
and Concord Holding Corporation. (Incorporated by reference to
the Registrant's Registration Statement No. 33-87474.)
3.1 -- Amended and Restated Certificate of Incorporation of The BISYS
Group, Inc. (Incorporated by reference to the Registrant's
Registration Statement No. 333-02932.)
3.2* -- Amended and Restated By-Laws of The BISYS Group, Inc.
4.1 -- Rights Agreement, dated as of May 8, 1997, by and between The
BISYS Group, Inc. and The Bank of New York, as Rights Agent
(including the form of Rights Certificate as Exhibit A).
(Incorporated by reference to Exhibit 2.1 of Form 8-A filed on
May 8, 1997 with the SEC.)
11
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10.1 -- Letter Agreement dated May 12, 1995 between the Registrant and
Lynn J. Mangum. (Incorporated by reference to Exhibit 10.18 to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995.)
10.2 -- Letter Agreement dated May 12, 1995 between the Registrant and
Paul H. Bourke. (Incorporated by reference to Exhibit 10.19 to
the Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1995.)
10.3 -- Letter Agreement dated May 12, 1995 between the Registrant and
Robert J. McMullan. (Incorporated by reference to Exhibit 10.20
to the Registrant's Annual Report on Form 10-K for the fiscal
year ended June 30, 1995.)
10.4 -- The BISYS Group, Inc. Amended and Restated Stock Option and
Restricted Stock Purchase Plan. (Incorporated by reference to
Exhibit 10.23 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended June 30, 1994.)
10.5 -- BISYS 401(k) Savings Plan. (Incorporated by reference to Exhibit
10.23 of the Registrant's Registration Statement No. 33-45417.)
10.6 -- The BISYS Group, Inc. Non-Employee Directors' Stock Option Plan.
(Incorporated by reference to Exhibit B to the Registrant's proxy
statement for its 1994 annual meeting of stockholders, filed with
the SEC on October 6, 1994.)
10.7 -- Lease of Little Falls, New Jersey facility dated January 9, 1991.
(Incorporated by reference to Exhibit 10.24 of the Registrant's
Registration Statement No. 33-45417.)
10.8 -- Lease of Cherry Hill, New Jersey facility dated November 29,
1990. (Incorporated by reference to Exhibit 10.25 of the
Registrant's Registration Statement No. 33-45417.)
10.9 -- Lease of Lombard, Illinois facility dated May 29, 1990.
(Incorporated by reference to Exhibit 10.27 of the Registrant's
Registration Statement No. 33-45417.)
10.10 -- Lease of Houston, Texas facility dated June 30, 1986.
(Incorporated by reference to Exhibit 10.28 of the Registrant's
Registration Statement No. 33-45417.)
10.11 -- Lease of Ambler, Pennsylvania facility dated April 4, 1989.
(Incorporated by reference to Exhibit 10.29 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended June 30,
1993.)
10.12 -- Lease of Columbus, Ohio facility dated August 30, 1994 as amended
by First Amendment dated April 14, 1995. (Incorporated by
reference to Exhibit 10.36 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended June 30, 1995.)
10.13 -- Registration Rights Agreement dated March 29, 1995 among the
Registrant and the several persons named on Schedule I thereto.
(Incorporated by reference to Exhibit 10.9 to the Registrant's
Report on Form 8-K filed on April 12, 1995.)
10.14 -- Registration Rights Agreement dated April 22, 1996 among the
Registrant and the several persons named on Schedule I thereto.
(Incorporated by reference to Exhibit 10.21 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended June 30,
1996.)
10.15 -- Registration Rights Agreement dated June 28, 1996 among the
Registrant and the several persons named on Schedule I thereto.
(Incorporated by reference to Exhibit 10.23 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended June 30,
1996.)
10.16 -- The BISYS Group, Inc. 1995 Stock Option Plan. (Incorporated by
reference to Exhibit A to the Registrant's proxy statement for
its 1995 annual meeting of stockholders, filed with the SEC.)
10.17 -- The BISYS Group, Inc. 1996 Stock Option Plan. (Incorporated by
reference to Exhibit A to Registrant's proxy statement for its
1996 annual meeting of stockholders.)
10.18* -- Credit Agreement by and among The BISYS Group, Inc., the Lenders
party thereto, and The Bank of New York, as Issuing Bank and as
Agent, with BNY Capital Markets, Inc., as Arranger, dated as of
March 5, 1997, without exhibits.
11* -- Computation of Per Share Earnings
13* -- Pages 16-32 of the Registrant's 1997 Annual Report to
Shareholders
21* -- List of subsidiaries of The BISYS Group, Inc.
23* -- Consent of Coopers & Lybrand L.L.P.
27* -- Financial Data Schedule
- -----------------------------
*Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
The BISYS Group, Inc.
Date: September 26, 1997 By: /s/ Robert J. McMullan
------------------------------------
Robert J. McMullan
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on the 26th day of September 1997.
Signature Title
/s/ Lynn J. Mangum Director, Chairman of the Board and Chief
- ---------------------- Executive Officer (Principal Executive
(Lynn J. Mangum) Officer)
/s/ Paul H. Bourke Director, Chief Operating Officer and President
- ----------------------
(Paul H. Bourke)
/s/ Robert J. McMullan Executive Vice President and Chief Financial Officer
- ------------------------ (Principal Financial and Accounting Officer)
(Robert J. McMullan)
/s/ Robert J. Casale Director
- ------------------------
(Robert J. Casale)
/s/ Thomas A. Cooper Director
- ------------------------
(Thomas A. Cooper)
/s/ Jay W. DeDapper Director
- -----------------------
(Jay W. DeDapper)
/s/ John J. Lyons Director
- -----------------------
(John J. Lyons)
/s/ Thomas E. McInerney Director
- ------------------------
(Thomas E. McInerney)
/s/ Neil P. Marcous Director
- ------------------------
(Neil P. Marcous)
13
<PAGE>
INDEX TO EXHIBITS FILED HEREWITH
EXHIBIT NO. DESCRIPTION
3.2 -- Amended and Restated By-Laws of The BISYS Group, Inc.
10.18 -- Credit Agreement by and among The BISYS Group, Inc., the Lenders
party thereto, and The Bank of New York, as Issuing Bank and as
Agent, with BNY Capital Markets, Inc., as Arranger, dated as of
March 5, 1997, without exhibits.
11 -- Computation of Per Share Earnings.
13 -- Pages 16-32 of the Registrant's 1997 Annual Report to
Shareholders.
21 -- List of subsidiaries of The BISYS Group, Inc.
23 -- Consent of Coopers & Lybrand L.L.P.
27 -- Financial Data Schedule.
<PAGE>
EXHIBIT 3.2
Amended and Restated
as of April 17, 1997
BY-LAWS
of
The BISYS-Registered Trademark- Group, Inc.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 3. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
SECTION 2. ANNUAL MEETINGS. The Annual Meetings of Stockholders
shall be held on such dates and at such times as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting, at
which meetings the stockholders shall elect by a plurality vote a Board of
Directors, and transact such other business as may properly be brought before
the meeting. Written notice of the Annual Meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
<PAGE>
SECTION 3. SPECIAL MEETINGS. Unless otherwise prescribed by law or
by the Certificate of Incorporation, Special Meetings of Stockholders, for any
purpose or purposes, may be called by either (i) the Chairman, if there be one,
or (ii) the President, (iii) any Vice President, if there be one, (iv) the
Secretary, or (v) any Assistant Secretary, if there be one, and shall be called
by any such officer at the request in writing of stockholders owning a majority
of the capital stock of the Corporation issued and outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Written notice of a Special Meeting stating the place, date and hour of the
meeting and the purpose or purposes for which the meeting is called shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting.
SECTION 4. QUORUM. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
SECTION 5. VOTING. Unless otherwise required by law, the Certificate
of Incorporation or these By-Laws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat. Each stockholder represented at
a meeting of stockholders shall be entitled to cast one
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vote for each share of the capital stock entitled to vote thereat held by such
stockholder. Such votes may be cast in person or by proxy but no proxy shall be
voted on or after three years from its date, unless such proxy provides for a
longer period. The Board of Directors, in its discretion, or the officer of the
Corporation presiding at a meeting of stockholders, in his discretion, may
require that any votes cast at such meeting shall be cast by written ballot.
SECTION 6. Consent of Stockholders in Lieu of meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
SECTION 7. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. This list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
3
<PAGE>
SECTION 8. STOCK LEDGER. The stock ledger of the Corporation shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 7 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of Directors
shall consist of not less than one nor more than nine members, such number to be
determined from time to time by the Board of Directors. Except as provided in
Section 2 of this Article III, directors shall be elected by a plurality of the
votes cast at Annual Meetings of Stockholders, and each director so elected
shall hold office until the next Annual Meeting and until his successor is duly
elected and qualified, or until his earlier resignation or removal. Any
director may resign at any time upon notice to the Corporation. Directors need
not be stockholders.
SECTION 2. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier resignation or removal.
SECTION 3. DUTIES AND POWERS. The business of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders.
SECTION 4. MEETINGS. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be
4
<PAGE>
called by the Chairman, if there be one, the President, or any director. Notice
thereof stating the place, date and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date of
the meeting, by telephone or telegram on twenty-four (24) hours' notice, or on
such shorter notice as the person or persons calling such meeting may deem
necessary or appropriate in the circumstances.
SECTION 5. QUORUM. Except as may be otherwise specifically provided
by law, the Certificate of Incorporation or these By-Laws, at all meetings of
the Board of Directors, a majority of the entire Board of Directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
SECTION 6. ACTIONS OF BOARD. Unless otherwise provided by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless
otherwise provided by the Certificate of Incorporation or these By-Laws, members
of the Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
SECTION 8. COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the entire Board of Directors, designate one or more
committees, each committee to
5
<PAGE>
consist of one or more of the directors of the Corporation. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
any such committee. In the absence or disqualification of a member of a
committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent allowed by law and provided
in the resolution establishing such committee, shall have and may exercise all
the powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation. Each committee shall keep regular
minutes and report to the Board of Directors when required.
SECTION 9. COMPENSATION. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each such meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board
6
<PAGE>
of Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (ii) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair, as to the Corporation as of the
time it is authorized, approved or ratified, by the Board of Directors, a
committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
SECTION 11. REMOVAL OF DIRECTORS. Any director or the entire Board
of Directors may be removed, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors (who must be a director) and one or more Vice-Presidents,
Assistant Vice-Presidents, Assistant Secretaries, Assistant Treasurers and other
officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of Incorporation or these By-Laws.
The officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors at its first meeting
held after each Annual Meeting of Stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be
7
<PAGE>
determined from time to time by the Board of Directors; and all officers of the
Corporation shall hold office until their successors are chosen and qualified,
or until their earlier resignation or removal. Any officer elected by the Board
of Directors may be removed at any time by the affirmative vote of a majority of
the Board of Directors. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors. The salary and incentive compensation
of the Chief Executive Officer and the officers of the Corporation reporting to
the Chief Executive Officer shall be determined by the Board of Directors or a
committee thereof.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice-President and any
such officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. He shall be the Chief Executive
Officer of the Corporation, and except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors shall exercise all the powers and discharge all the
duties of the President. The Chairman of the Board of Directors shall also
perform such other duties
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and may exercise such other powers as from time to time may be assigned to him
by these By-Laws or by the Board of Directors.
SECTION 5. PRESIDENT. The President shall, subject to the control of
the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall execute all bonds, mortgages, contracts and other instruments
of the Corporation requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except that the other officers of the Corporation may sign and execute documents
when so authorized by these By-Laws, the Board of Directors or the President.
In the absence or disability of the Chairman of the Board of Directors, or if
there be none, the President shall preside at all meetings of the stockholders
and the Board of Directors. If there be no Chairman of the Board of Directors,
the President shall be the Chief Executive Officer of the Corporation. The
President shall also perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.
SECTION 6. VICE-PRESIDENTS. At the request of the President or in
his absence or in the event of his inability or refusal to act (and if there be
no Chairman of the Board of Directors), the Vice-President or the
Vice-Presidents, if there are more than one (in the order designated by the
Board of Directors), shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. Each Vice-President shall perform such other duties and have
such other powers as the Board of Directors from time to time may prescribe. If
there be no Chairman of the Board of Directors and no Vice-President, the Board
of Directors shall designate the officer of the Corporation who, in the absence
of the President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall have
all powers of and be subject to all the restrictions upon the President.
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SECTION 7. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or President, under whose supervision he shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be no
Assistant Secretary, then either the Board of Directors or the President may
choose another officer to cause such notice to be given. The Secretary shall
have custody of the seal of the Corporation and the Secretary or any Assistant
Secretary, if there be one, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by the signature
of the Secretary or by the signature of any such Assistant Secretary. The Board
of Directors may give general authority to any other officer to affix the seal
of the Corporation and to attest the affixing by his signature.
SECTION 8. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond in such sum with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death,
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resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Corporation.
SECTION 9. ASSISTANT VICE-PRESIDENTS. Except as may otherwise be
provided in these By-Laws, Assistant Vice-Presidents, if there be any, shall
perform such duties and have such powers as from time to time may be assigned to
them by the Board of Directors, the President or any Vice-President, and in the
absence of any Vice-President or in the event of his disability or his refusal
to act, shall perform the duties of such Vice-President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon such
Vice-President.
SECTION 10. ASSISTANT SECRETARIES. Except as may be otherwise
provided in these By-Laws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, any Vice-President, if there be one, or
the Secretary, and in the absence of the Secretary or in the event of his
disability or refusal to act, shall perform the duties of the Secretary, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the Secretary.
SECTION 11. ASSISTANT TREASURERS. Assistant Treasurers, if there be
any, shall perform such duties and have such Powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice-President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
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SECTION 12. OTHER OFFICERS. Such other officers as the Board of
Directors, the Chairman of the Board of Directors, if there be one, or the
President may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors, the Chairman of the
Board of Directors, if there be one, or the President.
ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice-President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
SECTION 3. TRANSFERS. Stock of the Corporation shall be transferable
in the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the corporation only by the person named in the
certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be canceled before a new
certificate shall be issued.
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SECTION 4. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or entitled to express consent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given
personally or by telegram, telex or cable.
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SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of capital stock.
Before payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, deems proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for any proper purpose, and the
Board of Directors may modify or abolish any such reserve.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers to such other
person or persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal. Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced otherwise.
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ARTICLE VIII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER
THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer or employee of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR
IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer or employee of the Corporation, or is
or was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees)
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actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer or employee is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders. To the extent, however, that a
director, officer or employee of the Corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding described
above, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith, without the necessity of authorization
in the specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination
under Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
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another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust or other
enterprise of which such person is or was serving at the request of the
Corporation as a director, officer or employee. The provisions of this Section
4 shall not be deemed to be exclusive or to limit in any way the circumstances
in which a person may be deemed to have met the applicable standard of conduct
set forth in Sections 1 or 2 of this Article VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director,
officer or employee may apply to any court of competent jurisdiction in the
State of Delaware for indemnification to the extent otherwise permissible under
Sections 1 and 2 of this Article VIII. The basis of such indemnification by a
court shall be a determination by such court that indemnification of the
director, officer or employee is proper in the circumstances because he has met
the applicable standards of conduct set forth in Sections 1 or 2 of this Article
VIII, as the case may be. Notice of any application for indemnification
pursuant to this Section 5 shall be given to the Corporation promptly upon the
filing of such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred in
defending or investigating a threatened or pending action, suit or proceeding
may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director, officer or employee to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article VIII.
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SECTION 7. NON-EXCLUSIVITY AND SURVIVAL OF INDEMNIFICATION. The
indemnification and advancement of expenses provided by, or granted pursuant to,
the other Sections of this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any statute, By-Law, agreement, contract, vote of
stockholders or disinterested directors or pursuant to the direction (howsoever
embodied) of any court of competent jurisdiction or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Sections 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article VIII shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 8. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer or employee
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VIII.
SECTION 9. MEANING OF "CORPORATION" FOR PURPOSES OF ARTICLE VIII.
For purposes of this Article VIII, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
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consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
so that any person who is or was a director, officer or employee of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under the provisions of this Article VIII with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
SECTION 10. MEANING OF "OTHER ENTERPRISES" AND CERTAIN OTHER TERMS
FOR PURPOSES OF ARTICLE VIII. For purposes of this Article VIII, references to
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to 'serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or repealed, in
whole or in part, or new By-Laws may be adopted by the stockholders or by the
Board of Directors; provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
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SECTION 2. ENTIRE BOARD OF DIRECTORS. As used in this Article IX and
in these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
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EXHIBIT 10.18
CREDIT AGREEMENT
by and among
THE BISYS GROUP, INC.,
THE LENDERS PARTY HERETO,
AND
THE BANK OF NEW YORK, AS ISSUING BANK
AND AS AGENT
with
BNY CAPITAL MARKETS, INC., AS ARRANGER
________________
$100,000,000
________________
Dated as of March 5, 1997
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1
1.1. Definitions 1
1.2. Principles of Construction 21
2. AMOUNT AND TERMS OF REVOLVING CREDIT LOANS AND LETTERS
OF CREDIT 22
2.1. Revolving Credit Loans 22
2.2. Revolving Credit Notes 22
2.3. Procedure for Borrowing 22
2.4. Termination or Reduction of Commitments 24
2.5. Prepayments of the Revolving Credit Loans 24
2.6. Use of Proceeds 25
2.7. Letter of Credit Sub-Facility 25
2.8. Letter of Credit Participation and Funding
Commitments 26
2.9. Absolute Obligation With Respect to Letter of
Credit Payments 27
2.10. Payments 27
2.11. Records 28
3. INTEREST, FEES, YIELD PROTECTIONS, ETC. 29
3.1. Interest Rate and Payment Dates 29
3.2. Fees 30
3.3. Conversions 31
3.4. Concerning Interest Periods 32
3.5. Indemnification for Loss 32
3.6. Capital Adequacy 33
3.7. Reimbursement for Increased Costs 34
3.8. Illegality of Funding 35
3.9. Substituted Interest Rate 35
3.10. Taxes 36
3.11. Option to Fund 37
3.12. Substitution of a Lender 37
4. REPRESENTATIONS AND WARRANTIES 38
4.1. Subsidiaries; Capitalization 38
4.2. Existence and Power 39
4.3. Authority and Execution 39
4.4. Binding Agreement 39
4.5. Litigation 39
<PAGE>
4.6. Required Consents 39
4.7. Absence of Defaults; No Conflicting Agreements 40
4.8. Compliance with Applicable Laws 40
4.9. Taxes 40
4.10. Governmental Regulations 41
4.11. Federal Reserve Regulations; Use of Loan
Proceeds 41
4.12. Plans 41
4.13. Financial Statements 42
4.14. Property 42
4.15. Authorizations 42
4.16. Environmental Matters 42
4.17. Trade or Business 43
4.18. Solvency 43
4.19. Accounting Treatment of Internally Generated
Computer Software. 43
4.20. Absence of Certain Restrictions 43
4.21. No Misrepresentation 44
5. CONDITIONS TO EFFECTIVENESS 44
5.1. Evidence of Action 44
5.2. This Agreement 44
5.3. Revolving Credit Notes 45
5.4. Absence of Litigation 45
5.5. Approvals and Consents 45
5.6. Opinion of Counsel to the Borrower and the
Subsidiary Guarantors 45
5.7. Opinion of Special Counsel 45
5.8. Subsidiary Guaranty 45
5.9. Property, Public Liability and Other Insurance 46
5.10. Fees 46
5.11. Liens 46
5.12. Compliance Certificate 46
5.13. Other Documents 46
6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF
CREDIT 46
6.1. Conditions of Lending - Revolving Credit Loans
and Letters of Credit 46
6.2. Additional Conditions to Revolving Credit Loans
and Letters of Credit in Connection with
Permitted Acquisitions 47
7. AFFIRMATIVE COVENANTS 48
7.1. Financial Statements and Information 48
7.2. Certificates; Other Information 49
<PAGE>
7.3. Legal Existence 50
7.4. Taxes 51
7.5. Insurance 51
7.6. Performance of Obligations 51
7.7. Condition of Property 51
7.8. Observance of Legal Requirements 51
7.9. Inspection of Property; Books and Records;
Discussions 52
7.10. Authorizations 52
7.11. Financial Covenants 52
7.12. Additional Subsidiary Guarantors 53
8. NEGATIVE COVENANTS 53
8.1. Indebtedness 53
8.2. Liens 54
8.3. Merger, Consolidations and Acquisitions 55
8.4. Dispositions 56
8.5. Investments, Loans, Etc. 56
8.6. Restricted Payments 58
8.7. Business Changes 58
8.8. Subsidiaries 58
8.9. ERISA 58
8.10. Amendments, Etc. of Certain Agreements 58
8.11. Transactions with Affiliates 59
8.12. Issuance of Additional Capital Stock 59
8.13. Limitation on Certain Restrictions on
Subsidiaries 59
8.14. Sale and Leaseback Transactions 59
8.15. Trade or Business 59
9. DEFAULT 60
9.1. Events of Default 60
9.2. Contract Remedies 62
10. THE AGENT 63
10.1. Appointment 63
10.2. Delegation of Duties 63
10.3. Exculpatory Provisions 63
10.4. Reliance by Agent 64
10.5. Notice of Default 64
10.6. Non-Reliance on Agent and Other Lenders 65
10.7. Indemnification 65
10.8. Agent in Its Individual Capacity 66
<PAGE>
10.9. Successor Agent 66
11. OTHER PROVISIONS 67
11.1. Amendments and Waivers 67
11.2. Notices 68
11.3. No Waiver; Cumulative Remedies 69
11.4. Survival of Representations and Warranties
and Certain Obligations 69
11.5. Payment of Expenses and Taxes 69
11.6. Lending Offices 70
11.7. Assignments and Participations 71
11.8. Indemnity 72
11.9. Limitation of Liability 73
11.10. Counterparts 73
11.11. Adjustments; Set-off 74
11.12. Construction 75
11.13. Governing Law 75
11.14. Headings Descriptive 75
11.15. Severability 75
11.16. Integration 75
11.17. Consent to Jurisdiction 76
11.18. Service of Process 76
11.19. No Limitation on Service or Suit 76
11.20. WAIVER OF TRIAL BY JURY 76
11.21. Treatment of Certain Information 77
EXHIBITS
Exhibit A List of Commitments
Exhibit B Form of Revolving Credit Note
Exhibit C-1 Form of Borrowing Request
Exhibit C-2 Form of Letter of Credit Request
Exhibit D Form of Notice of Conversion
Exhibit E Form of Compliance Certificate
Exhibit F Form of Opinion of Counsel to the Borrower and the Subsidiary
Guarantors
Exhibit G Form of Opinion of Special Counsel
Exhibit H Form of Assignment and Acceptance Agreement
Exhibit I Form of Subsidiary Guaranty and Subordination Agreement
SCHEDULES
Schedule 1.1 List of Lending Offices
Schedule 4.1 List of Subsidiaries; Capitalization
Schedule 4.5 List of Litigation
<PAGE>
Schedule 4.10 List of Subsidiaries that are Investment Companies
Schedule 4.12 List of Existing Pension Plans
Schedule 8.1 List of Existing Indebtedness
Schedule 8.2 List of Existing Liens
Schedule 8.5 List of Existing Investments
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CREDIT AGREEMENT, dated as of March 5, 1997, by and among THE BISYS GROUP,
INC., a Delaware corporation (the "BORROWER"), the lenders party hereto
(together with their respective assigns, the "LENDERS", each a "LENDER") and THE
BANK OF NEW YORK, as agent for the Lenders (in such capacity, the "AGENT") and
as the Issuing Bank (as such term is defined below).
I. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
A. DEFINITIONS
As used in this Agreement, terms defined in the preamble have the
meanings therein indicated, and the following terms have the following meanings:
"ABR ADVANCES": the Revolving Credit Loans (or any portions thereof),
at such time as they (or such portions) are made and/or being maintained at a
rate of interest based upon the Alternate Base Rate.
"ACCOUNTANTS": Coopers & Lybrand, L.L.P. (or any successor thereto),
or such other firm of certified public accountants of recognized national
standing selected by the Borrower and reasonably satisfactory to the Agent.
"ACCUMULATED FUNDING DEFICIENCY": as defined in Section 302 of ERISA.
"ACQUISITION": with respect to any Person, the purchase or other
acquisition by such Person, by any means whatsoever (including through a merger,
dividend or otherwise and whether in a single transaction or in a series of
related transactions), of (i) any Capital Stock of, or other equity securities
of, any other Person if, immediately thereafter, such other Person would be
either a Subsidiary of such Person or otherwise under the control of such
Person, (ii) any Operating Entity, or (iii) any Property, including rights
acquired in connection with a Contract Acquisition, of (A) any other Person or
(B) any Operating Entity in either case other than in the ordinary course of
business, provided, however, that (1) except as otherwise provided by clause (2)
below, an acquisition of any Property, the consideration paid for which is less
than $1,000,000, shall be deemed to be in the ordinary course of business, and
(2) no acquisition of all or substantially all of the assets of such other
Person or Operating Entity shall be deemed to be in the ordinary course of
business.
"ACQUISITION COST": with respect to any Acquisition by any Person, the
sum of (i) all cash consideration paid or agreed to be paid by such Person to
make such Acquisition (in-
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clusive of payments by such Person of the seller's professional fees and
expenses and other out-of-pocket expenses in connection therewith), PLUS (ii)
the fair market value of all non-cash consideration paid by such Person in
connection therewith, PLUS (iii) an amount equal to the principal or stated
amount of all liabilities assumed or incurred by such Person in connection
therewith. The principal or stated amount of any liability assumed or incurred
by a Person in connection with an Acquisition which is a contingent liability
shall be an amount equal to the stated amount of such liability or, if the same
is not stated, the maximum reasonably anticipated amount payable by such Person
in respect thereof as determined by such Person in good faith.
"ACQUISITION RELATED CONTINGENT PAYMENT": a payment constituting all
or a portion of the purchase price payable in connection with a Permitted
Acquisition, the maximum aggregate potential amount of which payments cannot be
determined in advance of the occurrence or non-occurrence after the closing date
of such Permitted Acquisition of certain contingencies.
"ADVANCE": an ABR Advance or a Eurodollar Advance, as the case may be.
"AFFECTED ADVANCE": as defined in Section 3.9.
"AFFECTED PRINCIPAL AMOUNT": in the event that (i) the Borrower shall
fail for any reason to borrow a Revolving Credit Loan in respect of which it
shall have requested a Eurodollar Advance or convert an Advance to a Eurodollar
Advance after it shall have notified the Agent of its intent to do so, an amount
equal to the principal amount of such Eurodollar Advance; (ii) a Eurodollar
Advance shall terminate for any reason prior to the last day of the Interest
Period applicable thereto, an amount equal to the principal amount of such
Eurodollar Advance; and (iii) the Borrower shall prepay or repay all or any part
of the principal amount of a Eurodollar Advance prior to the last day of the
Interest Period applicable thereto, an amount equal to the principal amount of
such Advance so prepaid or repaid.
"AFFILIATE": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, control of a Person shall mean
the power, direct or indirect, (i) to vote 10% or more of the securities or
other interests having ordinary voting power for the election of directors or
other managing Persons thereof or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"AGGREGATE COMMITMENT AMOUNT": at any time, the sum at such time of
the Commitment Amounts of all Lenders.
"AGGREGATE CREDIT EXPOSURE": at any time, the sum at such time of (i)
the outstanding principal balance of the Revolving Credit Loans of all Lenders,
PLUS (ii) an amount equal to the Letter of Credit Exposure of all Lenders.
"AGREEMENT": this Credit Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
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"ALTERNATE BASE RATE": on any date, a rate of interest per annum equal
to the higher of (i) the Federal Funds Rate in effect on such date PLUS 1/2 of
1% or (ii) the BNY Rate in effect on such date.
"APPLICABLE FEE PERCENTAGE": with respect to the Commitment Fee and
the Letter of Credit Commissions, at all times during which the applicable
Pricing Level set forth below is in effect, the percentage set forth below next
to such Pricing Level and under the applicable column:
APPLICABLE FEE PERCENTAGE
Letter of
Commitment Credit
Pricing Level Fee Commissions
------------- ---------- -----------
Pricing Level I 0.150% 0.625%
Pricing Level II 0.175% 0.750%
Pricing Level III 0.200% 1.000%
Pricing Level IV 0.250% 1.250%.
Changes in the Applicable Fee Percentage resulting from a change in a
Pricing Level shall become effective upon the date of the delivery by the
Borrower to the Agent of a Compliance Certificate pursuant to Section 7.1(c)
evidencing a change in the Leverage Ratio which would affect the applicable
Pricing Level. If the Borrower shall fail to deliver a Compliance Certificate
within 45 days after the end of each of the first three fiscal quarters (or 90
days after the end of the last fiscal quarter) as required by Section 7.1(c),
the next higher Pricing Level than that in effect on such 45th day (or 90th day
in the case of the last quarter) shall apply from and including the 46th day
(the 91st day in the case of the last quarter) after the end of such fiscal
quarter to the date of the delivery by the Borrower to the Agent of a Compliance
Certificate demonstrating that a different Pricing Level is applicable.
Notwithstanding the foregoing, (i) if no payment of Commitment Fees and Letter
of Credit Commissions was due and payable during the period in which the
Borrower failed to deliver such Compliance Certificate, and if the Compliance
Certificate when delivered demonstrates that a Pricing Level different than that
which is applicable pursuant to the preceding sentence during such period should
apply, the Applicable Fee Percentage shall be recalculated for such period based
on such Compliance Certificate, and (ii) if a payment of Commitment Fees and
Letter of Credit Commissions was due and payable during such period and if the
Compliance Certificate when delivered demonstrates that a Pricing Level higher
than that which is applicable pursuant to the preceding sentence should apply
during such period, the Applicable Fee Percentage and related Commitment Fees
and Letter of Credit Commissions shall be recalculated for such period based
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on such Compliance Certificate and the difference between the amounts so
recalculated and the amounts paid during such period shall be due and payable on
the next date that Commitment Fees and Letter of Credit Commissions are due and
payable.
"APPLICABLE LENDING OFFICE": in respect of any Lender, (i) in the case
of such Lender's ABR Advances, its Domestic Lending Office and (ii) in the case
of such Lender's Eurodollar Advances, its Eurodollar Lending Office.
"APPLICABLE MARGIN": with respect to the unpaid principal balance of
ABR Advances and Eurodollar Advances, in each case at all times during which the
applicable Pricing Level set forth below is in effect, the percentage set forth
below next to such Pricing Level and under the applicable column, subject to the
provisos set forth below:
APPLICABLE MARGIN (TYPE OF ADVANCE)
Pricing Level ABR Eurodollar
------------- --- ----------
Pricing Level I 0.000% 0.625%
Pricing Level II 0.000% 0.750%
Pricing Level III 0.000% 1.000%
Pricing Level IV 0.000% 1.250%.
Changes in the Applicable Margin resulting from a change in a Pricing
Level shall become effective upon the date of the delivery by the Borrower to
the Agent of a Compliance Certificate pursuant to Section 7.1(c) evidencing a
change in the Leverage Ratio which would affect the applicable Pricing Level.
If the Borrower shall fail to deliver a Compliance Certificate within 45 days
after the end of each of the first three fiscal quarters (or 90 days after the
end of the last fiscal quarter) as required by Section 7.1(c), the next higher
Pricing Level than that in effect on such 45th day (or 90th day in the case of
the last quarter) shall apply from and including the 46th day (the 91st day in
the case of the last quarter) after the end of such fiscal quarter to the date
of the delivery by the Borrower to the Agent of a Compliance Certificate
demonstrating that a different Pricing Level is applicable. Notwithstanding the
foregoing, (i) if no Interest Payment Date occurred during the period in which
the Borrower failed to deliver such Compliance Certificate continued, and if the
Compliance Certificate when delivered demonstrates that a Pricing Level
different than that which is applicable pursuant to the preceding sentence
during such period should apply, the Applicable Margin shall be recalculated for
such period based on such Compliance Certificate, and (ii) if an Interest
Payment Date occurred during such period and if the Compliance Certificate when
delivered demonstrates that a Pricing Level higher than that which is applicable
pursuant to the preceding sentence should apply during such period, the
Applicable Margin and related payments shall be recalculated for such period
based on such Compliance Certificate and the difference between the amounts so
recalculated and the amount paid during such period shall be due and payable on
the next Interest Payment Date.
"APPROVED BANK": any bank whose (or whose parent company's) unsecured
non-credit supported short-term commercial paper rating from (i) Standard &
Poor's is at least A-1 or the equivalent thereof or (ii) Moody's is at least P-1
or the equivalent thereof.
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"ASSIGNMENT AND ACCEPTANCE AGREEMENT": an assignment and acceptance
agreement executed by an assignor and an assignee substantially in the form of
Exhibit H.
"ASSIGNMENT FEE": as defined in Section 11.7(b).
"AUTHORIZED SIGNATORY": as to (i) any Person which is a corporation,
the chairman of the board, the president, any vice president, the chief
financial officer or any other officer of such Person acceptable to the Agent
and (ii) any Person which is not a corporation, the Managing Person thereof or a
duly authorized representative of such Managing Person.
"AVAILABLE COMMITMENT AMOUNT": at any time, an amount equal to the
Aggregate Commitment Amount at such time MINUS the Aggregate Credit Exposure at
such time.
"BENEFITED LENDER": as defined in Section 11.11.
"BNY": The Bank of New York.
"BNY CAPITAL MARKETS": BNY Capital Markets, Inc.
"BNY RATE": a rate of interest per annum equal to the rate of interest
publicly announced in New York City by BNY from time to time as its prime
commercial lending rate, such rate to be adjusted automatically (without notice)
on the effective date of any change in such publicly announced rate.
"BORROWING DATE": any Business Day specified in (i) a Borrowing
Request as a date on which the Borrower requests the Lenders to make Revolving
Credit Loans or (ii) a Letter of Credit Request as a date on which the Borrower
requests the Issuing Bank to issue a Letter of Credit.
"BORROWING REQUEST": a request for Revolving Credit Loans in the form
of Exhibit C-1.
"BUSINESS DAY": for all purposes other than as set forth in clause
(ii) below, (i) any day other than a Saturday, a Sunday or a day on which
commercial banks located in New York City are authorized or required by law or
other governmental action to close, and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Advances, any day which is a Business Day described in clause (i)
above and which is also a day on which eurodollar funding between banks may be
carried on in
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London, England.
"CAPITAL LEASE OBLIGATIONS": with respect to any Person, obligations
of such Person with respect to leases which are required to be capitalized for
financial reporting purposes in accordance with GAAP.
"CAPITAL STOCK": as to any Person, all shares, interests, partnership
interests, limited liability company interests, participations, rights in or
other equivalents (however designated) of such Person's equity (however
designated) and any rights, warrants or options exchangeable for or convertible
into such shares, interests, participations, rights or other equity.
"CASH EQUIVALENTS": (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 of America
is pledged in full support thereof) having maturities of not more than six
months from the date of acquisition, (ii) Dollar denominated time deposits,
certificates of deposit and bankers acceptances of (x) any Lender or (y) any
Approved Bank, in any such case with maturities of not more than six months from
the date of acquisition, (iii) commercial paper issued by any Approved Bank or
by the parent company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with an unsecured non-credit
supported short-term commercial paper rating of at least A-1 or the equivalent
by Standard & Poor's or at least P-1 or the equivalent by Moody's, or guaranteed
by any industrial or financial company with a long term unsecured non-credit
supported senior debt rating of at least A or A-2, or the equivalent, by
Standard & Poor's or Moody's, as the case may be, and in each case maturing
within six months after the date of acquisition, (iv) marketable direct
obligations issued by any state of the United States of America or any political
subdivision of any such state or any public instrumentality thereof maturing
within six months from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's or Moody's and (v) investments in money market funds
substantially all the assets of which are comprised of securities of the types
described in clauses (i) through (iv) above.
"CODE": the Internal Revenue Code of 1986, as the same may be amended
from time to time, or any successor thereto, and the rules and regulations
issued thereunder, as from time to time in effect.
"COMMITMENT": in respect of any Lender, such Lender's undertaking
during the Commitment Period to make Revolving Credit Loans, subject to the
terms and conditions hereof, in an aggregate outstanding principal amount not
exceeding the Commitment Amount of such Lender.
"COMMITMENT AMOUNT": as of any date and with respect to any Lender,
the amount set forth adjacent to its name under the heading "Commitment Amount"
in Exhibit A on such date or, in the event that such Lender is not listed in
Exhibit A, the "Commitment Amount" which such Lender shall have assumed from
another Lender in accordance with Section 11.7 on or prior to such date, as the
same may be reduced from time to time pursuant to Section 2.4.
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"COMMITMENT FEE": as defined in Section 3.2(a).
"COMMITMENT PERCENTAGE": as to any Lender in respect of such Lender's
Commitment and its obligations with respect to Letters of Credit, the percentage
equal to such Lender's Commitment Amount divided by the Aggregate Commitment
Amount (or, if no Commitments then exist, the percentage equal to such Lender's
Commitment Amount on the last day upon which Commitments did exist divided by
the Aggregate Commitment Amount on such day).
"COMMITMENT PERIOD": the period from the Effective Date until the
Commitment Termination Date.
"COMMITMENT TERMINATION DATE": the earlier of the Business Day
immediately preceding the Maturity Date or such other date upon which the
Commitments shall have been terminated in accordance with Section 2.4 or Section
9.2.
"COMPENSATION FINANCING": as to any Subsidiary of the Borrower which
is a principal underwriter or distributor of shares of an Investment Company and
is so designated in such Investment Company's then effective registration
statement, either (i) the incurrence by such Subsidiary, as such principal
underwriter or distributor, of Indebtedness, the proceeds of which are loaned by
it to a broker or dealer entitled to compensation in connection with the sale of
shares of such Investment Company, which loan is to be repaid by such broker or
dealer at the time of its receipt of Contingent Deferred Sales Commissions or
12b-1 Fees to which such broker or dealer is entitled as a result of such sale
or (ii) the sale by such Subsidiary as such principal underwriter or distributor
of Contingent Deferred Sales Commissions or 12b-1 Fees to which such principal
underwriter or distributor is entitled in connection with the sale of shares of
such Investment Company.
"COMPENSATORY INTEREST PAYMENT": as defined in Section 3.1(c).
"COMPLIANCE CERTIFICATE": a certificate substantially in the form of
Exhibit E.
"CONCORD": Concord Holding Corporation, a Delaware corporation, and a
wholly-owned Subsidiary of the Borrower.
"CONSOLIDATED": the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED ADJUSTED EBITDA": for any period, Consolidated EBITDA
for such period plus the sum of, without duplication, (i) to the extent deducted
in determining
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Consolidated EBITDA, (A) transaction-related charges related to the acquisition
by the Borrower of BISYS Creative Solutions, Inc. and T.U.G., Inc. made under
the "pooling method" permitted by GAAP, and (B) the total Success Fees paid to
Furman Selz in connection with Contract Acquisitions with respect to which
Furman Selz was a Seller, not in excess of $17,150,000 before taxes ($11,374,000
net of taxes) for (A) and (B) in the aggregate, (ii) to the extent deducted in
determining Consolidated EBITDA, an amount equal to transaction-related charges
related to Permitted Acquisitions made under the "pooling method" permitted by
GAAP after the Effective Date (not in excess of 20% of the total consideration
in respect of any such Permitted Acquisition and $50,000,000 in the aggregate
for all such Permitted Acquisitions), and (iii) to the extent deducted in
determining Consolidated EBITDA, an amount equal to the difference between (x)
the total Success Fees paid in connection with Permitted Contract Acquisitions
made during such period and after the Effective Date (not in excess of
$50,000,000 in the aggregate for all Success Fees for all such Permitted
Contract Acquisitions), and (y) the amount thereof which would be amortized
during such period if such Success Fees were amortizable and assuming a 5 year
useful life thereof.
"CONSOLIDATED ASSETS": at any date of determination, the total assets
of the Borrower and its Subsidiaries determined on a Consolidated basis in
accordance with GAAP as at such date.
"CONSOLIDATED CAPITAL EXPENDITURES": for any period, the aggregate of
all expenditures incurred by the Borrower or any of its Subsidiaries during such
period which, in accordance with GAAP, are required to be included in "ADDITIONS
TO PROPERTY, PLANT OR EQUIPMENT" or similar items reflected on the balance sheet
of the Borrower and its Subsidiaries, provided, however, that "Capital
Expenditures" shall not include (i) capitalized leases, or (ii) expenditures of
proceeds of insurance settlements in respect of lost, destroyed or damaged
assets, equipment or other property to the extent such expenditures are made to
replace or repair such lost, destroyed or damaged assets, equipment or other
property within six months of the receipt of such proceeds.
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income for
such period PLUS the sum of, without duplication, (i) Consolidated Interest
Expense (plus non-cash amortization of fees with respect to interest rate swap,
cap or other interest rate hedging arrangements), (ii) provision for income
taxes and (iii) depreciation, amortization and all other non-cash charges for
such period of the Borrower and its Subsidiaries determined on a Consolidated
basis in accordance with GAAP, each to the extent deducted in determining
Consolidated Net Income for such period and LESS the sum of non-cash gains for
such period to the extent included in determining Net Income for such period.
For purposes of this definition, "CONSOLIDATED NET INCOME" and "CONSOLIDATED
INTEREST EXPENSE" shall not include any amounts earned by the Borrower or any of
its Subsidiaries in connection with Compensation Financings to the extent
permitted by Section 8.1(xi).
"CONSOLIDATED FIXED CHARGES": for any period, the sum of, without
duplication, (i) all scheduled payments of principal of Indebtedness during such
period, (ii) all payments made by the Borrower and its Subsidiaries in respect
of capitalized leases for such period determined on a Consolidated basis in
accordance with GAAP, (iii) Consolidated Interest
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Expense for such period, (iv) Acquisition Related Contingent Payments either
paid or accrued during such period by the Borrower or any of its Subsidiaries
determined on a Consolidated basis in accordance with GAAP, and (iv) regularly
scheduled principal payments on subordinated Indebtedness of the Borrower or any
of its Subsidiaries permitted pursuant to Section 8.1(v) to the extent the same
is permitted to be paid pursuant to the subordination provisions thereof.
"CONSOLIDATED INTEREST EXPENSE": for any period, the sum of, without
duplication, all interest (adjusted to give effect to all interest rate swap,
cap, collar or other interest rate hedging arrangements and non-cash
amortization of fees in connection therewith, all as determined on a
Consolidated basis in accordance with GAAP), paid or accrued in respect of
Consolidated Total Debt during such period.
"CONSOLIDATED NET INCOME": for any period, the sum of, without
duplication, net income of the Borrower and its Subsidiaries, determined on a
Consolidated basis in accordance with GAAP for such period.
"CONSOLIDATED NET WORTH": at any date of determination, the sum of all
amounts which would be included under shareholders' equity on a Consolidated
balance sheet of the Borrower and its Subsidiaries determined on a Consolidated
basis in accordance with GAAP as at such date.
"CONSOLIDATED TOTAL DEBT": at any date of determination, the aggregate
funded indebtedness (including, without limitation, Capital Lease Obligations)
on such date of the Borrower and its Subsidiaries on a Consolidated basis in
accordance with GAAP.
"CONTINGENT DEFERRED SALES COMMISSIONS": amounts owed by an Investment
Company to the principal underwriter or distributor thereof (as designated in
such Investment Company's then effective registration statement under the 1940
Act) as repayment for expenses incurred by such principal underwriter or
distributor pursuant to a written plan adopted by the shareholders of such
Investment Company.
"CONTINGENT OBLIGATION": as to any Person ( a "SECONDARY OBLIGOR"),
any obligation of such secondary obligor (i) guaranteeing or in effect
guaranteeing any return on any investment made by another Person, or (ii)
guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or
other obligation (a "PRIMARY OBLIGATION") of any other Person (a "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such secondary obligor, whether contingent, (A) to
purchase any primary obligation or any Property constituting direct or indirect
security therefor, (B) to advance or supply funds (x) for the purchase or
payment of any primary obligation or (y) to maintain
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working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of a primary obligor, (C) to purchase
Property, securities or services primarily for the purpose of assuring the
beneficiary of any primary obligation of the ability of a primary obligor to
make payment of a primary obligation, (D) otherwise to assure or hold harmless
the beneficiary of a primary obligation against loss in respect thereof, and (E)
in respect of the liabilities of any partnership in which a secondary obligor is
a general partner, except to the extent that such liabilities of such
partnership are nonrecourse to such secondary obligor and its separate Property,
provided, however, that the term "Contingent Obligation" shall not include the
indorsement of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation of a Person shall be deemed
to be an amount equal to the stated or determinable amount of a primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith.
"CONTRACT ACQUISITION": as defined in Section 8.3(d).
"CONTROL PERSON": as defined in Section 3.6.
"CONVERSION DATE": the date on which: (i) a Eurodollar Advance is
converted to an ABR Advance, (ii) an ABR Advance is converted to a Eurodollar
Advance or (iii) a Eurodollar Advance is converted to a new Eurodollar Advance.
"CREDIT EXPOSURE": with respect to any Lender as of any date, the sum
as of such date of (i) the outstanding principal balance of such Lender's
Revolving Credit Loans, PLUS (ii) an amount equal to such Lender's Letter of
Credit Exposure.
"CREDIT PARTY": the Borrower and each Subsidiary Guarantor.
"CUSTOMER": as defined in Section 8.3(d).
"DEFAULT": any event or condition which constitutes an Event of
Default or which, with the giving of notice, the lapse of time, or any other
condition, would, unless cured or waived, become an Event of Default.
"DISPOSITION": with respect to any Person, any sale, assignment,
transfer or other disposition by such Person, by any means, of (i) the Capital
Stock of, or other equity interests of, any other Person, (ii) any Operating
Entity, or (iii) any other Property of such Person other than in the ordinary
course of business, provided, however, that no such sale, assignment, transfer
or other disposition of Property (other than inventory, except to the extent
subject to a bulk sale) shall be deemed to be in the ordinary course of business
(a) if the fair market value thereof is in excess of $1,000,000, or (b) to the
extent that the fair market value thereof, when aggregated with all other sales,
assignments, transfers and other dispositions made by such Person within the
same fiscal year, exceeds $2,000,000, and then only to the extent of such
excess, if any, or (c) it is the sale, assignment, transfer or disposition of
(1) all or substantially all of the Property of such Person or (2) any Operating
Entity.
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"DISQUALIFIED STOCK": any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable at the option of the holder thereof by contract or otherwise,
is, or upon the happening of an event or passage of time would be, required to
be redeemed prior to the Maturity Date or is redeemable at the option of the
holder thereof at any time on or prior to the Maturity Date, or is convertible
into or exchangeable at the option of the holder thereof for debt securities at
any time prior to the Maturity Date (as from time to time extended).
"DOLLARS" and "$": lawful currency of the United States.
"DOMESTIC LENDING OFFICE": in respect of (i) any Lender listed on the
signature pages hereof, initially, the office or offices of such Lender
designated as such on Schedule 1.1; thereafter, such other office of such
Lender, through which it shall be making or maintaining ABR Advances, as
reported by such Lender to the Agent and the Borrower, and (ii) in the case of
any other Lender, initially, the office or offices of such Lender designated as
such on Schedule 2 of the Assignment and Acceptance Agreement or other document
pursuant to which it became a Lender; thereafter, such other office of such
Lender, through which it shall be making or maintaining ABR Advances, as
reported by such Lender to the Agent and the Borrower.
"DOMESTIC SUBSIDIARY": each Subsidiary of the Borrower that is
organized under the laws of the United States of America or any State thereof.
"EFFECTIVE DATE": March 5, 1997.
"ELIGIBLE ASSIGNEE": a Lender, any affiliate of a Lender and any other
bank, insurance company, pension fund, mutual fund or other financial
institution.
"EMPLOYEE BENEFIT PLAN": an employee benefit plan within the meaning
of Section 3(3) of ERISA maintained, sponsored or contributed to by the
Borrower, any of its Subsidiaries or any ERISA Affiliate.
"ENVIRONMENTAL LAWS": any and all federal, state and local laws
relating to the environment, the use, storage, transporting, manufacturing,
handling, discharge, disposal or recycling of hazardous substances, materials or
pollutants or industrial hygiene, and including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 USCA Section 9601 ET SEQ.; (ii) the Resource Conservation and
Recovery Act of 1976, as amended, 42 USCA Section 6901 ET SEQ.; (iii) the Toxic
Substance Control Act, as amended, 15 USCA Section 2601 ET SEQ.; (iv) the Water
Pollution Control Act, as amended, 33 USCA Section 1251 ET SEQ.; (v) the Clean
Air Act, as amended, 42 USCA Section 7401 ET SEQ.; (vi) the Hazardous Materials
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Transportation Authorization Act of 1994, as amended, 49 USCA Section 5101 ET
SEQ. and (vii) all rules, regulations, judgments, decrees, injunctions and
restrictions thereunder and any analogous state law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations issued thereunder, as
from time to time in effect.
"ERISA AFFILIATE": when used with respect to an Employee Benefit Plan,
ERISA, the PBGC or a provision of the Code pertaining to employee benefit plans,
any Person which is a member of any group of organizations within the meaning of
Sections 414(b) or (c) of the Code (or, solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, Sections 414(m) or (o) of the Code) of which the Borrower or any of its
Subsidiaries is a member.
"EURODOLLAR ADVANCES": collectively, the Revolving Credit Loans (or
any portions thereof), at such time as they (or such portions) are made and/or
being maintained at a rate of interest based upon the Eurodollar Rate.
"EURODOLLAR LENDING OFFICE": in respect of (i) any Lender listed on
the signature pages hereof, initially, the office or offices of such Lender
designated as such on Schedule 1.1; thereafter, such other office of such
Lender, through which it shall be making or maintaining Eurodollar Advances, as
reported by such Lender to the Agent and the Borrower and (ii) in the case of
any other Lender, initially, the office or offices of such Lender designated as
such on Schedule 2 of the Assignment and Acceptance Agreement or other document
pursuant to which it became a Lender; thereafter, such other office of such
Lender, through which it shall be making or maintaining Eurodollar Advances, as
reported by such Lender to the Agent and the Borrower.
"EURODOLLAR RATE": with respect to the Interest Period applicable to
any Eurodollar Advance, a rate of interest per annum, as determined by the
Agent, obtained by dividing (and then rounding to the nearest 1/16 of 1% or, if
there is no nearest 1/16 of 1%, then to the next higher 1/16 of 1%):
(a) the rate, as reported by BNY to the Agent, quoted by BNY to
leading banks in the interbank eurodollar market as the rate at which BNY is
offering Dollar deposits in an amount equal approximately to the Eurodollar
Advance of BNY to which such Interest Period shall apply for a period equal to
such Interest Period, as quoted at approximately 11:00 a.m. two Business Days
prior to the first day of such Interest Period, by
(b) a number equal to 1.00 MINUS the aggregate of the then
stated maximum rates during such Interest Period of all reserve requirements
(including, without limitation, marginal, emergency, supplemental and special
reserves), expressed as a decimal, established by the Board of Governors of the
Federal Reserve System and any other banking authority to which BNY and other
major United States money center banks are subject, in
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respect of eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of the Board of Governors of the Federal Reserve
System) or in respect of any other category of liabilities including deposits by
reference to which the interest rate on Eurodollar Advances is determined or any
category of extensions of credit or other assets which includes loans by
non-domestic offices of any Lender to United States residents. Such reserve
requirements shall include, without limitation, those imposed under such
Regulation D. Eurodollar Advances shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of credits for proration, exceptions or offsets
which may be available from time to time to any Lender under such Regulation D.
The Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in any such reserve requirement.
"EVENT OF DEFAULT": as defined in Section 9.1.
"EXEMPT SUBSIDIARY": each Subsidiary of the Borrower for so long as it
is (i) a registered broker-dealer, (ii) engaged in the insurance business and
subject to net capital rules or regulations of any Governmental Authority which
would treat the Contingent Obligations under the Subsidiary Guaranty as a
liability for purposes thereof if such Subsidiary was a Subsidiary Guarantor, or
(iii) holding no assets and conducting no business.
"EXISTING PENSION PLANS": as defined in Section 4.12.
"FEDERAL FUNDS RATE": for any day, a rate per annum (expressed as a
decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
of the quotations for such day on such transactions received by BNY as
determined by BNY and reported to the Agent.
"FEES": as defined in Section 2.10.
"FINANCIAL OFFICER": as to any Person, the chief financial officer of
such Person or such other officer as shall be satisfactory to the Agent.
"FINANCIAL STATEMENTS": as defined in Section 4.13.
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"FIXED CHARGE COVERAGE RATIO": at any date of determination, the ratio
of (i) an amount equal to Consolidated Adjusted EBITDA for the four fiscal
quarter period ending on such date or, if such date is not the last day of a
fiscal quarter, for the immediately preceding four fiscal quarter period MINUS
Consolidated Capital Expenditures made during such period MINUS income taxes
paid during such period to (ii) Consolidated Fixed Charges for such period.
"FOREIGN SUBSIDIARY": each Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"FUND SERVICES": BISYS Fund Services, Inc., a Delaware corporation,
and a wholly-owned Subsidiary of the Borrower.
"FUND SERVICES (OHIO)": BISYS Fund Services Ohio, Inc., an Ohio
corporation, and a wholly-owned Subsidiary of Fund Services.
"FUNDED CURRENT LIABILITY PERCENTAGE": as defined in Section
401(a)(29) of the Code.
"GAAP": generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and in the statements and
pronouncements of the Financial Accounting Standards Board or in such other
statement by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination, consistently applied.
"GOVERNMENTAL AUTHORITY": any foreign, federal, state, municipal or
other government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof, or any court or arbitrator.
"HAZARDOUS SUBSTANCE": any hazardous or toxic substance, material or
waste, including, but not limited to, (i) those substances, materials, and
wastes listed in the United States Department of Transportation Hazardous
Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as
hazardous substances (40 CFR Part 302) and amendments thereto and replacements
thereof and (ii) any substance, pollutant or material defined as, or designated
in, any Environmental Law as a "hazardous substance," "toxic substance,"
"hazardous material," "hazardous waste," "restricted hazardous waste,"
"pollutant," "toxic pollutant" or words of similar import.
"HIGHEST LAWFUL RATE": as to any Lender or the Issuing Bank, the
maximum rate of interest, if any, that at any time or from time to time may be
contracted for, taken, charged or received by such Lender on the Revolving
Credit Note held by it or by the Issuing Bank on the Reimbursement Agreements,
as the case may be, or which may be owing to such Lender or the Issuing Bank
pursuant to the Loan Documents under the laws applicable to such Lender or the
Issuing Bank and this transaction.
"INDEBTEDNESS": as to any Person, at a particular time, all items
which constitute,
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without duplication, (i) indebtedness for borrowed money, (ii) indebtedness in
respect of the deferred purchase price of Property (other than trade payables
incurred in the ordinary course of business), (iii) indebtedness evidenced by
notes, bonds, debentures or similar instruments, (iv) obligations with respect
to any conditional sale or title retention agreement, (v) indebtedness arising
under acceptance facilities and the amount available to be drawn under all
letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder to the extent such Person shall not
have reimbursed the issuer in respect of the issuer's payment thereof, (vi) all
liabilities secured by any Lien on any Property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof
(other than carriers', warehousemen's, mechanics', repairmen's or other like
non-consensual statutory Liens arising in the ordinary course of business),
(vii) Capital Lease Obligations and (viii) Contingent Obligations.
"INDEMNIFIED LIABILITY": as defined in Section 11.5.
"INDEMNIFIED PERSON": as defined in Section 11.8.
"INDEMNIFIED TAX": as defined in Section 3.10(a).
"INDEMNIFIED TAX PERSON": as defined in Section 3.10(a).
"INTERCOMPANY INDEBTEDNESS": loans which are (i) made by the Borrower
to direct or indirect Subsidiaries thereof or (ii) made by direct or indirect
Subsidiaries of the Borrower to the Borrower or to other direct or indirect
Subsidiaries of the Borrower.
"INTERCOMPANY LOAN": a loan that is made by the Borrower to a direct
or indirect Subsidiary thereof.
"INTEREST PAYMENT DATE": (i) as to any ABR Advance, the last day of
each March, June, September and December commencing on the first of such days to
occur after such ABR Advance is made or any Eurodollar Advance is converted to
an ABR Advance, (ii) as to any Eurodollar Advance as to which the Borrower has
selected an Interest Period of one, two or three months, the last day of such
Interest Period, (iii) as to any Eurodollar Advance as to which the Borrower has
selected an Interest Period of six months, the last day of each three month
interval occurring during such Interest Period and the last day of such Interest
Period; and (iv) as to all Advances, the Maturity Date.
"INTEREST PERIOD": with respect to any Eurodollar Advance requested by
the Borrower, the period commencing on, as the case may be, the Borrowing Date
or Conversion Date with respect to such Eurodollar Advance and ending one, two,
three or six months
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thereafter, as selected by the Borrower in its irrevocable Borrowing Request or
its irrevocable Notice of Conversion, provided, however, that (i) if any
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the immediately
preceding Business Day and (ii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month. Interest Periods shall
be subject to the provisions of Section 3.4.
"INVESTMENT COMPANY": an investment company registered under the 1940
Act.
"INVESTMENTS": as defined in Section 8.5.
"ISSUING BANK": BNY, in its capacity as the issuer of the Letters of
Credit.
"LETTER OF CREDIT": as defined in Section 2.7.
"LETTER OF CREDIT COMMISSIONS": as defined in Section 3.2(b).
"LETTER OF CREDIT COMMITMENT": the commitment of the Issuing Bank to
issue Letters of Credit having an aggregate outstanding face amount up to the
Letter of Credit Commitment Amount, and the commitment of the Lenders to
participate in the Letter of Credit Exposure as set forth in Section 2.8.
"LETTER OF CREDIT COMMITMENT AMOUNT": $10,000,000.
"LETTER OF CREDIT EXPOSURE": at any time, (i) in respect of all the
Lenders, the sum at such time, without duplication, of (x) the aggregate undrawn
face amount of the outstanding Letters of Credit, (y) the aggregate amount of
unpaid drafts drawn on all Letters of Credit, and (z) the aggregate unpaid
Reimbursement Obligations (after giving effect to any Revolving Credit Loans
made on such date to pay any such Reimbursement Obligations), and (ii) in
respect of any Lender, an amount equal to such Lender's Commitment Percentage
multiplied by the amount determined under clause (i) of this definition.
"LETTER OF CREDIT REQUEST": a request in the form of Exhibit C-2.
"LEVERAGE RATIO": at any date of determination, the ratio of (i)
Consolidated Total Debt on such date to (ii) Consolidated Adjusted EBITDA for
the four fiscal quarter period ending on such date or, if such date is not the
last day of a fiscal quarter, for the immediately preceding four fiscal quarter
period. For purposes of this definition, "CONSOLIDATED TOTAL DEBT" shall not
include any Indebtedness incurred by the Borrower or any of its Subsidiaries in
connection with Compensation Financings to the extent permitted by Section
8.1(xi).
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit or
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security
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interest of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement and any capital or financing
lease having substantially the same economic effect as any of the foregoing.
"LOAN DOCUMENTS": collectively, this Agreement, the Revolving Credit
Notes, the Reimbursement Agreements and the Subsidiary Guaranty.
"MANAGING PERSON": with respect to any Person that is (i) a
corporation, its board of directors, (ii) a limited liability company, its board
of control, managing member or members, (iii) a limited partnership, its general
partner, (iv) a general partnership or a limited liability partnership, its
managing partner or executive committee or (v) any other Person, the managing
body thereof or other Person analogous to the foregoing.
"MARGIN STOCK": any "margin stock", as defined in Regulation U of the
Board of Governors of the Federal Reserve System, as amended, supplemented or
otherwise modified from time to time.
"MATERIAL ADVERSE CHANGE": a material adverse change in the financial
condition, operations, business or Property of the Borrower and its Subsidiaries
taken as a whole.
"MATERIAL ADVERSE EFFECT": a material adverse effect on the financial
condition, operations, business or Property of the Borrower and its Subsidiaries
taken as a whole.
"MATERIAL SUBSIDIARY": any Subsidiary of the Borrower that is either
a. a Subsidiary Guarantor or b. a Foreign Subsidiary or an Exempt Subsidiary
(other than a Subsidiary of the Borrower that is an Exempt Subsidiary solely
because of the applicability of clause (iii) of the definition of "Exempt
Subsidiary") in respect of which either of the following conditions are met:(1)
such Subsidiary's total assets exceed 10% of Consolidated Assets as of the last
day of the most recently completed fiscal year of the Borrower, or (2)such
Subsidiary's EBITDA exceeds 10% of Consolidated EBITDA for the most recently
completed fiscal year of the Borrower. The term "EBITDA", as used in this
definition, means for any period, the net income of a Subsidiary of the Borrower
for such period PLUS the sum of, without duplication, interest expense, income
taxes, depreciation, amortization and all other non-cash charges for such
period, each to the extent deducted in determining net income for such period,
MINUS the sum of all non-cash gains for such period to the extent included in
determining net income for such period, all determined in the same manner as the
counterparts of such items are determined in the calculation of "Consolidated
EBITDA" for the Borrower and its Subsidiaries on a Consolidated basis.
"MATURITY DATE": March 5, 2002, or such earlier date on which the
Revolving
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Credit Notes shall become due and payable, whether by acceleration or otherwise.
"MOODY'S": Moody's Investors Service, Inc., or any successor thereto.
"MULTIEMPLOYER PLAN": a Pension Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"1940 ACT": the Investment Company Act of 1940, as amended, and the
Rules promulgated thereunder, as amended.
"NOTICE OF CONVERSION": a notice substantially in the form of Exhibit
D.
"OTHER TAXES": as defined in Section 3.10(c).
"OPERATING ENTITY": any Person or any business or operating unit of a
Person which is, or could be, operated separate and apart from (i) the other
businesses and operations of such Person, or (ii) any other line of business or
business segment.
"ORGANIZATIONAL DOCUMENTS": as to any Person which is (i) a
corporation, the certificate or articles of incorporation and by-laws of such
Person, (ii) a limited liability company, the limited liability company
agreement or similar agreement of such Person, (iii) a partnership, the
partnership agreement or similar agreement of such Person, (iv) a limited
liability partnership, the limited liability partnership agreement or similar
agreement of such Person, or (v) any other form of entity or organization, the
organizational documents analogous to the foregoing.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to
the functions thereof.
"PENSION PLAN": at any date of determination, any Employee Benefit
Plan (including a Multiemployer Plan), the funding requirements of which (under
Section 302 of ERISA or Section 412 of the Code) are, or at any time within the
six years immediately preceding such date, were in whole or in part, the
responsibility of the Borrower, any of its Subsidiaries or any ERISA Affiliate.
"PERMITTED ACQUISITION": an Acquisition permitted by Section 8.3 other
than a Permitted Contract Acquisition.
"PERMITTED CONTRACT ACQUISITION": an Acquisition permitted by Section
8.3(d).
"PERMITTED LIEN": a Lien permitted to exist under Section 8.2(a).
"PERSON": any individual, firm, partnership, limited liability
company, limited liability partnership, joint venture, corporation, association,
business enterprise, joint stock company, unincorporated association, trust,
Governmental Authority or any other entity,
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whether acting in an individual, fiduciary, or other capacity, and for the
purpose of the definition of "ERISA Affiliate", a trade or business.
"PRICING LEVEL": Pricing Level I, Pricing Level II, Pricing Level III
or Pricing Level IV, as applicable.
"PRICING LEVEL I": the applicable Pricing Level at any time when the
Leverage Ratio is less than 1.00:1.00.
"PRICING LEVEL II": the applicable Pricing Level at any time when the
Leverage Ratio is greater than or equal to 1.00:1.00 but less than 2.00:1.00.
"PRICING LEVEL III": the applicable Pricing Level at any time when the
Leverage Ratio is greater than or equal to 2.00:1.00 but less than 3.00:1.00.
"PRICING LEVEL IV": the applicable Pricing Level at any time when the
Leverage Ratio is greater than or equal to 3.00:1.00.
"PROHIBITED TRANSACTION": a transaction which is prohibited under
Section 4975 of the Code or Section 406 of ERISA and not exempt under Section
4975 of the Code or Section 408 of ERISA.
"PROPERTY": all real, personal, tangible, intangible or mixed property
of any type.
"PROPOSED LENDER": as defined in Section 3.12.
"REAL PROPERTY": all real property owned or leased by the Borrower or
any of its Subsidiaries.
"REGULATORY CHANGE": (i) the introduction or phasing in of any law,
rule or regulation after the Effective Date, (ii) the issuance or promulgation
after the Effective Date of any directive, guideline or request from any central
bank or United States or foreign Governmental Authority (whether or not having
the force of law), or (iii) any change after the Effective Date in the
interpretation of any existing law, rule, regulation, directive, guideline or
request by any central bank or United States or foreign Governmental Authority
charged with the administration thereof.
"REIMBURSEMENT AGREEMENT": as defined in Section 2.7(b).
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse the
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Issuing Bank for amounts drawn under a Letter of Credit.
"REMAINING INTEREST PERIOD": (i) in the event that the Borrower shall
fail for any reason to borrow a Revolving Credit Loan in respect of which it
shall have requested a Eurodollar Advance or convert an Advance to a Eurodollar
Advance after it shall have notified the Agent of its intent to do so, a period
equal to the Interest Period that the Borrower elected in respect of such
Eurodollar Advance; or (ii) in the event that a Eurodollar Advance shall
terminate for any reason prior to the last day of the Interest Period applicable
thereto, a period equal to the remaining portion of such Interest Period if such
Interest Period had not been so terminated; or (iii) in the event that the
Borrower shall prepay or repay all or any part of the principal amount of a
Eurodollar Advance prior to the last day of the Interest Period applicable
thereto, a period equal to the period from and including the date of such
prepayment or repayment to but excluding the last day of such Interest Period.
"REPORTABLE EVENT": with respect to any Pension Plan, (i) any event
set forth in Sections 4043(c) (other than a Reportable Event as to which the 30
day notice requirement is waived by the PBGC under applicable regulations),
4062(c) or 4063(a) of ERISA or the regulations thereunder, (ii) an event
requiring the Borrower, any of its Subsidiaries or any ERISA Affiliate to
provide security to a Pension Plan under Section 401(a)(29) of the Code, or
(iii) any failure to make any payment required by Section 412(m) of the Code.
"REQUIRED LENDERS": at any time when (i) no Revolving Credit Loans or
Letters of Credit are outstanding, Lenders having Commitment Amounts (or if no
Commitments then exist, Lenders having Commitment Amounts on the last day on
which Commitments did exist) greater than or equal to 66-2/3% of the Aggregate
Commitment Amount and (ii) at any time when Revolving Credit Loans or Letters of
Credit are outstanding, Lenders which have Revolving Credit Loans outstanding
and unreimbursed obligations in respect of Letters of Credit in an aggregate
amount greater than or equal to 66-2/3% of the Aggregate Credit Exposure.
"RESPONSIBLE OFFICER": as to any Person, its President, Chief
Financial Officer, Treasurer, General Counsel, Secretary, any Vice President,
Assistant Secretary, Assistant Treasurer, or any other individual responsible
for (i) the management of any Operating Entity thereof, or (ii) monitoring or
ensuring compliance with the Loan Documents.
"RESTRICTED PAYMENT": as to any Person (i) any dividend or other
distribution, direct or indirect, on account of any shares of Capital Stock or
other equity interest in such Person now or hereafter outstanding (other than a
dividend payable solely in shares of such Capital Stock to the holders of such
shares) and (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition, direct or indirect, of any shares of any class of
Capital Stock or other equity interest in such Person now or hereafter
outstanding.
"REVOLVING CREDIT LOAN" and "REVOLVING CREDIT LOANS": as defined in
Section 2.1.
"REVOLVING CREDIT NOTE" and "REVOLVING CREDIT NOTES": as defined in
Section
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2.2.
"RULE 12B-1": Rule 12b-1 promulgated under the 1940 Act.
"SALE AND LEASEBACK TRANSACTION": any transaction or series of related
transactions pursuant to which a Person sells or transfers any Property in
connection with the leasing, or the resale against installment payments, of such
Property to the seller or transferor.
"SEC": the Securities and Exchange Commission or any Governmental
Authority succeeding to the functions thereof.
"SELLER": as defined in Section 8.3(d).
"SOLVENT": with respect to any Person on a particular date, the
condition that on such date, (i) the fair value of the Property of such Person
is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (ii) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (iii) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (iv) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's Property would constitute an unreasonably small amount of
capital. For purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability after taking
into account probable payments by co-obligors.
"SPECIAL COUNSEL": Emmet, Marvin & Martin, LLP, special counsel to the
Agent.
"STANDARD & POOR'S": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., or any successor thereto.
"SUBSIDIARY": as to any Person, any corporation, association,
partnership, limited liability company, limited liability partnership, joint
venture or other business entity of which such Person or any Subsidiary of such
Person, directly or indirectly, either (i) in respect of a corporation, owns or
controls more than 50% of the outstanding Capital Stock having ordinary voting
power to elect a majority of the Managing Person, irrespective of whether a
class or classes shall or might have voting power by reason of the happening of
any contingency, or (ii) in respect of an association, partnership, limited
liability company, limited liability partnership,
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joint venture or other business entity, is entitled to share in more than 50% of
the profits and losses, however determined.
"SUBSIDIARY GUARANTORS": collectively, (i) each Subsidiary of the
Borrower that is a signatory to the Subsidiary Guaranty as of the Effective Date
and (ii) each other Person which becomes a Subsidiary Guarantor pursuant to the
provisions of the Subsidiary Guaranty.
"SUBSIDIARY GUARANTY": the Subsidiary Guaranty and Subordination
Agreement, by and among the Subsidiary Guarantors, the Borrower and the Agent,
substantially in the form of Exhibit I, as amended, supplemented or otherwise
modified from time to time.
"SUCCESS FEE": as defined in Section 8.3(d).
"TAXES": as defined in Section 3.10(a).
"TAX ON THE INCOME": as defined in Section 3.10(a).
"TERMINATION EVENT": with respect to any Pension Plan, (i) a
Reportable Event, (ii) the termination of a Pension Plan, or the filing of a
notice of intent to terminate a Pension Plan, or the treatment of a Pension Plan
amendment as a termination under Section 4041(c) of ERISA, (iii) the institution
of proceedings to terminate a Pension Plan under Section 4042 of ERISA, or (iv)
the appointment of a trustee to administer any Pension Plan under Section 4042
of ERISA.
"12B-1 FEES": all fees and distribution or other expenses incurred
under a plan adopted pursuant to Rule 12b-1 under the 1940 Act.
"TYPE": with respect to any Revolving Credit Loan, the character of
such Revolving Credit Loan as an ABR Advance or a Eurodollar Advance, each of
which constitutes a type of loan.
"UNFUNDED PENSION LIABILITIES": with respect to any Pension Plan, at
any date of determination, the amount determined by taking the accumulated
benefit obligation, as disclosed in accordance with Statement of Accounting
Standards No. 87, "Employers' Accounting for Pensions", over the fair market
value of Pension Plan assets.
"UNITED STATES": the United States of America (including the States
thereof and the District of Columbia).
"UNQUALIFIED AMOUNT": as defined in Section 3.1(c).
"UNRECOGNIZED RETIREE WELFARE LIABILITY": with respect to any Employee
Benefit Plan that provides postretirement benefits other than pension benefits,
the amount of the transition obligation, as determined in accordance with
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," as of the most recent valuation
date, that has not been recognized as an expense in an income
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statement of the Borrower and its Subsidiaries, provided that prior to the date
such Statement is applicable to the Borrower, such amount shall be based on an
estimate made in good faith of such transition obligation.
"U.S. PERSON": a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under any
laws of the United States, or any estate or trust that is subject to United
States federal income taxation regardless of the source of its income.
B. PRINCIPLES OF CONSTRUCTION
1. All terms defined in a Loan Document shall have the meanings
given such terms therein when used in the other Loan Documents or any
certificate, opinion or other document made or delivered pursuant thereto,
unless otherwise defined therein.
2. As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant thereto, accounting terms not defined
in Section 1.1, and accounting terms partly defined in Section 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
If at any time any change in GAAP would affect the computation of any financial
ratio or requirement set forth in this Agreement, the Agent, the Lenders and the
Borrower shall negotiate in good faith to amend such ratio or requirement to
reflect such change in GAAP (subject to the approval of the Required Lenders),
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.
3. The words "hereof", "herein", "hereto" and "hereunder" and
similar words when used in a Loan Document shall refer to such Loan Document as
a whole and not to any particular provision thereof, and Section, schedule and
exhibit references contained therein shall refer to Sections thereof or
schedules or exhibits thereto unless otherwise expressly provided therein.
4. The phrase "may not" is prohibitive and not permissive.
5. Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.
6. Unless specifically provided in a Loan Document to the contrary,
any
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reference to a time shall refer to such time in New York.
7. Unless specifically provided in a Loan Document to the contrary,
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each means "to but excluding".
8. References in any Loan Document to a fiscal period shall refer to
that fiscal period of the Borrower.
II. AMOUNT AND TERMS OF REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
A. REVOLVING CREDIT LOANS
Subject to the terms and conditions hereof, each Lender severally (and
not jointly) agrees to make revolving credit loans (each a "REVOLVING CREDIT
LOAN" and, as the context may require, collectively with all other Revolving
Credit Loans of such Lender and with the Revolving Credit Loans of all other
Lenders, the "REVOLVING CREDIT LOANS") to the Borrower from time to time during
the Commitment Period, provided that immediately after giving effect thereto a.
such Lender's Credit Exposure would not exceed such Lender's Commitment Amount,
and b. the Aggregate Credit Exposure would not exceed the Aggregate Commitment
Amount. During the Commitment Period, the Borrower may borrow, prepay in whole
or in part and reborrow under the Commitments, all in accordance with the terms
and conditions of this Agreement. Subject to the provisions of Sections 2.3 and
3.3, at the option of the Borrower, Revolving Credit Loans may be made as one or
more (i) ABR Advances, (ii) Eurodollar Advances or (iii) any combination
thereof.
B. REVOLVING CREDIT NOTES
The Revolving Credit Loans made by each Lender shall be evidenced by a
promissory note of the Borrower, substantially in the form of Exhibit B, with
appropriate insertions therein as to date and principal amount (each, as
indorsed or modified from time to time, a "REVOLVING CREDIT NOTE" and,
collectively with the Revolving Credit Notes of all other Lenders, the
"REVOLVING CREDIT NOTES"), payable to the order of such Lender for the account
of its Applicable Lending Office, dated the Effective Date, and in the stated
principal amount equal to such Lender's Commitment Amount. The outstanding
principal balance of the Revolving Credit Loans shall be due and payable on the
Maturity Date.
C. PROCEDURE FOR BORROWING
1. The Borrower may borrow under the Commitments on any Business Day
during the Commitment Period, provided that the Borrower shall notify the Agent
by the delivery of a Borrowing Request, which shall be sent by telecopy and
shall be irrevocable (confirmed promptly, and in any event within five Business
Days, by the delivery to the Agent of a Borrowing Request manually signed by the
Borrower), no later than 11:00 a.m. three
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Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Advances, or 11:00 a.m. one Business Day prior to the requested Borrowing Date,
in the case of ABR Advances, specifying (1) the aggregate principal amount to be
borrowed under the Commitments,(2) the requested Borrowing Date,(3) whether such
borrowing is to consist of one or more Eurodollar Advances, ABR Advances, or a
combination thereof and (4) if the borrowing is to consist of one or more
Eurodollar Advances, the length of the Interest Period for each such Eurodollar
Advance. Each (i) Eurodollar Advance to be made on a Borrowing Date, when
aggregated with all amounts to be converted to a Eurodollar Advance on such date
and having the same Interest Period as such first Eurodollar Advance, shall
equal no less than $1,000,000 or such amount PLUS a whole multiple of $100,000
in excess thereof, and (ii) each ABR Advance made on each Borrowing Date shall
equal no less than $1,000,000 or such amount PLUS a whole multiple of $100,000
in excess thereof or, if less, the Available Commitment Amount.
2. Upon receipt of each Borrowing Request, the Agent shall promptly
notify each Lender thereof. Subject to its receipt of the notice referred to in
the preceding sentence, each Lender will make the amount of its Commitment
Percentage of the requested Revolving Credit Loans available to the Agent for
the account of the Borrower at the office of the Agent set forth in Section 11.2
not later than 12:00 noon on the relevant Borrowing Date requested by the
Borrower, in funds immediately available to the Agent at such office. The
amounts so made available to the Agent on such Borrowing Date will then, subject
to the satisfaction of the terms and conditions of this Agreement, as determined
by the Agent, be made available on such date to the Borrower by the Agent at the
office of the Agent specified in Section 11.2 by crediting the account of the
Borrower on the books of such office with the aggregate of said amounts received
by the Agent.
3. Unless the Agent shall have received prior notice from a Lender
(by telephone or otherwise, such notice to be promptly confirmed by telecopy or
other writing) that such Lender will not make available to the Agent such
Lender's Commitment Percentage of the Revolving Credit Loans requested by the
Borrower, the Agent may assume that such Lender has made such share available to
the Agent on the Borrowing Date in accordance with this Section, provided that
such Lender received notice of the requested Revolving Credit Loans from the
Agent, and the Agent may, in reliance upon such assumption, make available to
the Borrower on the Borrowing Date a corresponding amount. If and to the extent
such Lender shall not have so made its Commitment Percentage of such Revolving
Credit Loans available to the Agent, such Lender and the Borrower severally
agree to pay to the Agent forthwith on demand such corresponding amount (to the
extent not previously paid by the other), together with interest thereon for
each day from the date such amount is made available to the Borrower to the date
such amount is paid to the Agent, at a rate per annum equal to, in the case of
the Borrower, the applicable interest rate set forth in Section 3.1 for ABR
Advances, and, in the case of such Lender, at a rate of interest per annum equal
to the Federal Funds Rate for the first three days
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after the due date of such payment until the date such payment is received by
the Agent and the Federal Funds Rate plus 2% thereafter. Such payment by the
Borrower, however, shall be without prejudice to its rights against such Lender.
If such Lender shall pay to the Agent such corresponding amount, such amount so
paid shall constitute such Lender's Revolving Credit Loan as part of the
Revolving Credit Loans for purposes of this Agreement, which Revolving Credit
Loan shall be deemed to have been made by such Lender on the Borrowing Date
applicable to such Revolving Credit Loans.
4. If a Lender makes a new Revolving Credit Loan on a Borrowing Date
on which the Borrower is to repay a Revolving Credit Loan from such Lender, such
Lender shall apply the proceeds of such new Revolving Credit Loan to make such
repayment, and only the excess of the proceeds of such new Revolving Credit Loan
over the Revolving Credit Loan being repaid need be made available to the Agent.
D. TERMINATION OR REDUCTION OF COMMITMENTS
1. VOLUNTARY REDUCTIONS. The Borrower shall have the right, upon at
least three Business Days' prior written notice to the Agent, to reduce
permanently the Aggregate Commitment Amount, in whole at any time, or in part
from time to time, to an amount not less than the sum of a. the aggregate
principal balance of the Revolving Credit Loans then outstanding (after giving
effect to any contemporaneous prepayment thereof) and b. the Letter of Credit
Exposure, provided, however, that each partial reduction of the Aggregate
Commitment Amount shall be an amount equal to $1,000,000 or such amount PLUS a
whole multiple of $100,000 in excess thereof.
2. IN GENERAL. Each reduction of the Aggregate Commitment Amount
shall be made by reducing each Lender's Commitment Amount by an amount equal to
such Lender's Commitment Percentage of such reduction. Simultaneously with each
reduction of the Aggregate Commitment Amount under this Section, the Borrower
shall pay the Commitment Fee accrued on the amount by which the Aggregate
Commitment Amount have been reduced.
E. PREPAYMENTS OF THE REVOLVING CREDIT LOANS
1. VOLUNTARY PREPAYMENTS. The Borrower may, at its option, prepay
the Revolving Credit Loans without premium or penalty (but subject to Section
3.5), in full at any time or in part from time to time by notifying the Agent in
writing at least on or before the proposed prepayment date, in the case of
Revolving Credit Loans consisting of ABR Advances and at least three Business
Days prior to the proposed prepayment date, in the case of Revolving Credit
Loans consisting of Eurodollar Advances, specifying whether the Revolving Credit
Loans to be prepaid consist of ABR Advances, Eurodollar Advances, or a
combination thereof, the amount to be prepaid and the date of prepayment. Each
such notice shall be irrevocable and the amount specified in each such notice
shall be due and payable on the date specified, together with accrued interest
to the date of such payment on the amount prepaid. Upon receipt of such notice,
the Agent shall promptly notify each Lender thereof. Each partial prepayment of
the Revolving Credit Loans pursuant to this subsection shall be in an aggregate
principal amount of $1,000,000 or such amount PLUS a whole multiple of $100,000
in excess thereof, or, if less,
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the outstanding principal balance of the Revolving Credit Loans. After giving
effect to any partial prepayment with respect to Eurodollar Advances which were
made (whether as the result of a borrowing or a conversion) on the same date and
which had the same Interest Period, the outstanding principal balance of such
Eurodollar Advances shall exceed $1,000,000 or such amount PLUS a whole multiple
of $100,000 in excess thereof.
2. MANDATORY PREPAYMENTS OF REVOLVING CREDIT LOANS RELATING TO
TERMINATIONS OF THE COMMITMENTS AND REDUCTIONS OF THE AGGREGATE COMMITMENT
AMOUNT. Simultaneously with the termination of the Commitments of all of the
Lenders and each reduction of the Aggregate Commitment Amount under Section 2.4,
the Borrower shall prepay the Revolving Credit Loans in full in the case of the
termination of the Commitments of all of the Lenders and prepay the Revolving
Credit Loans by the amount, if any, by which the Aggregate Credit Exposure
exceeds the Aggregate Commitment Amount as so reduced, in the case of a
reduction of the Aggregate Commitment Amount.
3. IN GENERAL. Simultaneously with each prepayment of a Revolving
Credit Loan, the Borrower shall prepay all accrued interest on the amount
prepaid through the date of prepayment. Unless otherwise specified by the
Borrower, each prepayment of Revolving Credit Loans shall first be applied to
ABR Advances. If any prepayment is made in respect of any Eurodollar Advance,
in whole or in part, prior to the last day of the applicable Interest Period,
the Borrower agrees to indemnify the Lenders in accordance with Section 3.5.
F. USE OF PROCEEDS
The Borrower agrees that the proceeds of the Revolving Credit Loans
shall be used solely, directly or indirectly,a. for the working capital needs of
the Borrower and its Subsidiaries,b. to finance Permitted Acquisitions and
Permitted Contract Acquisitions either directly or by the extension of
Intercompany Indebtedness to a Subsidiary to the extent permitted by Section
8.5(f),c. to pay all of the Fees due hereunder,d. to pay the reasonable
out-of-pocket fees and expenses incurred by the Borrower in connection with the
Loan Documents, and e. for the Borrower's general corporate purposes not
inconsistent with the provisions hereof. Notwithstanding anything to the
contrary contained in any Loan Document, the Borrower agrees that no part of the
proceeds of any Revolving Credit Loan will be used, directly or indirectly, for
a purpose which violates any law, including, without limitation, the provisions
of Regulations G, U or X of the Board of Governors of the Federal Reserve
System, as amended.
G. LETTER OF CREDIT SUB-FACILITY
1. Subject to the terms and conditions of this Agreement, the
Issuing Bank
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agrees, in reliance on the agreement of the other Lenders set forth in Section
2.8, to issue standby letters of credit (the "LETTERS OF CREDIT"; each,
individually, a "LETTER OF CREDIT") during the Commitment Period for the account
of the Borrower, provided that immediately after the issuance of each Letter of
Credit (i) the Letter of Credit Exposure of all Lenders (whether or not the
conditions for drawing under any Letter of Credit have or may be satisfied)
would not exceed the Letter of Credit Commitment Amount and (ii) the Aggregate
Credit Exposure would not exceed the Aggregate Commitment Amount. Each Letter
of Credit issued pursuant to this Section shall have an expiration date which
shall be not later than one Business Day prior to the Maturity Date. No Letter
of Credit shall be issued if the Agent, or any Lender by notice to the Agent no
later than 1:00 p.m. one Business Day prior to the requested date of issuance of
such Letter of Credit, shall have determined that any condition set forth in
Section 6 has not been satisfied.
2. Each Letter of Credit shall be issued for the account of the
Borrower in support of an obligation of the Borrower or a Subsidiary thereof in
favor of a beneficiary who has requested the issuance of such Letter of Credit
a. as a condition to a transaction entered into in connection with the
Borrower's ordinary course of business, or b. as support for Indebtedness
incurred by the Borrower, and permitted under Section 8.1, in connection with a
Permitted Acquisition. The Borrower shall give the Agent a Letter of Credit
Request for the issuance of each Letter of Credit by 11:00 a.m., three Business
Days prior to the requested date of issuance. Each Letter of Credit Request
shall be accompanied by the Issuing Bank's standard Application and Agreement
for Standby Letter of Credit (each, a "REIMBURSEMENT AGREEMENT") executed by an
Authorized Signatory of the Borrower, and shall specify (i) the beneficiary of
such Letter of Credit and the obligations in respect of which such Letter of
Credit is to be issued, (ii) the Borrower's proposal as to the conditions under
which a drawing may be made under such Letter of Credit and the documentation to
be required in respect thereof, (iii) the maximum amount to be available under
such Letter of Credit, and (iv) the requested dates of issuance and expiration.
Upon receipt of such Letter of Credit Request from the Borrower, the Agent shall
promptly notify the Issuing Bank and each other Lender thereof. Each Letter of
Credit shall be in form and substance reasonably satisfactory to the Issuing
Bank, with such provisions with respect to the conditions under which a drawing
may be made thereunder and the documentation required in respect of such drawing
as the Issuing Bank shall reasonably require. Each Letter of Credit shall be
used solely for the purposes described therein. The Issuing Bank shall, on the
proposed date of issuance and subject to the terms and conditions of the
Reimbursement Agreement and to the other terms and conditions of this Agreement,
issue the requested Letter of Credit.
3. Each payment by the Issuing Bank of a draft drawn under a Letter
of Credit shall give rise to an obligation on the part of the Borrower to
reimburse the Issuing Bank immediately for the amount thereof.
H. LETTER OF CREDIT PARTICIPATION AND FUNDING COMMITMENTS
1. Each Lender hereby unconditionally, irrevocably and severally
(and not jointly) for itself only and without any notice to or the taking of any
action by such Lender, takes an undivided participating interest in the
obligations of the Issuing Bank under and in connection with each Letter of
Credit in an amount equal to such Lender's Commitment Percentage
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of the amount of such Letter of Credit. Each Lender shall be liable to the
Issuing Bank for its Commitment Percentage of the unreimbursed amount of any
draft drawn and honored under each Letter of Credit. Each Lender shall also be
liable for an amount equal to the product of its Commitment Percentage and any
amounts paid by the Borrower pursuant to Section 2.7(c) and 2.9 that are
subsequently rescinded or avoided, or must otherwise be restored or returned.
Such liabilities shall be unconditional and without regard to the occurrence of
any Default or Event of Default or the compliance by any Credit Party with any
of its obligations under the Loan Documents.
2. The Issuing Bank will promptly notify the Agent, and the Agent
will promptly notify each Lender (which notice shall be promptly confirmed in
writing) of the date and the amount of any draft presented under any Letter of
Credit with respect to which full reimbursement of payment is not made by the
Borrower as provided in Section 2.7(c), and forthwith upon receipt of such
notice, such Lender (other than the Issuing Bank in its capacity as a Lender)
shall make available to the Agent for the account of the Issuing Bank its
Commitment Percentage of the amount of such unreimbursed draft at the office of
the Agent specified in Section 11.2, in lawful money of the United States and in
immediately available funds, before 4:00 p.m., on the day such notice was given
by the Agent, if the relevant notice was given by the Agent at or prior to 1:00
p.m., on such day, and before 12:00 noon, on the next Business Day, if the
relevant notice was given by the Agent after 1:00 p.m., on such day. The Agent
shall distribute the payments made by each Lender (other than the Issuing Bank
in its capacity as a Lender) pursuant to the immediately preceding sentence to
the Issuing Bank promptly upon receipt thereof in like funds as received. Each
Lender shall indemnify and hold harmless the Agent and the Issuing Bank from and
against any and all losses, liabilities (including liabilities for penalties),
actions, suits, judgments, demands, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses and an administration fee of
not less than $250 payable to the Issuing Bank as the issuer of the relevant
Letter of Credit) resulting from any failure on the part of such Lender to
provide, or from any delay in providing, the Agent with such Lender's Commitment
Percentage of the amount of any payment made by the Issuing Bank under a Letter
of Credit in accordance with this subsection (b) (except in respect of losses,
liabilities or other obligations suffered by the Issuing Bank resulting from the
gross negligence or willful misconduct of the Issuing Bank). If a Lender does
not make available to the Agent when due such Lender's Commitment Percentage of
any unreimbursed payment made by the Issuing Bank under a Letter of Credit
(other than payments made by the Issuing Bank by reason of its gross negligence
or willful misconduct), such Lender shall be required to pay interest to the
Agent for the account of the Issuing Bank on such Lender's Commitment Percentage
of such payment at a rate of interest per annum equal to the Federal Funds Rate
for the first three days after the due date of such payment until the date such
payment is received by the Agent and the Federal Funds Rate plus 2% thereafter.
The Agent shall distribute such interest payments to the Issuing Bank upon
receipt thereof in like funds as received.
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3. Whenever the Agent is reimbursed by the Borrower, for the account
of the Issuing Bank, for any payment under a Letter of Credit and such payment
relates to an amount previously paid by a Lender in respect of its Commitment
Percentage of the amount of such payment under such Letter of Credit, the Agent
(or the Issuing Bank, to the extent that the Agent has paid the same to the
Issuing Bank) will pay over such payment to such Lender a. before 4:00 p.m. on
the day such payment from the Borrower is received, if such payment is received
at or prior to 1:00 p.m. on such day, or b. before 12:00 noon on the next
succeeding Business Day, if such payment from the Borrower is received after
1:00 p.m. on such day.
I. ABSOLUTE OBLIGATION WITH RESPECT TO LETTER OF CREDIT PAYMENTS
The Borrower's obligation to reimburse the Agent for the account of
the Issuing Bank in respect of a Letter of Credit for each payment under or in
respect of such Letter of Credit shall be absolute and unconditional under any
and all circumstances and irrespective of any set-off, counterclaim or defense
to payment which the Borrower may have or have had against the beneficiary of
such Letter of Credit, the Agent, the Issuing Bank, as issuer of such Letter of
Credit, any Lender or any other Person, including, without limitation, any
defense based on the failure of any drawing to conform to the terms of such
Letter of Credit, any drawing document proving to be forged, fraudulent or
invalid, or the legality, validity, regularity or enforceability of such Letter
of Credit; provided, that, with respect to any Letter of Credit, the foregoing
shall not relieve the Issuing Bank of any liability it may have to the Borrower
for any actual damages sustained by the Borrower arising from a wrongful payment
under such Letter of Credit made as a result of the Issuing Bank's gross
negligence or willful misconduct.
J. PAYMENTS
1. Each borrowing of Revolving Credit Loans by the Borrower from the
Lenders, any conversion of Revolving Credit Loans from one Type to another and
any reduction in the Commitments shall be made pro rata according to the
Commitment Percentage of such Lender. Each payment, including each prepayment,
of principal and interest on the Revolving Credit Loans, of the Commitment Fee,
the Letter of Credit Commissions and of all of the other fees to be paid to the
Agent and the Lenders in connection with this Agreement (the Commitment Fee and
the Letter of Credit Commissions, together with all of such other fees, being
sometimes hereinafter collectively referred to as the "FEES") shall be made by
the Borrower prior to 1:00 p.m. on the date such payment is due to the Agent for
the account of the applicable Lenders at the Agent's office specified in Section
11.2, in each case in lawful money of the United States, in immediately
available funds and without set-off or counterclaim. As between the Borrower
and the Lenders, any payment by the Borrower to the Agent for the account of the
Lenders shall be deemed to be payment by the Borrower to the Lenders. The
failure of the Borrower to make any such payment by such time shall not
constitute a Default, provided that such payment is made on such due date, but
any such payment made after 1:00 p.m. on such due date shall be deemed to have
been made on the next Business Day for the purpose of calculating interest on
amounts outstanding on the Revolving Credit Loans. Promptly upon receipt
thereof by the Agent, each payment of principal and interest on the Revolving
Credit Loans shall be remitted by the Agent in like funds as received to each
Lender pro rata according to the aggregate outstanding principal balance of the
Revolving Credit Loans. Promptly upon
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receipt thereof by the Agent, each payment of the Commitment Fee and the Letter
of Credit Commissions shall be remitted by the Agent in like funds as received
to each Lender pro rata according to such Lender's Commitment Amount.
2. If any payment hereunder, under the Revolving Credit Notes or
under any Reimbursement Agreement shall be due and payable on a day which is not
a Business Day, the due date thereof (except as otherwise provided in the
definition of Interest Period) shall be extended to the next Business Day and
(except with respect to payments in respect of the Fees) interest shall be
payable at the applicable rate specified herein during such extension, provided,
however that if such next Business Day is after the Maturity Date, any such
payment shall be due on the immediately preceding Business Day.
K. RECORDS
1. LENDER'S RECORDS. Each Lender will note, either manually or
electronically, on its internal records with respect to each Revolving Credit
Loan made by it a. the date and amount of such Revolving Credit Loan,b. the
character of such Revolving Credit Loan as an ABR Advance, a Eurodollar Advance
or a combination thereof,c. the interest rate (without regard to the Applicable
Margin) and the Interest Period applicable to Eurodollar Advances, and d. each
payment and prepayment of the principal thereof.
2. AGENT'S AND ISSUING BANK'S RECORDS. The Agent and the Issuing
Bank shall keep records regarding the Revolving Credit Loans, the Letters of
Credit and the Loan Documents in accordance with their customary procedures for
agented credits and Letters of Credit, respectively.
3. PRIMA FACIE EVIDENCE. The entries made in the records maintained
pursuant to subsections (a) and (b) above shall, to the extent not prohibited by
applicable law, be prima facie evidence of the existence and amount of the
obligations of the Borrower recorded therein; provided that the failure of the
Agent, the Issuing Bank or any Lender, as the case may be, to make any notation
on its records shall not affect the Borrower's or any other Credit Party's
rights and obligations in respect of the Revolving Credit Loans, the Letters of
Credit or any other Loan Documents.
III. INTEREST, FEES, YIELD PROTECTIONS, ETC.
A. INTEREST RATE AND PAYMENT DATES
1. PRIOR TO MATURITY. Except as otherwise provided in Section 3.1(b)
and
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3.1(c), prior to maturity, the Revolving Credit Loans shall bear interest on the
outstanding principal balance thereof at the applicable interest rate or rates
per annum set forth below, as selected by Borrower in accordance with Section
2.3:
ADVANCES RATE
-------- ----
Each ABR Advance Alternate Base Rate PLUS the Applicable
Margin applicable to ABR Advances.
Each Eurodollar Advance Eurodollar Rate for the applicable Interest
Period PLUS the Applicable Margin applicable
to Eurodollar Advances.
2. DEFAULT RATE. Upon the occurrence and during the continuance of
an Event of Default, the unpaid principal balance of the Revolving Credit Loans
shall bear interest at a rate per annum (whether before or after the entry of a
judgment thereon) equal to 2% PLUS the rate which would otherwise be applicable
under Section 3.1(a), and any overdue interest or other amount payable under the
Loan Documents (including any unpaid Reimbursement Obligations) shall bear
interest (whether before or after the entry of a judgment thereon) at a rate per
annum equal to the Alternate Base Rate PLUS the Applicable Margin applicable to
ABR Advances PLUS 2%. For purposes of the preceding sentence, the rate
applicable pursuant to Section 3.1(a) to any overdue principal, interest or
other amount payable under the Loan Documents shall be a. in the case of an
overdue principal balance of any Eurodollar Advance, the applicable Eurodollar
Rate PLUS the Applicable Margin until the last day of the applicable Interest
Period (or the earlier termination thereof pursuant to this Agreement) and
thereafter at the Alternate Base Rate PLUS the Applicable Margin and b. in all
other cases, the Alternate Base Rate PLUS the Applicable Margin. All such
interest shall be payable on demand.
3. HIGHEST LAWFUL RATE. At no time shall the interest rate payable
on the Revolving Credit Loans of any Lender, together with the Fees and all
other amounts payable under the Loan Documents to such Lender, to the extent the
same are construed to constitute interest, exceed the Highest Lawful Rate
applicable to such Lender. If with respect to any Lender for any period during
the term of this Agreement, any amount paid to such Lender under the Loan
Documents, to the extent the same shall (but for the provisions of this Section)
constitute or be deemed to constitute interest, would exceed the maximum amount
of interest permitted by the Highest Lawful Rate applicable to such Lender
during such period (such amount being hereinafter referred to as an "UNQUALIFIED
AMOUNT"), then (i) such Unqualified Amount shall be applied or shall be deemed
to have been applied as a prepayment of the Revolving Credit Loans of such
Lender, and (ii) if in any subsequent period during the term of this Agreement,
all amounts payable under the Loan Documents to such Lender in respect of such
period which constitute or shall be deemed to constitute interest shall be less
than the maximum amount of interest permitted by the Highest Lawful Rate
applicable to such Lender during such period, then the Borrower shall pay to
such Lender in respect of such period an amount (each a "COMPENSATORY INTEREST
PAYMENT") equal to the lesser of (x) a sum which, when added to all such
amounts, would equal the maximum amount of interest permitted by the Highest
Lawful Rate applicable to such Lender during such period, and (y) an amount
equal to the Unqualified
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Amount less all other Compensatory Interest Payments made in respect thereof.
4. IN GENERAL. Interest on a. ABR Advances to the extent based on
the BNY Rate shall be calculated on the basis of a 365 or 366-day year (as the
case may be), and b. ABR Advances to the extent based on the Federal Funds Rate
and on Eurodollar Advances shall be calculated on the basis of a 360-day year,
in each case, for the actual number of days elapsed. Except as otherwise
provided in Section 3.1(b), interest shall be payable in arrears on each
Interest Payment Date and upon each payment (including prepayment) of the
Revolving Credit Loans. Any change in the interest rate on the Revolving Credit
Loans resulting from a change in the Alternate Base Rate or reserve requirements
shall become effective as of the opening of business on the day on which such
change shall become effective. The Agent shall, as soon as practicable, notify
the Borrower and the Lenders of the effective date and the amount of each such
change in the BNY Rate, but any failure to so notify shall not in any manner
affect the obligation of the Borrower to pay interest on the Revolving Credit
Loans in the amounts and on the dates required. Each determination of the
Alternate Base Rate or a Eurodollar Rate by the Agent pursuant to this Agreement
shall be conclusive and binding on all parties hereto absent manifest error.
The Borrower acknowledges that to the extent interest payable on ABR Advances is
based on the BNY Rate, such rate is only one of the bases for computing interest
on loans made by the Lenders, and by basing interest payable on ABR Advances on
the BNY Rate, the Lenders have not committed to charge, and the Borrower has not
in any way bargained for, interest based on a lower or the lowest rate at which
the Lenders may now or in the future make loans to other borrowers.
B. FEES
1. COMMITMENT FEES. The Borrower agrees to pay to the Agent, for the
account of the Lenders in accordance with each Lender's Commitment Percentage, a
fee (the "COMMITMENT FEE"), during the Commitment Period, at a rate per annum
equal to the Applicable Fee Percentage on the average daily Available Commitment
Amount. The Commitment Fee shall be payable quarterly in arrears on the last
day of each March, June, September and December of each year, commencing on the
first such day following the Effective Date, and ending on the date that the
Commitments shall expire or otherwise terminate. The Commitment Fee shall be
calculated on the basis of a 360-day year for the actual number of days elapsed.
2. LETTER OF CREDIT COMMISSIONS. The Borrower agrees to pay to the
Agent, for the account of the Lenders in accordance with each Lender's
Commitment Percentage, commissions (the "LETTER OF CREDIT COMMISSIONS") with
respect to the Letters of Credit for the period from and including the date of
issuance of each thereof to and including the expiration date thereof, at a rate
per annum equal to the Applicable Fee Percentage in effect on the date of
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issuance thereof on the average daily maximum amount available under any
contingency to be drawn under such Letter of Credit. The Letter of Credit
Commissions shall be a. calculated on the basis of a 360-day year for the actual
number of days elapsed and b. payable quarterly in arrears on the last day of
each March, June, September and December of each year and on the date that the
Commitments shall expire. In addition to the Letter of Credit Commissions, the
Borrower agrees to pay to the Issuing Bank, for its own account, its standard
fees and charges customarily charged to customers similar to the Borrower with
respect to any Letter of Credit.
3. AGENT'S AND ISSUING BANK'S FEES. The Borrower agrees to pay to
the Agent and the Issuing Bank, for their own respective accounts, such other
fees as have been agreed to in writing by the Borrower, the Agent and the
Issuing Bank.
C. CONVERSIONS
1. The Borrower may elect from time to time to convert one or more
Eurodollar Advances to ABR Advances by giving the Agent at least one Business
Day's prior irrevocable notice of such election, specifying the amount to be
converted, provided, that any such conversion of Eurodollar Advances shall only
be made on the last day of the Interest Period applicable thereto. In addition,
the Borrower may elect from time to time to convert a. ABR Advances to
Eurodollar Advances and b. Eurodollar Advances to new Eurodollar Advances by
selecting a new Interest Period therefor, in each case by giving the Agent at
least three Business Days' prior irrevocable notice of such election, in the
case of a conversion to Eurodollar Advances, specifying the amount to be so
converted and the initial Interest Period relating thereto, provided that any
such conversion of ABR Advances to Eurodollar Advances shall only be made on a
Business Day and any such conversion of Eurodollar Advances to new Eurodollar
Advances shall only be made on the last day of the Interest Period applicable to
the Eurodollar Advances which are to be converted to such new Eurodollar
Advances. Each such notice shall be irrevocable and shall be given by the
delivery by telecopy of a Notice of Conversion (confirmed promptly, and in any
event within five Business Days, by the delivery to the Agent of a Notice of
Conversion manually signed by the Borrower). The Agent shall promptly provide
the Lenders with notice of each such election. Advances may be converted
pursuant to this Section in whole or in part, provided that the amount to be
converted to each Eurodollar Advance, when aggregated with any Eurodollar
Advance to be made on such date in accordance with Section 2.3 and having the
same Interest Period as such first Eurodollar Advance, shall equal no less than
$1,000,000 or such amount PLUS a whole multiple of $100,000 in excess thereof.
2. Notwithstanding anything in this Agreement to the contrary, upon
the occurrence and during the continuance of a Default or an Event of Default,
the Borrower shall have no right to elect to convert any existing ABR Advance to
a new Eurodollar Advance or to convert any existing Eurodollar Advance to a new
Eurodollar Advance. In such event, all ABR Advances shall be automatically
continued as ABR Advances and all Eurodollar Advances shall be automatically
converted to ABR Advances on the last day of the Interest Period applicable to
such Eurodollar Advance.
3. Each conversion shall be effected by each Lender by applying the
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proceeds of its new ABR Advance or Eurodollar Advance, as the case may be, to
its Advances (or portion thereof) being converted (it being understood that any
such conversion shall not constitute a borrowing for purposes of Sections 4, 5
or 6).
D. CONCERNING INTEREST PERIODS
Notwithstanding any other provision of any Loan Document:
1. If the Borrower shall have failed to elect a Eurodollar
Advance under Section 2.3 or 3.3, as the case may be, in connection with any
borrowing of new Revolving Credit Loans or expiration of an Interest Period with
respect to any existing Eurodollar Advance, the amount of the Revolving Credit
Loans subject to such borrowing or such existing Eurodollar Advance shall
thereafter be an ABR Advance until such time, if any, as the Borrower shall
elect a new Eurodollar Advance pursuant to Section 3.3.
2. No Interest Period selected in respect of the conversion of
any Eurodollar Advance shall end after the Maturity Date.
3. The Borrower shall not be permitted to have more than ten
Eurodollar Advances outstanding at any one time, it being agreed that each
borrowing of a Eurodollar Advance pursuant to a single Borrowing Request shall
constitute the making of one Eurodollar Advance for the purpose of calculating
such limitation.
E. INDEMNIFICATION FOR LOSS
Notwithstanding anything contained herein to the contrary, if the
Borrower shall fail to borrow or convert on a Borrowing Date or Conversion Date
after it shall have given notice to do so in which it shall have requested a
Eurodollar Advance, or if a Eurodollar Advance shall be terminated for any
reason prior to the last day of the Interest Period applicable thereto, or if,
while a Eurodollar Advance is outstanding, any repayment or prepayment of such
Eurodollar Advance is made for any reason (including, without limitation, as a
result of acceleration or illegality) on a date which is prior to the last day
of the Interest Period applicable thereto, the Borrower agrees to indemnify each
Lender against, and to pay on demand directly to such Lender, any loss or
expense suffered by such Lender as a result of such failure to borrow or
convert, termination, repayment or prepayment, including, without limitation, an
amount, if greater than zero, equal to:
A x (B-C) x D
360
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where:
"A" equals such Lender's pro rata share of the Affected Principal Amount;
"B" equals the Eurodollar Rate (expressed as a decimal), applicable to such
Eurodollar Advances;
"C" equals the Eurodollar Rate (expressed as a decimal), in effect on or about
the first day of the applicable Remaining Interest Period, based on the
applicable rates offered or bid, as the case may be, on or about such date, for
deposits in an amount equal approximately to such Lender's pro rata share of the
Affected Principal Amount with an Interest Period equal approximately to the
applicable Remaining Interest Period, as determined by such Lender;
"D" equals the number of days from and including the first day of the applicable
Remaining Interest Period to but excluding the last day of such Remaining
Interest Period;
and any other out-of-pocket loss or expense (including any internal processing
charge customarily charged by such Lender) suffered by such Lender in connection
with such Eurodollar Advance, including, without limitation, in liquidating or
employing deposits acquired to fund or maintain the funding of its pro rata
share of the Affected Principal Amount, or redeploying funds prepaid or repaid,
in amounts which correspond to its pro rata share of the Affected Principal
Amount. Each determination by the Agent or a Lender pursuant to this Section
shall be conclusive and binding on the Borrower absent manifest error.
F. CAPITAL ADEQUACY
If the amount of capital required or expected to be maintained by any
Lender or any Person directly or indirectly owning or controlling such Lender or
the Issuing Bank (each a "CONTROL PERSON"), shall be affected by the occurrence
of a Regulatory Change and such Lender or the Issuing Bank shall have determined
that such Regulatory Change shall have had or will thereafter have the effect of
reducing a. the rate of return on such Lender's or such Control Person's
capital, or b.the asset value to such Lender or the Issuing Bank or such Control
Person of the Revolving Credit Loans made or maintained by such Lender, or of
the Reimbursement Obligations or any participation therein, in any case to a
level below that which such Lender or the Issuing Bank or such Control Person
could have achieved or would thereafter be able to achieve but for such
Regulatory Change (after taking into account such Lender's or the Issuing Bank's
or such Control Person's policies regarding capital adequacy) by an amount
deemed by such Lender or the Issuing Bank to be material to such Lender or the
Issuing Bank or Control Person, then, within ten days after demand by such
Lender or the Issuing Bank, the Borrower shall pay to such Lender or the Issuing
Bank or such Control Person such additional amount or amounts as shall be
sufficient to compensate such Lender or the Issuing Bank or such Control Person,
as the case may be, for such reduction. No failure by any Lender or the
Issuing Bank to demand any amount under this Section shall constitute a waiver
of such Lender's or the Issuing Bank's right to demand such amount at any time,
provided that such Lender or the Issuing Bank shall notify the Borrower of its
demand for any such amount not later than 90 days after the officer of such
Lender or the Issuing Bank having
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primary responsibility for administering this Agreement, or such Person's
immediate supervisor, has obtained knowledge of the basis for demanding such
amount. Any Lender or the Issuing Bank that demands the payment of amounts
pursuant to this Section shall submit to the Borrower a statement setting forth
the calculations in reasonable detail of such amounts, and such statement shall
be presumed correct absent manifest error.
G. REIMBURSEMENT FOR INCREASED COSTS
If any Lender, the Agent or the Issuing Bank shall determine that a
Regulatory Change:
1. does or shall subject it to any Taxes of any kind whatsoever
with respect to any Eurodollar Advances or its obligations under this Agreement
to make Eurodollar Advances, or change the basis of taxation of payments to it
of principal, interest or any other amount payable hereunder in respect of its
Eurodollar Advances, or impose on the Agent, the Issuing Bank or such Lender any
other condition regarding the Letters of Credit including any Taxes required to
be withheld from any amounts payable under the Loan Documents (except for
imposition of, or change in the rate of, Tax on the Income of such Lender); or
2. does or shall impose, modify or make applicable any reserve,
special deposit, compulsory loan, assessment, increased cost or similar
requirement against assets held by, or deposits of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any office of
such Lender in respect of its Eurodollar Advances which is not otherwise
included in the determination of a Eurodollar Rate or against any Letters of
Credit issued by the Issuing Bank or participated in by any Lender;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing, converting or maintaining its Eurodollar Advances or its
commitment to make such Eurodollar Advances, or to reduce any amount receivable
hereunder in respect of its Eurodollar Advances, or to increase the cost to the
Issuing Bank of issuing or maintaining the Letters of Credit or the cost to any
Lender of participating therein or the cost to the Agent or the Issuing Bank of
performing its respective functions hereunder with respect to the Letters of
Credit, then, in any such case, the Borrower shall pay such Lender, the Agent,
or the Issuing Bank, as the case may be, within ten days after demand therefor,
such additional amounts as is sufficient to compensate such Lender, the Issuing
Bank or the Agent, as the case may be, for such additional cost or reduction in
such amount receivable which such Lender deems to be material as determined by
such Lender, the Issuing Bank or the Agent, as the case may be; provided,
however, that nothing in this Section shall require the Borrower to indemnify
the Lenders, the Agent, or the Issuing Bank, as the case may be, with respect to
withholding Taxes for which the Borrower has no obligation under Section 3.10.
No failure by any Lender, the Agent or the Issuing Bank to
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demand any amount under this Section shall constitute a waiver of such Lender's,
the Agent's or the Issuing Bank's right to demand such amount at any time,
provided that such Lender, the Agent or the Issuing Bank shall notify the
Borrower of its demand for any such amount not later than 90 days after the
officer of such Lender, the Agent or the Issuing Bank having primary
responsibility for administering this Agreement, or such Person's immediate
supervisor, has obtained knowledge of the basis for demanding such amount. Any
Lender, the Agent, or the Issuing Bank demanding amounts be paid pursuant to
this Section shall submit to the Borrower a statement setting forth the
calculations in reasonable detail of such amounts, and such statement shall be
presumed correct absent manifest error.
H. ILLEGALITY OF FUNDING
Notwithstanding any other provision hereof, if any Lender shall
reasonably determine that any law, regulation, treaty or directive, or any
change therein or in the interpretation or application thereof, shall make it
unlawful for such Lender to make or maintain any Eurodollar Advance as
contemplated by this Agreement, such Lender shall promptly notify the Borrower
and the Agent thereof, and a. the commitment of such Lender to make such
Eurodollar Advances or convert ABR Advances to Eurodollar Advances shall
forthwith be suspended,b. such Lender shall fund its portion of each requested
Eurodollar Advance as an ABR Advance and c. such Lender's Revolving Credit Loans
then outstanding as such Eurodollar Advances, if any, shall be converted
automatically to an ABR Advance on the last day of the then current Interest
Period applicable thereto or at such earlier time as may be required. If the
commitment of any Lender with respect to Eurodollar Advances is suspended
pursuant to this Section and such Lender shall have obtained actual knowledge
that it is once again legal for such Lender to make or maintain Eurodollar
Advances, such Lender shall promptly notify the Agent and the Borrower thereof
and, upon receipt of such notice by each of the Agent and the Borrower, such
Lender's commitment to make or maintain Eurodollar Advances shall be reinstated.
I. SUBSTITUTED INTEREST RATE
In the event that a. the Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that by reason
of circumstances affecting the interbank eurodollar market either adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate applicable
pursuant to Section 3.1 or b. the Required Lenders shall have notified the Agent
that they have determined (which determination shall be conclusive and binding
on the Borrower) that the applicable Eurodollar Rate will not adequately and
fairly reflect the cost to such Lenders of maintaining or funding loans bearing
interest based on such Eurodollar Rate, with respect to any portion of the
Revolving Credit Loans that the Borrower has requested be made as Eurodollar
Advances or Eurodollar Advances that will result from the requested conversion
of any portion of the Advances into or of Eurodollar Advances (each, an
"AFFECTED ADVANCE"), the Agent shall promptly notify the Borrower and the
Lenders (by telephone or otherwise, to be promptly confirmed in writing) of such
determination, on or, to the extent practicable, prior to the requested
Borrowing Date or Conversion Date for such Affected Advances. If the Agent
shall give such notice, (a) any Affected Advances shall be made as ABR Advances,
(b) the Advances (or any portion thereof) that were to have been converted to
Affected Advances shall be converted to ABR Advances and (c) any outstanding
Affected
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Advances shall be converted, on the last day of the then current Interest Period
with respect thereto, to ABR Advances. Until any notice under clauses (i) or
(ii), as the case may be, of this Section has been withdrawn by the Agent (by
notice to the Borrower promptly upon either (x) the Agent having determined that
such circumstances affecting the interbank eurodollar no longer exist and that
adequate and reasonable means do exist for determining the Eurodollar Rate
pursuant to Section 3.1 or (y) the Agent having been notified by such Required
Lenders that circumstances no longer render the Advances (or any portion
thereof) Affected Advances, no further Eurodollar Advances shall be required to
be made by the Lenders, nor shall the Borrower have the right to convert all or
any portion of the Revolving Credit Loans to or as Eurodollar Advances.
J. TAXES
1. PAYMENTS TO BE FREE AND CLEAR. All payments by each Credit Party
under the Loan Documents to or for the account of the Agent, any Lender or the
Issuing Bank (each, an "INDEMNIFIED TAX PERSON") shall be made free and clear
of, and without any deduction or withholding for or on account of, any and all
current or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto (including interest, additions to tax,
and penalties thereon) imposed, levied, collected, withheld or assessed by the
United States or any political subdivision or taxing authority thereof
(collectively, "TAXES"), excluding as to any Indemnified Tax Person, (i) a Tax
on the Income imposed on such Indemnified Tax Person and (ii) any interest,
fees, additions to tax or penalties for late payment thereof (each such
nonexcluded Tax, an "INDEMNIFIED TAX"). For purposes hereof, "TAX ON THE INCOME"
shall mean, as to any Person, a Tax imposed by one of the following
jurisdictions or by any political subdivision or taxing authority thereof: (i)
the United States, (ii) the jurisdiction in which such Person is organized,
(iii) the jurisdiction in which such Person's principal office is located, or
(iv) in the case of each Lender, any jurisdiction in which such Lender's
Applicable Lending Office is located; which Tax is an income tax or franchise
tax imposed on all or part of the net income or net profits of such Person or
which Tax represents interest, fees, or penalties for late payment of such an
income tax or franchise tax.
2. GROSSING UP OF PAYMENTS. If any Credit Party or any other Person
is required by any law, rule, regulation, order, directive, treaty or guideline
to make any deduction or withholding (which deduction or withholding would
constitute an Indemnified Tax) from any amount required to be paid by any Credit
Party to or on behalf of an Indemnified Tax Person under any Loan Document a.
such Credit Party shall pay such Indemnified Tax before the date on which
penalties attach thereto, such payment to be made for its own account (if the
liability to pay is imposed on such Credit Party) or on behalf of and in the
name of such Indemnified Tax Person (if the liability is imposed on such
Indemnified Tax Person), and b. the sum payable to such Indemnified Tax Person
shall be increased as may be necessary so that after making all re-
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quired deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section) such Indemnified Tax
Person receives an amount equal to the sum it would have received had no such
deductions or withholdings been made.
3. OTHER TAXES. Each Credit Party agrees to pay any current or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Loan
Documents or otherwise with respect to, the Loan Documents (collectively, the
"OTHER TAXES").
4. EVIDENCE OF PAYMENT. Within 30 days after the reasonable request
therefor by the Agent in connection with any payment of Indemnified Taxes or
Other Taxes, each Credit Party will furnish to the Agent the original or a
certified copy of an official receipt from the jurisdiction to which payment is
made evidencing payment thereof or, if unavailable, a certificate from a
Financial Officer that states that such payment has been made and that sets
forth the date and amount of such payment.
5. U.S. TAX CERTIFICATES. Each Indemnified Tax Person that is
organized under the laws of any jurisdiction other than the United States or any
political subdivision thereof that is exempt from United States federal
withholding tax, or that is subject to such tax at a reduced rate under an
applicable treaty, with respect to payments under the Loan Documents shall
deliver to the Agent for transmission to the Borrower, on or prior to the
Effective Date (in the case of each Indemnified Tax Person listed on the
signature pages hereof) or on the effective date of the Assignment and
Acceptance Agreement or other document pursuant to which it becomes an
Indemnified Tax Person (in the case of each other Indemnified Tax Person), and
at such other times as the Borrower or the Agent may reasonably request,
Internal Revenue Form 4224 or Form 1001 or other certificate or document
required under United States law to establish entitlement to such exemption or
reduced rate. No Credit Party shall be required to pay any additional amount to
any such Indemnified Tax Person under subsection (b) above if such Indemnified
Tax Person shall have failed to satisfy the requirements of the immediately
preceding sentence; provided that if such Indemnified Tax Person shall have
satisfied such requirements on the Effective Date (in the case of each
Indemnified Tax Person listed on the signature pages hereof) or on the effective
date of the Assignment and Acceptance Agreement or other document pursuant to
which it became an Indemnified Tax Person (in the case of each other Indemnified
Tax Person), nothing in this subsection shall relieve any Credit Party of its
obligation to pay any additional amounts pursuant to subsection (b) in the event
that, as a result of any change in applicable law or treaty, such Indemnified
Tax Person is no longer properly entitled to deliver certificates, documents or
other evidence at a subsequent date establishing the fact that such Indemnified
Tax Person is no longer entitled to such exemption or reduced rate.
K. OPTION TO FUND
Each Lender has indicated that, if the Borrower requests a Eurodollar
Advance, such Lender may wish to purchase one or more deposits in order to fund
or maintain its funding
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of its Commitment Percentage of such Eurodollar Advance during the Interest
Period with respect thereto; it being understood that the provisions of this
Agreement relating to such funding are included only for the purpose of
determining the rate of interest to be paid in respect of such Eurodollar
Advance and any amounts owing under Sections 3.5 and 3.7. Each Lender shall be
entitled to fund and maintain its funding of all or any part of each Eurodollar
Advance in any manner it sees fit, but all such determinations hereunder shall
be made as if each Lender had actually funded and maintained its Commitment
Percentage of each Eurodollar Advance during the applicable Interest Period
through the purchase of deposits in an amount equal to its Commitment Percentage
of such Eurodollar Advance having a maturity corresponding to such Interest
Period. Any Lender may fund its Commitment Percentage of each Eurodollar
Advance from or for the account of any branch or office of such Lender as such
Lender may choose from time to time.
L.SUBSTITUTION OF A LENDER
Notwithstanding anything to the contrary contained herein, if any
Lender shall request compensation pursuant to Section 3.6 or 3.7 in an aggregate
amount in excess of $10,000, then, in each such case, provided that no Default
or Event of Default shall then exist and be continuing, during the 90 day period
after the receipt of such request, the Borrower may require that such Lender
transfer all of its right, title and interest under the Loan Documents to one or
more of the other Lenders or any other Eligible Assignee identified by the
Borrower and reasonably acceptable to the Agent and the Issuing Bank (a
"PROPOSED LENDER"), if such Proposed Lender agrees to assume all of the
obligations of such Lender under the Loan Documents for consideration equal to
the outstanding principal amount of such Lender's Revolving Credit Loans,
together with interest thereon to the date of such transfer, all accrued, but
theretofore unpaid, fees owing to such Lender pursuant to Sections 3.1 and 3.2,
and all other amounts payable under the Loan Documents to such Lender on or
prior to the date of such transfer (including, without limitation, any fees
accrued hereunder and any amounts which would be payable under Section 3.5 as if
all of such Lender's Loans were being prepaid in full on such date). Subject to
the execution and delivery by the Borrower at its expense of a new Revolving
Credit Note, an Assignment and Acceptance Agreement, and such other documents as
such Lender may reasonably require, such Proposed Lender shall be a "Lender" for
all purposes hereunder. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements of the Borrower contained in
Sections 3.5, 3.6, 3.7, 3.10, 11.5 and 11.8 (without duplication of any payments
made to such Lender by the Borrower or the Proposed Lender) shall survive for
the benefit of any Lender replaced under this Section 3.12 with respect to the
time prior to such replacement. In addition and notwithstanding anything herein
to the contrary, such Lender shall be entitled to receive the additional amounts
to which it would be entitled pursuant to Section 3.6 or 3.7 had it not been
replaced pursuant hereto.
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IV. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement
and to make the Revolving Credit Loans and the Issuing Bank to issue the Letters
of Credit and the Lenders to participate therein, the Borrower makes the
following representations and warranties to the Agent, the Issuing Bank and each
Lender:
A. SUBSIDIARIES; CAPITALIZATION
As of the Effective Date, (i) the Borrower has only the Subsidiaries
set forth on Schedule 4.1 and (ii) the authorized, issued and outstanding
Capital Stock of the Borrower and each such Subsidiary is as set forth on
Schedule 4.1. As of the Effective Date, except as set forth on Schedule 4.1,a.
none of the Subsidiaries is a Foreign Subsidiary or an Exempt Subsidiary,b. the
shares of, or partnership or other interests in, each Subsidiary of the Borrower
are owned beneficially and of record by the Borrower or another Subsidiary of
the Borrower, are free and clear of all Liens and are duly authorized, validly
issued, fully paid and nonassessable,c. neither the Borrower nor any of its
Subsidiaries has issued any securities convertible into, or options or warrants
for, any common or preferred equity securities thereof,d. there are no
agreements, voting trusts or understandings binding upon the Borrower or any of
its Subsidiaries with respect to the voting securities of the Borrower or any of
its Subsidiaries or affecting in any manner the sale, pledge, assignment or
other disposition thereof, including any right of first refusal, option,
redemption, call or other right with respect thereto, whether similar or
dissimilar to any of the foregoing.
B. EXISTENCE AND POWER
Each of the Borrower and each of its Subsidiaries is duly organized or
formed and validly existing in good standing under the laws of the jurisdiction
of its incorporation or formation, has all requisite power and authority to own
its Property and to carry on its business as now conducted, and is in good
standing and authorized to do business by it in each jurisdiction in which the
nature of the business conducted therein or the Property owned by it therein
makes such qualification necessary, except where such failure to qualify could
not reasonably be expected to have a Material Adverse Effect.
C. AUTHORITY AND EXECUTION
Each of the Borrower and each of the Subsidiary Guarantors has full
legal power and authority to enter into, execute, deliver and perform the terms
of the Loan Documents to which it is a party all of which have been duly
authorized by all proper and necessary corporate, partnership or other
applicable action and are in full compliance with its Organizational Documents.
The Borrower and each of the Subsidiary Guarantors has duly executed and
delivered the Loan Documents to which it is a party.
D. BINDING AGREEMENT
The Loan Documents (other than the Revolving Credit Notes) constitute,
and the
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Revolving Credit Notes, when issued and delivered pursuant hereto for value
received, will constitute, the valid and legally binding obligations of each
Credit Party, in each case, to the extent it is a party thereto, enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally.
E. LITIGATION
Except as set forth on Schedule 4.5, there are no actions, suits or
proceedings at law or in equity or by or before any Governmental Authority
(whether purportedly on behalf of the Borrower, any of its Subsidiaries or any
other Credit Party) pending or, to the knowledge of the Borrower, threatened
against the Borrower, any of its Subsidiaries or any other Credit Party or
maintained by the Borrower, any of its Subsidiaries or any other Credit Party or
which may affect the Property of the Borrower, any of its Subsidiaries or any
other Credit Party or any of their respective Properties or rights, which a.
could reasonably be expected to have a Material Adverse Effect,b. call into
question the validity or enforceability of, or otherwise seek to invalidate, any
Loan Document, or c. might, individually or in the aggregate, materially and
adversely affect any of the transactions contemplated by any Loan Document.
F. REQUIRED CONSENTS
Except for information filings required to be made in the ordinary
course of business which are not a condition to the performance by the Borrower
or any of its Subsidiaries under the Loan Documents to which it is a party, no
consent, authorization or approval of, filing with, notice to, or exemption by,
stockholders or holders of any other equity interest, any Governmental Authority
or any other Person is required to authorize, or is required in connection with
the execution, delivery and performance of the Loan Documents to which the
Borrower or any of its Subsidiaries or any other Credit Party is a party or is
required as a condition to the validity or enforceability of the Loan Documents
to which any of the same is a party.
G. ABSENCE OF DEFAULTS; NO CONFLICTING AGREEMENTS
1. Neither the Borrower, any of its Subsidiaries nor any other
Credit Party is in default under any mortgage, indenture, contract or agreement
to which it is a party or by which it or any of its Property is bound, the
effect of which default could reasonably be expected to have a Material Adverse
Effect. The execution, delivery or carrying out of the terms of the Loan
Documents will not constitute a default under, or result in the creation or
imposition of, or obligation to create, any Lien upon any Property of the
Borrower or any of its Subsidiaries or result in a breach of or require the
mandatory repayment of or other acceleration of payment under or pursuant to the
terms of any such mortgage, indenture, contract or agreement.
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2. Neither the Borrower, any of its Subsidiaries nor any other
Credit Party is in default with respect to any judgment, order, writ,
injunction, decree or decision of any Governmental Authority which default could
reasonably be expected to have a Material Adverse Effect. The execution,
delivery or carrying out of the terms of the Loan Documents will not result in
any default with respect to any judgment, order, writ, injunction, decree or
decision of any Governmental Authority.
H. COMPLIANCE WITH APPLICABLE LAWS
The Borrower and each of its Subsidiaries is complying in all material
respects with all statutes, regulations, rules and orders of all Governmental
Authorities which are applicable to the Borrower or such Subsidiary, a violation
of which could reasonably be expected to have a Material Adverse Effect. The
execution, delivery or carrying out of the terms of the Loan Documents will not
result in a violation of any statute, regulation, rule or order of any
Governmental Authority which is applicable to the Borrower and its Subsidiaries.
I. TAXES
The Borrower and each of its Subsidiaries has filed or caused to be
filed all tax returns required to be filed and has paid, or has made adequate
provision for the payment of, all taxes shown to be due and payable on said
returns or in any assessments made against it (other than those being contested
as required under Section 7.4) which would be material to the Borrower or any of
its Subsidiaries, and no tax Liens have been filed with respect thereto. The
charges, accruals and reserves on the books of the Borrower and each of its
Subsidiaries with respect to all taxes are, to the best knowledge of the
Borrower, adequate for the payment of such taxes, and the Borrower knows of no
unpaid assessment which is due and payable against the Borrower or any of its
Subsidiaries or any claims being asserted which could reasonably be expected to
have a Material Adverse Effect, except such thereof as are being contested as
required under Section 7.4, and for which adequate reserves have been set aside
in accordance with GAAP.
J. GOVERNMENTAL REGULATIONS
Neither the Borrower, any of its Subsidiaries nor any Person
controlled by, controlling, or under common control with, the Borrower or any of
its Subsidiaries, is (a) an "investment company" within the meaning of the 1940
Act or a Person deemed to be an "investment company" for purposes of the 1940
Act, except as set forth on Schedule 4.10, (b) subject to regulation under the
Public Utility Holding Company Act of 1935, as amended, or the Federal Power
Act, as amended, or (c) is subject to any statute or regulation which prohibits
or restricts the incurrence of Indebtedness, including, without limitation,
statutes or regulations relative to common or contract carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services, except for statutes and regulations that limit the incurrence of
Indebtedness by Exempt Subsidiaries (other than Subsidiaries of the Borrower
that are Exempt Subsidiaries solely because of the applicability of clause (iii)
of the definition of "Exempt Subsidiary").
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K. FEDERAL RESERVE REGULATIONS; USE OF LOAN PROCEEDS
Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. After giving
effect to the making of each Revolving Credit Loan, Margin Stock will constitute
less than 25% of the assets (as determined by any reasonable method) of the
Borrower and its Subsidiaries.
L. PLANS
The only Pension Plans in effect as of the Effective Date (the
"EXISTING PENSION PLANS") are listed on Schedule 4.12. Each Employee Benefit
Plan of the Borrower, its Subsidiaries and the ERISA Affiliates is in compliance
with ERISA and the Code, where applicable, in all material respects. As of the
Effective Date,a. the amount of all Unfunded Pension Liabilities under the
Pension Plans, excluding any plan which is a Multiemployer Plan, does not exceed
$1,000,000, and b. the amount of the aggregate Unrecognized Retiree Welfare
Liability under all applicable Employee Benefit Plans does not exceed
$1,000,000. The Borrower and each of its Subsidiaries and ERISA Affiliates has
complied with the requirements of Section 515 of ERISA with respect to each
Pension Plan which is a Multiemployer Plan. As of the Effective Date, the
aggregate potential annual withdrawal liability payments, as determined in
accordance with Title IV of ERISA, of the Borrower and its Subsidiaries and
ERISA Affiliates with respect to all Pension Plans which are Multiemployer Plans
is approximately $0. The Borrower and its Subsidiaries and ERISA Affiliates
have, as of the Effective Date, made all contributions or payments to or under
each such Pension Plan required by law or the terms of such Pension Plan or any
contract or agreement with respect thereto, except where the failure so to do
could not reasonably be expected to have a Material Adverse Effect. No material
liability to the PBGC has been, or is expected by the Borrower, any of its
Subsidiaries or any ERISA Affiliate to be, incurred by the Borrower, any such
Subsidiary or any ERISA Affiliate. Liability, as referred to in this Section
includes any joint and several liability. Each Employee Benefit Plan which is a
group health plan within the meaning of Section 5000(b)(1) of the Code is in
material compliance with the continuation of health care coverage requirements
of Section 4980B of the Code.
M. FINANCIAL STATEMENTS
The Borrower has heretofore delivered to the Agent and the Lenders
copies of its Form 10-K for the fiscal year ended June 30, 1996, containing the
audited Consolidated Balance Sheets of the Borrower and its Subsidiaries as of
June 30, 1996 and June 30, 1995 and the related Consolidated Statements of
Operations, Stockholder's Equity and Cash Flows for the periods then ended (with
the applicable related notes and schedules, the "FINANCIAL STATEMENTS").
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The Financial Statements fairly present the Consolidated financial condition and
results of the operations of the Borrower and its Subsidiaries as of the dates
and for the periods indicated therein and have been prepared in conformity with
GAAP. Except as reflected in the Financial Statements or in the footnotes
thereto, neither the Borrower nor any of its Subsidiaries has any obligation or
liability of any kind (whether fixed, accrued, contingent, unmatured or
otherwise) which, in accordance with GAAP, should have been shown in the
Financial Statements and was not. Since June 30, 1996, the Borrower and each of
its Subsidiaries has conducted its business only in the ordinary course and
there has been no Material Adverse Change.
N. PROPERTY
The Borrower and each of its Subsidiaries has a. good and marketable
title to all of its Property, title to which is material to the Borrower or such
Subsidiary and b. a valid leasehold interest in all Property, a leasehold
interest in which is material to the Borrower or such Subsidiary, in each case
subject to no Liens, except Permitted Liens.
O. AUTHORIZATIONS
The Borrower and each of its Subsidiaries possesses or has the right
to use all franchises, licenses, trademarks and other rights as are material and
necessary for the conduct of its business, and with respect to which it is in
compliance, with no known conflict with the valid rights of others which could
reasonably be expected to have a Material Adverse Effect. No event has occurred
which permits or, to the best knowledge of the Borrower, after notice or the
lapse of time or both, or any other condition, could reasonably be expected to
permit, the revocation or termination of any such franchise, license or other
right which revocation or termination could reasonably be expected to have a
Material Adverse Effect.
P. ENVIRONMENTAL MATTERS
1. No Hazardous Substances have been generated or manufactured on,
transported to or from, treated at, stored at or discharged from any real
property owned or operated by the Borrower or any Subsidiary thereof or, to the
Borrower's knowledge, any real property leased by the Borrower or any Subsidiary
thereof, in violation of any Environmental Laws; no Hazardous Substances have
been discharged into subsurface waters under any real property owned or operated
by the Borrower or any Subsidiary thereof or, to the Borrower's knowledge, any
real property leased by the Borrower or any Subsidiary thereof, in violation of
any Environmental Laws; no Hazardous Substances have been discharged from any
real property owned or operated by the Borrower or any Subsidiary thereof or, to
the Borrower's knowledge, any real property leased by the Borrower or any
Subsidiary thereof, on or into Property or waters (including subsurface waters)
adjacent to any Real Property in violation of any Environmental Laws; and there
are not now, nor ever have been, on any real property owned or operated by the
Borrower or any Subsidiary thereof or, to the Borrower's knowledge, any real
property leased by the Borrower or any Subsidiary thereof, any underground or
above ground storage tanks regulated under any Environmental Laws.
2. Neither the Borrower nor any of its Subsidiaries a. has received
notice
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(written or oral) or otherwise learned of any claim, demand, suit, action,
proceeding, event, condition, report, directive, Lien, violation, non-compliance
or investigation indicating or concerning any potential or actual liability
(including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, government response costs, removal costs,
remedial costs, natural resources damages, Property damages, personal injuries
or penalties) arising in connection with: (x) any non-compliance with or
violation of the requirements of any applicable Environmental Laws, or (y) the
presence of any Hazardous Substance on any Real Property (or any Real Property
previously owned by the Borrower or any of its Subsidiaries) or the release or
threatened release of any Hazardous Substance into the environment,b. has any
threatened or actual liability in connection with the presence of any Hazardous
Substance on any Real Property (or any Real Property previously owned by the
Borrower or any of its Subsidiaries) or the release or threatened release of any
Hazardous Substance into the environment,c. has received notice of any federal
or state investigation evaluating whether any remedial action is needed to
respond to the presence of any Hazardous Substance on any Real Property (or any
Real Property previously owned by the Borrower or any of its Subsidiaries) or a
release or threatened release of any Hazardous Substance into the environment
for which the Borrower or any of its Subsidiaries is or may be liable, or d. has
received notice that the Borrower or any of its Subsidiaries is or may be liable
to any Person under any Environmental Law.
Q. TRADE OR BUSINESS
The Borrower engages in no trade or business other than the holding of
the Capital Stock of its Subsidiaries and activities incidental thereto.
R. SOLVENCY
Immediately after giving effect to the transactions contemplated by
the Loan Documents, the Borrower and each of its Subsidiaries is and will be
Solvent.
S. ACCOUNTING TREATMENT OF INTERNALLY GENERATED COMPUTER SOFTWARE.
The Borrower and its Subsidiaries charge to operations the cost of
routine maintenance of software products, design costs and development costs
incurred prior to establishment of a product's technical feasibility in
accordance with GAAP. The Borrower and its Subsidiaries capitalize and amortize
over the useful life of a product any such costs which are incurred after the
establishment of a product's technological feasibility.
T. ABSENCE OF CERTAIN RESTRICTIONS
No indenture, certificate of designation for preferred stock,
agreement or in-
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strument to which the Borrower or any of its Subsidiaries is a party (other than
this Agreement), prohibits or limits in any way, directly or indirectly the
ability of any Subsidiary of the Borrower to make Restricted Payments or repay
any Indebtedness to the Borrower or to another Subsidiary of the Borrower,
except for restrictions in respect of net capital requirements imposed by
applicable law upon Subsidiaries of the Borrower that are registered
broker-dealers or are engaged in the insurance business.
U. NO MISREPRESENTATION
No representation or warranty contained in any Loan Document and no
certificate or report from time to time furnished by the Borrower or any of its
Subsidiaries in connection with the transactions contemplated thereby, contains
or will contain a misstatement of material fact, or, to the best knowledge of
the Borrower, omits or will omit to state a material fact required to be stated
in order to make the statements therein contained not misleading in the light of
the circumstances under which made, provided that any projections or pro-forma
financial information contained therein are based upon good faith estimates and
assumptions believed by the Borrower to be reasonable at the time made, it being
recognized by the Agent and the Lenders that such projections as to future
events are not to be viewed as facts, and that actual results during the period
or periods covered thereby may differ from the projected results.
V. CONDITIONS TO EFFECTIVENESS
The effectiveness of this Agreement shall be subject to the
fulfillment of the following conditions precedent on or prior to the Effective
Date:
A. EVIDENCE OF ACTION
The Agent shall have received a certificate, dated the Effective Date,
of the Secretary or Assistant Secretary or other analogous counterpart of each
Credit Party a. attaching a true and complete copy of the resolutions of its
Managing Person and of all documents evidencing all necessary corporate,
partnership or similar action (in form and substance satisfactory to the Agent)
taken by it to authorize the Loan Documents to which it is a party and the
transactions contemplated thereby,b. attaching a true and complete copy of its
Organizational Documents,c. setting forth the incumbency of its officer or
officers or other analogous counterpart who may sign the Loan Documents,
including therein a signature specimen of such officer or officers and d.
attaching a certificate of good standing of the Secretary of State of the
jurisdiction of its formation and of each other jurisdiction in which such
Credit Party maintains its principal place of business.
B. THIS AGREEMENT
The Agent shall have received counterparts of this Agreement signed by
each of the parties hereto (or receipt by the Agent from a party hereto of a
telecopy signature page signed by such party which shall have agreed to promptly
provide the Agent with originally executed counterparts hereof).
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C. REVOLVING CREDIT NOTES
The Agent shall have received the Revolving Credit Notes, duly
executed by an Authorized Signatory of the Borrower and dated the Effective
Date.
D. ABSENCE OF LITIGATION
There shall be no injunction, writ, preliminary restraining order or
other order of any nature issued by any Governmental Authority in any respect
affecting the transactions provided for in the Loan Documents and no action or
proceeding by or before any Governmental Authority has been commenced and is
pending or, to the knowledge of the Borrower, threatened, seeking to prevent or
delay the transactions contemplated by the Loan Documents or challenging any
other terms and provisions hereof or thereof or seeking any damages in
connection therewith, and the Agent shall have received a certificate, dated the
Effective Date, in all respects satisfactory to the Agent, of an executive
officer of the Borrower to the foregoing effects.
E. APPROVALS AND CONSENTS
All approvals and consents of all Persons required to be obtained in
connection with the consummation of the transactions contemplated by the Loan
Documents shall have been obtained and shall be in full force and effect, and
all required notices have been given and all required waiting periods shall have
expired, and the Agent shall have received a certificate, dated the Effective
Date, in all respects satisfactory to the Agent, of an executive officer of the
Borrower to the foregoing effects.
F. OPINION OF COUNSEL TO THE BORROWER AND THE SUBSIDIARY GUARANTORS
The Agent shall have received an opinion of Kevin J. Dell, Esq., Vice
President, Secretary and General Counsel of the Borrower and counsel to the
Subsidiary Guarantors, addressed to the Agent, the Issuing Bank and the Lenders
(and permitting Special Counsel to rely thereon), and dated the Effective Date,
substantially in the form of Exhibit F. It is understood that such opinion is
being delivered to the Agent and the Lenders upon the direction of the Borrower
and the Subsidiary Guarantors and that the Agent and the Lenders may and will
rely on such opinion.
G. OPINION OF SPECIAL COUNSEL
The Agent shall have received an opinion of Special Counsel, addressed
to the Agent, the Issuing Bank and the Lenders and dated the Effective Date
substantially in the form
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of Exhibit G.
H. SUBSIDIARY GUARANTY
The Agent shall have received the Subsidiary Guaranty, duly executed
by an Authorized Signatory of the Borrower and each of its Subsidiaries that is
not a Foreign Subsidiary or an Exempt Subsidiary.
I. PROPERTY, PUBLIC LIABILITY AND OTHER INSURANCE
The Agent shall have received a certificate of all insurance
maintained by the Borrower and its Subsidiaries in form and substance reasonably
satisfactory to the Agent.
J. FEES
All fees payable to the Agent, the Issuing Bank and the Lenders on the
Effective Date shall have been paid.
K. LIENS
There shall be no Liens, except Permitted Liens, upon the Property of
the Credit Parties and the Agent shall have received a certificate, dated the
Effective Date, in all respects satisfactory to the Agent, of an executive
officer of the Borrower to the foregoing effects.
L. COMPLIANCE CERTIFICATE
The Agent shall have received a certificate of a Financial Officer of
the Borrower, dated the Effective Date, attaching a pro-forma Compliance
Certificate (after giving effect to the making of Revolving Credit Loans, if
any, on the Effective Date) in all respects satisfactory to the Agent.
M. OTHER DOCUMENTS
The Agent shall have received such other documents, each in form and
substance reasonably satisfactory to the Agent, as the Agent shall reasonably
require in connection with the making of the effectiveness of this Agreement.
VI. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
A. CONDITIONS OF LENDING - REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
The obligation of each Lender to make any Revolving Credit Loan or the
Issuing Bank to issue any Letter of Credit on a Borrowing Date and each Lender
to participate therein is subject to the satisfaction of the following
conditions precedent as of the date of such Revolving Credit Loan or the
issuance of such Letter of Credit, as the case may be:
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1. COMPLIANCE. On each Borrowing Date and after giving effect
to the Revolving Credit Loans to be made and the Letters of Credit to be issued
thereon a. there shall exist no Default or Event of Default,b. the
representations and warranties contained in the Loan Documents shall be true and
correct with the same effect as though such representations and warranties had
been made on such Borrowing Date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct on and as of
such earlier date,c. no Material Adverse Change shall have occurred since June
30, 1996, and d. the Aggregate Credit Exposure will not exceed the Aggregate
Commitment Amount. Each borrowing by the Borrower and each request by the
Borrower for the issuance of a Letter of Credit shall constitute a certification
by the Borrower as of such Borrowing Date that each of the foregoing matters is
true and correct in all respects.
2. BORROWING REQUEST; LETTER OF CREDIT REQUEST. With respect to
the Revolving Credit Loans to be made, and the Letters of Credit to be issued,
on each Borrowing Date, the Agent shall have received,a. in the case of
Revolving Credit Loans, a Borrowing Request and b. in the case of Letters of
Credit, a Letter of Credit Request, in each case duly executed by an Authorized
Signatory of the Borrower.
3. LOAN CLOSINGS. All documents required by the provisions of
the Loan Documents to be executed or delivered to the Agent on or before the
applicable Borrowing Date shall have been executed and shall have been delivered
at the office of the Agent set forth in Section 11.2 on or before such Borrowing
Date.
4. OTHER DOCUMENTS. The Agent shall have received such other
documents as the Agent or the Lenders shall reasonably request.
B. ADDITIONAL CONDITIONS TO REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
IN CONNECTION WITH PERMITTED ACQUISITIONS
In addition to the satisfaction on the Effective Date of the
conditions set forth in Section 5 and the satisfaction on any Borrowing Date of
the conditions set forth in Section 6.1, the obligation of each Lender to make
any Revolving Credit Loan and the obligation of the Issuing Bank to issue
Letters of Credit, the proceeds of which are to be used directly or indirectly
to make a Permitted Acquisition (including by the making of an Intercompany
Loan) is subject to the satisfaction of the following conditions precedent as of
the date of such Revolving Credit Loan or such Letter of Credit:
1. LEVERAGE RATIO. After giving effect to the making of such
Revolving Credit Loan or the issuance of such Letter of Credit, the Leverage
Ratio shall be less
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than 3.00:1.00, provided, however, that in computing the Leverage Ratio for
purposes of this subsection (a) only, Consolidated Adjusted EBITDA shall be
determined on a pro forma basis for the period of four consecutive quarters
immediately succeeding the date on which such Permitted Acquisition is to be
consummated.
2. TARGET'S BUSINESS. The Person to be acquired in such
Permitted Acquisition is engaged in substantially the same or a related business
as any Subsidiary of the Borrower, including, without limitation, the software,
financial services, transaction processing and outsourcing businesses, or in the
case of an Acquisition of a business or assets, such business is substantially
the same as or related to, or such assets are devoted to a business that is
substantially the same as or related to, as the case may be, the business of any
Subsidiary of the Borrower.
3. HISTORICAL FINANCIAL STATEMENTS. The Agent and the Lenders
shall have received historical financial statements of the Person or business to
be acquired in such Permitted Acquisition for no less than three years to the
date of such Permitted Acquisition or such lesser amount of time for which such
statements exist.
4. FINANCIAL OFFICER'S CERTIFICATE. The Agent and the Lenders
shall have received a certificate (in form and substance satisfactory to the
Agent) of a Financial Officer of the Borrower to the effect that (and including
calculations indicating that), on a pro forma basis after giving effect to such
Permitted Acquisition,a. all of the representations and warranties in the Loan
Documents will be true and correct,b. no Default or Event of Default exists or
would exist immediately before and after giving effect to the consummation of
such Permitted Acquisition and c. certifying compliance with subsections (a) and
(b) of this Section 6.2 (including calculations in reasonable detail).
VII. AFFIRMATIVE COVENANTS
The Borrower agrees that, so long as this Agreement is in effect, any
Revolving Credit Loan or Reimbursement Obligation (contingent or otherwise) in
respect of any Letter of Credit remains outstanding and unpaid, or any other
amount is owing under any Loan Document to any Lender, the Issuing Bank or the
Agent, the Borrower shall:
A. FINANCIAL STATEMENTS AND INFORMATION
Maintain, and cause each of its Subsidiaries to maintain, a system of
accounting in accordance with GAAP, and furnish or cause to be furnished to the
Agent and each Lender:
1. As soon as available, but in any event within 90 days after
the end of each fiscal year, a copy of the Borrower's annual report on Form 10-K
in respect of such fiscal year, together with the annual audited Consolidated
Balance Sheets and the related Consolidated Statements of Operations,
Stockholders' Equity and Cash Flows of the Borrower and its Subsidiaries
prepared in conformity with GAAP and as filed with the SEC, setting forth in
comparative form the figures for the preceding fiscal year. The Consolidated
Balance Sheets
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and Consolidated Statements of Operations, Stockholders' Equity and Cash Flows
shall be audited and certified without qualification by the Accountants, which
certification shall (1) state that the examination by such Accountants in
connection with such Consolidated financial statements has been made in
accordance with generally accepted auditing standards and, accordingly, included
such tests of the accounting records and such other auditing procedures as were
considered necessary in the circumstances, and (2) include the opinion of such
Accountants that such Consolidated financial statements have been prepared in
accordance with GAAP in a manner consistent with prior fiscal periods, except as
otherwise specified in such opinion.
2. As soon as available, but in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year, a copy
of the Borrower's quarterly report on Form 10-Q in respect of such fiscal
quarter together with the quarterly unaudited Consolidated Balance Sheets and
the related unaudited Consolidated Statements of Operations, Stockholders'
Equity and Cash Flows of the Borrower and its Subsidiaries prepared in
conformity with GAAP and as filed with the SEC, setting forth in comparative
form the figures for the corresponding periods of the preceding fiscal year,
certified by a Financial Officer of the Borrower, as being complete and correct
in all material respects and as presenting fairly the Consolidated financial
condition and the Consolidated results of operations of the Borrower and its
Subsidiaries.
3. Within 45 days after the end of each of the first three
fiscal quarters of each fiscal year (90 days after the end of the last fiscal
quarter), a Compliance Certificate, certified by a Financial Officer of the
Borrower.
4. Such other information as the Agent or any Lender may
reasonably request from time to time.
B. CERTIFICATES; OTHER INFORMATION
Furnish to the Agent and each Lender:
1. Prompt written notice if:a. any Indebtedness of the Borrower
or any of its Subsidiaries in an aggregate amount in excess of $1,000,000 is
declared or shall become due and payable prior to its stated maturity, or is
called and not paid when due,b. a default shall have occurred under, or the
holder or obligee of, any note (other than the Revolving Credit Notes),
certificate, security or other evidence of Indebtedness, with respect to any
other Indebtedness of the Borrower or any of its Subsidiaries has the right to
declare Indebtedness in an aggregate amount in excess of $1,000,000 due and
payable prior to its stated maturity, or c. there shall occur and be continuing
a Default or an Event of Default.
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2. Prompt written notice of:a. any citation, summons, subpoena,
order to show cause or other document naming the Borrower or any of its
Subsidiaries a party to any proceeding before any Governmental Authority which
could reasonably be expected to have a Material Adverse Effect or which calls
into question the validity or enforceability of any of the Loan Documents, and
include with such notice a copy of such citation, summons, subpoena, order to
show cause or other document,b. any lapse or other termination of any material
license, permit, franchise or other authorization issued to the Borrower, or any
of its Subsidiaries by any Person or Governmental Authority, and c. any refusal
by any Person or Governmental Authority to renew or extend any such material
license, permit, franchise or other authorization, which lapse, termination,
refusal or dispute could reasonably be expected to have a Material Adverse
Effect;
3. Promptly upon becoming available, copies of all a. regular,
periodic or special reports, schedules and other material which the Borrower or
any of its Subsidiaries may now or hereafter be required to file with or deliver
to any securities exchange or the SEC, and b. material news releases and annual
reports relating to the Borrower and any of its Subsidiaries;
4. Prompt written notice in the event that the Borrower, any of
its Subsidiaries or any ERISA Affiliate knows, or has reason to know, that a.
any Termination Event has occurred or will occur,b. any condition exists with
respect to a Pension Plan which presents a material risk of (A) termination of
the Pension Plan, (B) imposition of an excise tax, (C) requirement to provide
security to the Pension Plan or (D) other liability on the Borrower, any of its
Subsidiaries or any ERISA Affiliate,c. the Borrower, any of its Subsidiaries or
any ERISA Affiliate has applied for a waiver of the minimum funding standard
under Section 412 of the Code with respect to a Pension Plan,d. the aggregate
amount of the Unfunded Pension Liabilities under all Pension Plans is in excess
of $1,000,000,e. the aggregate amount of Unrecognized Retiree Welfare Liability
under all applicable Employee Benefit Plans is in excess of $1,000,000,f. the
Borrower, any of its Subsidiaries or any ERISA Affiliate has engaged in a
Prohibited Transaction with respect to an Employee Benefit Plan that may
reasonably be expected to have a Material Adverse Effect,g. the imposition of
any tax under Section 4980B(a) of the Code that may reasonably be expected to
have a Material Adverse Effect, or h. the assessment of a civil penalty under
Section 502(c) of ERISA that may reasonably be expected to have a Material
Adverse Effect, together with a certificate of a Financial Officer of the
Borrower setting forth the details of such event and the action which the
Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect
thereto, together with a copy of all notices and filings with respect thereto.
5. Prompt written notice in the event that Borrower, any of its
Subsidiaries or any ERISA Affiliate shall receive a demand letter from the PBGC
notifying the Borrower, such Subsidiary or such ERISA Affiliate of any final
decision finding liability and the date by which such liability must be paid,
together with a copy of such letter and a certificate of a Financial Officer of
the Borrower setting forth the action which the Borrower, such Subsidiary or
such ERISA Affiliate proposes to take with respect thereto.
6. Promptly upon the same becoming available, and in any event
by
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the date such amendment is adopted, a copy of any Pension Plan amendment that
the Borrower, any of its Subsidiaries or any ERISA Affiliate proposes to adopt
which would require the posting of security under Section 401(a)(29) of the
Code, together with a certificate of a Financial Officer of the Borrower setting
forth the reasons for the adoption of such amendment and the action which the
Borrower, such Subsidiary or such ERISA Affiliate proposes to take with respect
thereto.
7. As soon as possible and in any event by the tenth day after
any required installment or other payment under Section 412 of the Code owed to
a Pension Plan shall have become due and owing and remains unpaid, a copy of the
notice of failure to make required contributions provided to the PBGC by the
Borrower, any of its Subsidiaries or any ERISA Affiliate under Section 412(n) of
the Code, together with a certificate of a Financial Officer setting forth the
action which the Borrower, such Subsidiary or such ERISA Affiliate proposes to
take with respect thereto.
8. Such other information as the Agent or any Lender shall
reasonably request from time to time.
C. LEGAL EXISTENCE
Except as may otherwise be permitted by Sections 8.3 and 8.4,
maintain, and cause each of its Subsidiaries to maintain, its corporate,
partnership or analogous existence, as the case may be, in good standing in the
jurisdiction of its incorporation or formation and in each other jurisdiction in
which the failure so to do could reasonably be expected to have a Material
Adverse Effect.
D. TAXES
Pay and discharge when due, and cause each of its Subsidiaries so to
do, all Taxes, upon or with respect to the Borrower or such Subsidiary and all
Taxes upon the income, profits and Property of the Borrower and its
Subsidiaries, which if unpaid, could reasonably be expected to have a Material
Adverse Effect or become a Lien on Property of the Borrower or such Subsidiary
(other than a Lien described in Section 8.2(a)(i)), unless and to the extent
only that such Taxes shall be contested in good faith and by appropriate
proceedings diligently conducted by the Borrower or such Subsidiary and only so
long as no Lien (other than a Permitted Lien) shall attach with respect thereto
and no foreclosure, distraint, sale or similar proceedings shall have been
commenced and provided that the Borrower shall give the Agent prompt notice of
such contest and that such reserve or other appropriate provision as shall be
required by the Accountants in accordance with GAAP shall have been made
therefor.
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E. INSURANCE
Maintain, and cause each of its Subsidiaries to maintain, with
financially sound and reputable insurance companies, insurance on all its
Property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption
coverage) as are usually insured against in the same general area by companies
engaged in the same or a similar business; and furnish to the Agent, upon
written request, full information as to the insurance carried.
F. PERFORMANCE OF OBLIGATIONS
Pay and discharge when due, and cause each of its Subsidiaries so to
do, all lawful Indebtedness, obligations and claims for labor, materials and
supplies or otherwise which, if unpaid, might a. have a Material Adverse Effect,
or b.become a Lien upon Property of the Borrower or any of its Subsidiaries
other than a Permitted Lien, unless and to the extent only that the validity of
such Indebtedness, obligation or claim shall be contested in good faith and by
appropriate proceedings diligently conducted, and provided further that the
Borrower shall give the Agent prompt notice of any such contest and that such
reserve or other appropriate provision as shall be required by the Accountants
in accordance with GAAP shall have been made therefor.
G. CONDITION OF PROPERTY
At all times, maintain, protect and keep in good repair, working order
and condition, ordinary wear and tear excepted, and cause each of its
Subsidiaries so to do, all Property necessary to the operation of the Borrower's
or any of its Subsidiaries' businesses.
H. OBSERVANCE OF LEGAL REQUIREMENTS
Observe and comply in all respects, and cause each of its Subsidiaries
so to do, with all laws, ordinances, orders, judgments, rules, regulations,
certifications, franchises, permits, licenses, directions and requirements of
all Governmental Authorities, which now or at any time hereafter may be
applicable to it, a violation of which could reasonably be expected to have a
Material Adverse Effect, except such thereof as shall be contested in good faith
and by appropriate proceedings diligently conducted by it, provided that the
Borrower shall give the Agent prompt notice of such contest and that such
reserve or other appropriate provision as shall be required by the Accountants
in accordance with GAAP shall have been made therefor.
I. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS
At all reasonable times, upon reasonable prior notice, permit
representatives of the Agent and each Lender to visit the offices of the
Borrower and its Subsidiaries, to examine the books and records thereof and
Accountants' reports relating thereto, and to make copies or extracts therefrom,
to discuss the affairs of the Borrower and its Subsidiaries with the officers
thereof, and to examine and inspect the Property of the Borrower and its
Subsidiaries and to meet and discuss the affairs of the Borrower and its
Subsidiaries with the Accountants.
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J. AUTHORIZATIONS
Maintain, and cause each of its Subsidiaries to maintain, in full
force and effect, all material licenses, franchises, permits, licenses,
authorizations and other rights as are necessary for the conduct of its
business.
K. FINANCIAL COVENANTS
1. FIXED CHARGE COVERAGE RATIO. Maintain at all times a Fixed Charge
Coverage Ratio of not less than 1.20:1.00.
2. LEVERAGE RATIO. Maintain at all times a Leverage Ratio of not
more than 3.50:1.00.
3. CONSOLIDATED NET WORTH. Maintain as of the last day of each
fiscal quarter, Consolidated Net Worth in an amount not less than the sum,
without duplication, of a. $110,000,000, PLUS b. 60% of Consolidated Net Income
(if positive) for each fiscal quarter commencing after June 30, 1996 to the date
of such determination, PLUS c. 90% of the total net proceeds received by the
Borrower from the sale of its Capital Stock after the Effective Date, PLUS d.
90% of any increase to Consolidated Net Worth resulting from any issuance by the
Borrower of shares of its Capital Stock.
4. CONSOLIDATED EBITDA AND CONSOLIDATED ASSETS ATTRIBUTABLE TO AND
OWNED BY SUBSIDIARY GUARANTORS. Within 90 days after the last day of each
fiscal quarter, ensure that at least 75% of a. Consolidated EBITDA for such
fiscal quarter had been earned by one or more of the Subsidiary Guarantors and
b. the assets of the Borrower and its Subsidiaries on a Consolidated basis had
been owned directly by one or more of the Subsidiary Guarantors as of the last
day of such fiscal quarter, it being understood that if as of the last day of a
fiscal quarter the Borrower is not in compliance with this subsection (d), the
Borrower shall nonetheless be deemed in compliance if, within such 90 day
period, one or more of its Subsidiaries which are not then Subsidiary Guarantors
become Subsidiary Guarantors in the manner provided by Section 7.12.
L. ADDITIONAL SUBSIDIARY GUARANTORS
Cause each Domestic Subsidiary (other than an Exempt Subsidiary) which
is not a Subsidiary Guarantor, including each Domestic Subsidiary which was an
Exempt Subsidiary but which has ceased to be an Exempt Subsidiary, to become a
Subsidiary Guarantor by executing a Supplement (as defined therein) to the
Subsidiary Guaranty in accordance with the terms thereof and delivering the same
to the Agent together with a. a certificate, dated the date
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such Subsidiary shall have become a party to the Subsidiary Guaranty, executed
by such Subsidiary and substantially in the form of, and with substantially the
same attachments as, the certificate which would have been required under
Section 5.1 if such Subsidiary had become a party to the Subsidiary Guaranty on
the Effective Date, and b. if requested by the Agent, an opinion of counsel to
such Subsidiary covering the same matters with respect to such Subsidiary as are
covered by the opinion delivered pursuant to Section 5.6, and otherwise in form
and substance reasonably satisfactory to the Agent.
VIII. NEGATIVE COVENANTS
The Borrower agrees that, so long as this Agreement is in effect, any
Revolving Credit Loan or Reimbursement Obligation (contingent or otherwise) in
respect of any Letter of Credit remains outstanding and unpaid, or any other
amount is owing under any Loan Document to any Lender, the Issuing Bank or the
Agent, the Borrower shall not, directly or indirectly:
A. INDEBTEDNESS
Create, incur, assume or suffer to exist any liability for
Indebtedness, or permit any of its Subsidiaries so to do, except a. Indebtedness
due under the Loan Documents; b.Indebtedness of the Borrower or any of its
Subsidiaries existing on the Effective Date as set forth on Schedule 8.1,
including, except as set forth in the proviso below, refinancings thereof but
not increases in the amount of any thereof, provided that refinancings of such
existing Indebtedness shall not be permitted unless the interest rate on any
such refinanced Indebtedness is not in excess of the rate available for similar
borrowings by similar borrowers at the time of the refinancing, the final
maturity of such refinanced Indebtedness is not earlier than the Maturity Date,
and if the Indebtedness being refinanced is subordinated to the Indebtedness
under the Loan Documents, such refinanced Indebtedness shall be so subordinated
on the same terms and to the same extent as such Indebtedness being so
refinanced,c. Capital Lease Obligations of the Borrower or any of its
Subsidiaries and purchase money Indebtedness incurred by the Borrower or any of
its Subsidiaries in connection with the purchase, after the Effective Date, of
any Property, (in each case other than any such Indebtedness described in clause
(ii) above) in an aggregate principal amount not to exceed $2,000,000;d.
Intercompany Indebtedness to the extent permitted by Section 8.5(f);e.
subordinated Indebtedness of the Borrower incurred in connection with a
Permitted Acquisition, provided that (1) such Indebtedness is subordinated to
the Indebtedness under the Loan Documents in form and substance satisfactory to
the Agent and Required Lenders and (2) no Default or Event of Default would
exist immediately before and after giving effect thereto;f. senior Indebtedness
of the Borrower incurred in connection with a Permitted Acquisition in an
aggregate amount not in excess of $5,000,000, provided that (1) no Default or
Event of Default would exist immediately before and after giving effect thereto
and (2) if such Indebtedness is secured, the Lien in respect thereof is a Lien
permitted by Section 8.2(a)(xi);g. Acquisition Related Contingent Payments
incurred after the Effective Date with respect to Permitted Acquisitions which,
at the time of the incurrence thereof, are commercially reasonable under the
circumstances;h. Contingent Obligations of Fund Services as a general partner of
BISYS Fund Services, L.P.;i. Contingent Obligations of the Borrower under
performance guaranties of the obligations of its Subsidiaries, provided that (1)
such
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guaranty is required as a condition of a Person retaining the services of a
Subsidiary of the Borrower,(2) the obligations which are guaranteed are not
financial obligations other than financial obligations incurred in the ordinary
course of business, and (3) to the extent that any such obligations are
financial obligations, (a)such obligations are not in excess of $10,000,000 in
the aggregate or (b) the guaranty in respect of such obligations is in a form to
be negotiated that is mutually satisfactory to the Agent and the Borrower;j.
Contingent Obligations of the Borrower under operating or capital leases of one
or more of its Subsidiaries provided, in the case of Contingent Obligations in
respect of Capital Lease Obligations, such Capital Lease Obligations are
permitted to be incurred pursuant to clause (iii) above;k. Indebtedness of a
Subsidiary of the Borrower in respect of Compensation Financings, provided that
(1) no Default or Event of Default would exist immediately before and after
giving effect thereto and (2) such Indebtedness shall be unsecured or, if
secured, shall be secured only by the 12b-1 Fees and/or Contingent Deferred
Sales Commissions to which such Subsidiary is entitled from such Investment
Company or its shareholders; and l.in addition to Indebtedness permitted under
clause (iii) above, Capital Lease Obligations in connection with Sale and
Leaseback Transactions to the extent permitted by Section 8.14.
B. LIENS
1. Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, or permit any of its
Subsidiaries so to do, except a.Liens for Taxes in the ordinary course of
business which are not delinquent or which are being contested in accordance
with Section 7.4, provided that enforcement of such Liens is stayed pending such
contest;b. Liens in connection with workers' compensation, unemployment
insurance or other social security obligations (but not ERISA);c. deposits or
pledges to secure bids, tenders, contracts (other than contracts for the payment
of money), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the ordinary course of business;d. zoning
ordinances, easements, rights of way, minor defects, irregularities, and other
similar restrictions affecting real Property which do not adversely affect the
value of such real Property or the financial condition of the Borrower or such
Subsidiary or impair its use for the operation of the business of the Borrower
or such Subsidiary;e. Liens arising by operation of law such as mechanics',
materialmen's, carriers', warehousemen's liens incurred in the ordinary course
of business which are not delinquent or which are being contested in accordance
with Section 7.6, provided that enforcement of such Liens is stayed pending such
contest;f. Liens arising out of judgments or decrees which are being contested
in accordance with Section 7.6, provided that enforcement of such Liens is
stayed pending such contest;g. Liens in favor of the Agent, the Issuing Bank and
the Lenders under the Loan Documents;h. purchase money Liens on Property of the
Borrower or any of its Subsidiaries acquired after the Effective Date to secure
Indebtedness of such Person permitted by Section 8.1(iii), incurred in
connection with the acquisition of such Property, provided that each such Lien
is limited to such Property so
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acquired;i. Liens on Property of the Borrower and its Subsidiaries existing on
the Effective Date as set forth on Schedule 8.2 as renewed from time to time,
but not any increases in the amounts secured thereby;j. Liens on Margin Stock to
the extent that a prohibition on such Liens would result in the Agent, the
Issuing Bank and the Lenders being deemed to be "indirectly secured" by Margin
Stock under Regulation U of the Board of Governors of the Federal Reserve
System, as amended, taking into account the value of Margin Stock owned by the
Borrower and its Subsidiaries and any other relevant facts and circumstances;
and k. Liens on Property of the Borrower or any of its Subsidiaries acquired
after the Effective Date in a Permitted Acquisition, provided that such Liens
are limited to the Property so acquired and were not created in contemplation of
such acquisition.
2. Subject to clause (x) of subsection (a) above, enter into or
permit any of its Subsidiaries to enter into, any agreement which prohibits or
limits the ability of the Borrower or any of its Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of its Property, whether now owned
or hereafter acquired except a. purchase money mortgages or capital leases
otherwise permitted by this Agreement in which case any prohibition or
limitation shall only be effective against the assets financed thereby and b.
this Agreement.
C. MERGER, CONSOLIDATIONS AND ACQUISITIONS
Consolidate with, be acquired by, merge into or with any Person, make
any Acquisition or enter into any binding agreement to do any of the foregoing
which is not contingent on obtaining the consent of the Required Lenders, or
permit any of its Subsidiaries so to do, except:
1. provided that no Default or Event of Default would exist
immediately before and after giving effect thereto, any direct or indirect
wholly-owned Subsidiary of the Borrower may merge with or into a. the Borrower
or any other direct or indirect wholly-owned Subsidiary of the Borrower,
provided that (1) the Agent shall have received ten days prior written notice
thereof,(2) in the case of a merger of the Borrower with any Subsidiary, the
Borrower shall be the survivor,(3) in the case of a merger of any Subsidiary
Guarantor and any wholly-owned Subsidiary that is not a Subsidiary Guarantor,
either the Subsidiary Guarantor shall be the surviving entity or the survivor
shall become a Subsidiary Guarantor in accordance with the provisions of Section
7.12 and the Subsidiary Guaranty or by an instrument of assumption in form and
substance satisfactory to the Agent, and (4) the Agent shall have received such
opinions, certificates and other documents in connection therewith as it shall
require and b. any other Person in connection with a Permitted Acquisition
described in subsection (c) below, provided that (1)the Agent shall have
received ten days prior written notice thereof,(2) in the case of a merger of
any Subsidiary Guarantor and such other Person, either the Subsidiary Guarantor
shall be the surviving entity or the survivor shall become a Subsidiary
Guarantor in accordance with the provisions of Section 7.12 and the Subsidiary
Guaranty or by an instrument of assumption in form and substance satisfactory to
the Agent,(3) no Capital Stock is issued by any Credit Party in connection
therewith except to the extent permitted by Section 8.13 and (4) the Agent shall
have received such opinions, certificates and other documents in connection
therewith as it shall require;
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2. Investments permitted by Section 8.5;
3. provided that no Default or Event of Default would exist
immediately before and after giving effect thereto, the Borrower or any of its
Subsidiaries may make Acquisitions other than Contract Acquisitions, provided,
further, however, that in the case of an Acquisition made directly or indirectly
with the proceeds of Revolving Credit Loans or Letters of Credit (including by
the making of an Intercompany Loan), the conditions of Section 6.2 shall be
satisfied; and
(d) provided that no Default or Event of Default would exist
immediately before and after giving effect thereto, the Borrower or any
Subsidiary thereof may make an Acquisition of rights under a contract or group
of related contracts with a customer (the "CUSTOMER") that had previously been a
party to a similar contract or group of contracts with a another Person (the
"SELLER") with respect to which the Borrower or such Subsidiary has agreed to
pay a fee (a "SUCCESS FEE") to the Seller upon the successful negotiation,
execution and delivery of a replacement contract or group of contracts with the
Customer within a specified period of time (a "CONTRACT ACQUISITION"), provided,
further that the Leverage Ratio on a pro forma basis for the period of four
consecutive quarters immediately succeeding the date on which such Contract
Acquisition is consummated is less than 3.00:1.00 and the Agent and the Lenders
shall have received a certificate (in form and substance satisfactory to the
Agent) of a Financial Officer of the Borrower to the foregoing effect, setting
forth calculations in reasonable detail.
D. DISPOSITIONS
Make any Disposition, or permit any of its Subsidiaries so to do,
except
1. Dispositions of any Investments permitted under Section
8.5(a);
2. Dispositions of Property which, in the reasonable opinion of
the Borrower or such Subsidiary, is obsolete or no longer useful in the conduct
of its business;
3. sales or other dispositions of receivables in respect of
12b-1 Fees and Contingent Deferred Sales Commissions in the ordinary course of
business;
4. Sale and Leaseback Transactions to the extent permitted by
Section 8.14; and
5. Dispositions of Margin Stock to the extent that a
prohibition or restriction on such Dispositions would result in the Agent, the
Issuing Bank and the Lenders
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being deemed to be "indirectly secured" by such Margin Stock under Regulation U
of the Board of Governors of the Federal Reserve System, as amended, taking into
account the value of the Margin Stock owned by the Borrower and its Subsidiaries
and any other relevant facts and circumstances.
E. INVESTMENTS, LOANS, ETC.
At any time, purchase or otherwise acquire, hold or invest in the
Capital Stock of, or any other interest in, any Person, or make any loan or
advance to, or enter into any arrangement for the purpose of providing funds or
credit to, or make any other investment, whether by way of capital contribution,
time deposit or otherwise, in or with any Person, or permit any of its
Subsidiaries so to do, (all of which are sometimes referred to herein as
"INVESTMENTS") except, without duplication:
1. Investments in Cash Equivalents;
2. Investments existing on the Effective Date as set forth on
Schedule 8.5;
3. normal business banking accounts and short-term certificates
of deposit and time deposits in, or issued by, federally insured institutions in
amounts not exceeding the limits of such insurance;
4. repurchase agreements fully collateralized by any obligation
described in Section 8.5(c);
5. Permitted Acquisitions and Permitted Contract Acquisitions;
6. Investments by the Borrower or any of its wholly-owned
Subsidiaries in Intercompany Indebtedness, provided that a. such Indebtedness is
repayable on demand,b. no Default or Event of Default would exist immediately
before or after giving effect thereto,c. the amount of Intercompany Indebtedness
extended by the Borrower or any Domestic Subsidiary to Foreign Subsidiaries
shall not exceed $10,000,000 in the aggregate at any time, and (iv) the Borrower
shall not permit any of its Subsidiaries that is an "investment company" within
the meaning of the 1940 Act or a Person deemed to be an "investment company" for
purposes of the 1940 Act to incur Intercompany Indebtedness as a result of the
Borrower or any other Subsidiary thereof making an Investment in such Subsidiary
with the proceeds of Revolving Credit Loans or Letters of Credit;
7. Investments consisting of loans to employees of the Borrower
or any of its Subsidiaries made in the ordinary course of business, provided
that no Default or Event of Default would exist immediately before or after
giving effect thereto;
8. Investments consisting of minority interests in
substantially the same or a related business to that of the Borrower or any of
its Subsidiaries in an aggregate amount not to exceed $10,000,000, provided that
no Default or Event of Default would exist
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immediately before or after giving effect thereto;
9. Investments in shares of an Investment Company for which a
direct or indirect subsidiary of the Borrower is a principal underwriter named
in such Investment Company's registration statement under the 1940 Act, provided
that (1) such shares are acquired by such Subsidiary prior to the public
offering of such Investment Company's shares,(2) such shares are acquired by
such Subsidiary solely for purposes of enabling such Investment Company to
satisfy the net worth requirement of Section 14(a)(1) of the 1940 Act, and (C)
the amount paid for such shares is limited to the amount necessary to enable
such Investment Company to satisfy the net worth requirement of Section 14(a)(1)
of the 1940 Act PLUS an additional $10,000,000 in the aggregate for all such
Investments, it being understood that nothing herein shall require the sale of
any such shares;
10. Investments in shares of open-end management Investment
Companies, provided that after giving effect to any such Investment, the
consideration paid for such shares, when aggregated with the consideration paid
for all other such shares then held by the Borrower and its Subsidiaries, shall
not exceed 10% of the value of Consolidated Assets as at such time of such
Investment; and
11. in addition to Investments permitted by subsection (f)
above, capital contributions by the Borrower or any Subsidiary thereof to Exempt
Subsidiaries (other than a Subsidiary of the Borrower that is an Exempt
Subsidiary solely because of the applicability of clause (iii) of the definition
of "Exempt Subsidiary"), provided that a. no Default or Event of Default shall
or would exist immediately before and after giving effect thereto, and b. the
amount of any such Investment shall not exceed the amount necessary to meet the
net capital requirements applicable to such Exempt Subsidiaries.
F. RESTRICTED PAYMENTS
Declare or pay any Restricted Payments payable in cash or otherwise or
apply any of its Property thereto or set apart any sum therefor, or permit any
of its Subsidiaries so to do, except that:a. a wholly-owned Subsidiary of the
Borrower may declare and pay Restricted Payments to its parent and b. provided
that no Default or Event of Default would exist immediately before or after
giving effect thereto, the Borrower may repurchase shares of its Capital Stock
in an aggregate amount not in excess of $30,000,000.
G. BUSINESS CHANGES
Materially change the nature of its business as conducted on the
Effective Date, or alter or modify its structure, or change its fiscal year from
that in effect on the Effective Date,
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or permit its Subsidiaries so to do.
H. SUBSIDIARIES
Create or acquire any other Subsidiary, or permit any of its
Subsidiaries so to do, except (a) as permitted in connection with a Permitted
Acquisition, and (b) that the Borrower may create Exempt Subsidiaries.
I. ERISA
Establish or contribute, or permit any of its Subsidiaries so to do,
to any Pension Plan (other than an Existing Pension Plan) except to the extent
that the same could not reasonably be expected to result in a Material Adverse
Effect, cause any Pension Plan to have a Funded Current Liability Percentage of
less than 60%, or increase benefits, or permit any of its Subsidiaries so to do,
under any Employee Benefit Plan or establish or contribute to any new Employee
Benefit Plan except to the extent that the same could not reasonably be expected
to result in a Material Adverse Effect.
J. AMENDMENTS, ETC. OF CERTAIN AGREEMENTS
Enter into or agree to any amendment, modification or waiver of any
term or condition of its Organizational Documents in any way which would
adversely affect the interests of the Agent, the Issuing Bank or any of the
Lenders under any of the Loan Documents.
K. TRANSACTIONS WITH AFFILIATES
Become a party to any transaction with an Affiliate, or permit any of
its Subsidiaries so to do, unless the Borrower's or such Subsidiary's, as the
case may be, Managing Person shall have determined that the terms and conditions
relating thereto are as favorable to the Borrower or such Subsidiary, as the
case may be, as those which would be obtainable at the time in a comparable
arms-length transaction with a Person other than an Affiliate.
L. ISSUANCE OF ADDITIONAL CAPITAL STOCK
Create or acquire the Capital Stock of, or Property of, any Person
which shall thereupon become a direct or indirect Subsidiary, or issue any
additional Capital Stock, or permit any of its Subsidiaries so to do, except a.
the Borrower may issue Capital Stock (other than Disqualified Stock) in
connection with the exercise of stock options granted pursuant to the Borrower's
stock option and employee stock purchase plans,b. provided that no Default or
Event of Default would exist immediately before or after giving effect thereto,
the Borrower or any of its Subsidiaries may issue additional Capital Stock
(other than Disqualified Stock),c. as otherwise permitted by Section 8.3 or 8.8.
M. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES
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Directly or indirectly create or otherwise cause or suffer to exist or
become effective, any encumbrance or restriction on the ability of any
Subsidiary of the Borrower to a. pay Restricted Payments or any Indebtedness
owed to the Borrower or any Subsidiary of the Borrower,b. make loans or advances
to the Borrower or any Subsidiary of the Borrower or c.transfer any of its
Property to the Borrower, or permit any of its Subsidiaries so to do, except for
such encumbrances or restrictions existing under or by reason of (x) applicable
law, including, without limitation, any restriction in respect of net capital
requirements imposed upon Subsidiaries of the Borrower that are broker-dealers
or are engaged in the insurance business, and (y) the Loan Documents.
N. SALE AND LEASEBACK TRANSACTIONS
Enter into any Sale and Leaseback Transaction or permit any of its
Subsidiaries so to do, except that the Borrower or any Subsidiary of the
Borrower may enter into Sale and Leaseback Transactions of equipment to be used
in the conduct of its business, provided, however, that the aggregate principal
amount of Capital Lease Obligations in respect of such leases shall not exceed
$10,000,000.
O. TRADE OR BUSINESS
Engage in any trade or business other than the holding of the Capital
Stock of its Subsidiaries and activities incidental thereto.
IX. DEFAULT
A. EVENTS OF DEFAULT
The following shall each constitute an "EVENT OF DEFAULT" hereunder:
1. The failure of the Borrower to make any payment of principal
on any Revolving Credit Note, or any reimbursement payment hereunder or under
any Reimbursement Agreement, when due and payable; or
2. The failure of the Borrower to make any payment of interest,
Fees, expenses or other amounts payable under any Loan Document or otherwise to
the Agent with respect to the loan facilities established hereunder within three
Business Days of the date when due and payable; or
3. The failure of the Borrower to observe or perform any
covenant
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or agreement contained in Sections 2.6, 7.3, 7.11 or Section 8; or
4. The failure of any Credit Party to observe or perform any
other term, covenant, or agreement contained in any Loan Document and such
failure shall have continued unremedied for a period of 30 days after a
Responsible Officer of such Credit Party shall have obtained knowledge thereof;
or
5. Any representation or warranty made by any Credit Party (or
by an officer thereof on its behalf) in any Loan Document or in any certificate,
report, opinion (other than an opinion of counsel) or other document delivered
or to be delivered pursuant thereto, shall prove to have been incorrect or
misleading (whether because of misstatement or omission) in any material respect
when made; or
6. Liabilities and/or other obligations of the Borrower (other
than its obligations under the Revolving Credit Notes), any of its Subsidiaries
or any other Credit Party, whether as principal, guarantor, surety or other
obligor, for the payment of any Indebtedness or operating leases in an aggregate
amount in excess of $2,000,000 a. shall become or shall be declared to be due
and payable prior to the expressed maturity thereof, or b. shall not be paid
when due or within any grace period for the payment thereof,c. any holder of any
such obligation shall have the right to declare such obligation due and payable
prior to the expressed maturity thereof or (iv) as a consequence of the
occurrence or continuation of any event or condition, the Borrower, any of its
Subsidiaries or such other Credit Party has become obligated to purchase or
repay any Indebtedness before its regularly scheduled maturity date;
7. Any license, franchise, permit, right, approval or agreement
of the Borrower, any of its Subsidiaries or any other Credit Party is not
renewed, or is suspended, revoked or terminated and the non-renewal, suspension,
revocation or termination thereof would have a Material Adverse Effect; or
8. The Borrower or any Material Subsidiary shall a. suspend or
discontinue its business,b. make an assignment for the benefit of creditors,c.
generally not be paying its debts as such debts become due,d. admit in writing
its inability to pay its debts as they become due,e. file a voluntary petition
in bankruptcy,f. become insolvent (however such insolvency shall be
evidenced),g. file any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment of debt, liquidation or dissolution or
similar relief under any present or future statute, law or regulation of any
jurisdiction,h. petition or apply to any tribunal for any receiver, custodian or
any trustee for any substantial part of its Property,i. be the subject of any
such proceeding filed against it which remains undismissed for a period of 60
days,j. file any answer admitting or not contesting the material allegations of
any such petition filed against it or any order, judgment or decree approving
such petition in any such proceeding,k. seek, approve, consent to, or acquiesce
in any such proceeding, or in the appointment of any trustee, receiver,
sequestrator, custodian, liquidator, or fiscal agent for it, or any substantial
part of its Property, or an order is entered appointing any such trustee,
receiver, custodian, liquidator or fiscal agent and such order remains in effect
for 60 days, or l. take any formal action for the purpose of effecting any of
the foregoing or looking to the liquidation or dissolution of the Borrower or
such Material Subsidiary; or
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9. An order for relief is entered under the United States
bankruptcy laws or any other decree or order is entered by a court having
jurisdiction a. adjudging the Borrower or any Material Subsidiary bankrupt or
insolvent,b. approving as properly filed a petition seeking reorganization,
liquidation, arrangement, adjustment or composition of or in respect of the
Borrower or any Material Subsidiary under the United States bankruptcy laws or
any other applicable Federal or state law,c. appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) of the
Borrower or any Material Subsidiary or of any substantial part of the Property
of any thereof, or d. ordering the winding up or liquidation of the affairs of
the Borrower or any Material Subsidiary, and any such decree or order continues
unstayed and in effect for a period of 60 days; or
10. Judgments or decrees against the Borrower, any of its
Subsidiaries or any other Credit Party aggregating in excess of $2,000,000 shall
remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a
period of 30 days; or
11. The occurrence of an Event of Default as defined in any Loan
Document; or
12. Any Loan Document shall cease, for any reason, to be in full
force and effect, or any Credit Party shall so assert in writing or shall
disavow any of its obligations thereunder; or
13. a.any Termination Event shall occur;b. any Accumulated
Funding Deficiency, whether waived, shall exist with respect to any Pension
Plan;c. any Person shall engage in any Prohibited Transaction involving any
Employee Benefit Plan;d. the Borrower, any of its Subsidiaries or any ERISA
Affiliate shall fail to pay when due an amount which is payable by it to the
PBGC or to a Pension Plan under Title IV of ERISA;e. the imposition of any tax
under Section 4980B(a) of the Code;f. the assessment of a civil penalty with
respect to any Employee Benefit Plan under Section 502(c) of ERISA; or g.any
other event or condition shall occur or exist with respect to an Employee
Benefit Plan which in the case of clauses (i) through (vii) would, individually
or in the aggregate, have a Material Adverse Effect.
B. CONTRACT REMEDIES
1. Upon the occurrence of an Event of Default or at any time
thereafter during the continuance thereof, (a) if such event is an Event of
Default specified whether in clause (h) or (i) above, the Commitments of all of
the Lenders shall immediately and automatically terminate and the Revolving
Credit Loans, all accrued and unpaid interest thereon, any Reimbursement
Obligations owing or contingently owing in respect of all outstanding Letters
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of Credit and all other amounts owing under the Loan Documents shall immediately
become due and payable, and the Borrower shall forthwith deposit an amount equal
to the Letter of Credit Exposure in a cash collateral account with and under the
exclusive control of the Agent, and the Agent may, and, upon the direction of
the Required Lenders shall, exercise any and all remedies and other rights
provided in the Loan Documents, and (b) if such event is any other Event of
Default, any or all of the following actions may be taken: (i) with the consent
of the Required Lenders, the Agent may, and upon the direction of the Required
Lenders shall, by notice to the Borrower, declare the Commitments of all of the
Lenders and the Letter of Credit Commitment to be terminated forthwith,
whereupon such Commitments and the Letter of Credit Commitment shall immediately
terminate, and (ii) with the consent of the Required Lenders, the Agent may, and
upon the direction of the Required Lenders shall, by notice of default to the
Borrower, declare the Revolving Credit Loans, all accrued and unpaid interest
thereon, any Reimbursement Obligations owing or contingently owing in respect of
all outstanding Letters of Credit and all other amounts owing under the Loan
Documents to be due and payable forthwith, whereupon the same shall immediately
become due and payable, and the Borrower shall forthwith deposit an amount equal
to the Letter of Credit Exposure in a cash collateral account with and under the
exclusive control of the Agent, and the Agent may, and upon the direction of the
Required Lenders shall, exercise any and all remedies and other rights provided
in the Loan Documents. Except as otherwise provided in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived. The Borrower hereby further expressly waives and covenants
not to assert any appraisement, valuation, stay, extension, redemption or
similar laws, now or at any time hereafter in force which might delay, prevent
or otherwise impede the performance or enforcement of any Loan Document.
2. In the event that the Commitments of all the Lenders and the
Letter of Credit Commitment shall have been terminated or the Revolving Credit
Loans, all accrued and unpaid interest thereon, any Reimbursement Obligations
owing or contingently owing in respect of all outstanding Letters of Credit and
all other amounts owing under the Loan Documents shall have been declared due
and payable pursuant to the provisions of this Section, any funds received by
the Agent, the Issuing Bank and the Lenders from or on behalf of the Borrower
shall be applied by the Agent, the Issuing Bank and the Lenders in liquidation
of the Revolving Credit Loans, the Reimbursement Obligations and the other
obligations of the Borrower under the Loan Documents in the following manner and
order:a. first, to the payment of interest on, and then the principal portion
of, any Revolving Credit Loans which the Agent may have advanced on behalf of
any Lender for which the Agent has not then been reimbursed by such Lender or
the Borrower;b. second, to the payment of any fees or expenses due the Agent
from the Borrower;c. third, to reimburse the Agent, the Issuing Bank and the
Lenders for any expenses (to the extent not paid pursuant to clause (ii) above)
due from the Borrower pursuant to the provisions of Section 11.5;d. fourth, to
the payment of accrued Fees and all other fees, expenses and amounts due under
the Loan Documents (other than principal and interest on the Revolving Credit
Loans and the Reimbursement Obligations);e. fifth, to the payment pro rata
according to the outstanding principal balance of the Revolving Credit Loans and
the Letter of Credit Exposure, of interest due on the Revolving Credit Loans and
the Letter of Credit Exposure of each Lender;f. sixth, to the payment of
principal outstanding on the Revolving Credit Loans and under the Reimbursement
Agreements; and g. seventh, to the payment of any other amounts owing to the
Agent, the Issuing Bank and the Lenders under any Loan Document.
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X. THE AGENT
A. APPOINTMENT
Each of the Issuing Bank and each Lender hereby irrevocably designates
and appoints BNY as the Agent of the Issuing Bank and such Lender under the Loan
Documents and each of the Issuing Bank and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions of
the Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of the Loan Documents, together
with such other powers as are reasonably incidental thereto. The duties of the
Agent shall be mechanical and administrative in nature, and, notwithstanding any
provision to the contrary elsewhere in any Loan Document, the Agent shall not
have any duties or responsibilities other than those expressly set forth
therein, or any fiduciary relationship with, or fiduciary duty to, the Issuing
Bank or any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into the Loan Documents or
otherwise exist against the Agent.
B. DELEGATION OF DUTIES
The Agent may execute any of its duties under the Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to rely upon, and
shall be fully protected in, and shall not be under any liability for, relying
upon, the advice of counsel concerning all matters pertaining to such duties.
C. EXCULPATORY PROVISIONS
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be a. liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with the Loan Documents (except the Agent for its own gross
negligence or willful misconduct), or b. responsible in any manner to the
Issuing Bank or any of the Lenders for any recitals, statements, representations
or warranties made by the Borrower or any other Credit Party or any officer
thereof contained in the Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agent under
or in connection with, the Loan Documents or for the value, validity,
effectiveness, genuineness, perfection, enforceability or sufficiency of any of
the Loan Documents or for any failure of the Borrower or any other Credit Party
or any other Person to perform its obligations thereunder. The Agent shall not
be under any obligation to the Issuing Bank or any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, the Loan Documents, or to inspect the Property,
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books or records of the Borrower or any other Credit Party. The Issuing Bank
and the Lenders acknowledge that the Agent shall not be under any duty to take
any discretionary action permitted under the Loan Documents unless the Agent
shall be instructed in writing to do so by the Issuing Bank and Required Lenders
and such instructions shall be binding on the Issuing Bank and all Lenders and
all holders of the Revolving Credit Notes; provided, however, that the Agent
shall not be required to take any action which exposes the Agent to personal
liability or is contrary to law or any provision of the Loan Documents. The
Agent shall not be under any liability or responsibility whatsoever, as Agent,
to the Borrower or any other Credit Party or any other Person as a consequence
of any failure or delay in performance, or any breach, by the Issuing Bank or
any Lender of any of its obligations under any of the Loan Documents.
D. RELIANCE BY AGENT
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
opinion, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by a proper Person or Persons
and upon advice and statements of legal counsel (including, without limitation,
counsel to the Borrower or any other Credit Party), independent accountants and
other experts selected by the Agent. The Agent may treat the Issuing Bank or
each Lender, as the case may be, or the Person designated in the last notice
filed with it under this Section, as the holder of all of the interests of the
Issuing Bank or such Lender, as the case may be, in its Revolving Credit Loans,
Revolving Credit Notes, the Letters of Credit and the Reimbursement Obligations,
as applicable, until written notice of transfer, signed by the Issuing Bank or
such Lender (or the Person designated in the last notice filed with the Agent)
and by the Person designated in such written notice of transfer, in form and
substance satisfactory to the Agent, shall have been filed with the Agent. The
Agent shall not be under any duty to examine or pass upon the validity,
effectiveness, enforceability or genuineness of the Loan Documents or any
instrument, document or communication furnished pursuant thereto or in
connection therewith, and the Agent shall be entitled to assume that the same
are valid, effective and genuine, have been signed or sent by the proper parties
and are what they purport to be. The Agent shall be fully justified in failing
or refusing to take any action under the Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under the Loan Documents in accordance with a request or
direction of the Required Lenders, and such request or direction and any action
taken or failure to act pursuant thereto shall be binding upon the Issuing Bank,
all the Lenders and all future holders of the Revolving Credit Notes and the
Reimbursement Obligations.
E. NOTICE OF DEFAULT
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Agent has received
written notice thereof from the Issuing Bank, a Lender or the Borrower. In the
event that the Agent receives such a notice, the Agent shall promptly give
notice thereof to the Issuing Bank, the Lenders and the Borrower. The Agent
shall take such action with respect to such Default or Event of Default as shall
be di-
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rected by the Required Lenders, provided, however, that unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem to be in the best interests
of the Lenders.
F. NON-RELIANCE ON AGENT AND OTHER LENDERS
Each of the Issuing Bank and each Lender expressly acknowledges that
neither the Agent nor any of its respective officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by the Agent hereinafter, including any review
of the affairs of the Borrower or any other Credit Party, shall be deemed to
constitute any representation or warranty by the Agent to any Lender. Each of
the Issuing Bank and each Lender represents to the Agent that it has,
independently and without reliance upon the Agent, the Issuing Bank or any
Lender, and based on such documents and information as it has deemed appropriate
made its own evaluation of and investigation into the business, operations,
Property, financial and other condition and creditworthiness of the Borrower or
any other Credit Party and made its own decision to enter into this Agreement.
Each of the Issuing Bank and each Lender also represents that it will,
independently and without reliance upon the Agent, the Issuing Bank or any
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, evaluations and decisions
in taking or not taking action under any Loan Document, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, Property, financial and other condition and creditworthiness of the
Borrower or any other Credit Party. Except for notices, reports and other
documents expressly required to be furnished to the Issuing Bank and/or the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide the Issuing Bank or any Lender with any credit or
other information concerning the business, operations, Property, financial and
other condition or creditworthiness of the Borrower or any other Credit Party
which at any time may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
G. INDEMNIFICATION
Each Lender agrees to indemnify and hold harmless the Agent in its
capacity as such (to the extent not promptly reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), pro rata according to
the aggregate of the outstanding principal balance of the Revolving Credit Loans
and any unpaid Reimbursement Obligations (or at any time when no Revolving
Credit Loans are outstanding and there are no unpaid Reimbursement Obligations,
according to its Commitment Percentage), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever including, without
limitation, any amounts paid to the
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Lenders (through the Agent) by the Borrower or any other Credit Party pursuant
to the terms of the Loan Documents, that are subsequently rescinded or avoided,
or must otherwise be restored or returned) which may at any time (including,
without limitation, at any time following the payment of the Revolving Credit
Loans, the Revolving Credit Notes and the Reimbursement Obligations) be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any other documents contemplated by or referred to
therein or the transactions contemplated thereby or any action taken or omitted
to be taken by the Agent under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent resulting
solely from the finally adjudicated gross negligence or willful misconduct of
the Agent. Without limitation of the foregoing, each Lender agrees to reimburse
the Agent promptly upon demand for its pro rata share of any unpaid fees owing
to the Agent, and any costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) payable by the Borrower under Section
11.5, to the extent that the Agent has not been paid such fees or has not been
reimbursed for such costs and expenses, by the Borrower. The failure of any
Lender to reimburse the Agent promptly upon demand for its pro rata share of any
amount required to be paid by the Lenders to the Agent as provided in this
Section shall not relieve any other Lender of its obligation hereunder to
reimburse the Agent for its pro rata share of such amount, but no Lender shall
be responsible for the failure of other Lender to reimburse the Agent for such
other Lender's pro rata share of such amount. If after having been indemnified
or reimbursed by the Lenders as provided by this Section, the Agent shall have
received payment from the obligor in respect of the obligation or liability for
which it received such indemnification or reimbursement from the Lenders, the
Agent shall disburse to the Lenders an amount equal to the amount of the payment
so received on a pro rata basis. The agreements in this Section shall survive
the termination of the Commitments of all of the Lenders, the Letter of Credit
Commitment, and the payment of all amounts payable under the Loan Documents.
H. AGENT IN ITS INDIVIDUAL CAPACITY
BNY and its affiliates may make secured or unsecured loans to, accept
deposits from, issue letters of credit for the account of, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower
or any other Credit Party as though BNY were not Agent hereunder and BNY Capital
Markets did not arrange the transactions contemplated hereby. With respect to
the Commitments made or renewed by BNY and the Revolving Credit Note issued to,
and the Reimbursement Obligations owing to, BNY, BNY shall have the same rights
and powers under the Loan Documents as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall in each
case include BNY.
I. SUCCESSOR AGENT
If at any time the Agent deems it advisable, in its sole discretion,
it may submit to the Issuing Bank and each of the Lenders a written notice of
its resignation as Agent under the Loan Documents, such resignation to be
effective upon the earlier of a. the written acceptance of the duties of the
Agent under the Loan Documents by a successor Agent and b.
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on the 30th day after the date of such notice. Upon any such resignation, the
Required Lenders shall have the right to appoint from among the Lenders a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders and accepted such appointment in writing within 30 days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Issuing Bank and the Lenders, appoint a successor Agent,
which successor Agent shall be a commercial bank organized under the laws of the
United States or any State thereof and having a combined capital, surplus, and
undivided profits of at least $100,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent's rights, powers,
privileges and duties as Agent under the Loan Documents shall be terminated.
The Borrower, the other Credit Parties, the Issuing Bank and the Lenders shall
execute such documents as shall be necessary to effect such appointment. After
any retiring Agent's resignation as Agent, the provisions of the Loan Documents
shall inure to its benefit as to any actions taken or omitted to be taken by it,
and any amounts owing to it, while it was Agent under the Loan Documents. If at
any time there shall not be a duly appointed and acting Agent, the Borrower
agrees to make each payment due under the Loan Documents directly to the Issuing
Bank and the Lenders entitled thereto during such time.
XI. OTHER PROVISIONS
A. AMENDMENTS AND WAIVERS
With the written consent of the Required Lenders, the Agent, the
Issuing Bank and the Borrower and any other appropriate Credit Party may, from
time to time, enter into written amendments, supplements or modifications of the
Loan Documents and, with the consent of the Required Lenders, the Agent on
behalf of the Issuing Bank and the Lenders may execute and deliver to any such
parties a written instrument waiving or a consent to a departure from, on such
terms and conditions as the Agent may specify in such instrument, any of the
requirements of the Loan Documents or any Default or Event of Default and its
consequences; provided, however, that:
1. no such amendment, supplement, modification, waiver or consent
shall, without the consent of all of the Lenders,a. increase the Commitment
Amount of any Lender or the Aggregate Commitment Amount, or extend the Maturity
Date; b.decrease the rate, or extend the time of payment, of interest of, or
change or forgive the principal amount or extend the time of payment of, or
change the pro rata allocation of payments under, any Revolving Credit Note,c.
release or discharge any Subsidiary Guarantor in respect of the Subsidiary
Guaranty;d. reduce the amount, or extend the time of payment, of any Fee;e.
change the provisions of
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Sections 3.6, 3.10, 9.1(a), 9.1(b), 11.1 or 11.7(a), or f. change the definition
of "Required Lenders"; and
2. without the written consent of the Issuing Bank, no such
amendment, supplement, modification or waiver shall change the Letter of Credit
Commitment, change the amount or the time of payment of the Letter of Credit
Commissions or change any other term or provision which relates to the Letter of
Credit Commitment or the Letters of Credit or any other rights of the Issuing
Bank under any Loan Document; and
3. without the written consent of the Agent, no such amendment,
supplement, modification or waiver shall amend, modify or waive any provision of
Section 10 or otherwise change any of the rights or obligations of the Agent
hereunder or under the Loan Documents.
Any such amendment, supplement, modification or waiver shall apply
equally to the Issuing Bank and each of the Lenders and shall be binding upon
the parties to the applicable Loan Document, the Lenders, the Issuing Bank, the
Agent and all future holders of the Revolving Credit Notes and the Reimbursement
Obligations. In the case of any waiver, the parties to the applicable Loan
Document, the Issuing Bank, the Lenders and the Agent shall be restored to their
former position and rights hereunder and under the outstanding Revolving Credit
Notes and other Loan Documents to the extent provided for in such waiver, and
any Default or Event of Default waived shall not extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon. The
Loan Documents may not be amended orally or by any course of conduct.
B. NOTICES
All notices, requests and demands to or upon the respective parties to
the Loan Documents to be effective shall be in writing and, unless otherwise
expressly provided therein, shall be deemed to have been duly given or made when
delivered by hand, one Business Day after having been sent by overnight courier
service, or when deposited in the mail (first-class postage prepaid and
certified, return receipt requested), or, in the case of notice by telecopy,
when sent, addressed as follows in the case of the Borrower, the Agent or the
Issuing Bank, addressed to the Domestic Lending Office, in the case of each
Lender, or addressed to such other addresses as to which the Agent may be
hereafter notified by the respective parties thereto or any future holders of
the Notes:
The Borrower:
The BISYS Group, Inc.
150 Clove Road
Little Falls, New Jersey 07424
Attention: Executive Vice President/
Chief Financial Officer
Telephone: (201) 812-8610
Telecopy: (201) 812-1217
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with a copy to
The BISYS Group, Inc.
150 Clove Road
Little Falls, New Jersey 07424
Attention: General Counsel
Telephone: (201) 812-8607
Facsimile: (201) 812-1217
The Agent or the Issuing Bank:
The Bank of New York
One Wall Street
Agency Function Administration
18th Floor
New York, New York 10286
Attention: Pina Impeduglia
Telephone: (212) 635-4696
Telecopy: (212) 635-6365 or 6366 or 6367
with a copy to:
The Bank of New York
385 Rifle Camp Road
West Paterson, New Jersey 07424
Attention: Frank S. Bridges,
Vice President
Telephone: (201) 357-7712
Facsimile: (201) 357-7705
except that any notice, request or demand by the Borrower to or upon the Agent,
the Issuing Bank or the Lenders pursuant to Section 2.3, 2.7 or 3.3 shall not be
effective until received. Any party to a Loan Document may rely on signatures
of the parties thereto which are transmitted by telecopy or other electronic
means as fully as if originally signed.
C. NO WAIVER; CUMULATIVE REMEDIES
No failure to exercise and no delay in exercising, on the part of the
Agent, the Issuing Bank or any Lender, any right, remedy, power or privilege
under any Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy,
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power or privilege under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges under the Loan Documents are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
D. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND CERTAIN OBLIGATIONS
1. All representations and warranties made under the Loan Documents
and in any document, certificate or statement delivered pursuant thereto or in
connection therewith shall survive the execution and delivery of the Loan
Documents.
2. The obligations of the Borrower under Sections 3.5, 3.6, 3.7,
3.8, 3.9, 3.10, 3.11, 11.5 and 11.8 shall survive the termination of the
Commitments of all of the Lenders, the Letter of Credit Commitment and the
payment of the Revolving Credit Loans, the Reimbursement Obligations and all
other amounts payable under the Loan Documents.
E. PAYMENT OF EXPENSES AND TAXES
The Borrower agrees, promptly upon presentation of a statement or
invoice therefor, and whether any Revolving Credit Loan is made or any Letter of
Credit is issued a. to pay or reimburse the Agent and BNY Capital Markets for
all their respective out-of-pocket costs and expenses reasonably incurred in
connection with the development, preparation, execution and syndication of, the
Loan Documents and any amendment, supplement or modification thereto (whether or
not executed or effective), any documents prepared in connection therewith and
the consummation of the transactions contemplated thereby, including, without
limitation, the reasonable fees and disbursements of Special Counsel,b. to pay
or reimburse the Agent, the Issuing Bank and the Lenders for all of their
respective costs and expenses, including, without limitation, reasonable fees
and disbursements of counsel, incurred in connection with (1) any Default or
Event of Default and any enforcement or collection proceedings resulting
therefrom or in connection with the negotiation of any restructuring or
"work-out" (whether consummated or not) of the obligations of any Credit Party
under any of the Loan Documents and (2) the enforcement of this Section, and c.
to pay, indemnify and hold each Lender, the Issuing Bank and the Agent and each
of their respective officers, directors and employees harmless from and against
any and all other liabilities, obligations, claims, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, without limitation, reasonable counsel fees and
disbursements) with respect to the enforcement and performance of the Loan
Documents, the use of the proceeds of the Revolving Credit Loans and the Letters
of Credit and the enforcement and performance of the provisions of any
subordination agreement involving the Agent, the Issuing Bank and the Lenders
(all the foregoing, collectively, the "INDEMNIFIED LIABILITIES") and, if and to
the extent that the foregoing indemnity may be unenforceable for any reason, the
Borrower agrees to make the maximum payment not prohibited under applicable law;
provided, however, that the Borrower shall have no obligation to pay Indemnified
Liabilities to the Agent, the Issuing Bank or any Lender arising from the
finally adjudicated gross negligence or willful misconduct of the Agent, the
Issuing Bank or such Lender or claims between one indemnified party and another
indemnified party. The agreements in this Section shall survive the termination
of the Commitments of all of the
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Lenders, the Letter of Credit Commitment and the payment of all amounts payable
under the Loan Documents.
F. LENDING OFFICES
1. Each Lender shall have the right at any time and from time to
time to transfer its Revolving Credit Loans to a different office, provided that
such Lender shall promptly notify the Agent and the Borrower of any such change
of office. Such office shall thereupon become such Lender's Domestic Lending
Office or Eurodollar Lending Office, as the case may be, provided, however, that
no Lender shall be entitled to receive any greater amount under Sections 3.5,
3.7 and 3.10, as a result of a transfer of any such Revolving Credit Loans to a
different office of such Lender than it would be entitled to immediately prior
thereto unless such claim would have arisen even if such transfer had not
occurred.
2. Each Lender agrees that, upon the occurrence of any event giving
rise to any increased cost or indemnity under Sections 3.5, 3.7 and 3.10 with
respect to such Lender, it will, if requested by the Borrower, use reasonable
efforts (subject to overall policy considerations of such Lender) to designate
another lending office for any Revolving Credit Loans affected by such event,
provided that such designation is made on such terms that such Lender 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
any such Section. Nothing in this Section shall affect or postpone any of the
obligations of the Borrower or the right of any Lender provided in Sections 3.5,
3.6, 3.7 and 3.10.
G. ASSIGNMENTS AND PARTICIPATIONS
1. The Loan Documents shall be binding upon and inure to the benefit
of the Borrower, the Lenders, the Issuing Bank, the Agent, all future holders of
the Revolving Credit Notes and the Reimbursement Obligations, and their
respective successors and assigns, except that neither the Borrower nor any
other Credit Party may assign, delegate or transfer any of its rights or
obligations under the Loan Documents without the prior written consent of the
Agent, the Issuing Bank and each Lender.
2. Each of the Issuing Bank and each Lender shall have the right at
any time, upon notice to the Agent of its intent to do so, to sell, assign,
transfer or negotiate all or any part of its rights and obligations under the
Loan Documents to one or more of its affiliates, to one or more of the other
Lenders (or to affiliates of such other Lenders) or, with the prior written
consent of the Borrower, the Agent and the Issuing Bank (which consents shall
not be unreasonably withheld and, in the case of the Borrower, shall not be
required upon the occurrence and during the continuance of an Event of Default),
to sell, assign, transfer or
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negotiate all or any part of its rights and obligations under the Loan Documents
to any Eligible Assignee, provided that a. each such sale, assignment, transfer
or negotiation (other than sales, assignments, transfers or negotiations (x) to
its affiliates or (y) its entire interest) shall be in a minimum amount of
$5,000,000 or such amount PLUS an integral multiple of $1,000,000 in excess
thereof and b. there shall be paid to the Agent by it a fee (an "ASSIGNMENT
FEE") of $3,000. For each assignment, the parties to such assignment shall
execute and deliver to the Agent for its acceptance and recording an Assignment
and Acceptance Agreement. Upon such execution, delivery, acceptance and
recording by the Agent, from and after the effective date specified in such
Assignment and Acceptance Agreement, the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance Agreement,
the assignor Lender or the Issuing Bank, as the case may be, thereunder shall be
released from its obligations under the Loan Documents. The Borrower agrees
upon written request of the Agent to execute and deliver (1) to such assignee, a
Revolving Credit Note, dated the effective date of such Assignment and
Acceptance Agreement, in an aggregate principal amount equal to the Revolving
Credit Loans assigned to, and Commitment assumed by, such assignee and (2) to
such assignor Lender if it did not assign its entire interest, a Revolving
Credit Note, dated the effective date of such Assignment and Acceptance
Agreement, in an aggregate principal amount equal to the balance of such
assignor Lender's Commitment Amount, if any, and each assignor Lender shall
cancel and return to the Borrower its existing Revolving Credit Note. The
execution and delivery of Revolving Credit Notes pursuant to the preceding
sentence shall be at the Borrower's expense unless the assignee is an Affiliate
of the assignor, in which case the expense shall be borne by the assignor. Upon
any such sale, assignment or other transfer, the Commitment Amounts set forth in
Exhibit A shall be adjusted accordingly by the Agent and a new Exhibit A shall
be distributed by the Agent.
3. Each of the Issuing Bank and each Lender may, with the prior
written consent of the Agent and the Issuing Bank (which consent shall not be
unreasonably withheld), grant participations in all or any part of its rights
under the Loan Documents to one or more Eligible Assignees, provided that a. its
obligations under the Loan Documents shall remain unchanged,b. it shall remain
solely responsible to the other parties to the Loan Documents for the
performance of such obligations,c. the Borrower, the Issuing Bank, the Agent and
the Lenders, as applicable, shall continue to deal solely and directly with it
in connection with its rights and obligations under the Loan Documents,d. no
sub-participations shall be permitted unless approved by the Agent and e. the
voting rights of any holder of any participation shall be limited to decisions
that only do any of the following:(1) subject the participant to any additional
obligation,(2) reduce the principal of, or interest on the Revolving Credit
Notes or any fees or other amounts payable under the Loan Documents,(3) postpone
any date fixed for the payment of principal of, or interest on the Revolving
Credit Notes or any fees or other amounts payable under the Loan Documents, or
(4) release any guarantor under any guaranty. The Borrower acknowledges and
agrees that any such participant shall for purposes of Sections 3.5, 3.6, 3.7,
3.8, 3.9, 3.10 and 3.11, be deemed to be a "Lender"; provided, however, the
Borrower shall not, at any time, be obligated to pay any participant in any
interest of the Issuing Bank or any Lender hereunder any sum which, when
aggregated with the sums payable to other participants in the same interest and
the sums payable to the Issuing Bank or Lender granting such participations,
would be in excess of the sum which the Borrower would have been obligated to
pay to the Issuing Bank or such Lender, as the case may be, in respect of such
interest had the Issuing
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Bank or such Lender, as the case may be, not sold such participation.
4. If any a. assignment is made pursuant to subsection (b) above or
b. any participation is granted pursuant to subsection (c) above, to any Person
that is not a U.S. Person, such Person shall furnish such certificates,
documents or other evidence to the Borrower and the Agent in the case of clause
(i), and to the Borrower and the Issuing Bank or the Lender which sold such
participation, as the case may be, in the case of clause (ii), as shall be
required by Section 3.10(c).
5. Neither the Issuing Bank nor any Lender shall, as between and
among the Borrower, the Issuing Bank, the Agent and such Lender, as the case may
be, be relieved of any of its obligations under the Loan Documents as a result
of any sale, assignment, transfer or negotiation of, or granting of
participations in, all or any part of its Revolving Credit Loans, its Revolving
Credit Notes, its Commitment, the Letter of Credit Commitment, or the
Reimbursement Agreements, as applicable, except that it shall be relieved of its
obligations to the extent of any such sale, assignment, transfer, or negotiation
of all or any part of its Revolving Credit Loans, its Commitment, its Revolving
Credit Notes, the Letter of Credit Commitment, or the Reimbursement Agreements,
as applicable, pursuant to subsection (b) above.
6. Notwithstanding anything to the contrary contained in this
Section, the Issuing Bank or any Lender may at any time or from time to time
assign all or any portion of its rights under the Loan Documents to a Federal
Reserve Bank, provided that any such assignment shall not release such assignor
from its obligations thereunder.
H. INDEMNITY
The Borrower agrees to defend, protect, indemnify, and hold harmless
the Agent, BNY Capital Markets, the Issuing Bank and each and all of the
Lenders, each of their respective Affiliates and each of the respective
officers, directors, employees and agents of each of the foregoing (each an
"INDEMNIFIED PERSON" and, collectively, the "INDEMNIFIED PERSONS") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel to such Indemnified Persons in connection with any
investigative, administrative or judicial proceeding, whether direct, indirect
or consequential and whether based on any federal or state laws or other
statutory regulations, including, without limitation, securities and commercial
laws and regulations, under common law or at equitable cause, or on contract or
otherwise, including any liabilities and costs under Environmental Laws,
Federal, state or local health or safety laws, regulations, or common law
principles, arising from or in connection with the past, present or future
operations of the Borrower, any other Credit Party, or their respective
predecessors in interest, or the past, present
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or future environmental condition of the Property of the Borrower or any of its
Subsidiaries, the presence of asbestos-containing materials at any such
Property, or the release or threatened release of any Hazardous Substance into
the environment from any such Property) in any manner relating to or arising out
of the Loan Documents, any commitment letter or fee letter executed and
delivered by the Borrower or any of its Subsidiaries, the Issuing Bank and/or
the Agent, the capitalization of the Borrower or any of its Subsidiaries, the
Commitments, the Letter of Credit Commitment, the making of, issuance of,
management of and participation in the Revolving Credit Loans or the Letters of
Credit, or the use or intended use of the Letters of Credit and the proceeds of
the Loans hereunder, provided that the Borrower shall have no obligation under
this Section to an Indemnified Person with respect to any of the foregoing to
the extent the same (1) is found in a final judgment of a court having
jurisdiction to have resulted primarily out of the gross negligence or wilful
misconduct of such Indemnified Person, (2) arises solely from claims between one
such Indemnified Person and another such Indemnified Person, or (3) arises out
of a final judgment relating hereto, rendered against such Indemnified Person in
favor of the Borrower. The indemnity set forth herein shall be in addition to
any other obligations or liabilities of the Borrower to each Indemnified Person
under the Loan Documents or at common law or otherwise, and shall survive any
termination of the Loan Documents, the expiration of the Commitments of all of
the Lenders, the Letter of Credit Commitment and the payment of all Indebtedness
of the Credit Parties under the Loan Documents.
I. LIMITATION OF LIABILITY
No claim may be made by the Borrower, any of its Subsidiaries, any
Lender, the Issuing Bank, the Agent or other Person against the Borrower, any of
its Subsidiaries, any Lender, the Issuing Bank, the Agent, or any directors,
officers, employees, or agents of any of them for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by any Loan Document, or any act, omission or event occurring in
connection therewith, and each of the Borrower, its Subsidiaries, any such
Lender, the Issuing Bank, the Agent or other Person hereby waives, releases and
agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
J. COUNTERPARTS
Each Loan Document (other than the Revolving Credit Notes) may be
executed by one or more of the parties thereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same document. It shall not be necessary in making proof
of any Loan Document to produce or account for more than one counterpart signed
by the party to be charged. A counterpart of any Loan Document or to any
document evidencing, and of any an amendment, modification, consent or waiver to
or of any Loan Document transmitted by telecopy shall be deemed to be an
originally executed counterpart. A set of the copies of the Loan Documents
signed by all the parties thereto shall be deposited with each of the Borrower,
the Issuing Bank and the Agent. Any party to a Loan Document may rely upon the
signatures of any other party thereto which are transmitted by telecopy or other
electronic means to the same extent as if originally signed.
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K. ADJUSTMENTS; SET-OFF
1. If any Lender (a "BENEFITED LENDER") shall at any time receive
any payment of all or any part of the principal of its Revolving Credit Loans or
the Reimbursement Obligations owing to such Lender, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 9.1(h) or (i), or
otherwise), in a greater proportion than any such payment to and collateral
received by any other Lender in respect of the principal of such other Lender's
Revolving Credit Loans or the Reimbursement Obligations owing to such other
Lender, or interest thereon, such Benefited Lender shall purchase for cash from
each of the other Lenders such portion of each such other Lender's Revolving
Credit Loans and Reimbursement Obligations, and shall provide each of such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders,
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. The Borrower agrees that each Lender so
purchasing a portion of another Lender's Revolving Credit Loans and
Reimbursement Obligations may exercise all rights of payment (including, without
limitation, rights of set-off, to the extent not prohibited by law) with respect
to such portion as fully as if such Lender were the direct holder of such
portion.
2. In addition to any rights and remedies of the Issuing Bank and
the Lenders provided by law, upon the occurrence of an Event of Default and the
acceleration of the obligations owing in connection with the Loan Documents, or
at any time upon the occurrence and during the continuance of an Event of
Default, under Section 9.1(a) or (b), each of the Issuing Bank and each Lender
shall have the right, without prior notice to the Borrower or any other Credit
Party, any such notice being expressly waived by the Borrower and each other
Credit Party to the extent not prohibited by applicable law, to set-off and
apply against any indebtedness, whether matured or unmatured, of the Borrower or
such other Credit Party, as the case may be, to the Issuing Bank or such Lender,
as the case may be, any amount owing from the Issuing Bank or such Lender, as
the case may be, to the Borrower or such other Credit Party, as the case may be,
at, or at any time after, the happening of any of the above-mentioned events.
To the extent not prohibited by applicable law, the aforesaid right of set-off
may be exercised by the Issuing Bank or such Lender, as the case may be, against
the Borrower or such other Credit Party, as the case may be, or against any
trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit
of creditors, re-
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ceiver, or execution, judgment or attachment creditor of the Borrower or such
other Credit Party, as the case may be, or against anyone else claiming through
or against the Borrower or such other Credit Party, as the case may be, or such
trustee in bankruptcy, custodian, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by the Issuing Bank or such Lender, as the case may be, prior to the
making, filing or issuance, or service upon the Issuing Bank or such Lender, as
the case may be, of, or of notice of, any such petition, assignment for the
benefit of creditors, appointment or application for the appointment of a
receiver, or issuance of execution, subpoena, order or warrant. Each of the
Issuing Bank and each Lender agrees promptly to notify the Borrower and the
Agent after any such set-off and application made by such Lender, provided that
the failure to give such notice shall not affect the validity of such set-off
and application.
L. CONSTRUCTION
Each party to a Loan Document represents that it has been represented
by counsel in connection with the Loan Documents and the transactions
contemplated thereby and that the principle that agreements are to be construed
against the party drafting the same shall be inapplicable.
M. GOVERNING LAW
The Loan Documents and the rights and obligations of the parties
thereunder shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of New York, without regard to principles
of conflict of laws, but including Section 5-1401 of the General Obligations
Law.
N. HEADINGS DESCRIPTIVE
Section headings have been inserted in the Loan Documents for
convenience only and shall not be construed to be a part thereof.
O. SEVERABILITY
Every provision of the Loan Documents is intended to be severable, and
if any term or provision thereof shall be invalid, illegal or unenforceable for
any reason, the validity, legality and enforceability of the remaining
provisions thereof shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
P. INTEGRATION
All exhibits to a Loan Document shall be deemed to be a part thereof.
Except for agreements between the Agent and/or the Issuing Bank and the Borrower
with respect to certain fees, the Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent, the Issuing Bank and the Lenders
with respect to the subject matter thereof and supersede all prior agreements
and understandings among the Borrower, the Agent, the Issuing Bank and the
Lenders with respect to the subject matter thereof.
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Q. CONSENT TO JURISDICTION
Each party to a Loan Document hereby irrevocably submits to the
jurisdiction of any New York State or Federal court sitting in the City of New
York over any suit, action or proceeding arising out of or relating to the Loan
Documents. Each party to a Loan Document hereby irrevocably waives, to the
fullest extent permitted or not prohibited by law, any objection which it may
now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or
proceeding brought in such a court has been brought in an inconvenient forum.
Each Credit Party hereby agrees that a final judgment in any such suit, action
or proceeding brought in such a court, after all appropriate appeals, shall be
conclusive and binding upon it.
R. SERVICE OF PROCESS
Each party to a Loan Document hereby irrevocably consents to the
service of process in any suit, action or proceeding by sending the same by
first class mail, return receipt requested or by overnight courier service, to
the address of such party set forth in Section 11.2 of the applicable Loan
Document executed by such party. Each party to a Loan Document hereby agrees
that any such service (i) shall be deemed in every respect effective service of
process upon it in any such suit, action, or proceeding, and (ii) shall to the
fullest extent enforceable by law, be taken and held to be valid personal
service upon and personal delivery to it.
S. NO LIMITATION ON SERVICE OR SUIT
Nothing in the Loan Documents or any modification, waiver, consent or
amendment thereto shall affect the right of the Agent, the Issuing Bank or any
Lender to serve process in any manner permitted by law or limit the right of the
Agent, the Issuing Bank or any Lender to bring proceedings against any Credit
Party in the courts of any jurisdiction or jurisdictions in which such Credit
Party may be served.
T. WAIVER OF TRIAL BY JURY
EACH OF THE AGENT, THE ISSUING BANK, THE LENDERS AND THE CREDIT
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN.
FURTHER, EACH CREDIT PARTY HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF
THE ISSUING BANK, THE AGENT, OR THE LENDERS, OR COUNSEL TO THE
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ISSUING BANK, THE AGENT OR THE LENDERS, HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT THE ISSUING BANK, THE AGENT OR THE LENDERS WOULD NOT, IN THE EVENT OF SUCH
LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. EACH
CREDIT PARTY ACKNOWLEDGES THAT THE ISSUING BANK, THE AGENT AND THE LENDERS HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS
SECTION.
U. TREATMENT OF CERTAIN INFORMATION
Each Lender, the Issuing Bank and the Agent agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature, all non-public information supplied by the Borrower or any
of its Subsidiaries pursuant to this Agreement which 1. is identified by such
Person as being confidential at the time the same is delivered to such Lender,
the Issuing Bank or the Agent, or 2. constitutes any financial statement,
financial projections or forecasts, budget, compliance certificate, audit
report, management letter or accountants' certification delivered hereunder,
provided, however, that nothing herein shall limit the disclosure of any such
information a. to the extent required by statute, rule, regulation or judicial
process,b. on a confidential basis, to counsel to any of the Lenders, the
Issuing Bank or the Agent, c.to bank examiners, auditors or accountants, and any
analogous counterpart thereof,d. to the Agent, the Lenders, or the Issuing Bank
e. in connection with any litigation to which any one or more of the Lenders,
the Issuing Bank or the Agent is a party,f. to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) agrees to keep such information
confidential on substantially the same basis as set forth in this Section, or g.
to any affiliate of the Agent, BNY Capital Markets, any Lender or the Issuing
Bank that is a Section 20 securities affiliate of such Person or that is an
affiliate of such Person reasonably believed by such Person to require such
information in connection with the transactions contemplated by the Loan
Documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
THE BISYS GROUP, INC.
By: __________________________
Name: ________________________
Title: _______________________
THE BANK OF NEW YORK,
Individually, as Issuing Bank
and as Agent
By: __________________________
Name: ________________________
Title: _______________________
THE BANK OF NOVA SCOTIA
By: __________________________
Name: ________________________
Title: _______________________
FIRST UNION NATIONAL BANK
By: __________________________
Name: ________________________
Title: _______________________
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FLEET BANK, NATIONAL ASSOCIATION
By: __________________________
Name: ________________________
Title: _______________________
PNC BANK, NATIONAL ASSOCIATION
By: __________________________
Name: ________________________
Title: _______________________
CORESTATES BANK, N.A.
By: __________________________
Name: ________________________
Title: _______________________
THE FIRST NATIONAL BANK OF CHICAGO
By: __________________________
Name: ________________________
Title: _______________________
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Exhibit 11
COMPUTATION OF PER SHARE EARNINGS
THE BISYS, INC. AND SUBSIDIARIES
For the Years Ended June 30, 1997, 1996 and 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
1996 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Primary:
- --------
Net earnings (loss attributable to common stock $ 40,751 $ 18,024 $ (6,484)
========= ========= =========
Weighted average number of common shares outstanding 25,038 23,704 22,819
Common shares issuable under stock option plans 3,371 2,944 2,694
Less shares assumed repurchased with proceeds (2,052) (1,580) (1,332)
--------- --------- ---------
Weighted average number of common and 26,357 25,068 24,181
common equivalent shares outstanding ========= ========= =========
Net earnings (loss) per common share $ 1.55 $ 0.72 $ (0.27)
========= ========= =========
Fully Diluted:
- --------------
Net earnings (loss attributable to common stock $ 40,751 $ 18,024 $ (6,484)
========= ========= =========
Weighted average number of common shares outstanding 25,038 23,704 22,819
Common shares issuable under stock option plans 3,371 2,944 2,694
Less shares assumed repurchased with proceeds (1,860) (1,256) (1,332)
--------- --------- ---------
Weighted average number of common and 26,549 25,392 24,181
common equivalent shares outstanding ========= ========= =========
Net earnings (loss) per common share $ 1.53 $ 0.71 $ (0.27)
========= ========= =========
</TABLE>
<PAGE>
1997
FINANCIALS
17 Selected financial data
18 Management's discussion and analysis of results of operations and financial
condition
20 Management's statement of responsibility
21 Report of independent accountants
22 Consolidated statement of operations
23 Consolidated balance sheet
24 Consolidated statement of cash flows
25 Consolidated statement of stockholders' equity
26 Notes to consolidated financial statements
32 Market price information and Consolidated quarterly results
16
<PAGE>
<TABLE>
<CAPTION>
THE BISYS GROUP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
FOR YEARS ENDED JUNE 30, 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Revenues $318,988 $247,061 $200,527 $170,799 $112,413
- -------------------------------------------------------------------------------------------------------------------
Operating costs and expenses:
Service and operating 170,717 131,708 105,163 83,567 49,963
General and administrative 54,638 39,980 46,953 33,843 23,062
Selling and conversion 12,410 9,248 8,988 13,592 9,046
Research and development 10,408 10,176 9,392 8,895 7,359
Amortization of intangibles 3,613 3,811 5,095 3,097 653
Merger expenses and other charges 1,500 22,250 28,340 - 9,138
- -------------------------------------------------------------------------------------------------------------------
Operating earnings (loss) 65,702 29,888 (3,404) 27,805 13,192
Interest (income) expense (2,216) (372) 649 887 (722)
- -------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income tax provision 67,918 30,260 (4,053) 26,918 13,914
Income tax provision 27,167 12,236 2,431 8,027 6,791
- -------------------------------------------------------------------------------------------------------------------
Earnings (loss) before cumulative
effect of change in
accounting principle 40,751 18,024 (6,484) 18,891 7,123
Cumulative effect of change in
accounting principle - - - - 13,700
- -------------------------------------------------------------------------------------------------------------------
Net earnings (loss) $40,751 $18,024 $(6,484) $18,891 $20,823
- -------------------------------------------------------------------------------------------------------------------
Earnings (loss) before cumulative
effect of change
in accounting principle
per common share $ 1.55 $ 0.72 $ (0.27) $ 0.84 $ 0.34
Cumulative effect of change
in accounting principle per
common share - - - - 0.65
- -------------------------------------------------------------------------------------------------------------------
Net earnings (loss) per common share $ 1.55 $ 0.72 $ (0.27) $ 0.84 $ 0.99
- -------------------------------------------------------------------------------------------------------------------
Weighted average common and common
equivalent shares outstanding 26,357 25,068 24,181 22,472 21,030
- -------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA:
JUNE 30,
Working capital $87,641 $40,448 $ 5,326 $30,888 $46,131
Total assets 265,085 214,625 165,338 181,394 98,036
Long-term debt and capital lease obligations,
including current maturities 1,668 1,974 8,405 36,049 456
Stockholders' equity 191,919 143,172 114,627 117,368 74,404
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
THE BISYS GROUP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The BISYS Group, Inc. and subsidiaries (the "Company") provides outsourcing
solutions to and through financial organizations and reports as a single
segment. The operating margins for each business unit of the Company are not
significantly different. The following table presents the percentage of
revenues represented by each item in the Company's consolidated statement of
operations for the periods indicated:
FOR YEARS ENDED JUNE 30, 1997 1996 1995
Revenues 100.0% 100.0% 100.0%
- --------------------------------------------------------------------------
Operating costs and expenses:
Service and operating 53.5 53.3 52.5
General and administrative 17.1 16.2 23.4
Selling and conversion 3.9 3.8 4.5
Research and development 3.3 4.1 4.7
Amortization of intangibles 1.1 1.5 2.5
Merger expenses and other charges .5 9.0 14.1
- --------------------------------------------------------------------------
Operating earnings (loss) 20.6 12.1 (1.7)
Interest (income) expense (0.7) (0.2) 0.3
- --------------------------------------------------------------------------
Earnings (loss) before income tax provision 21.3 12.3 (2.0)
Income tax provision 8.5 5.0 1.2
- --------------------------------------------------------------------------
Net earnings (loss) 12.8% 7.3% (3.2)%
- --------------------------------------------------------------------------
Revenues increased $71.9 million in fiscal 1997 and $46.5 million in fiscal
1996, representing increases of 29.1% and 23.2%, respectively. Growth in fiscal
1997 and 1996 was derived from sales to new clients, existing client growth,
cross-sales to existing clients and revenues from acquired businesses, partially
offset by lost business and sale of the Item Processing Division in fiscal 1997.
Service and operating expenses increased $39.0 million in fiscal 1997 and $26.5
million in fiscal 1996, representing percentage increases of 29.6% and 25.2%,
respectively. Service and operating expenses increased as a percentage of
revenues in fiscal 1997 by 0.2% to 53.5%, and by 0.8% to 53.3% in fiscal 1996.
The increases resulted from additional costs associated with greater revenues.
General and administrative expenses increased $14.7 million, or 36.7%, and
increased as a percentage of revenues by 0.9% to 17.1% in fiscal 1997 and
decreased $7.0 million, or 14.9%, in fiscal 1996. The dollar increase in fiscal
1997 resulted from additional costs associated with greater revenues. The
decrease in fiscal 1996 resulted from synergies gained from the consolidation of
acquired businesses and from further utilization of existing general and
administrative support resources.
Selling and conversion expenses increased $3.2 million, or 34.2%, and increased
as a percentage of revenues by 0.1% to 3.9% in fiscal 1997, and increased $0.3
million, or 2.9% and decreased as a percentage of revenues by 0.7% to 3.8% in
fiscal 1996. The increases in fiscal 1997 resulted from added costs associated
with higher selling and conversion activities.
Research and development expenses increased $0.2 million to $10.4 million, or
2.3%, in fiscal 1997 and decreased as a percentage of revenues by 0.8% to 3.3%.
In fiscal 1996 such expenses increased $0.8 million to $10.2 million or 8.3% and
decreased as percentage of revenues by 0.6% to 4.1%. The dollar increases
resulted from increased personnel expenses to support greater research and
development activities, and the reduction in percentage of revenues was a result
of acquiring and merging with businesses which do not require substantial
research and development to produce revenues.
Amortization of intangible assets was $3.6 million in fiscal 1997, decreasing
from $3.8 million in fiscal 1996 and from $5.1 million in fiscal 1995. As a
percentage of revenues, amortization decreased to 1.1% from 1.5% and from 2.5%
over the same years. The decrease in fiscal 1996 amortization from fiscal 1995
amortization was primarily due to the accelerated amortization in fiscal 1995 of
$1.3 million of the goodwill associated with the BISYS Loan Services business,
which was sold in August 1995.
In fiscal 1997, $1.5 million of additional commission charges were incurred as a
result of increased mutual fund assets serviced pursuant to the outsourcing
alliance with the mutual fund division of Furman Selz, LLC. In fiscal 1996,
merger expenses and other charges aggregated $22.2 million. This included
transaction related expenses arising from Strategic Solutions Group, Inc.
(BISYS Creative Solutions) and T.U.G., Inc. (BISYS Insurance Services) mergers
and commissions and other expenses associated with the outsourcing alliance with
the mutual fund division of Furman Selz, LLC which, in total, aggregated $15.7
million. The Company also recorded a charge of $6.0 million to integrate these
new operations and to combine certain TOTALPLUS data center operations and
certain offices of BISYS Document Solutions. Additionally, the Company wrote
off the remaining deferred financing costs of $0.5 million in conjunction with
the expiration of its term loan facility.
18
<PAGE>
In fiscal 1995, merger expenses and other charges aggregated $32.3 million,
including $4.0 million which is included in general and administrative. In
conjunction with the Concord merger in March 1995, the Company incurred the
following expenses: merger transaction expenses of $3.3 million (legal and
financial); $12.5 million in costs to combine operations (severance, facilities
write-offs, fixed asset and leasehold write-offs and other expenses); $4.0
million related to a contract adjustment due to a change of terms; and a $3.0
million charge-off of an investment in an affiliate due to impairment of its
carrying value. In connection with the Document Solutions Inc. ("Document
Solutions") merger in May 1995, the transaction expenses were $5.6 million.
Operating earnings increased by $35.8 million and $33.3 million to $65.7
million and to $29.9 million in fiscal 1997 and 1996, respectively, and
increased as a percentage of revenues from 12.1% to 20.6% in fiscal 1997. The
increases were primarily due to revenue gains, the synergies realized from
consolidation of the acquired businesses, and the reduction in merger expenses
and other charges.
Interest income increased $1.8 million to $2.2 million in fiscal 1997 due to
higher average balances of cash and cash equivalents. In fiscal 1996, interest
income increased from an expense of $0.6 million in fiscal 1995 to income of
$0.4 million, primarily as a result of the Company paying off all of its
outstanding term loan indebtedness in August 1995.
The provision for income taxes increased to $27.2 million in fiscal 1997 from
$12.2 million in fiscal 1996 and from $2.4 million in fiscal 1995. The
fiscal 1997 provision reflects an effective tax rate of 40.0% and was
impacted by $1.2 million of non-deductible amortization and $2.2 million of
state taxes and other expenses. The fiscal 1996 provision reflects an
effective tax rate of 40.4% and includes the impact of the decrease in the
valuation allowance of $2.0 million, the effect of non-deductible
amortization, merger related expenses, and other expenses totaling $2.3
million, and state taxes of $1.3 million.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had cash and cash equivalents of $80.0
million and working capital of $87.6 million. The Company has been able to
satisfy its cash requirements through its cash flows from operations. In
addition, the Company has a $100.0 million senior unsecured revolving credit
facility including a $10.0 million letter of credit sub-facility available to
finance working capital requirements. At June 30, 1997, the Company had $0.1
million outstanding in the form of letters of credit. The interest rate on
outstanding long-term borrowings of $1.7 million at June 30, 1997 was 7.75%.
For the year ended June 30, 1997, operating activities provided cash of $46.3
million, primarily as a result of net income of $40.8 million plus several
non-cash items including depreciation and amortization of $11.8 million,
deferred income taxes of $8.5 million offset by changes in net operating assets
and liabilities of $13.9 million. Investing activities used cash of $11.8
million, primarily due to capital expenditures of $16.0 million offset by $3.8
million in net cash acquired in dispositions of subsidiaries. Financing
activities provided cash of $6.2 million, primarily from $6.5 million in
proceeds from shares of common stock issued of which $5.4 million was in
connection with the exercise of stock options.
For the years ended June 30, 1996 and 1995, operating activities provided cash
of $39.7 million and $15.5 million, respectively. investing activities used cash
of $3.2 million and provided $6.2 million in fiscal years 1996 and 1995,
respectively, and financing activities used cash of $4.5 million and $25.9
million, respectively.
The Company's strategy includes the acquisition of complementary businesses
financed by a combination of internally generated funds, long-term debt and
common stock.
CORPORATE AND OTHER
The Company has and will continue to make certain investments in its
software systems and applications to ensure the Company is year 2000 compliant.
The financial impact to the Company has not been and is not anticipated to be
material to its financial position or results of operations in any given year.
In July 1997, a client of the Company's Fund Services division terminated its
distribution and administration agreements effective September 1997. The action
is expected to have a negative impact on the Company's growth in earnings for
fiscal 1998 and the Company expects to take a one-time charge to realign
operations. For fiscal 1997, revenue related to the agreements accounted for
approximately $15.0 million.
The impact of new accounting standards is discussed in note 1 to the
consolidated financial statements.
SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein, the matters
discussed in this annual report are forward-looking statements which involve
risks and uncertainties, including but not limited to economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, services and related products, prices, and other factors discussed in
the company's prior filings with the Securities and Exchange Commission.
19
<PAGE>
MANAGEMENT'S STATEMENT
OF RESPONSIBILITY
The management of the Company assumes responsibility for the integrity and
objectivity of the information in the fiscal 1997 Annual Report. The information
was prepared in conformity with generally accepted accounting principles and
reflects the best judgement of management.
To provide reasonable assurance that transactions authorized by management are
recorded and reported properly and that assets are safeguarded, the Company
maintains a system of internal controls. The concept of reasonable assurance
implies that the cost of such a system is weighted against the benefits to be
derived therefrom.
Coopers and Lybrand L.L.P., independent accountants, audits the financial
statements of the Company in accordance with generally accepted auditing
standards. Such audit considers the Company's internal control structure and
includes a communication of recommendations for improvements in the Company's
internal control structure.
The Audit Committee of the Board of Directors ensures that management is
properly discharging its financial reporting responsibilities. In performing
this function, the Committee meets with management and the independent
accountants throughout the year. Additional access to the committee is provided
to the independent accountants on an unrestricted basis, allowing discussion of
audit results, internal accounting controls, and financial reporting.
/s/ Lynn J. Mangum
Lynn J. Mangum
Chairman and
Chief Executive Officer
20
<PAGE>
REPORT OF INDEPENDENT
ACCOUNTANTS
To the Board of Directors and Stockholders
The BISYS Group, Inc.:
We have audited the accompanying consolidated balance sheet of The BISYS Group,
Inc. and subsidiaries as of June 30, 1997 and 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended June 30, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The BISYS Group,
Inc. and subsidiaries as of June 30, 1997 and 1996, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended June 30, 1997, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand LLP
Coopers & Lybrand L.L.P.
New York, New York
August 15, 1997
21
<PAGE>
THE BISYS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR YEARS ENDED JUNE 30, 1997 1996 1995
Revenues $318,988 $247,061 $200,527
- --------------------------------------------------------------------------------
Operating costs and expenses:
Service and operating 170,717 131,708 105,163
General and administrative 54,638 39,980 46,953
Selling and conversion 12,410 9,248 8,988
Research and development 10,408 10,176 9,392
Amortization of intangibles 3,613 3,811 5,095
Merger expenses and other charges 1,500 22,250 28,340
- --------------------------------------------------------------------------------
Operating earnings (loss) 65,702 29,888 (3,404)
Interest (income) expense (2,216) (372) 649
- --------------------------------------------------------------------------------
Earnings (loss) before
income tax provision 67,918 30,260 (4,053)
Income tax provision 27,167 12,236 2,431
- --------------------------------------------------------------------------------
Net earnings (loss) $40,751 $ 18,024 $ (6,484)
- --------------------------------------------------------------------------------
Net earnings (loss) per common share $ 1.55 $ 0.72 $ (0.27)
- --------------------------------------------------------------------------------
Weighted average common and common
equivalent shares outstanding 26,357 25,068 24,181
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
22
<PAGE>
THE BISYS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, 1997 1996
ASSETS
Current assets:
Cash and cash equivalents $79,951 $ 39,284
Accounts receivable, net 59,987 47,846
Deferred tax asset 5,083 12,159
Prepaid expenses and other 6,980 5,126
- -----------------------------------------------------------------------------
Total current assets 152,001 104,415
Property and equipment, net 32,111 25,264
Intangible assets, net 75,719 80,850
Other assets 5,254 4,096
- -----------------------------------------------------------------------------
Total assets $265,085 $214,625
- -----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 83 $ 306
Accounts payable 6,673 6,056
Accrued liabilities 57,604 57,605
- -----------------------------------------------------------------------------
Total current liabilities 64,360 63,967
Long-term debt 1,585 1,668
Deferred tax liability 6,860 5,425
Other liabilities 361 393
- -----------------------------------------------------------------------------
Total liabilities 73,166 71,453
- -----------------------------------------------------------------------------
Commitments and contingencies (Notes 6 and 9)
STOCKHOLDERS' EQUITY
Common stock, $0.02 par value, 80,000,000
shares authorized, 25,235,288 and
24,782,101 shares issued and
outstanding at June 30, 1997
and 1996, respectively 505 496
Additional paid-in capital 153,775 145,788
Retained earnings (accumulated deficit) 37,639 (3,112)
- -----------------------------------------------------------------------------
Total stockholders' equity 191,919 143,172
- -----------------------------------------------------------------------------
Total liabilities and stockholders' equity $265,085 $214,625
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
23
<PAGE>
THE BISYS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
FOR YEARS ENDED JUNE 30, 1997 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $40,751 $18,024 $ (6,484)
Adjustments to reconcile net earnings
(loss) to net cash
provided by operating activities:
Depreciation and amortization 11,759 9,965 11,009
Deferred income tax provision (benefit) 8,511 2,324 (1,648)
Other (827) - 3,202
Change in assets and liabilities, net of
effects from acquisitions:
Accounts receivable, net (11,801) (15,614) (4,538)
Prepaid expenses and other (2,411) 371 (269)
Accounts payable 617 (508) 1,953
Accrued liabilities and other 900 23,309 11,308
Other assets (1,158) 1,849 962
- --------------------------------------------------------------------------------
Net cash provided by operating activities 46,341 39,720 15,495
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash acquired in other acquisitions
and dispositions 3,827 3,024 -
Capital expenditures (15,974) (12,698) (9,210)
Purchase of short-term investments (3,000) - (5,523)
Proceeds from sales and maturities
of investments 3,523 6,796 21,208
Purchase of intangible assets (208) (367) (322)
- --------------------------------------------------------------------------------
Net cash provided (used) by investing activities (11,832) (3,245) 6,153
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt and
capital lease obligations - 6,800 -
Repayment of debt and capital lease obligations (306) (16,073) (27,572)
Exercise of stock options 5,385 4,113 808
Issuance of common stock 1,079 673 693
Other - - 221
- --------------------------------------------------------------------------------
Net cash provided (used) by financing activities 6,158 (4,487) (25,850)
- --------------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents 40,667 31,988 (4,202)
Cash and cash equivalents at beginning of year 39,284 7,296 11,498
- --------------------------------------------------------------------------------
Cash and cash equivalents at end of year $79,951 $39,284 $ 7,296
- --------------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for:
Interest $ 335 $ 664 $ 2,377
Income taxes $14,249 $ 6,391 $ 4,517
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
24
<PAGE>
THE BISYS GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOTES RETAINED
ADDITIONAL RECEIVABLE EARNINGS
FOR YEARS ENDED JUNE 30, 1995, COMMON STOCK PAID-IN FOR STOCK (ACCUMULATED
1996 AND 1997 SHARES AMOUNT CAPITAL ISSUED DEFICIT)
<S> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994 22,627 $453 $132,757 $ (221) $(15,621)
Exercise of stock options 417 8 924 - -
Issuance of common stock 44 1 692 - -
Tax benefit of stock options exercised and other - - 2,127 - -
Adjustment to conform reporting periods (Note 2) 19 - 156 - (386)
Payment on notes receivable for stock - - - 221 -
Net loss - - - - (6,484)
BALANCE, JUNE 30, 1995 23,107 462 136,656 - (22,491)
Exercise of stock options 630 13 4,661 - -
Issuance of common stock 33 1 672 - -
Tax benefit of stock options exercised - - 3,549 - -
Common stock issued in acquisitions 1,012 20 250 - 1,355
Net earnings - - - - 18,024
BALANCE, JUNE 30, 1996 24,782 496 145,788 - (3,112)
Exercise of stock options 412 8 5,377 - -
Issuance of common stock 41 1 1,078 - -
Tax benefit of stock options exercised - - 1,532 - -
Net earnings - - - - 40,751
BALANCE, JUNE 30, 1997 25,235 $505 $153,775 $ - $ 37,639
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
25
<PAGE>
THE BISYS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
THE COMPANY
The BISYS Group, Inc. and subsidiaries ("BISYS" or the "Company") is a
leading national provider of outsourcing solutions to and through financial
organizations.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of The BISYS
Group, Inc. and its subsidiaries. All significant intercompany balances and
transactions have been eliminated.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid debt instruments purchased
with original maturities of three months or less, including $48.2 million and
$12.7 million of overnight repurchase agreements at June 30, 1997 and 1996,
respectively. The Company maintains cash deposits in banks which from time to
time exceed the amount of deposit insurance available. Management periodically
assesses the financial condition of the institutions and believes that any
potential credit loss is minimal.
SHORT-TERM INVESTMENTS
Management determines the appropriate classification of investments in debt
and equity securities at the time of purchase. Marketable debt and equity
securities available for sale are carried at market based upon quoted market
prices. Unrealized gains or losses on available for sale securities are
accumulated as an adjustment to stockholders' equity, net of related deferred
income taxes. Realized gains or losses are computed based on specific
identification of the securities sold. Realized and gross unrealized gains and
losses on short-term investments were not significant for the years ended June
30, 1997, 1996 and 1995.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight line method over the estimated useful lives of the assets as
follows:
ESTIMATED
USEFUL LIVES
(YEARS)
BUILDINGS AND IMPROVEMENTS 5 - 40
COMPUTER EQUIPMENT AND SYSTEMS 2 - 5
FURNITURE AND FIXTURES 3 - 12
LEASEHOLD IMPROVEMENTS LEASE TERM
SOFTWARE DEVELOPMENT COSTS 3 - 5
Depreciation expense for the years ended June 30, 1997, 1996 and 1995 was
$8,146,000, $6,154,000 and $5,914,000, respectively.
Expenditures for major renewals and improvements are capitalized, while minor
replacements, maintenance and repairs which do not improve or extend the life of
such assets are charged to expense as incurred. Disposals are removed at cost
less accumulated depreciation with the resulting gain or loss being reflected in
operations. Maintenance and repairs amounted to approximately $5,600,000,
$4,286,000 and $4,198,000 for the years ended June 30, 1997, 1996 and 1995,
respectively.
INTANGIBLE ASSETS
Intangible assets are amortized on a straight line basis over the estimated
useful lives as follows:
ESTIMATED
USEFUL LIVES
(YEARS)
COST IN EXCESS OF NET ASSETS ACQUIRED 10 - 40
CUSTOMER RELATIONSHIPS 30
OTHER 1 - 5
Accumulated amortization of intangible assets was $14,736,000 and $12,642,000 at
June 30, 1997 and 1996, respectively.
The Company evaluates, for impairment, the carrying value of intangible assets
by comparing the carrying value of intangible assets including goodwill, to the
anticipated future undiscounted cash flows from the businesses whose acquisition
gave rise to the asset. If an intangible asset is impaired the asset is written
down to fair value. Intangible assets resulting from acquired customer
relationships are evaluated in light of actual customer attrition rates to
ensure that the carrying value of these intangible assets is recoverable. In
fiscal 1995, the Company accelerated the amortization of $1,342,000 of goodwill
associated with the BISYS loan services business, which was sold in August
1995.
SOFTWARE COSTS
The Company charges to operations routine maintenance of software, design
costs and development costs incurred prior to the establishment of a product's
technological feasibility. Costs incurred subsequent to the establishment of a
product's technological feasibility are capitalized and amortized over the
expected useful life of the related product. For the years ended June 30, 1997,
1996 and 1995, the Company did not capitalize any internal costs related to the
development of new software.
REVENUE RECOGNITION
The Company records revenue as earned as evidenced by contracts or invoices
for its services at prices established by contract, price list and/or fee
schedule less applicable discounts. The Company is not subject to returns in its
businesses.
26
<PAGE>
ACCOUNTS RECEIVABLE
A majority of the Company's receivables are from financial institutions and
investment companies which approximated $36.5 million and $12.2 million,
respectively, at June 30, 1997. The Company performs ongoing credit evaluations
of its customers and generally does not require collateral for accounts
receivable. The Company's credit losses have been minimal. At June 30, 1997 and
1996, the Company's allowance for doubtful accounts was approximately $2,673,000
and $2,146,000, respectively.
PER SHARE DATA
Per share data is computed using the weighted average number of common and
common equivalent shares outstanding during each year presented. Fully diluted
and primary earnings per share are approximately the same for each year
presented. Common equivalent shares consist of stock options and are computed
using the treasury stock method.
STOCK-BASED COMPENSATION
The Company applies APB opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations in accounting for its stock-based
compensation plans.
INCOME TAXES
The liability method is used in accounting for income taxes whereby
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws.
RECLASSIFICATION
Certain reclassifications have been made to the 1995 and 1996 consolidated
financial statements to conform to the 1997 presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. The most significant estimates are related to the allowance for
doubtful accounts, intangible assets, merger expenses and other charges, income
taxes and contingencies. It is reasonably possible that actual results could
differ from these estimates in the near term.
DISCLOSURE REGARDING FINANCIAL INSTRUMENTS
For all financial instruments, including cash and cash equivalents,
receivables, accounts payable and long- term debt, the carrying value is
considered to approximate fair value.
NEW ACCOUNTING STANDARDS
In March 1997, the Financial Accounting Standards Board issued FAS 128,
"Earnings Per Share". FAS 128 supersedes APB 15, "Earnings Per Share", and
changes the computation of earnings per share (EPS) by replacing the "primary"
EPS requirements of APB 15 with a basic EPS computation based upon weighted
average shares outstanding. It also requires dual presentation of basic and
diluted EPS on the face of the income statement for all entities with complex
capital structures. FAS 128 is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods. The Company
will adopt FAS 128 in the second quarter of fiscal 1998, as required.
Earnings per common share computed under the provisions of FAS 128 for the year
ended June 30, 1997 would have been $1.63 basic earnings per share and $1.55
diluted earnings per share.
In June 1997, the Financial Accounting Standards Board issued FAS 131
"Disclosures about Segments of an Enterprise and Related Information". FAS 131
specifies revised guidelines for determining an entity's operating segments and
the type and level of financial information to be disclosed. FAS 131 is
effective for financial statements for fiscal years beginning after December 15,
1997. The Company is presently evaluating the impact of the new disclosure
standard and anticipates adopting its provisions no later than the year ended
June 30, 1999.
2. BUSINESS COMBINATIONS
On April 22, 1996, the company merged with Strategic solutions group, Inc.
("SSG" doing business as Creative Solutions) by exchanging 520,599 shares of
BISYS common stock for all the outstanding shares of SSG. On June 28, 1996, the
Company merged with T.U.G., Inc. ("TUG") by exchanging 491,314 shares of BISYS
common stock for all the outstanding shares of TUG. The acquisitions of SSG and
TUG have been accounted for as poolings of interests, although historical
financial statements have not been restated due to immateriality. The Company
incurred a charge of $1,750,000 in the year ended June 30, 1996 for costs
associated with these mergers (See Note 10).
On March 29, 1995, BISYS merged with Concord Holding Corporation ("Concord") by
exchanging 5,926,009 shares of BISYS common stock for all of the outstanding
Concord shares. On May 15, 1995, BISYS merged with Document Solutions, Inc. by
exchanging 1,765,287 shares of BISYS common stock for all the outstanding
Document Solutions shares. The mergers were each accounted for as poolings of
interests. The consolidated financial statements reflect the financial position
and results of operations of the combined companies for all periods presented.
A charge of $32,329,000 was recorded in the year ended June 30, 1995 for costs
associated with the mergers of Concord and Document Solutions (See Note 10).
27
<PAGE>
THE BISYS GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. DETAIL OF CERTAIN FINANCIAL STATEMENT ACCOUNTS
(IN THOUSANDS):
1997 1996
PROPERTY AND EQUIPMENT, NET:
LAND $ 271 $ 271
BUILDINGS AND IMPROVEMENTS 4,432 4,271
COMPUTER EQUIPMENT AND SYSTEMS 30,477 27,089
FURNITURE AND FIXTURES 18,366 14,425
LEASEHOLD IMPROVEMENTS 1,669 1,655
SOFTWARE DEVELOPMENT COSTS 4,005 307
- ----------------------------------------------------------------------
59,220 48,018
ACCUMULATED DEPRECIATION
AND AMORTIZATION (27,109) (22,754)
- ----------------------------------------------------------------------
$ 32,111 $ 25,264
- ----------------------------------------------------------------------
INTANGIBLE ASSETS, NET:
COST IN EXCESS OF NET ASSETS ACQUIRED $ 62,250 $ 63,698
CUSTOMER RELATIONSHIPS 28,000 28,000
OTHER 205 1,794
- ----------------------------------------------------------------------
90,455 93,492
LESS: ACCUMULATED AMORTIZATION (14,736) (12,642)
- ----------------------------------------------------------------------
$ 75,719 $ 80,850
- ----------------------------------------------------------------------
ACCRUED LIABILITIES:
MERGER COSTS AND OTHER $ 2,525 $ 9,984
COMMISSIONS 1,315 13,760
COMPENSATION 9,209 6,660
DEFERRED INCOME 6,988 6,003
INCOME TAXES 3,418 1,299
MARKETING 18,779 12,046
OTHER 15,370 7,853
- ----------------------------------------------------------------------
$ 57,604 $ 57,605
- ----------------------------------------------------------------------
4. LONG-TERM DEBT
Long-term debt consists of the following at June 30, 1997 and 1996 (in
thousands):
1997 1996
Mortgage notes payable $ 1,661 $ 1,726
Other borrowings 7 248
Less current maturities (83) (306)
- ----------------------------------------------------------------------
$ 1,585 $ 1,668
- ----------------------------------------------------------------------
Interest rates at June 30 7.75% 7.75%
- ----------------------------------------------------------------------
Mortgage notes payable of $1,661,000 require monthly principal and interest
payments of $16,525 and are collateralized by real estate. The interest rate is
fixed at 7.75% through May 1998 and fluctuates based on certain market
conditions subsequent to that date. Maturities of the mortgage notes payable
are $77,000 in fiscal 1998, $78,000 in fiscal 1999, $84,000 in fiscal 2000,
$91,000 in fiscal 2001 and $1,331,000 thereafter.
In March 1997, the Company entered into a new $100 million credit facility with
its banks. The new agreement establishes a $100 million senior unsecured
revolving credit facility (including a $10 million letter of credit subfacility)
to support working capital requirements and fund the Company's future
acquisitions. The facility expires in March 2002.
Outstanding borrowings under the credit facility bear interest at prime or, at
the Company's option, LIBOR plus a margin not to exceed 1.25% based upon the
ratio of the Company's consolidated indebtedness to common stockholders' equity
(the "Pricing Formula"). The credit agreement requires the Company to pay an
agent fee of $25,000 per year and a commitment fee ranging from 0.15% and 0.25%,
based on the Pricing Formula, on the unused portion of the facility. The
facility is guaranteed by all subsidiaries of The BISYS Group, Inc. (except for
broker/dealer, insurance and non-operating companies).
The credit agreement requires, among other things, the Company to maintain
certain financial covenants and limits the Company's ability to incur additional
indebtedness and to pay dividends. As of June 30, 1997, no amounts were
permitted for the payment of dividends.
The Company can borrow under the facility through March 2002, up to $100
million, reduced by the outstanding letters of credit ($134,000 at June 30,
1997). Interest is payable quarterly for prime rate borrowings or at maturity
for LIBOR borrowings, which range from 30-180 days.
In May 1996, the Company's previous multiple draw acquisition facility expired
and the remaining unamortized debt issuance costs of $513,000 were charged to
expense.
5. INCOME TAXES
The significant components of the Company's net deferred tax asset (liability)
as of June 30, 1997 and 1996 are as follows (in thousands):
1997 1996
Tax effects of:
Property and equipment $ 1,156 $ 3,281
Accrued liabilities 2,584 9,909
Accounts receivable 1,354 655
Tax credit carryforwards - 1,589
Other 2,439 1,470
- ----------------------------------------------------------------------
Deferred tax asset 7,533 16,904
Less valuation allowance (1,319) (1,319)
- ----------------------------------------------------------------------
Net deferred tax asset 6,214 15,585
Deferred tax liability - identifiable
intangible assets (7,991) (8,851)
- ----------------------------------------------------------------------
Deferred income taxes, net (liability)
asset $(1,777) $ 6,734
- ----------------------------------------------------------------------
The Company periodically evaluates the deferred tax asset and adjusts the
related valuation allowance on the deferred tax asset to an amount which is more
likely than not to be realized through
28
<PAGE>
future taxable income.
The components of the income tax provision for the years ended June 30, 1997,
1996, and 1995 are as follows (in thousands):
1997 1996 1995
DEFERRED FEDERAL TAX $ 7,428 $ 2,172 $(2,397)
FEDERAL TAX CURRENTLY PAYABLE 15,731 8,052 4,135
DEFERRED STATE TAX 1,083 152 749
STATE TAX CURRENTLY PAYABLE 2,925 1,860 (56)
- ----------------------------------------------------------------------
$27,167 $12,236 $ 2,431
- ----------------------------------------------------------------------
A reconciliation of the Company's income tax provision and the amount computed
by applying the statutory federal income tax rate to earnings (loss) before
income tax provision for the years ended June 30, 1997, 1996 and 1995 are as
follows (in thousands):
1997 1996 1995
Federal income tax
at statutory rate $23,772 $10,591 $(1,419)
Amortization and
charge-off of non-deductible
intangible assets 1,195 664 1,165
Change in valuation allowance - (1,987) (1,344)
Non-deductible merger
related expenses - 490 3,219
State taxes 2,532 1,308 450
Other, net (332) 1,170 360
- ----------------------------------------------------------------------
$27,167 $12,236 $ 2,431
- ----------------------------------------------------------------------
6. LEASES
The Company leases various office space under noncancellable operating leases
with remaining terms of up to ten years. The Company also leases certain office
and computer equipment under operating leases expiring through 2003. Rental
expense associated with these operating leases for the years ended June 30,
1997, 1996 and 1995 were $15,096,000, $15,892,000 and $13,846,000, respectively.
The future minimum rental payments under noncancellable operating leases for the
years ending after June 30, 1997 are as follows (in thousands):
OPERATING
FISCAL YEAR LEASES
1998 $12,267
1999 10,536
2000 6,878
2001 4,738
2002 3,707
Thereafter 5,839
- --------------------------------------------------------------
$43,965
7. SUPPLEMENTAL CASH FLOW INFORMATION
In fiscal 1997, 1996 and 1995, the Company recorded a deferred tax asset related
to tax benefits associated with stock options of approximately $1,532,000,
$3,549,000 and $1,333,000, respectively, with a corresponding adjustment to
additional paid-in capital. Also in fiscal 1995, Document Solutions recorded
compensation expense in the amount of $794,000 in connection with common stock
awarded to employees of Document Solutions by a shareholder with a corresponding
adjustment to additional paid-in capital. These noncash transactions have been
excluded from the consolidated statement of cash flows.
The Company also paid contingent merger consideration in cash based upon the
resolution of contingencies of $186,000, $216,000 and $971,000 for the years
ended June 30, 1997, 1996 and 1995, respectively. The recipients of such
payments are not employees of the Company.
During the years ended June 30, 1997, 1996 and 1995, the Company received
proceeds of $5,385,000, $4,113,000 and $808,000 respectively, and recorded a
deduction to deferred compensation of $561,000 in 1996 and $124,000 in 1995 with
offsetting increases in additional paid-in capital relating to the exercise of
stock options.
8. RETIREMENT SAVINGS PLAN
The Company has a contributory retirement and savings plan which covers all
employees and meets the requirements of Section 401(k) of the Internal Revenue
Code. Employees may contribute up to 15% of their compensation to the plan
which is matched 50% by the Company up to 6% of the employee's compensation not
to exceed $4,750.
The Company may, at the discretion of the Board of Directors, make additional
contributions to the plan. The Company's matching contribution vests 40% with
the employee after two years and 20% per year thereafter. The Company's expense
to match employee contributions for the years ended June 30, 1997, 1996 and
1995, was approximately $1,511,000, $1,069,000 and $1,087,000, respectively.
9. CONTINGENCIES
The Company is involved in litigation arising in the ordinary course of
business. Management believes that the Company has adequate defenses and/or
insurance coverage against litigation and that the outcome of these proceedings,
individually or in the aggregate, will not have a material adverse effect upon
the Company's financial position, results of operations, or cash flows.
29
<PAGE>
10. MERGER EXPENSES AND OTHER CHARGES
As discussed in Note 2, the Company recorded a charge in fiscal 1996 of
$1,750,000 in connection with the acquisitions of SSG and TUG. In June 1996,
the Company also entered into an outsourcing alliance agreement with the mutual
fund division of Furman Selz, LLC and incurred estimated commission and other
expenses of $13,960,000. The Company also recorded a charge of $6,027,000 in
fiscal 1996 to integrate new operations and to combine certain data center
operations and certain offices of Document Solutions.
In fiscal 1997, the Company incurred an additional commission charge of
$1,500,000 as a result of servicing additional mutual fund assets pursuant to
the alliance with Furman.
As discussed in Note 2, the Company recorded a charge of $32,329,000 during
fiscal 1995, for costs associated with the mergers of Concord and Document
Solutions, of which $3,989,000 is included in general and administrative
expense on the accompanying consolidated statement of operations.
Total merger expenses and other charges recorded for the year ended June 30,
1997, 1996 and 1995 consisted of the following (in thousands):
1997 1996 1995
MERGER TRANSACTION EXPENSES
(LEGAL AND FINANCIAL) $ - $ 1,750 $ 8,877
COSTS TO COMBINE OPERATIONS:
COMPENSATION RELATED - 3,320 5,700
FACILITIES RELATED - 1,862 5,500
OTHER - 845 1,314
COMMISSIONS AND OTHER EXPENSES
INCURRED IN CONNECTION WITH
OUTSOURCING ALLIANCE 1,500 13,960 -
WRITE-OFF OF DEFERRED FINANCING COSTS - 513 -
GENERAL AND ADMINISTRATIVE - - 3,989
CONTRACT ADJUSTMENT - - 4,000
CHARGE-OFF OF INVESTMENT IN AFFILIATE - - 2,949
- ----------------------------------------------------------------------------
$1,500 $22,250 $32,329
- ----------------------------------------------------------------------------
During the years ended June 30, 1997 and 1996, the following costs were paid and
charged against the merger related accruals (in thousands):
1997 1996
MERGER TRANSACTION EXPENSES $2,125 $4,243
COMMISSIONS 14,145 4,100
COMPENSATION RELATED COSTS 2,416 1,368
FACILITIES RELATED COSTS 2,024 1,451
OTHER 694 -
- -----------------------------------------------------------------------------
$21,404 $11,162
- -----------------------------------------------------------------------------
At June 30, 1997, $3,840,000 of estimated costs for merger expenses, commissions
and costs to combine operations are unpaid and included in accrued liabilities
on the accompanying balance sheet.
11. SHAREHOLDER RIGHTS PLAN
On May 7, 1997, the Board of Directors adopted a Shareholder Rights Plan and
declared a dividend distribution at the rate of one Right for each share of
common stock held of record as of the close of business on May 16, 1997 and for
each share of common stock issued thereafter up to the distribution date
(defined below).
Each Right entitles holders of common stock to buy one share of common stock of
the Company at an exercise price of $175.00. The Rights would be exercisable,
and would detach from the common stock (the "Distribution Date") only if a
person or group (i) were to acquire 15 percent or more of the outstanding shares
of common stock of the Company; (ii) were to announce a tender or exchange offer
that, if consummated, would result in a person or group beneficially owning 15
percent or more of the outstanding shares of common stock of the Company; (iii)
were declared by the Board to be an Adverse Person (as defined in the Plan) if
such person or group beneficially owns 10% or more of the outstanding shares of
common stock in the Company. In the event of any occurrence triggering the
Distribution Date, each right would entitle the holder (other than such an
acquiring person or group) to purchase the outstanding shares of common stock of
the Company (or, in certain circumstances, common stock of the acquiring person)
with a value of twice the exercise price of the Rights upon payment of the
exercise price. The Company will be entitled to redeem the Rights at $0.0025
per Right at any time. The Rights will expire at the close of business on May
16, 2007.
12. STOCK BASED COMPENSATION PLANS
The Company has stock option and restricted stock purchase plans which provide
for granting of options and/or restricted stock for 6,922,500 shares to certain
employees and outside directors. The options vest primarily over a five year
period at each anniversary date of the grant. These options expire following
termination of employment or within ten years of the date of the grant,
whichever comes first. Pro forma disclosures are provided for fiscal 1997 and
1996 as if the company had adopted the cost recognition requirements of FAS 123
"Accounting for Stock-based Compensation".
The fair value of each stock option grant is estimated on the date of grant
using The Black-Scholes pricing model with the following assumptions for grants
in 1997 and 1996: 1) expected dividend yields of 0% 2) risk-free interest rates
ranging from 5.35% to 6.78%, 3) expected volatility of 30%, and 4) a weighted
average expected life of 5.3 years. For the purpose of pro forma disclosures,
the estimated fair value of the options is amortized to expense over the
options' vesting period of 5 years for employees. Using these assumptions, the
weighted average fair value per option share at date of grant for options
granted during 1997 and 1996 was $15.08 and $12.43, respectively.
Had compensation expense been recognized for the Company's stock-based
compensation plans in accordance with FAS 123, the net earnings and net earnings
per common share for the years ended June 30, 1997 and 1996 would have been as
follows (in thousands, except per share data):
1997 1996
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
- --------------------------------------------------------------------------
NET EARNINGS $40,751 $38,072 $18,024 $17,100
NET EARNINGS
PER COMMON
SHARE $ 1.55 $ 1.46 $ 0.72 $ 0.68
- --------------------------------------------------------------------------
The effect of applying FAS 123 for only 1997 and 1996 option grants may not be
representative of the pro forma impact in future years.
30
<PAGE>
The following is a summary of stock option activity for the years ended
June 30, 1997, 1996, and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 3,175,692 $24.93 2,681,471 $17.90 2,383,745 $16.40
Options Granted 839,300 $36.03 1,304,800 $28.94 583,470 $20.76
Options Exercised (411,931) $17.54 (628,768) $14.42 (138,300) $ 4.01
Options Cancelled (161,433) $30.20 (181,811) $20.75 (147,444) $19.16
Outstanding at end of year 3,441,628 $29.06 3,175,692 $24.93 2,681,471 $17.89
Exercisable at end of year 1,096,085 $22.76 869,296 $17.51 1,012,228 $13.96
</TABLE>
The following summarizes information about the Company's stock options
outstanding at June 30, 1997:
<TABLE>
<CAPTION>
Weighted Weighted Weighted
Average Average Average
Exercise Remaining Life Exercise Price
Range of Exercise Prices Options Outstanding Price (in years) Exercisable of Exercisable
<S> <C> <C> <C> <C> <C>
$00.01-$10.00 423,609 $3.44 4.40 380,892 $3.13
$10.01-$20.00 717,119 $18.98 6.29 401,293 $18.98
$20.01-$30.00 1,104,100 $24.32 7.71 229,100 $24.14
$30.01-$40.00 1,196,800 $35.90 9.22 84,800 $35.93
</TABLE>
13. SUBSEQUENT EVENT
On August 15,1997, the Company completed its acquisition of Charter Systems,
Inc. (Charter) through the issuance of 588,945 shares of BISYS common stock and
exchange of 258,605 BISYS equivalent stock options for all the outstanding
shares and stock options of Charter. The transaction will be accounted for as a
pooling of interests, although historical financial statements will not be
restated due to immateriality. The value of the transaction is approximately
$33.5 million and the Company is expected to incur merger transaction expenses
of approximately $3.0 million, net of tax.
Charter provides network planning, design, implementation and 24-hour monitoring
and performance analysis for local and wide area network environments.
31
<PAGE>
THE BISYS GROUP, INC. AND SUBSIDIARIES
MARKET PRICE INFORMATION
(UNAUDITED)
The following information relates to the Company's $0.02 par value common stock
which trades in the over-the-counter market and is quoted in the NASDAQ
National Market System under the symbol BSYS. Price information of the Company's
common stock is presented below:
FISCAL 1997
QUARTER ENDED HIGH LOW
September 30, 1996 $41 1/2 $29
December 31, 1996 43 3/8 34 3/4
March 31, 1997 37 1/4 27 7/8
June 30, 1997 42 1/8 28 1/4
- --------------------------------------------------------------------------------
FISCAL 1996
QUARTER ENDED HIGH LOW
September 30, 1995 $29 $21 3/4
December 31, 1995 31 1/8 24 3/4
March 31, 1996 33 1/2 27 1/4
June 30, 1996 38 3/4 32
- --------------------------------------------------------------------------------
At June 30, 1997, the Company's common stock was held by approximately 3,700
stockholders of record or through nominee or street name accounts with brokers.
CONSOLIDATED QUARTERLY RESULTS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL 1997
- -----------------------------------------------------------------------------------------------------------
QUARTERS ENDED SEP 30 DEC 31 MAR 31 JUN 30
<S> <C> <C> <C>
Revenues $72,395 $74,797 $83,961 $87,835
Operating earnings 12,274 14,433 17,591 21,404
Earnings before income tax provision 12,778 14,926 18,256 21,958
Net earnings 7,666 8,957 10,952 13,176
Net earnings per common share 0.29 0.34 0.42 0.50
- -----------------------------------------------------------------------------------------------------------
Weighted average common and
common equivalent shares
outstanding 26,341 26,394 26,237 26,364
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
FISCAL 1996
- -----------------------------------------------------------------------------------------------------------
QUARTERS ENDED SEP 30 DEC 31 MAR 31 JUN 30
<S> <C> <C> <C> <C>
Revenues $52,272 $55,943 $65,923 $72,923
Operating earnings (loss) 8,856 11,039 15,004 (5,011)
Earnings (loss) before income
tax provision 8,742 11,051 15,214 (4,747)
Net earnings (loss) 5,421 6,851 9,444 (3,692)
Net earnings (loss) per common share 0.22 0.28 0.38 (0.14)
- -----------------------------------------------------------------------------------------------------------
Weighted average common and
common equivalent shares
outstanding 24,366 24,676 24,923 26,088
- -----------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES OF THE BISYS GROUP, INC. AS OF JUNE 30, 1997
-----------------------------------------------------------------
1. BISYS, Inc., a Delaware corporation.
(a) BISYS/STDS, Inc., a Georgia corporation.
2. BISYS Qualified Plan Services, Inc., a Delaware corporation.
3. BISYS Research Services, Inc., a Delaware corporation.
4. BISYS Fund Services, Inc., a Delaware corporation ("Fund Services").
(a) WC Subsidiary Corp., a Delaware corporation (a subsidiary of Fund
Services).
(b) BISYS Fund Services Ohio, Inc., an Ohio corporation (a subsidiary of
Fund Services).
(c) BISYS Fund Services L.P., an Ohio limited partnership (Fund Services
is the sole general partner).
(d) OFFITT Funds Distributor, Inc.
(e) Life Cycle Mutual Funds Distributors, Inc.
(f) Centura Fund Distributor, Inc.
(g) Performance Funds Distributor, Inc.
(h) Barr-Rosenberg Fund Distributor, Inc.
(i) Evergreen Fund Distributors, Inc.
(j) IBJ Funds Distributor, Inc.
5. CHS Insurance Services, Inc., a Delaware corporation.
(a) BISYS Ohio Agency, Inc., an Ohio corporation (80% owned by)
6. The One Group Services Company, a Delaware corporation.
7. Document Solutions, Inc., a Delaware corporation.
8. Concord Holding Corporation, a Delaware corporation ("Concord").
(a) BNY Hamilton Distributor, Inc., a Delaware corporation (a subsidiary
of Concord).
(b) Concord Financial Services, Inc., a Delaware corporation (a subsidiary
of Concord).
(c) Concord Financial Group, Inc., a Delaware corporation (a subsidiary of
Concord).
(d) BISYS Fund Services (Ireland) Limited, an Ireland corporation (a
subsidiary of Concord).
(e) Emerald Asset Management, Inc., a Florida corporation (a subsidiary of
Concord).
<PAGE>
(f) Infinity Advisers, Inc., a Delaware corporation (a subsidiary of
Concord).
(g) Pilot Fund Distributors, Inc., a Delaware corporation (a subsidiary of
Concord).
(h) Five Arrows Fund Distributor, Inc., a Delaware corporation (a
subsidiary of Concord).
(i) Vista Fund Distributor, Inc., a Delaware corporation (a subsidiary of
Concord).
(j) Concord (Cayman Islands) Limited, a Cayman Islands corporation (a
subsidiary of Concord).
(k) Parkstone Services Company, a Delaware corporation (a subsidiary of
Concord).
9. T.U.G., Inc., a Pennsylvania corporation.
(a) Underwriters Service of Maryland, Inc.
(b) Underwriters Equity Corp.
(c) T.U.G., Inc. of Hawaii (Inactive)
(d) Step Administration, Inc. (Inactive)
(e) Brokerage Systems, Inc. (Inactive)
(f) T.U.G. Holding Co.
(g) Crums Mill Associates (Partnership, 66.68% ownership)
(h) TTSG (Partnership, 50% Ownership)
(i) Dector/T.U.G. Group (Partnership/50% ownership)
10. BISYS Creative Solutions, Inc., a Delaware corporation.
11. ASO Services Co., Inc., a Delaware corporation.
<PAGE>
Exhibit 23
COOPERS COOPERS & LYBRAND L.L.P.
& LYBRAND A professional services firm
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
The BISYS Group, Inc. on Forms S-8 (File Nos. 33-91666, 33-91676, and 333-02966)
and in the Registration Statements of The BISYS Group, Inc. on Form S-3 (File
Nos. 33-98894 and 333-16813) of our report dated August 15, 1997 on our audits
of the consolidated financial statements of The BISYS Group, Inc. and
subsidiaries as of June 30, 1997 and 1996, and for each of the three years in
the period ended June 30, 1997, which report is incorporated by reference in
this Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
New York, New York
September 16, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements of the BISYS Group, Inc. and Subsidiaries for
the year ended June 30, 1997 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 79,951
<SECURITIES> 0
<RECEIVABLES> 62,660
<ALLOWANCES> 2,673
<INVENTORY> 0
<CURRENT-ASSETS> 152,001
<PP&E> 59,220
<DEPRECIATION> 27,109
<TOTAL-ASSETS> 265,085
<CURRENT-LIABILITIES> 64,360
<BONDS> 1,585
0
0
<COMMON> 505
<OTHER-SE> 191,414
<TOTAL-LIABILITY-AND-EQUITY> 191,919
<SALES> 0
<TOTAL-REVENUES> 318,988
<CGS> 0
<TOTAL-COSTS> 170,717
<OTHER-EXPENSES> 14,021
<LOSS-PROVISION> 1,494
<INTEREST-EXPENSE> 269
<INCOME-PRETAX> 67,918
<INCOME-TAX> 27,167
<INCOME-CONTINUING> 40,751
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,751
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.53
</TABLE>
