================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
---------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
---------------
COMMISSION FILE NUMBER: 0-20724
THE WYATT COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 53-0181291
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
601 13th Street, N.W.
Suite 1000
Washington, D.C. 20005
(Address of principal executive offices, including zip code)
Telephone Number (202) 508-4600
(Registrant's telephone number, including area code)
_______________________________________________________________________________
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of May 8, 1996.
Common Stock, $1.00 par value 18,937,040
- - ----------------------------- ------------
Class Number of Shares
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE WYATT COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of U.S. Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
Quarters Ended March 31, Nine Months Ended March 31,
------------------------ --------------------------
1996 1995 1996 1995
----------- ----------- ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Fees $ 126,080 $ 122,566 $ 361,871 $ 359,507
Costs of providing services:
Salaries and employee benefits 62,105 65,276 182,950 188,457
Occupancy and communications 16,533 18,823 48,746 55,014
Professional and subcontracted services 17,619 13,083 51,141 41,848
Other 6,381 6,933 18,335 20,098
--------- --------- ---------- ----------
102,638 104,115 301,172 305,417
General and administrative expenses 9,567 11,542 28,547 34,205
Depreciation and amortization 7,680 7,040 19,258 16,329
--------- --------- ---------- ----------
119,885 122,697 348,977 355,951
Income (loss) from operations 6,195 (131) 12,894 3,556
Other:
Interest income 210 157 975 1,037
Interest expense (243) (432) (733) (1,129)
Income from affiliates 390 - 107 -
--------- --------- ---------- ----------
Income (loss) before income taxes, minority interest and
cumulative effect of a change in accounting 6,552 (406) 13,243 3,464
Provision for income taxes 2,918 (570) 7,495 2,042
--------- --------- ---------- ----------
Income before minority interest and cumulative
effect of a change in accounting 3,634 164 5,748 1,422
Minority interest in net (income) loss of consolidated subsidiaries 54 (78) (71) (76)
--------- --------- ---------- ----------
3,688 86 5,677 1,346
Cumulative effect of a change in accounting for
postemployment benefits, net of tax benefit of $1,000 - - - (800)
--------- --------- ---------- ----------
Net income $ 3,688 $ 86 $ 5,677 $ 546
========= ========= ========== ==========
Earnings (loss) per share:
Income before cumulative effect of a change in accounting $ 0.20 $ 0.00 $ 0.31 $ 0.07
Cumulative effect of a change in accounting 0.00 0.00 0.00 (0.04)
--------- --------- ---------- ----------
Net income $ 0.20 $ 0.00 $ 0.31 $ 0.03
========= ========= ========== ==========
</TABLE>
See accompanying notes
- 2 -
<PAGE>
THE WYATT COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
March 31, June 30,
1996 1995
----------- -----------
ASSETS (unaudited)
<S> <C> <C>
Cash and cash equivalents $ 16,831 $ 11,860
Receivables from clients:
Billed, net of allowances 73,522 82,072
Unbilled 52,999 55,291
--------- ---------
126,521 137,363
Income taxes receivable 2,118 2,055
Other current assets 8,362 6,966
--------- ---------
Total current assets 153,832 158,244
Investment in affiliates 34,829 18,783
Fixed assets 36,172 36,776
Deferred income taxes 34,818 33,784
Deferred software and development costs 35,346 28,979
Other intangible assets 4,461 3,002
Other assets 8,930 7,054
--------- ---------
$ 308,388 $ 286,622
========= =========
LIABILITIES, REDEEMABLE COMMON STOCK, AND PERMANENT SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 78,520 $ 74,773
Income taxes payable 5,419 436
Deferred income taxes 33,752 33,209
--------- ---------
Total current liabilities 117,691 108,418
Accrued retirement benefits 83,707 75,232
Deferred rent 11,911 12,908
Other noncurrent liabilities 9,643 10,030
Minority interest in subsidiaries 384 321
Redeemable Common Stock - $1 par value:
25,000,000 shares authorized;
19,177,035 and 19,129,706 issued
and outstanding; at redemption value 86,488 86,275
Permanent shareholders' equity:
Adjustment for redemption value greater than amounts paid in by shareholders (31,280) (35,179)
Retained earnings 28,584 26,887
Cumulative translation gain 1,260 1,730
Commitments and contingencies - -
--------- ---------
$ 308,388 $ 286,622
========= =========
</TABLE>
See accompanying notes
- 3 -
<PAGE>
THE WYATT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
Nine Months Ended March 31,
----------------------------
1996 1995
---------- -----------
<S> <C> <C>
(Unaudited)
Cash flows from operating activities:
Net income $ 5,677 $ 546
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for doubtful receivables from clients 4,133 3,276
Depreciation and amortization 11,126 11,479
Amortization of deferred software and development costs
and other intangible assets 8,132 4,850
Change in working capital 20,931 (17,479)
Deferred income taxes (491) 6,056
Income from affiliates (107) -
Minority interest in net income of consolidated subsidiaries 71 76
Other (277) 643
--------- ---------
Net cash provided by operating activities 49,195 9,447
--------- ---------
Cash flows from investing activities:
Purchase of short-term investments - 2,530
Purchases of fixed assets (17,059) (14,266)
Proceeds from sales of fixed assets 4,714 326
Acquisitions (1,945) (562)
Investment in software and systems (25,883) (13,176)
Investment in affiliates (4,054) -
--------- ---------
Net cash used in investing activities (44,227) (25,148)
--------- ---------
Cash flows from financing activities:
Net borrowings - 7,904
Issuances of Redeemable Common Stock 10,013 7,455
Repurchases of Redeemable Common Stock (9,881) (7,349)
--------- ---------
Net cash provided by financing activities 132 8,010
--------- ---------
Effect of exchange rate changes on cash (129) 418
--------- ---------
Increase (decrease) in cash and cash equivalents 4,971 (7,273)
Cash and cash equivalents at beginning of period 11,860 26,259
--------- ---------
Cash and cash equivalents at end of period $ 16,831 $ 18,986
========= =========
</TABLE>
See accompanying notes
- 4 -
<PAGE>
THE WYATT COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN PERMANENT SHAREHOLDERS' EQUITY
(Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
Adjustment For Redemption
Cumulative Value Greater Than Amounts
Retained Translation Paid In By
Earnings Gain Shareholders
----------- ----------- ------------
<S> <C> <C> <C>
Balance at June 30, 1995 $ 26,887 $ 1,730 $ (35,179)
Net income 5,677
Effect of repurchases of 2,173,818 shares of
common stock (various prices per share) (3,980) 3,980
Foreign currency translation adjustment (470)
Adjustment of redemption value for change
in Formula Book Value per share (81)
---------- ---------- ----------
Balance at March 31, 1996 (unaudited) $ 28,584 $ 1,260 $ (31,280)
========== ========== ==========
</TABLE>
See accompanying notes
- 5 -
<PAGE>
THE WYATT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying unaudited consolidated financial statements of The Wyatt
Company and its subsidiaries, (collectively, "Wyatt" or "the Company"), are
presented in accordance with the rules and regulations of the Securities
and Exchange Commission and do not include all of the disclosures normally
required by generally accepted accounting principles. In the opinion of
management, these statements reflect all adjustments, consisting only of
normal recurring adjustments, which are necessary for a fair presentation
of the consolidated financial statements for the interim periods. The
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto contained in
the Company's Form 10-K for the year ended June 30, 1995.
The results of operations for the nine months ended March 31, 1996, are not
necessarily indicative of the results that can be expected for the entire
fiscal year ending June 30, 1996. Certain prior year amounts have been
reclassified to conform to the current year presentation.
2. On March 31, 1996, the Company transferred the employee benefits
administrative outsourcing operations of Wyatt PREFERRED CHOICE(R)("WPC"),
including certain deferred systems development costs totaling approximately
$11.9 million, to a newly formed limited liability company, Wellspring
Resources, LLC ("Wellspring"). Wellspring also acquired the furniture,
fixtures and equipment of the WPC Jacksonville and Washington based
operations at Wyatt's carrying value of $3.9 million and paid Wyatt a
licensing fee of $1.0 million for the use of certain software. This
licensing fee will be deferred and amortized over 3 years. The new company,
owned 50% by Wyatt and 50% by State Street Bank and Trust Company ("State
Street"), will provide benefits and human resources administration
outsourcing services. Wellspring's future capital requirements and
operating results will be shared by Wyatt and State Street in proportion to
their ownership interests. Wyatt accounts for this investment using the
equity method.
Concurrent with the Wellspring transaction, State Street acquired Wyatt's
daily valuation defined contribution recordkeeping operations for a cash
payment to Wyatt of $3.5 million, which approximated the Company's carrying
value.
3. In connection with the formation of Wellspring, Wyatt retained certain
client contracts for administrative and recordkeeping service and entered
into agreements, whereby Wellspring will provide the services to Wyatt and
those clients. In management's opinion, these agreements are on terms
equivalent to those which unaffiliated parties would deem reasonable.
Identifiable implementation costs associated with these long-term contracts
to provide clients with administrative and recordkeeping services are
deferred and amortized to expense ratably over the estimated remaining life
of the respective contracts upon the commencement of services under each
contract. The deferred costs totaled $25.5 million and $17.0 million as of
March 31, 1996 and June 30, 1995, respectively.
A portion of the fees received by Wyatt under these long-term contracts are
deferred until the applicable services are commenced, from which point the
deferred fees are recognized ratably over the remaining life of the
contract. The deferred fees related to these contracts are included in
other noncurrent liabilities and totaled $5.9 million and $8.5 million as
of March 31, 1996 and June 30, 1995, respectively.
- 6 -
<PAGE>
4. Under the Company's stock purchase plan, the Company is obligated to
repurchase its Redeemable Common Stock, except in certain circumstances.
Accordingly, the redemption value of outstanding shares is classified as
Redeemable Common Stock and not as permanent shareholders' equity.
Redeemable Common Stock is equal to the number of shares outstanding
multiplied by the Formula Book Value per share, which was $4.51 per share
at March 31, 1996 and June 30, 1995. Permanent shareholders' equity
includes an adjustment for the difference between the redemption value of
the Redeemable Common Stock and the amounts actually paid by shareholders
for the shares.
5. During the nine months ended March 31, 1996, the company repurchased
2,173,818 shares of common stock, at various prices per share. The
computation of earnings per share is based upon the weighted average number
of shares of common stock outstanding during the period. The number of
shares used in the computation is 18,130,000 and 18,997,000 for the three
months ended March 31, 1996 and 1995, respectively, and 18,501,000 and
19,243,000 for the nine months period ended March 31, 1996 and 1995,
respectively.
6. On July 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 112 (SFAS 112), "Employer's Accounting for Postemployment
Benefits". SFAS 112 requires accrual accounting for benefits provided to
employees after employment but before retirement; in Wyatt's case, these
benefits relate to the Company's long term disability plan. Previously, the
Company recorded the expenses associated with these benefits as they were
paid. Adoption of SFAS 112 required the Company to record the cumulative
liability and corresponding expense of $1.8 million, net of $1.0 million in
income tax benefits, in the quarter ended September 30, 1994 for the
cumulative effect of a change in accounting.
7. On April 1, 1995, the Company transferred its United Kingdom operations to
R Watson & Sons ("Watsons"), and received a beneficial interest and a 10%
interest in a defined profit pool of the partnership. The Company also
transferred its Continental European operations to a newly formed holding
company owned by Wyatt and Watsons in exchange for 50.1% of the shares.
Wyatt accounts for these investments on the equity method and their net
results are recorded within the caption "Income from Affiliates" on the
statement of operations.
- 7 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
GENERAL
The Wyatt Company, together with its affiliates and consolidated subsidiaries,
(collectively, "Wyatt" or "the Company"), provides human resource and employee
benefits consulting and administrative/recordkeeping services. The Company also
provides a broad range of services in risk management and general insurance and
investment consulting, and derives fees from sales of surveys and licensing of
software. The Company works with organizations of all sizes, from the largest
multinationals to public employers and nonprofit institutions.
Wyatt's fiscal year ends June 30. The financial statements contained in this
quarterly report reflect consolidated balance sheets as of the end of the third
quarter of fiscal year 1996 (March 31, 1996) and as of the end of the prior
fiscal year 1995 (June 30, 1995), and consolidated statements of operations, of
cash flows and of changes in permanent shareholders' equity for the three and
nine months ended March 31, 1996 and 1995.
RESULTS OF OPERATIONS--THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1996
COMPARED TO THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1995.
For the first nine months of fiscal year 1996 the Company produced net income of
$5.7 million, an increase of $5.2 million over net income of $.5 million for the
first nine months of fiscal year 1995. The improvement is due largely to
increases in associate utilization and new client growth. The rate of increased
revenues has outpaced both inflation and expense growth during the period.
Fiscal year 1996 results also include a net pension curtailment gain of $1.7
million arising primarily from participants who joined new plans of the
Company's affiliates. Fiscal year 1995 results include a net charge of $.8
million related to the cumulative effect of a required change in accounting for
postemployment benefits.
Fees for the first nine months of fiscal year 1996 total $361.9 million compared
to $359.5 million for the first nine months of fiscal year 1995. Fiscal year
1995 results include fees of $11.0 million for the third quarter and $30.0
million for the first nine months related to the European operations that were
transferred to the Watsons affiliate and the newly formed holding company,
Watson Wyatt Holdings (Europe) Limited (WWHE), as described in Note 7 to the
consolidated financial statements. Excluding the effect of this transfer, fee
revenue increased $14.5 million, or 13% in the third quarter and $32.4 million,
or 10% year-to-date. Revenue growth has occurred across most lines of business,
including the WPC outsourcing business and in the Company's Asia/Pacific
operations. Average billable hours per associate increased as compared with last
year.
The Company produced income before income taxes, minority interest and
cumulative effect of a change in accounting of $6.6 million during the third
quarter of fiscal year 1996 compared to a loss of $.4 million in the third
quarter of fiscal year 1995, an improvement of $7.0 million. The Company
experienced income after-tax of $3.7 million on fees generated during the
quarter of $126.1 million. For the same quarter last year, the company had net
income of $.1 million on fees totaling $122.6 million.
Salaries and employee benefit expenses for the third quarter of fiscal year 1996
were $62.1 million, a decrease of $3.2 million, or 5%, from the third quarter of
fiscal year 1995. The Company incurred salaries and employee benefit expenses of
$183.0 million in the first nine months of fiscal year 1996, a decrease of $5.5
million, or 3%, from the prior fiscal year expense of $188.5 million. The
decrease results primarily from the previously mentioned transfer of the
European operations and an increase in deferred salary costs
- 8 -
<PAGE>
related to the WPC outsourcing business, partially offset by normal annual
salary increases and increases in the Company's bonus plan accrual.
Occupancy and communication expenses during the third quarter of fiscal year
1996 totaled $16.5 million, a decrease of $2.3 million, or 12%, from the third
quarter of the prior year. Occupancy and communication expenses for the first
nine months of fiscal year 1996 totaled $48.7 million, a decrease of $6.3
million, or 11%, from the first nine months of fiscal year 1995. The decrease in
expenses is primarily attributable to the exclusion of the European operating
results from fiscal year 1996.
Professional and subcontracted services relating to consulting offices were
$17.6 million during the third quarter of fiscal year 1996, an increase of $4.5
million, or 35% over fiscal year 1995. For the first nine months of fiscal year
1996, professional and subcontracted services totaled $51.1 million, an increase
of $9.3 million, or 22% over the first nine months of fiscal year 1995. This
increase is related to the expansion of the WPC operation and revenue growth in
other lines of business.
Other costs of providing services, which include travel and hotel, publications,
and general office expenses, were $6.4 million for the third quarter of fiscal
year 1996, a decrease of $0.5 million, or 8%, from the third quarter of fiscal
year 1995. For the first nine months of fiscal year 1996, other costs of
providing services decreased $1.8 million, or 9%, from $20.1 million to $18.3
million.
General and administrative ("G&A") expenses for the third quarter of fiscal year
1996 were $9.6 million, a $2.0 million, or 17%, decrease from the third quarter
of fiscal year 1996. G&A expenses of $28.5 million for the first nine months of
fiscal year 1996 have decreased $5.7 million, or 17%, from fiscal year 1995.
During fiscal year 1995 the Company incurred G&A expenses, many of which were of
a nonrecurring nature, in the course of making a number of important changes to
the Company. For fiscal year 1996, the Company has reduced its overall G&A
function and related expenditures, which is reflected in the decrease between
years.
Depreciation and amortization expense of $7.7 million for the third quarter of
fiscal year 1996 represents an increase of $.6 million over the third quarter of
fiscal year 1995. For the first nine months of fiscal year 1996, depreciation
expense has increased $2.9 million, or 18%, over the prior year expense of $16.3
million. The increased expense is primarily due to the amortization of
capitalized software costs.
Income before income taxes, minority interest and cumulative effect of a change
in accounting of $13.2 million for the first nine months of fiscal year 1996
resulted in a tax provision of $7.5 million. This compares to a provision of
$2.0 million on $3.5 million of income before income taxes, minority interest
and cumulative effect of a change in accounting for the first nine months of
fiscal year 1995. The effective tax rates for the nine months ending March 31,
1996 and March 31, 1995, including tax benefits relating to the cumulative
effect of a change in accounting in fiscal year 1995, were 57% and 59%,
respectively.
LIQUIDITY AND CAPITAL RESOURCES.
The Company relies primarily on funds from operations and short-term borrowings
as its source of liquidity. The Company believes that it has access to ample
financial resources to finance its growth as well as support ongoing operations.
The Company's cash and cash equivalents at March 31, 1996 totaled $16.8 million,
compared to $11.9 million at June 30, 1995. The Company had no borrowings at
March 31, 1996 and at June 30, 1995.
CASH FROM OPERATIONS. During fiscal year 1996 the Company implemented improved
billing and collection practices to strengthen the role of working capital
management in its profit goals. These practices have
- 9 -
<PAGE>
contributed to an improvement in the Company's cash flows. For the first nine
months of fiscal year 1996, the Company generated cash flows from operations of
$49.2 million, compared to cash flows from operations of $9.4 million for the
first nine months of fiscal year 1995, an improvement of $39.8 million. This
improvement was due primarily to increases in working capital cash flows and net
income.
The Company's operating cash flow is generally stable and typically does not
fluctuate widely within an economic cycle. The Company's ratio of current assets
to current liabilities was 1.3 at March 31, 1996 and 1.5 at June 30, 1995.
CASH FROM INVESTING ACTIVITIES. Investing activity cash outflow was $44.2
million for the nine months of fiscal year 1996, versus $25.1 million in 1995,
primarily due to the effect of increased investment in the benefits outsourcing
business, the acquisition of HRE, Inc., and expansion of the Company's
consulting offices.
Anticipated commitments of funds for the remainder of fiscal year 1996 include
estimated capital expenditures of $3.6 million. Through its partnership with
State Street, the Company expects in fiscal 1997 and 1998 to grow its
outsourcing client base and expand Wellspring into other areas of human
resources administration. Both firms will share equally in the future capital
requirements of Wellspring. The Company expects that its share of the ongoing
capital requirements of Wellspring will be funded primarily through operating
cash flows.
The Company also has an $80 million revolving credit line which matures on
January 5, 2001. Fifty-five million dollars of the credit line is available to
the Company as revolving credit for operating needs, subject to certain
borrowing limitations.
CASH FROM FINANCING ACTIVITIES. Cash flow provided by financing activities was
$.1 million for the first nine months of fiscal year 1996, versus $8.0 million
in the preceding year. The decrease is due primarily to the level of borrowing
in 1995. The company had no significant borrowing in the first nine months of
fiscal year 1996 as a result of improvements in operating cash flows.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Wyatt is from time to time a defendant in various lawsuits which arise in the
ordinary course of business. These disputes typically involve claims relating to
employment matters or the rendering of professional services. The management of
the Company does not believe that any such currently pending or threatened
litigation is likely to have a material adverse effect on the business or
financial condition of Wyatt.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
- 10 -
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORMS 8-K
a. Exhibits
4.1 Form of Certificate Representing Common Stock of The Wyatt Company(1)
4.2 Section 9 of the Company's Bylaws, defining the rights of shareholders(2)
10.1 Third Amended and Restated Credit and Security Agreement,
dated January 5, 1996(3)
b. Reports on Form 8-K
Current Report on Form 8-K (File No. 0-20724), filed on January 23, 1996.
- - -----------
(1) Incorporated by reference from Registrant's Initial Registration Statement
on Form 10 (File No. 0-20724), filed on October 13, 1992.
(2) Incorporated by reference from Registrant's amended Registration Statement
on Form 10A (File No. 0-20724), filed on December 30, 1994.
(3) Filed herewith
- 11 -
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 8, 1996
The Wyatt Company
(Registrant)
/S/ A. W. Smith, Jr. /S/ Barbara L. Landes
- - ----------------------------- -----------------------------
Name: A. W. Smith, Jr. Name: Barbara L. Landes
Title: President and Chief Title: Vice President, Finance and
Executive Officer Chief Financial Officer
- 12 -
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1995
<PERIOD-END> Mar-31-1996
<CASH> 16,831
<SECURITIES> 0
<RECEIVABLES> 127,519
<ALLOWANCES> 998
<INVENTORY> 0
<CURRENT-ASSETS> 153,832
<PP&E> 132,829
<DEPRECIATION> 96,657
<TOTAL-ASSETS> 308,388
<CURRENT-LIABILITIES> 117,691
<BONDS> 105,261
0
0
<COMMON> 19,177
<OTHER-SE> 65,875
<TOTAL-LIABILITY-AND-EQUITY> 308,388
<SALES> 0
<TOTAL-REVENUES> 361,871
<CGS> 301,172
<TOTAL-COSTS> 348,977
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 733
<INCOME-PRETAX> 13,243
<INCOME-TAX> 7,495
<INCOME-CONTINUING> 5,677
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,677
<EPS-PRIMARY> .31
<EPS-DILUTED> 0
</TABLE>
THIRD AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
by and among
THE WYATT COMPANY (d/b/a Watson Wyatt Worldwide),
WYATT PREFERRED CHOICE, LLC,
WYATT PREFERRED CHOICE, L.P.,
WYATT INVESTMENT CONSULTING, INC.,
Borrowers,
NATIONSBANK, N.A.,
Agent,
and
MELLON BANK, N.A.,
NBD BANK,
NATIONSBANK, N.A.,
the Banks.
Dated as of January 5, 1996
$80,000,000
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS
Section 1.1. Definitions........................................... 2
Section 1.2. Accounting Terms and Determinations.................. 13
Section 1.3. Other Definitional Provisions........................ 13
ARTICLE II. LOANS AND PAYMENTS...................................... 14
Section 2.1. Loans................................................ 14
Section 2.2. Loan Procedures and Use of Proceeds;
Servicing............................................ 17
Section 2.3. The Banks' Obligations Under the Loans............... 19
Section 2.4. Extension and Conversion............................. 19
Section 2.5. Letters of Credit.................................... 20
Section 2.6. Repayment............................................ 26
Section 2.7. Interest............................................. 26
Section 2.8. Prepayments; Commitment Increase; Reduction
or Termination....................................... 27
Section 2.9. Fees................................................. 29
Section 2.10. Method of Payment.................................... 30
Section 2.11. Application of Collections........................... 31
Section 2.12. Capital Adequacy..................................... 32
Section 2.13. Inability To Determine Interest Rate................. 32
Section 2.14. Illegality........................................... 33
Section 2.15. Requirements of Law.................................. 33
Section 2.16. Taxes................................................ 34
Section 2.17. Indemnity............................................ 37
ARTICLE III. SECURITY............................................. 37
Section 3.1. Security Interests................................... 37
Section 3.2. Perfection and Administration........................ 38
Section 3.3. Power of Attorney; Notice............................ 39
Section 3.4. Guaranty............................................. 39
Section 3.5. Pledge Agreements; Pledged Shares.................... 39
ARTICLE IV. REPRESENTATIONS AND WARRANTIES....................... 40
Section 4.1. Organization......................................... 41
Section 4.2. Authorization........................................ 41
Section 4.3. Validity............................................. 42
Section 4.4. Governmental Approvals............................... 42
Section 4.5. Litigation........................................... 42
Section 4.6. Financial Condition.................................. 43
Section 4.7. Records and Business Location........................ 43
Section 4.8. Security Interests................................... 43
Section 4.9. Encumbrances......................................... 43
Section 4.10. ERISA................................................ 44
Section 4.11. Margin Stock......................................... 44
Section 4.12. Taxes................................................ 44
Section 4.13. Burdensome Documents................................. 44
Section 4.14. Environmental Matters................................ 44
Section 4.15. Employee Loans; Stock Plan; Qualified
Employee Status...................................... 45
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ARTICLE V. CONDITIONS PRECEDENT................................. 45
Section 5.1. Conditions Precedent to Closing...................... 45
Section 5.2. Conditions Precedent to Loans and Issuance of
Letters of Credit.................................... 46
ARTICLE VI. AFFIRMATIVE COVENANTS................................ 48
Section 6.1. Payments Hereunder............................... 48
Section 6.2. Existence and Good Standing; Insurance;
Conduct.......................................... 48
Section 6.3. Taxes and Charges................................ 48
Section 6.4. Financial Statements............................. 49
Section 6.5. Reports.......................................... 50
Section 6.6. Loan Balances.................................... 51
Section 6.7. Uncertificated Securities........................ 51
Section 6.8. Positive Net Worth............................... 52
Section 6.9. Notification to Employees........................ 52
ARTICLE VII. NEGATIVE COVENANTS................................... 52
Section 7.1. Mergers and Related Transactions................. 52
Section 7.2. Encumbrances and Loans........................... 53
Section 7.3. Sales and Dispositions........................... 54
Section 7.4. Fiscal Year; Governing Documents................. 54
Section 7.5. Investments...................................... 54
Section 7.6. Financial Requirements........................... 55
Section 7.7. Franchises....................................... 56
Section 7.8. Certificated Securities.......................... 56
Section 7.9. Capital Expenditures............................. 56
Section 7.10. Transaction with Affiliates...................... 56
Section 7.11. Limitation on Restrictions on Subsidiary
Dividends and Other Distributions, etc........... 56
Section 7.12. Issuance and Sale of Subsidiary Stock............ 57
ARTICLE VIII. DEFAULT.............................................. 57
Section 8.1. Events of Default................................ 57
Section 8.2. Acceleration..................................... 59
Section 8.3. Right of Setoff.................................. 59
Section 8.4. Rights to Collateral............................. 60
ARTICLE IX. BANKS AND AGENT...................................... 61
Section 9.1. Appointment of Agent............................. 61
Section 9.2. Responsibilities and Powers of Agent............. 61
Section 9.3. No Action by Individual Banks.................... 63
Section 9.4. Occurrence of an Event of Default................ 63
Section 9.5. Procedure on Default............................. 64
Section 9.6. Liquidation...................................... 64
Section 9.7. Notice of Actions................................ 64
Section 9.8. Indemnification.................................. 64
Section 9.9. Resignation...................................... 65
Section 9.10. Default by Agent................................. 66
Section 9.11. Defaults By Banks............................... 66
Section 9.12. Other Obligations................................ 68
Section 9.13. Rescission of Payments........................... 69
Section 9.14. Application of Collateral Proceeds............... 69
Section 9.15. Representations of Banks......................... 69
Section 9.16. Termination of Commitments....................... 70
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Section 9.17. Rounding......................................... 70
Section 9.18. Interest Swap Provider........................... 70
ARTICLE X. MISCELLANEOUS........................................ 70
Section 10.1. Rights and Waivers............................... 70
Section 10.2. Binding Effect; Assignment....................... 71
Section 10.3. Severability..................................... 72
Section 10.4. Interpretation................................... 72
Section 10.5. Governing Law; Jury Trial........................ 72
Section 10.6. Payment of Expenses and Taxes; Indemnification... 73
Section 10.7. Survival of Representations and Warranties....... 73
Section 10.8. Notices.......................................... 73
Section 10.9. Execution........................................ 74
Section 10.10. Amendments....................................... 74
Section 10.11. Relationship of the Parties...................... 75
Section 10.12. Limitation on Joint Obligations.................. 75
Section 10.13. Rights of Contribution........................... 75
Section 10.14. Asset Services No Longer a Party................. 76
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<PAGE>
EXHIBITS
Exhibit A Replacement Revolving Credit Note
Exhibit B Employee Note
Exhibit C Guaranty
Exhibit D-1 Individual Pledge Agreement
Exhibit D-2 Personal Holding Company Pledge Agreement
Exhibit E Stock Power
Exhibit F Truth in Lending Disclosure Statement
Exhibit G Borrowing Base Certificate
Exhibit H Initial Transaction Statement
Exhibit I Periodic Transaction Statement
Exhibit J Agreement to Stock Pledge Agreements
Exhibit K Form of Notice of Borrowing
Exhibit L Form of Solvency Certificate
SCHEDULES
Schedule 1 Subsidiaries
Schedule 2 Permitted Noncompliance
Schedule 3 Litigation
Schedule 4 Jurisdictions -- Places of Business
Schedule 5 Burdensome Documents
Schedule 6 Real Property
Schedule 7 Indebtedness
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<PAGE>
THIRD AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT ("AGREEMENT")
is entered into as of this 5th day of January, 1996, by and among The Wyatt
Company (d/b/a Watson Wyatt Worldwide), a Delaware corporation with its
principal place of business in Washington, D.C. ("WYATT"), Wyatt Preferred
Choice, LLC, a Delaware limited liability company with its principal place of
business in Washington, D.C. ("WPC-LLC"), Wyatt Preferred Choice, L.P., a
Delaware limited partnership with its principal place of business in Washington,
D.C.("WPC-LP"), and Wyatt Investment Consulting, Inc., a Delaware corporation
with its principal place of business in Washington, D.C. ("WIC") (each of the
foregoing is a "Borrower" and, collectively, they are the "BORROWERS"), Wyatt
Asset Services, Inc., a Massachusetts corporation with its principal place of
business in Washington, D.C. ("ASSET SERVICES"), Mellon Bank, N.A. ("MELLON"),
NBD Bank ("NBD"), NationsBank, N.A. ("NATIONSBANK") (each of the foregoing banks
is individually, a "BANK" and, collectively, they are the "BANKS"), and
NationsBank, N.A., a national banking association and one of the Banks
hereunder, as agent for the Banks (in such capacity, together with any successor
in such capacity, the "AGENT").
WHEREAS, the Banks, the Agent, Wyatt, Asset Services, WPC-LLC and WPC-LP
are parties to (i) that Second Amended and Restated Credit and Security
Agreement dated February 11, 1994, as amended by that First Amendment to Second
Amended and Restated Credit and Security Agreement, dated as of September 15,
1994, and that Second Amendment to Second Amended and Restated Credit and
Security Agreement, dated as of March 24, 1995, and (ii) that certain Collateral
Transfer and Security Agreement dated as of July 1, 1994 (collectively, the
agreements referred to in clauses (i) and (ii) are referred to herein as the
"PRIOR AGREEMENT"), pursuant to which and on the terms and conditions stated
therein (a) the Banks agreed to provide a revolving credit facility to Wyatt,
Asset Services, WPC-LLC and WPC-LP in an aggregate principal amount not to
exceed $62,500,000 and (b) NationsBank agreed to make, and Mellon and NBD agreed
to purchase participations in, term loans, in an aggregate principal amount not
to exceed $32,500,000, to employees or associates ("QUALIFIED EMPLOYEES") of
Wyatt or of Wyatt subsidiaries or affiliates (as such terms are defined in
Article FOURTEENTH of Wyatt's Articles of Incorporation) in order to finance the
purchase of shares of Wyatt's common stock by such Qualified Employees; and
WHEREAS, Wyatt, Asset Services, WPC-LLC and WPC-LP desire to amend the
Prior Agreement to, among other things (1) extend the term of the revolving
credit facility under the Prior Agreement, (2) add WIC as a Borrower, (3) remove
Asset Services as a Borrower and (4) modify certain of the covenants and
agreements contained in the Prior Agreement; and
WHEREAS, the Banks are agreeable to such amendments upon the terms and
conditions of this Agreement.
<PAGE>
NOW, THEREFORE, in consideration of their mutual covenants and agreements
contained herein, the parties hereby covenant and agree, and the Prior Agreement
is hereby amended and restated in its entirety, as follows:
ARTICLE I. DEFINITIONS
Section 1.1 DEFINITIONS. For purposes of this Agreement, terms bearing
initial capitals and defined in various sections hereof shall have the meanings
stated therein; and the following terms shall have the meanings stated below,
except as the context otherwise requires:
"Additional Collateral" has the meaning stated in Section 2.8(b)(iii).
"Adjusted Base Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to
the greater of (a) the Federal Funds Rate in effect on such day PLUS 1/2 of 1.0%
or (b) the Prime Rate in effect on such day, MINUS 1.0%. If for any reason the
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable after due inquiry to ascertain the Federal
Funds Rate for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Adjusted
Base Rate shall be determined without regard to clause (a) of the first sentence
of this definition until the circumstances giving rise to such inability no
longer exist. Any change in the Adjusted Base Rate due to a change in the Prime
Rate or the Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or the Federal Funds Rate, respectively.
"Affiliate" means, as to any Person, any other Person which directly or
indirectly controls, is under common control with, or is controlled by, such
Person.
"Agent" has the meaning stated on page 1 hereof and, with respect to the
Employee Loans, shall include NationsBank in its individual capacity.
"Agent's Fee" has the meaning stated in Section 2.9(c).
"Agent's Fee Letter" means the letter agreement between the Agent and the
Borrowers dated the Closing Date.
"Aggregate Revolving Credit Commitment" has the meaning stated in Section
2.1(a).
"Agreement" has the meaning stated on page 1 hereof.
"Applicable Percentage" means, for purposes of calculating the applicable
interest rate for any day for any Eurodollar Loan
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<PAGE>
or the applicable Unused Fee or the LOC Fee for any day for purposes of Section
2.9, the appropriate applicable percentage corresponding to the Debt to Cash
Flow Ratio in effect as of the most recent Calculation Date:
Applicable Applicable Applicable
Debt Percentage Percentage Percentage
to for for for
Cash Eurodollar LOC Unused
Pricing Flow Loans Fees Fee
Level Ratio
- - ------- ------------------ ------------ ------------- ----------------
III Greater
than 1.5 to 1.0 1.00% 1.00% .375%
II Equal to or less
than 1.5 to 1.0 but
greater than .5 to
1.0 .75% .75% .30%
I Equal to or less
than .5 to 1.0 .50% .50% .25%
Determination of the appropriate Applicable Percentages for the Loans based
on the Debt to Cash Flow Ratio shall be made as of each Calculation Date. The
Debt to Cash Flow Ratio in effect as of a Calculation Date shall establish the
Applicable Percentages that shall be effective as of the date designated by the
Agent as the Applicable Percentage Change Date; provided, however, that a new
Applicable Percentage shall apply to outstanding Eurodollar Loans only if and
when such Eurodollar Loans are extended into new Interest Periods. The Agent
shall determine the Applicable Percentages as of each Calculation Date and shall
promptly notify the Borrowers and the Banks of the Applicable Percentages so
determined and of the Applicable Percentage Change Date. The Applicable
Percentage for the purpose of calculating LOC Fees shall be fixed for the term
of each related Letter of Credit based on the Applicable Percentage in effect
for LOC Fees at the time of issuance thereof. Any renewal or extension of a
Letter of Credit for the purpose of calculating the LOC Fee shall be considered
a new issuance thereof. Such determinations by the Agent of the Applicable
Percentages shall be conclusive absent demonstrable error. The initial
Applicable Percentages shall be based on Pricing Level II until the first
Applicable Percentage Change Date occurring after the Closing Date.
"Applicable Percentage Change Date" means, with respect to any Calculation
Date, a date designated by the Agent that is not more than fifteen (15) Business
Days after receipt by the Agent of the Required Financial Information for such
Calculation Date.
"Applicable Rate" means (i) for all periods prior to and including January
5, 2001, the Adjusted Base Rate and (ii) for all periods thereafter (a) if no
Cash Flow Deficiency exists as of the immediately preceding Calculation Date,
the Adjusted Base
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<PAGE>
Rate and (b) if a Cash Flow Deficiency exists as of the immediately preceding
Calculation Date, the Prime Rate.
"Asset Services" has the meaning stated on page 1 hereof.
"Authorized Financial Officer" means any of Wyatt's treasurer, controller
or chief financial officer.
"Bank" and "Banks" have the meanings stated on page 1 hereof and shall
include any assignees thereof in accordance with Section 10.2.
"Base Rate" means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greater of
(a) the Federal Funds Rate in effect on such day PLUS 1/2 of 1% or (b) the Prime
Rate in effect on such day. If for any reason the Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable after due inquiry to ascertain the Federal Funds Rate for any reason,
including the inability or failure of the Agent to obtain sufficient quotations
in accordance with the terms hereof, the Base Rate shall be determined without
regard to clause (a) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a rate determined by
reference to the Base Rate.
"Borrower" means each and any of Wyatt, WPC-LLC, WPC-LP and WIC, and
"Borrowers" means all of them collectively.
"Borrowing Base" has the meaning stated in Section 2.1(a).
"Borrowing Base Certificate" has the meaning stated ln Section 5.2(b).
"Business Day" means a day other than a Saturday, Sunday or other day on
which commercial banks in Charlotte, North Carolina or Washington, D.C. are
authorized or required by law to close, except that, when used in connection
with a Revolving Credit Loan that is a Eurodollar Loan, such day shall also be a
day on which dealings between banks are carried on in U.S. dollar deposits in
London, England and New York, New York.
"Calculation Date" means the last day of each fiscal quarter of Wyatt.
"Canadian Loan Program" means Wyatt's employee loan program established for
the benefit of its Canadian employees.
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<PAGE>
"Capital Expenditures" means amounts expended for (i) the acquisition of
assets, whether tangible or intangible, having a useful life in excess of one
year and not intended for resale in the normal course of business, including but
not limited to land, buildings, fixtures, equipment and computer software, (ii)
additions or improvements to or rebuilding of existing assets, (iii)
improvements to leased property, and (iv) such other purposes as are required,
under GAAP, to be treated as capital expenditures.
"Cash Flow Deficiency" means and shall exist at any time when the Debt to
Cash Flow Ratio of Wyatt, on a consolidated basis, is 1.5 to 1 or greater.
"Closing Date" means the later of the date stated on the first page hereof
and the date on which all of the conditions precedent stated in Section 5.1 have
been satisfied and all of the parties have executed this Agreement.
"Collateral" has the meaning stated in Section 3.1.
"Collections" means all monies or other assets received by the Agent or any
Bank, as repayment of amounts advanced under the Notes, as proceeds of
Collateral or otherwise, for credit against principal, interest, commitment
fees, costs or expenses, or other amounts due under the Notes.
"CSAP" means Wyatt's Canadian Separation Allowance Plan established for the
benefit of Wyatt's Canadian employees in connection with the Canadian Loan
Program.
"Debt to Cash Flow Ratio" means the ratio of (i) Funded Debt to (ii)
EBITDA.
"EBITDA" means, for any period of calculation, the sum of (i) net income
for such period, PLUS, to the extent deducted in the calculation of net income,
(ii) the sum of interest expense, income taxes, depreciation and amortization,
determined on a consolidated basis in accordance with GAAP.
"EBITDAR" means, for any period of calculation, the sum of (i) EBITDA for
such period and (ii) Lease Expenses for such period, determined on a
consolidated basis in accordance with GAAP.
"Eligible Receivables" means the accounts receivable of the Borrowers
payable by account debtors located in the United States, British Columbia,
Ontario and Quebec, after deducting from the face amount of such accounts
receivable all payments, setoffs, disputed items, adjustments and other credits
applicable thereto, (i) in which valid and enforceable first priority security
interests have been granted and perfected in favor of the Agent, (ii) in which
all other notice and filing requirements for the collectibility of such accounts
receivable have been completed, including, without limitation, applicable
requirements under the federal Assignment of Claims Act if the account debtor
5
<PAGE>
is the United States or any agency thereof, (iii) with respect to which no
Authorized Financial Officer has actual notice or knowledge of the bankruptcy or
insolvency of the account debtor, and, (iv)(A) in the case of billed accounts
receivable, which are not aged more than 90 days from the date of the invoice to
the account debtor and (B) in the case of unbilled accounts receivable, which
are not aged more than 90 days from the date that billable hours creating such
account were reported to the originating Borrower's financial headquarters.
"Employee Loan Commitment" has the meaning stated in Section 2.1(d).
"Employee Loan Commitment Period" has the meaning stated in Section 2.1(d).
"Employee Loan Participation" has the meaning stated in Section 2.1(d).
"Employee Loan" and "Employee Loans" have the meanings stated in Section
2.1(d).
"Employee Note" and "Employee Notes" have the meanings stated in Section
2.1(g).
"ERISA" has the meaning stated in Section 4.10.
"Eurodollar Loan" means any Revolving Credit Loan bearing interest at a
rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar Loan
comprising part of the same borrowing (including conversions, extensions and
renewals), a per annum interest rate determined pursuant to the following
formula:
Eurodollar Rate = Interbank Offered Rate
------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor), as
such regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable with respect
to Eurocurrency liabilities as that term is defined in Regulation D (or against
any other category of liabilities that includes deposits by reference to which
the interest rate of Eurodollar Loans is determined), whether or not a Bank has
any Eurocurrency liabilities subject to such reserve requirement at that time.
Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as
such shall be deemed subject to reserve requirements without benefits of credits
for
6
<PAGE>
proration, exceptions or offsets that may be available from time to time to a
Bank. The Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" has the meaning stated in Section 8.1.
"Federal Funds Rate" means, for any day, the rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 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 (A) if such day 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 and (B) if no such rate is
so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to the Agent on such day on such
transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means the ratio of (i) EBITDAR to (ii) the
sum of interest expense plus Lease Expenses.
"Funded Debt" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) all purchase money
indebtedness of such Person, including without limitation the principal portion
of all obligations of such Person under capital leases (but excluding operating
leases), (iii) all guaranty and other contingent obligations of such Person with
respect to Funded Debt of another Person (which, for the avoidance of doubt,
exclude guaranties of operating leases), (iv) the maximum available amount of
all standby letters of credit or acceptances issued or created for the account
of such Person and (v) all Funded Debt of another Person secured by an
encumbrance on any property of such Person, whether or not such Funded Debt has
been assumed. The Funded Debt of any Person shall include the Funded Debt of any
partnership or joint venture in which such Person is a general partner or joint
venturer (but only to the extent to which such Person's assets are at risk in
such joint venture).
"GAAP" has the meaning stated in Section 1.2.
"General Exceptions" has the meaning stated in Section 4.3.
"Governmental Authority" means any Federal, state, local or foreign court
or governmental agency, authority, instrumentality or regulatory body.
"Guaranty" has the meaning stated in Section 3.4.
"Incipient Default" has the meaning stated in Section 5.2(a).
7
<PAGE>
"Interbank Offered Rate" means, with respect to any Eurodollar Loan for the
Interest Period applicable thereto, the average (rounded upward to the nearest
one-sixteenth (1/16) of one percent) per annum rate of interest determined by
the principal office of the Agent (each such determination to be conclusive and
binding) as of two Business Days prior to the first day of such Interest Period,
as the effective rate at which deposits in immediately available funds in U.S.
dollars are being, have been, or would be offered or quoted by the Agent to
major banks in the applicable interbank market for Eurodollar deposits at any
time during the Business Day which is the second Business Day immediately
preceding the first day of such Interest Period, for a term comparable to such
Interest Period and in the amount of the requested Eurodollar Loan. If no such
offers or quotes are generally available for such amount, then the Agent shall
be entitled to determine the Eurodollar Rate by estimating in its reasonable
judgment the per annum rate (as described above) that would be applicable if
such quote or offers were generally available.
"Interest Payment Date" means (i) as to any Employee Loan, the third
Business Day of the month following the immediately preceding Calculation Date,
any date of repayment of principal of such Loan and the relevant Termination
Date, (ii) as to any Revolving Credit Loan which is a Base Rate Loan, the third
Business Day of the month immediately following the end of each preceding month,
any date of repayment of principal of such Loan and the relevant Termination
Date, and (iii) as to any Revolving Credit Loan which is a Eurodollar Loan, the
last day of each Interest Period for such Loan, any date of repayment of
principal of such Loan and the relevant Termination Date, and in addition where
the applicable Interest Period is more than three months, then also the date
three months from the beginning of the Interest Period, and each three months
thereafter. If an Interest Payment Date falls on a date which is not a Business
Day, such Interest Payment Date shall be deemed to be the next succeeding
Business Day, except that in the case of Eurodollar Loans where the next
succeeding Business Day falls in the next succeeding calendar month, then the
next preceding Business Day.
"Interest Period" means, as to Revolving Credit Loans that are Eurodollar
Loans, a period of one, two, three or six month's duration, as the Borrowers may
elect, commencing in each case, on the date of the borrowing (including
conversions, extensions and renewals); provided, however, (A) if any Interest
Period would end on a day which is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day (except that in the case
of Eurodollar Loans where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day), (B) no
Interest Period shall extend beyond the Termination Date, and (C) where an
Interest Period begins on a day for which there is no numerically corresponding
day in the calendar month in which the Interest Period is to end, such Interest
Period shall end on the last day of such calendar month.
8
<PAGE>
"Interest Rate Protection Agreement" means an interest rate swap, cap or
collar agreement or similar arrangement between any Person and a Bank providing
for the transfer or mitigation of interest risks either generally or under
specific contingencies.
"Interest Swap Provider" means a Bank party to an Interest Rate Protection
Agreement with one or more of the Borrowers.
"Investment" in any Person by a Borrower means: (i) the amount paid or
committed to be paid, or the value of property or services contributed or
committed to be contributed, by the Borrower for or in connection with the
acquisition by the Borrower of any stock, bonds, note, debentures, partnership
or other ownership interests or other securities of or equity in such Person;
and (ii) the amount of any advance, loan or extension of credit to, or guaranty
or other similar obligation with respect to any indebtedness (including the
assumption of liabilities resulting from a merger as provided in Section 7.1(a))
of, such Person by the Borrower and (without duplication) any amount committed
to be advanced, loaned, or extended to, or the payment of which is committed to
be assured by a guaranty or similar obligation for the benefit of, such Person
by the Borrower.
"Issuing Bank" means NationsBank.
"Lease Expenses" means, for any period, all rental payments due under
leases for such period, irrespective of the term of any thereof, determined on a
consolidated basis in accordance with GAAP.
"Letter of Credit" means any irrevocable, standby letter of credit issued
by the Issuing Bank for the account of the Borrowers or any subsidiary in
accordance with the terms of Section 2.5.
"Liquidation Costs" means all expenses, costs and fees (including, without
limitation, attorney's fees and expenses), of any nature whatsoever, paid or
incurred by or on behalf of any Bank, including the Agent, in connection with
(i) the collection or enforcement of the Loans or enforcement of this Agreement,
(ii) the collection or enforcement of the Notes, and/or (iii) the creation,
perfection, collection, maintenance, preservation, defense, protection,
realization upon, disposition, sale or enforcement of all or any part of the
Collateral providing security for the Loans.
"Loan" and "Loans" have the meanings stated in Section 2.2(a) herein and
shall include all loans made under the Prior Agreement which are outstanding on
the date hereof.
"Loan Documents" has the meaning stated in Section 10.1.
"LOC Documents" means, with respect to any Letter of Credit, such Letter of
Credit, any amendments thereto, any documents delivered in connection therewith,
any application therefor, and
9
<PAGE>
any agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or providing
for (i) the rights and obligations of the parties concerned or at risk or (ii)
any collateral security for such obligations.
"LOC Fees" has the meaning stated in Section 2.9.
"LOC Obligations" means, at any time, the sum of (i) the maximum amount
which is, or at any time thereafter may become, available to be drawn under
Letters of Credit then outstanding, assuming compliance with all requirements
for drawings referred to in such Letters of Credit plus (ii) the aggregate
amount of all drawings under Letters of Credit honored by the Issuing Bank but
not theretofore reimbursed.
"Local Collateral" has the meaning stated in Section 4.8.
"Majority Banks" means the Banks the Ratable Shares of which aggregate 51
percent or more of all Ratable Shares at any time.
"Margin Stock Event" has the meaning stated in Section 2.8(b)(ii).
"Material Subsidiary" means a Subsidiary of a Borrower the accounts
receivable of which comprise seven and one-half percent or more of such
Borrower's consolidated accounts receivable.
"Maturity Date" means January 5, 2001, or any extension thereof requested
by the Borrowers and granted by the Banks in their sole discretion upon receipt
by the Agent of a written request from the Borrowers for such an extension not
less than 45 days before the Maturity Date.
"Mellon" has the meaning stated on page 1 hereof.
"NationsBank" has the meaning stated on page 1 hereof.
"NBD" has the meaning stated on page 1 hereof.
"Net Worth" means, for any period, the redemption value of the total issued
and outstanding shares of Wyatt's redeemable common stock, as adjusted for
redemption value greater than amounts paid by Wyatt's shareholders, for such
period, plus retained earnings and cumulative translation gains, if any, for
such period.
"Net Worth Test Year" has the meaning stated in Section 7.6(a).
"Notes" has the meaning stated in Section 2.1(g).
"Notice of Borrowing" has the meaning stated in Section 5.2(b) hereof and
shall be in substantially the form of EXHIBIT K.
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<PAGE>
"Obligations" has the meaning stated in Section 9.1.
"Official" has the meaning stated in Section 8.1(e).
"PBGC" has the meaning stated in Section 4.10.
"Permitted CSAP Loan" means a loan extended under the Canadian Loan Program
to one of Wyatt's Canadian employees for which a Separation Allowance Account is
maintained having a balance not in excess of 90% of the dollar amount credited
from time to time to such account.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or a government or any agency or political
subdivision thereof.
"Plan" has the meaning stated in Section 4.10.
"Pledge Agreements" has the meaning stated in Section 3.5(a).
"Pledged Shares" has the meaning stated in Section 3.5(a).
"Prime Rate" means the per annum rate of interest established from time to
time by the Agent at its principal office in Charlotte, North Carolina as its
Prime Rate. Any change in the interest rate resulting from a change in the Prime
Rate shall become effective as of 12:01 a.m. of the Business Day on which each
change in the Prime Rate is announced by the Agent. The Prime Rate is a
reference rate used by the Agent in determining interest rates on certain loans
and is not intended to be the lowest rate of interest charged on any extension
of credit to any debtor.
"Prior Agreement" has the meaning stated in the recitals hereof.
"Qualified Employees" has the meaning stated in the recitals hereof.
"Ratable Share" has the meaning stated in Section 2.1(a) hereof.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
"Required Financial Information" means, with respect to the
applicable Calculation Date, (i) the financial statements of the Borrowers
required to be delivered pursuant to Section 6.4 for the fiscal period or
quarter ending as of such Calculation Date, and (ii) the certificate of an
Authorized Financial Officer required by Section 6.4 to be delivered with the
financial statements described in clause (i) above.
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"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or to which any of its material property is
subject.
"Revolving Credit Commitment" has the meaning stated in Section 2.1(a).
"Revolving Credit Loans" has the meaning stated in Section 2.1(a).
"Revolving Credit Note" has the meaning stated in Section 2.1(c).
"Secured Obligations" has the meaning stated in Section 3.1.
"Secured Parties" has the meaning stated in Section 3.1.
"Selected Banks" (A) means the Banks which are signatories to this
Agreement and (B) the one hundred largest commercial banks which either are
United States national banking associations or are chartered under the laws of a
state of the United States and which have ratings by Thompson BankWatch, Inc.
(or successor) no lower than the following: (i) for the largest fifty banks in
asset size: "C"; and (ii) for the next fifty banks in asset size: "B" and (C)
banks chartered under the laws of Canada and of a quality and/or rating
equivalent to or not less than the rating identified in (B)(ii) above.
"Separation Allowance Account" means the account established for each of
Wyatt's qualified Canadian employees to which, from time to time, Wyatt may
credit dollar amounts allocated to such employee based on such employee's share
in the CSAP. For the avoidance of doubt, no such account shall be funded with
actual dollars, but the dollar amount credited thereto shall be reflected as a
liability on the balance sheet of Wyatt.
"Stock Powers" has the meaning stated in Section 3.5(b).
"Subsidiaries" means the corporations identified on SCHEDULE 1 and any
other Person in which, at any time subsequent to the Closing Date, any Borrower,
directly or indirectly, beneficially or legally, (i) owns more than 50 percent
of the stock having ordinary voting power for the election of Directors, in the
case of a corporation, or (ii) owns more than 50 percent of the ownership
interests of a partnership or joint venture or is a general partner of a
partnership.
"Termination Date" means (i) as to the Revolving Credit Loans, the Maturity
Date and (ii) as to any Employee Loan, the date of the final maturity of such
Employee Loan.
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"Total Commitment" has the meaning stated in Section 2.1(a).
"Unused Aggregate Total Commitment" means, for any date of calculation, the
amount by which (a) the aggregate of the then applicable Total Commitments
exceeds (b) the sum of (i) the outstanding aggregate principal amount of all
Revolving Credit Loans, (ii) the outstanding aggregate principal amount of all
Employee Loans and (iii) the LOC Obligations outstanding.
"Unused Fee" has the meaning stated in Section 2.9(b).
"Unused Fee Calculation Period" has the meaning stated in Section 2.9(b).
"Vice President and Chief Financial Officer" means the person holding the
office identified and described in Section 4.12 of Wyatt's bylaws or the person
acting in such capacity or, in the event of a change in the title or
description, the person holding the office, under whatever title, most closely
corresponding to the description now contained in such Section 4.12 and most
closely corresponding to the typical duties of a chief financial officer of a
corporation or the person acting in such capacity.
"Watson" has the meaning stated in Section 7.1(c).
"WIC" has the meaning stated on page 1 hereof.
"WPC-LLC" has the meaning stated on page 1 hereof.
"WPC-LP" has the meaning stated on page 1 hereof.
"WWH(E)L" has the meaning stated in Section 7.1(c).
"Wyatt" has the meaning stated on page 1 hereof.
Section 1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all financial and accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time ("GAAP"), applied on a basis consistent (except for changes concurred in
by Wyatt's independent public accountants) with the most recent audited
consolidated financial statements of Wyatt and its consolidated Subsidiaries
delivered to the Banks.
Section 1.3. OTHER DEFINITIONAL PROVISIONS. References in this Agreement to
"Articles", "Sections", "Schedules" or "Exhibits" shall be to Articles,
Sections, Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided. Wherever used herein, the singular number shall include
the plural, and vice versa, whenever appropriate to protect the interests of the
Banks, and the conjunctive shall include the disjunctive, and vice versa,
whenever so appropriate. Without
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limitation of the foregoing, references to any or each Borrower shall be deemed
to include the Borrowers collectively, and vice versa, whenever appropriate to
protect the interests of the Banks. "Include", "includes" and "including" shall
be deemed to be followed by "without limitation" whether or not they are in fact
followed by such words or words of like import. "Writing", "written" and
comparable terms refer to printing, typing and other means of reproducing words
in a visible form. References to any agreement or contract are to such agreement
or contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof. References to any Person include the
successors and assigns of such Person. References "from" or "through" any date
mean, unless otherwise specified, "from and including" or "through and
including", respectively.
ARTICLE II. LOANS AND PAYMENTS
Section 2.1. LOANS.
(a) REVOLVING CREDIT COMMITMENT. Each of the Banks hereby severally agrees
to lend and Borrowers agree to accept, subject to the terms and conditions of
this Agreement, revolving credit loans not to exceed at any one time outstanding
to the Borrowers, together with the LOC Obligations, the lesser of (i) such
Bank's Ratable Share of $55,000,000 (the "AGGREGATE REVOLVING CREDIT
COMMITMENT," and each Bank's Ratable Share of the Aggregate Revolving Credit
Commitment being a "REVOLVING CREDIT COMMITMENT"), as such amount may be
increased or reduced from time to time pursuant to Section 2.8, and (ii) such
Bank's Ratable Share of the Borrowing Base, net of the aggregate outstanding
principal amount of the Employee Loans, at such time. Each Bank's Revolving
Credit Commitment, as such amount may be increased or reduced from time to time
pursuant to Section 2.8, is set forth beneath such Bank's name on the signature
pages hereof opposite the caption "REVOLVING CREDIT COMMITMENT." As used herein,
"RATABLE SHARE" shall mean the proportion that a Bank's Total Commitment bears
to the Total Commitments of all of the Banks. As to any Bank, "TOTAL COMMITMENT"
shall mean the amount set forth beneath such Bank's name on the signature pages
hereof opposite the caption "TOTAL COMMITMENT," as such amount may be reduced
from time to time pursuant to Section 2.8. "BORROWING BASE" shall mean the sum
of (x) 85 percent of Borrowers' billed Eligible Receivables, and (y) 50 percent
of Borrowers' unbilled Eligible Receivables; PROVIDED, HOWEVER, that at no time
shall the amount of the Borrowing Base consisting of unbilled Eligible
Receivables exceed the amount of the Borrowing Base consisting of billed
Eligible Receivables. A "REVOLVING CREDIT LOAN" shall mean a revolving credit
loan made by a Bank to the Borrowers pursuant to this Section 2.1, and
"REVOLVING CREDIT LOANS" shall mean the Revolving Credit Loans of all the Banks
to the Borrowers.
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(b) AVAILABILITY OF REVOLVING CREDIT LOANS. Revolving Credit Loans will be
made in accordance with Section 2.2 and may be requested during the period
beginning on the Closing Date and ending on the Maturity Date. All Revolving
Credit Loans shall be in minimum amounts of $100,000 or integral multiples of
$100,000 in excess thereof. Revolving Credit Loans for less than $1,000,000
shall consist of Base Rate Loans; Revolving Credit Loans for $1,000,000 and
greater may consist of Base Rate Loans or Eurodollar Loans, or a combination
thereof, as the Borrowers may request; PROVIDED, HOWEVER, that no more than five
(5) Eurodollar Loans shall be outstanding hereunder at any time. Revolving
Credit Loans may be repaid and reborrowed in accordance with the provisions
hereof. For purposes hereof, Eurodollar Loans with different Interest Periods
shall be considered as separate Eurodollar Loans, even if they begin on the same
date and have the same duration, although borrowings, extensions and conversions
may, in accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new Eurodollar Loan with a single
Interest Period.
(c) REVOLVING CREDIT NOTES. Each Revolving Credit Loan made by a Bank under
this Agreement shall be evidenced by a revolving promissory note issued by the
Borrowers to the Bank making such Revolving Credit Loan substantially in the
form of EXHIBIT A and maturing on the Maturity Date (each such note, together
with all amendments, extensions, renewals, replacements, or refundings thereof
in whole or in part, is a "REVOLVING CREDIT NOTE" and such Revolving Credit
Notes are, collectively, the "REVOLVING CREDIT NOTES").
(d) EMPLOYEE LOAN COMMITMENT. Subject to the terms and conditions of this
Agreement, NationsBank hereby also agrees to make term loans to Qualified
Employees (collectively, the "EMPLOYEE LOANS" and each an "EMPLOYEE LOAN") not
to exceed (i) at any one time outstanding in the aggregate the lesser of (A)
$25,000,000 (the "EMPLOYEE LOAN COMMITMENT"), as such amount may be increased or
reduced from time to time pursuant to Section 2.8, and (B) the Borrowing Base
net of outstanding Revolving Credit Loans and LOC Obligations at such time and
(ii) with respect to any single such Employee Loan, the book value of the shares
of stock to be purchased or refinanced with the proceeds of the Employee Loan,
computed at the time such Employee Loan is made in accordance with the Bylaws of
Wyatt. Subject to the terms and conditions of this Agreement, each Bank hereby
irrevocably agrees to purchase a participation in the Employee Loans made or to
be made hereunder, and a participation in all security now or hereafter provided
with respect hereto, equal to its Ratable Share of such Employee Loans and
security, not to exceed in the aggregate such Bank's Employee Loan Participation
(as defined below) NOTWITHSTANDING (i) the amount of such borrowing may not
comply with the minimum amount for advances of Employee
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Loans otherwise required hereunder, (ii) whether any conditions specified in
Section 5.2 are then satisfied, (iii) whether an Incipient Default or an Event
of Default then exists, (iv) failure for any such request or deemed request for
an Employee Loan to be made by the time otherwise required hereunder, (v)
whether the date of such borrowing is a date on which Employee Loans are
otherwise permitted to be made hereunder or (vi) any termination of the Total
Commitments relating thereto immediately prior to or contemporaneously with such
borrowing. NationsBank shall have no obligation under this Agreement to make any
Employee Loan unless and until it shall have received from each of the other
Banks, in accordance with this Agreement, such Bank's Ratable Share of such
Loans in accordance with this Section 2.1(d) and Section 5.2(c). As to any Bank,
"EMPLOYEE LOAN PARTICIPATION" shall mean the amount set forth beneath such
Bank's name on the signature pages hereof opposite the caption "EMPLOYEE LOAN
PARTICIPATION," as such amount may be increased or reduced from time to time
pursuant to Section 2.8.
(e) AVAILABILITY OF EMPLOYEE LOANS. Employee Loans will be made in
accordance with Section 2.2. During the period from the Closing Date through
January 5, 1999 (the "EMPLOYEE LOAN COMMITMENT PERIOD"), Employee Loans
hereunder may be made (i) once during each fiscal year of Wyatt on the ordinary
sale date for purchases by or for the benefit of Qualified Employees of Wyatt's
common stock, which occurs during the period December 1 to March 31, and (ii) on
such other dates as the Borrowers and the Agent may agree in writing. No single
Employee Loan hereunder shall be in an initial amount less than $400.00.
Employee Loans shall consist of Adjusted Base Rate Loans. Amounts repaid on an
Employee Loan may be reborrowed during the Employee Loan Commitment Period.
(f) DELIVERY OF EMPLOYEE LOAN DOCUMENTS. Within 30 days of the funding of
an Employee Loan, Wyatt shall provide in connection with such Employee Loan the
following documents: (i) a completed documentation checksheet in a form approved
in writing by NationsBank, a Stock Power (for all Pledged Shares consisting of
certificated securities, if any), an executed Truth in Lending Disclosure
Statement in the form of EXHIBIT F, an Employee Note, and a Pledge Agreement,
all executed by the Qualified Employee to whom the Employee Loan is to be made
(or, as to a Note, Pledge Agreement and Stock Power, if any, for Pledged Shares
to be pledged by a personal holding company, by such personal holding company
and by the Qualified Employee, as appropriate) (the Stock Power, if any, in all
cases to be undated and executed in blank) and (ii) an Agreement to Stock Pledge
Agreements, executed by Wyatt, substantially in the form of EXHIBIT J and
identifying by schedule each of the funded Employee Loans.
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(g) EMPLOYEE NOTES. Each of the Employee Loans shall be evidenced by a
promissory note (together with all amendments, extensions, renewals, or
replacements thereof, an "EMPLOYEE NOTE" and, collectively, all such notes,
"EMPLOYEE NOTES") issued to NationsBank by the Qualified Employee to whom the
Employee Loan is made substantially in the form of EXHIBIT B. Each Employee Note
shall mature on the earliest of (i) the seventh September 30 following the
funding of the corresponding Employee Loan, (ii) one calendar year after the
Qualified Employee to or for the benefit of whom the Employee Loan is made
ceases to be a Qualified Employee and (iii) the date upon which any of the
common stock purchased with the Employee Loan is sold. The Revolving Credit
Notes and the Employee Notes are sometimes herein referred to collectively as
the "Notes".
(h) ACKNOWLEDGEMENT REGARDING REPLACEMENT NOTES. The Borrowers acknowledge
that each Bank has surrendered that certain Third Replacement Revolving Credit
Note dated September 15, 1994 and issued to it by Wyatt, Asset Services, WPC-LLC
and WPC-LP in exchange for the Fourth Replacement Revolving Credit Note issued
by the Borrowers to such Bank hereunder, without effecting any novation.
Section 2.2 LOAN PROCEDURES AND USE OF PROCEEDS; SERVICING
(a) REQUESTS. Each request by the Borrowers for a Loan shall be submitted
to the Agent in accordance with Section 5.2(b) or (c), as applicable, of this
Agreement. As used herein, "LOANS" means the Revolving Credit Loans and Employee
Loans and "LOAN" means any such Revolving Credit Loan or Employee Loan
individually. Employee Loans made for the purchase by or for the benefit of
Qualified Employees of shares of Wyatt common stock shall be made to Wyatt and
duly applied by Wyatt to the purchase of such stock.
(b) NOTICE TO BANKS. The Agent shall notify each of the other Banks as soon
as practicable upon receipt of any request for a Revolving Credit Loan or an
Employee Loan, and that notice shall include the date that the Borrowers desire
the Loan to be made and such Bank's Ratable Share of such Loan. All funds
constituting a Bank's Ratable Share of such Loan shall be received by Agent in
immediately available funds or other funds satisfactory to Agent not later than
2:00 p.m., Charlotte, North Carolina time, on the date on which the Borrowers
have requested the Loan to be made. Unless the Agent shall have been notified by
telephone, confirmed in writing, by any Bank by 12:00 noon, Charlotte, North
Carolina time, on the day the Borrowers have requested that such Loan be made
that such Bank will not make available the amount which would constitute its
Ratable Share of such requested Loan on the date specified therefor, the Agent
may assume that such Bank has made such amount available to the Agent and, in
reliance upon such
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assumption, make available to the Borrowers or to an appropriate escrow account,
as appropriate, a corresponding amount. If and to the extent that such Bank
shall not have made such amount available to the Agent, such Bank and each of
the Borrowers severally agree to repay the Agent forthwith on demand such
corresponding amount, and such Bank further agrees to pay to the Agent, upon
demand, interest thereon, for each day from the date the Agent made such amount
available to the Borrowers to the date such amount is repaid to the Agent, at
the interest rate applicable at the time to Loans of the same type funded by the
Agent.
(c) USE OF REVOLVING CREDIT LOAN PROCEEDS. All proceeds of the Revolving
Credit Loans shall be used by the Borrowers for general business purposes,
PROVIDED, HOWEVER, that proceeds of the Revolving Credit Loans shall not be used
to make payments of principal, interest, or fees under or in connection with the
Employee Loans at any time that defaults under all or substantially all of the
Employee Notes have occurred and are continuing.
(d) USE OF EMPLOYEE LOAN PROCEEDS. All proceeds of the Employee Loans shall
be used for purchases by or for the benefit of Qualified Employees of common
stock of Wyatt.
(e) SERVICING. Wyatt agrees to act as servicer for the Agent and
NationsBank with respect to the Employee Loans (in such capacity, the
"SERVICER"). On behalf of the Agent and NationsBank, the Servicer will
administer, service and collect payments in respect of all Employee Loans, which
duties shall include, without limitation, (i) prior to the funding of an
Employee Loan to a Qualified Employee, (A) compiling and ensuring completion and
execution, as applicable, of those documents provided by such Qualified Employee
pursuant to Section 2.1(f), and (B) confirming such person's status as a
Qualified Employee and (ii) subsequent to the funding of an Employee Loan to a
Qualified Employee, (A) collecting payments submitted by such Qualified Employee
pursuant to the relevant Employee Note, (B) recordkeeping regarding current loan
balances and other matters relating to such Employee Loan, (C) responding to
questions about such Employee Loan from such Qualified Employee and (D)
providing to the Agent, within 51 days after the end of each calendar quarter,
an Employee Loan delinquency report for the immediately preceding calendar
quarter. The Agent shall have the exclusive right to remove the Servicer at any
time for cause and, upon 30 days written notice, without cause. Upon any such
removal, the Agent shall promptly appoint a successor Servicer who shall be
reasonably acceptable to the Borrowers; PROVIDED, HOWEVER, that no approval of
the Borrowers shall be required during the continuance of an Event of Default.
Wyatt, with the prior written consent of the Agent, which consent shall not be
unreasonably withheld, shall be permitted to appoint a subservicer to perform
its obligations under this Section 2.2(e).
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Section 2.3 THE BANKS' OBLIGATIONS UNDER THE LOANS. Each Bank shall be
obligated to fund Revolving Credit Loans requested under Section 5.2(b) and its
participation in Employee Loans requested under Section 5.2(c) in accordance
with its Ratable Share and Sections 2.1 and 2.2. The Obligations of each Bank
hereunder are several and not joint. The failure of any Bank to perform its
obligations hereunder shall not affect the obligations of any other Bank or any
Borrower to any other party, nor shall any other party be liable for the failure
of such Bank to perform its obligations hereunder.
Section 2.4 EXTENSION AND CONVERSION. Subject to the terms of Section 5.2,
the Borrowers shall have the option, on any Business Day, to extend existing
Revolving Credit Loans into a subsequent permissible Interest Period or to
convert Revolving Credit Loans into Revolving Credit Loans of another type;
PROVIDED, HOWEVER, that (i) except as provided in Section 2.14, Eurodollar Loans
may be converted into Base Rate Loans only on the last day of the Interest
Period applicable thereto, (ii) Eurodollar Loans may be extended, and Base Rate
Loans may be converted into Eurodollar Loans, only if no Incipient Default or
Event of Default is in existence on the date of extension or conversion, (iii)
Revolving Credit Loans extended as, or converted into, Eurodollar Loans shall be
subject to the terms of the definition of "INTEREST PERIOD" and shall be in such
minimum amounts as provided in Section 2.1(b), (iv) no more than 5 separate
Eurodollar Loans shall be outstanding hereunder at any time and (v) any request
for extension or conversion of a Eurodollar Loan which shall fail to specify an
Interest Period shall be deemed to be a request for an Interest Period of one
month. Each such extension or conversion shall be effected by the Borrowers by
giving a Notice of Extension/Conversion (or telephone notice promptly confirmed
in writing) to the Agent prior to 11:00 A.M. (Charlotte, North Carolina time) on
the Business Day of, in the case of the conversion of a Eurodollar Loan into a
Base Rate Loan, and on the third Business Day prior to, in the case of the
extension of a Eurodollar Loan as, or conversion of a Base Rate Loan into, a
Eurodollar Loan, the date of the proposed extension or conversion, specifying
the date of the proposed extension or conversion, the Revolving Credit Loans to
be so extended or converted, the types of Revolving Credit Loans into which such
Revolving Credit Loans are to be converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for extension or conversion
shall constitute a representation and warranty by the Borrowers of the matters
specified in Section 5.2(a). In the event the Borrowers fail to request
extension or conversion of any Eurodollar Loan in accordance with this Section,
or any such conversion or extension is not permitted or required by this
Section, then such Loan shall be automatically converted into a Base Rate Loan
at the end of the Interest Period applicable thereto. The Agent shall give each
Bank notice as promptly as practicable of any such proposed extension or
conversion affecting any Loan.
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Section 2.5 LETTERS OF CREDIT.
(a) ISSUANCE. Subject to the terms and conditions hereof and of the LOC
Documents, if any, and any other terms and conditions which the Issuing Bank may
reasonably require, the Issuing Bank agrees from time to time to issue Letters
of Credit from the Closing Date until the Maturity Date as the Borrowers may
request, in a form acceptable to the Issuing Bank; PROVIDED, HOWEVER, that (i)
the LOC Obligations outstanding shall not at any time exceed TEN MILLION DOLLARS
($10,000,000) and (ii) the sum of the aggregate principal amount of outstanding
Revolving Credit Loans plus LOC Obligations outstanding shall not at any time
exceed the lesser of (A) the Aggregate Revolving Credit Commitment and (B) the
Borrowing Base, net of the outstanding principal amount of the Employee Loans.
Except as otherwise expressly agreed upon by all the Banks, no Letter of Credit
shall have an original expiry date more than two years from the date of
issuance; PROVIDED, FURTHER, that no Letter of Credit, as originally issued or
as extended, shall have an expiry date extending beyond the day before the
Maturity Date. Each Letter of Credit shall comply with the related LOC
Documents. The issuance and expiry date of each Letter of Credit shall be a
Business Day.
(b) NOTICE AND REPORTS. The request for the issuance of a Letter of Credit
shall be submitted by the Borrowers to the Issuing Bank at least three (3)
Business Days prior to the requested date of issuance. The Issuing Bank will, at
least quarterly and more frequently upon request, disseminate to each of the
Banks a detailed report specifying the Letters of Credit which are then issued
and outstanding and any activity with respect thereto which may have occurred
since the date of the prior report, and including therein, among other things,
the account party, the beneficiary, the face amount and expiry date as well as
any payment or expirations which may have occurred.
(c) PARTICIPATION. Each Bank, upon issuance of a Letter of Credit, shall be
deemed to have purchased without recourse a risk participation from the Issuing
Bank in such Letter of Credit and the obligations arising thereunder, in each
case in an amount equal to its pro rata share of the obligations under such
Letter of Credit (based on the respective Ratable Shares of the Banks) and shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to the Issuing Bank therefor and discharge
when due, its pro rata share of the obligations arising under such Letter of
Credit. Without limiting the scope and nature of each Bank's participation in
any Letter of Credit, to the extent that the Issuing Bank has not been
reimbursed as required hereunder or under any such Letter of Credit, each such
Bank shall pay to the Issuing Bank its pro rata share of such
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unreimbursed drawing in same day funds on the day of notification by the Issuing
Bank of an unreimbursed drawing pursuant to the provisions of subsection (d)
hereof. The obligation of each Bank to so reimburse the Issuing Bank shall be
absolute and unconditional and shall not be affected by the occurrence of an
Incipient Default, an Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise impair the joint and several
obligation of the Borrowers to reimburse the Issuing Bank under any Letter of
Credit, together with interest as hereinafter provided.
(d) REIMBURSEMENT. In the event of any drawing under any Letter of Credit,
the Issuing Bank will promptly notify the Borrowers. Unless the Borrowers shall
immediately notify the Issuing Bank that the Borrowers intend to otherwise
immediately reimburse the Issuing Bank for such drawing, the Borrowers shall be
deemed to have requested that the Banks make a Revolving Credit Loan in the
amount of the drawing as provided in subsection (e) hereof on the related Letter
of Credit, the proceeds of which will be used to satisfy the related
reimbursement obligations. The Borrowers jointly and severally promise to
reimburse the Issuing Bank on the day of drawing under any Letter of Credit
(either with the proceeds of a Revolving Credit Loan obtained hereunder or
otherwise) in same day funds. If the Borrowers shall fail to reimburse the
Issuing Bank as provided hereinabove (and Revolving Credit Loans are not
available to effect such reimbursement), the unreimbursed amount of such drawing
shall bear interest at a per annum rate equal to the Base Rate plus two percent
(2%). The Borrowers' reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of setoff,
counterclaim or defense to payment the Borrowers may claim or have against the
Issuing Bank, the Agent, the Banks, the beneficiary of the Letter of Credit
drawn upon or any other Person, including without limitation any defense based
on any failure of the applicable account party or the Borrowers to receive
consideration or the legality, validity, regularity or unenforceability of the
Letter of Credit. The Issuing Bank will promptly notify the other Banks of the
amount of any unreimbursed drawing and each Bank shall promptly pay to the Agent
for the account of the Issuing Bank in dollars and in immediately available
funds, the amount of such Bank's pro rata share of such unreimbursed drawing.
Such payment shall be made on the day such notice is received by such Bank from
the Issuing Bank if such notice is received at or before 2:00 P.M. (Charlotte,
North Carolina time); otherwise such payment shall be made at or before 12:00
Noon (Charlotte, North Carolina time) on the Business Day next succeeding the
day such notice is received. If such Bank does not pay such amount to the
Issuing Bank in full upon such request, such Bank shall, on demand, pay to the
Agent for the account of the Issuing Bank interest on the unpaid
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amount during the period from the date of such drawing until such Bank pays such
amount to the Issuing Bank in full at a rate per annum equal to, if paid within
two (2) Business Days of the date of drawing, the Federal Funds Rate and
thereafter at a rate equal to the Base Rate. Each Bank's obligation to make such
payment to the Issuing Bank, and the right of the Issuing Bank to receive the
same, shall be absolute and unconditional, shall not be affected by any
circumstance whatsoever and without regard to the termination of this Agreement
or the Total Commitments hereunder, the existence of an Incipient Default or
Event of Default or the acceleration of the obligations of the Borrowers
hereunder and shall be made without any offset, abatement, withholding or
reduction whatsoever. Simultaneously with the making of each such payment by a
Bank to the Issuing Bank, such Bank shall, automatically and without any further
action on the part of the Issuing Bank or such Bank, acquire a participation in
an amount equal to such payment (excluding the portion of such payment
constituting interest owing to the Issuing Bank) in the related unreimbursed
drawing portion of the LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the Borrowers with respect
thereto.
(e) REPAYMENT WITH REVOLVING CREDIT LOANS. On any day on which the
Borrowers shall have requested, or been deemed to have requested, a Revolving
Credit Loan to reimburse a drawing under a Letter of Credit, the Agent shall
give notice to the Banks that a Revolving Credit Loan has been requested or
deemed requested by the Borrowers to be made in connection with a drawing under
a Letter of Credit, in which case a Revolving Credit Loan comprised solely of
Base Rate Loans shall be immediately made to the Borrowers by all Banks
(notwithstanding any termination of the Total Commitments pursuant to Section
8.2) PRO RATA based on the respective Ratable Shares of the Banks (determined
before giving effect to any termination of the Total Commitments pursuant to
Section 8.2) and the proceeds thereof shall be paid directly to the Issuing Bank
for application to the respective LOC Obligations. Each such Bank hereby
irrevocably agrees to make its pro rata share of each such Revolving Credit Loan
immediately upon any such request or deemed request in the amount, in the manner
and on the date specified in the preceding sentence NOTWITHSTANDING (i) the
amount of such borrowing may not comply with the minimum amount for advances of
Revolving Credit Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 5.2 are then satisfied, (iii) whether an Incipient Default
or an Event of Default then exists, (iv) failure of any such request or deemed
request for Revolving Credit Loans to be made by the time otherwise required
hereunder, (v) whether the date of such borrowing is a date on which Revolving
Credit Loans are otherwise permitted to be made hereunder or (vi) any
termination of the Total Commitments
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relating thereto immediately prior to or contemporaneously with such
borrowing. In the event that any Revolving Credit Loan cannot for any reason be
made on the date otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy Code with
respect to any of the Borrowers), then each such Bank hereby agrees that it
shall forthwith purchase (as of the date such borrowing would otherwise have
occurred, but adjusted for any payments received from the Borrowers on or after
such date and prior to such purchase) from the Issuing Bank such participation
in the outstanding LOC Obligations as shall be necessary to cause each such Bank
to share in such LOC Obligations ratably (based upon the respective Ratable
Shares of the Banks (determined before giving effect to any termination of the
Total Commitments pursuant to Section 8.2)), PROVIDED that at the time any
purchase of participation pursuant to this sentence is actually made, the
purchasing Bank shall be required to pay to the Issuing Bank, to the extent not
paid to the Issuing Bank by the Borrowers in accordance with the terms of
subsection (d) hereof, interest on the principal amount of participation
purchased for each day from and including the day upon which such borrowing
would otherwise have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within two (2) Business Days of the
date of the Revolving Credit Loan, the Federal Funds Rate, and thereafter at a
rate equal to the Base Rate.
(f) DESIGNATION OF SUBSIDIARIES AS ACCOUNT PARTIES. Notwithstanding
anything to the contrary set forth in this Agreement, including without
limitation subsection (a) hereof, a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit is issued for the
account of a Subsidiary of a Borrower, provided that notwithstanding such
statement, the Borrowers shall be the actual account party for all purposes of
this Agreement for such Letter of Credit and such statement shall not affect the
Borrowers' reimbursement obligations hereunder with respect to such Letter of
Credit.
(g) RENEWAL, EXTENSION. The renewal or extension of any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the issuance
of a new Letter of Credit hereunder.
(h) UNIFORM CUSTOMS AND PRACTICES. The Issuing Bank may have the Letters of
Credit be subject to The Uniform Customs and Practice for Documentary Credits,
as published as of the date of issue by the International Chamber of Commerce
(the "UCP"), in which case the UCP may be incorporated therein and deemed in all
respects to be a part thereof.
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(i) INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES.
(i) In addition to its other obligations under this Section 2.5, the
Borrowers hereby agree to protect, indemnify, pay and save the Issuing Bank
harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Bank may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of the Issuing Bank to honor a drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"GOVERNMENT ACTS").
(ii) As between the Borrowers and the Issuing Bank, the Borrowers
shall assume all risks of the acts, omissions or misuse of any Letter of
Credit by the beneficiary thereof. The Issuing Bank shall not be
responsible: (A) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with
the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (D) for
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (E) for any consequences arising from causes beyond the
control of the Issuing Bank, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting of the
Issuing Bank's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
the Issuing Bank, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put
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such Issuing Bank under any resulting liability to the Borrowers.
It is the intention of the parties that this Agreement shall be
construed and applied to protect and indemnify the Issuing Bank
against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrowers
including, without limitation, any and all Government Acts. The
Issuing Bank shall not, in any way, be liable for any failure by the
Issuing Bank or anyone else to pay any drawing under any Letter of
Credit as a result of any Government Acts or any other cause beyond
the control of the Issuing Bank.
(iv) Nothing in this subsection (i) is intended to limit the
reimbursement obligations of the Borrowers contained in subsection (d)
above. The obligations of the Borrowers under this subsection (i)
shall survive the termination of this Agreement. No act or omissions
of any current or prior beneficiary of a Letter of Credit shall in any
way affect or impair the rights of the Issuing Bank to enforce any
right, power or benefit under this Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (i), the Borrowers shall have no obligation to indemnify
the Issuing Bank in respect of any liability incurred by the Issuing
Bank (A) arising out of the gross negligence or willful misconduct of
the Issuing Bank, as determined by a court of competent jurisdiction,
or (B) caused by the Issuing Bank's failure to pay under any Letter of
Credit after presentation to it of a request strictly complying with
the terms and conditions of such Letter of Credit, as determined by a
court of competent jurisdiction, unless such payment is prohibited by
any law, regulation, court order or decree.
(j) RESPONSIBILITY OF ISSUING BANK. It is expressly understood and
agreed that the obligations of the Issuing Bank hereunder to the Banks are
only those expressly set forth in this Agreement and that the Issuing Bank
shall be entitled to assume that the conditions precedent set forth in
Section 5.2 have been satisfied unless it shall have acquired actual
knowledge that any such condition precedent has not been satisfied;
PROVIDED, HOWEVER, that nothing set forth in this Section 2.5 shall be
deemed to prejudice the right of any Bank to recover from the Issuing Bank
any amounts made available by such Bank to the Issuing Bank pursuant to
this Section 2.5 in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit
constituted gross
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negligence or willful misconduct on the part of the Issuing Bank.
(k) CONFLICT WITH LOC DOCUMENTS. In the event of any conflict between
this Agreement and any LOC Document, this Agreement shall control.
Section 2.6 REPAYMENT. All obligations of the Borrowers hereunder are joint
and several. Borrowers shall repay the outstanding principal balance under the
Revolving Credit Notes in full on the Maturity Date. Borrowers shall also repay
the amount of the outstanding principal balance under any Employee Note that is
due and payable under such Employee Note, whether by acceleration of maturity or
otherwise, 50 days after such amount becomes due and payable if such amount is
then unpaid, provided, however, that at any time that defaults under all or
substantially all of the Employee Notes have occurred and are continuing,
Borrowers shall immediately repay the aggregate principal amount outstanding
under the Employee Notes upon demand therefor by the Agent.
Section 2.7. Interest.
(a) REVOLVING CREDIT LOANS. Subject to the provisions of subsection
(d) below, each Revolving Credit Loan shall bear interest on the
outstanding principal balance thereunder at a per annum rate equal to:
(i) BASE RATE LOANS. During such periods as any Revolving Credit
Loan (or portion thereof) shall consist of Base Rate Loans, at a per
annum rate equal to the Base Rate.
(ii) EURODOLLAR LOANS. During such periods as any Revolving
Credit Loan (or any portion thereof) shall consist of Eurodollar
Loans, at a per annum rate equal to the sum of the Eurodollar Rate for
the Interest Period in effect for such Eurodollar Loan plus the
Applicable Percentage for Eurodollar Loans in effect from time to
time.
(b) EMPLOYEE LOANS. Subject to the provisions of subsection (d) below,
each Employee Loan shall bear interest on the outstanding principal balance
thereunder at a per annum rate equal to the Applicable Rate in effect from
time to time.
(c) PAYMENTS AND ACCRUALS. Interest shall be payable in arrears on
each Interest Payment Date applicable to the Loan (or portion thereof)
unless otherwise specified herein. The interest due on each Interest
Payment Date shall be (i) with respect to Revolving Credit Loans that are
Base Rate Loans, the interest accrued during the immediately preceding
month, (ii) with respect to Revolving Credit Loans that are Eurodollar
Loans, the interest accrued during the applicable
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Interest Period or, where the applicable Interest Period is more than three
months, the immediately preceding three-month portion thereof and (iii)
with respect to Employee Loans, the interest accrued during the immediately
preceding calendar quarter. Unless otherwise specifically provided herein
or in the Notes, all late payments of principal and interest shall bear
interest at the rate specified in clause (d) immediately below.
(d) DURING AN EVENT OF DEFAULT. Notwithstanding the foregoing, upon
the occurrence, and during the continuance, of an Event of Default, the
principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the Notes, the Guaranty, the
Pledge Agreements and any other related documents shall bear interest,
payable on demand, at a per annum rate 2% greater than the rate which would
otherwise be applicable (or if no rate is applicable, whether in respect of
interest, fees or other amounts, then 2% greater than the Base Rate).
Section 2.8 PREPAYMENTS; COMMITMENT INCREASE; REDUCTION OR
TERMINATION.
(a) VOLUNTARY PREPAYMENTS. The Borrowers shall have the right to
prepay the Revolving Credit Loans in whole or in part from time to time on
any Business Day without premium or penalty; PROVIDED, HOWEVER, that (i)
Revolving Credit Loans that are Eurodollar Loans may only be prepaid on
three Business Days' prior written notice to the Agent specifying the
applicable Loans to be prepaid; (ii) any prepayment of Revolving Credit
Loans that are Eurodollar Loans will be subject to Section 2.17; (iii) each
such partial prepayment of Loans shall be (A) in the case of Revolving
Credit Loans that are Eurodollar Loans, in a minimum principal amount of
$1,000,000 and in integral multiples of $100,000 in excess thereof and (B)
in the case of Revolving Credit Loans that are Base Rate Loans, in a
minimum principal amount of $100,000 and in integral multiples of $100,000
in excess thereof. Subject to the foregoing terms, amounts prepaid
hereunder shall be applied as the Borrowers may elect; PROVIDED, that if
the Borrowers shall fail to specify application of a voluntary prepayment
then such prepayment shall be applied first to Base Rate Loans and then to
Eurodollar Loans in direct order of Interest Period maturities.
(b) MANDATORY PREPAYMENTS; PURCHASE OF EMPLOYEE NOTES.
(i) OVERADVANCE. (A) If at any time the sum of the aggregate amount of
outstanding Revolving Credit Loans PLUS LOC Obligations outstanding shall
exceed the Aggregate Revolving Credit Commitment, the Borrowers promise,
jointly and severally, to prepay immediately the outstanding principal
balance on the Revolving Credit Loans in an amount sufficient to eliminate
such excess.
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(B) If at any time the sum of the aggregate amount of outstanding
Employee Loans shall exceed the Employee Loan Commitment, then the
Borrowers shall purchase from NationsBank, Employee Notes in an amount
sufficient to eliminate such excess.
(ii) MARGIN STOCK EVENT. In the event that any of the Pledged Shares
become "margin stock" as defined by Regulation U (a "MARGIN STOCK EVENT"),
the Borrowers promise, jointly and severally, to prepay immediately the
outstanding principal balance on the Revolving Credit Loans and/or to
purchase Employee Loans in an amount sufficient to bring the Loans into
compliance with Regulation U.
(iii) BORROWING BASE VIOLATION. Borrowers shall prepay Revolving
Credit Loans at any time and in the amount that the aggregate principal
balance of the Loans and LOC Obligations outstanding exceeds the Borrowing
Base as provided in Section 6.6. In the event that the aggregate principal
amount outstanding under the Employee Loans and the LOC Obligations exceeds
the Borrowing Base after the Revolving Credit Loans are prepaid as required
herein, then the Borrowers shall purchase from NationsBank Employee Notes
and provide and grant to NationsBank and the Banks, to the extent of their
participations, a perfected first-priority security interest in cash
collateral (the "ADDITIONAL COLLATERAL") acceptable to NationsBank as
determined by NationsBank in its discretion in an amount sufficient to
reduce the aggregate outstanding balance under the remaining Employee Loans
and LOC Obligations to an amount less than or equal to the Borrowing Base
at such time; PROVIDED, HOWEVER, that in lieu of purchasing Employee Notes
as provided herein the Borrowers may provide and grant to NationsBank and
the Banks, to the extent of their participations, a perfected
first-priority security interest in Additional Collateral in an amount
equal to the amount that would otherwise be required to purchase Employee
Notes hereunder.
(iv) NONCOMPLIANCE WITH SECTION 2.1(F). In the event that Wyatt shall
have failed timely to deliver the documentation required to be delivered in
accordance with Section 2.1(f), the Borrowers promise, jointly and
severally, to purchase the applicable Employee Loans.
(v) APPLICATION. All prepayments made pursuant to this Section 2.8(b)
shall (A) be subject to Section 2.17, and (B) be applied first to Base Rate
Loans and then to Eurodollar Loans in direct order of Interest
Period maturities.
(c) NOTICE OF PREPAYMENTS; REBORROWING. The Borrowers will provide notice
to the Agent of any prepayment by 12:00 noon (Charlotte, North Carolina time) on
the date of prepayment in the case of prepayments of Base Rate Loans and on the
third Business Day prior to the date of prepayment in the case of prepayments of
Revolving Credit Loans that are Eurodollar Loans. Amounts paid
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on the Revolving Credit Loans under this Section 2.8 may be reborrowed in
accordance with the provisions hereof.
(d) COMMITMENT INCREASE. Subject to the Borrowing Base limitations stated
in Section 6.6 hereof, upon 15 days' advance written notice from Borrowers to
the Banks, and in increments of $2.5 million, up to $7.5 million of the amount
available under the Aggregate Revolving Credit Commitment may be converted to
amounts available under the Employee Loan Commitment, and up to $7.5 million of
the amount available under the Employee Loan Commitment may similarly be
converted to amounts available under the Aggregate Revolving Credit Commitment;
PROVIDED, HOWEVER, that such conversions may be implemented on no more than two
occasions during any fiscal year of Borrowers. Each increase hereunder in the
Employee Loan Commitment or the Aggregate Revolving Credit Commitment shall
reduce, dollar for dollar, the amount available under the Aggregate Revolving
Credit Commitment or the Employee Loan Commitment, respectively. The Revolving
Credit Commitment and the Employee Loan Participation of each Bank shall be
ratably increased or decreased, as appropriate, with each increase or decrease
in the Aggregate Revolving Credit Commitment and the Employee Loan Commitment.
At no time shall (i) the Aggregate Revolving Credit Commitment exceed $62.5
million, (ii) the Employee Loan Commitment exceed $32.5 million, or (iii) the
aggregate of the Total Commitments exceed $80 million.
(e) REDUCTION OR TERMINATION. Borrowers may (i) terminate the Total
Commitments at any time if no Loans or LOC Obligations are outstanding at such
time, and (ii) ratably and permanently reduce from time to time, by an aggregate
amount of not less than $3,000,000 and additional increments of $1,000,000, the
unused portion of the Total Commitments, and may, in increments of $1,000,000,
allocate such reductions to amounts available under the Revolving Credit
Commitments and the Employee Loan Participations.
Section 2.9. FEES.
(a) ARRANGEMENT FEE. The Borrowers agree, jointly and severally, to pay to
the Agent (or its designee) in immediately available funds on or before the
Closing Date the arrangement fee set forth in the Agent's Fee
Letter.
(b) UNUSED FEE. In consideration of the aggregate Total Commitments made
available by the Banks hereunder, the Borrowers agree, jointly and severally, to
pay to the Agent for the account of the Banks a fee (the "Unused Fee") on the
Unused Aggregate Total Commitment computed at a per annum rate for each day
during the applicable Unused Fee Calculation Period (hereinafter defined) equal
to the Applicable Percentage for such Unused Fee. The Unused Fee shall commence
to accrue on the Closing Date and shall be due and payable in arrears on the
third (3rd) Business Day of each January, April, July and October (and the
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Termination Date) for the immediately preceding fiscal quarter (or portion
thereof) (each such fiscal quarter or portion thereof for which the Unused Fee
is payable hereunder being herein referred to as an "UNUSED FEE CALCULATION
PERIOD"), beginning with the first of such dates to occur after the Closing
Date.
(c) ADMINISTRATIVE FEES. The Borrowers agree, jointly and severally, to pay
to the Agent, for its own account, the annual administrative fee set forth in
the Agent's Fee Letter, payable on each anniversary of the Closing Date until
and including the last occurring Termination Date (the "AGENT'S FEE").
(d) LETTER OF CREDIT FEE. The Borrowers agree, jointly and severally, to
pay to the Agent for account of the Banks, a fee for each Letter of Credit
issued hereunder (the "LOC FEE") on the available amount to be drawn under such
Letter of Credit computed at a per annum rate for each day during the applicable
LOC Term (hereinafter defined) equal to the Applicable Percentage for such LOC
Fee. The LOC Fee shall commence to accrue on the issuance date for each Letter
of Credit and shall be due and payable in arrears on the third (3rd) Business
Day of each January, April, July and October (and on the expiry date thereof)
for the immediately preceding fiscal quarter (or portion thereof) (each such
fiscal quarter or portion thereof for which the LOC Fee is payable hereunder
being herein referred to as an "LOC TERM"), beginning with the first of such
dates to occur after the date of issuance of each Letter of Credit.
Section 2.10 METHOD OF PAYMENT. Unless otherwise provided herein, whenever
any payment of principal, interest, fees or any other payment to be made
hereunder becomes due on other than a Business Day, such payment may be made on
the next succeeding Business Day, and such extension of time shall in such case
be included in the computation of the amount of interest then to be paid. All
payments and prepayments by Borrowers hereunder and the makers of Employee Notes
shall be made to the Agent, at its address stated in Section 10.8 hereof, in
such money of the United States as at the time of payment shall be legal tender
for the payment of public and private debts and in immediately available funds.
Borrowers, jointly and severally, and the Banks hereby authorize the Agent to
debit the deposit accounts of any or all of Borrowers, or to advance Revolving
Credit Loans on Borrowers' behalf, at the time any payment by the Borrowers to
the Agent under this Agreement is due, in the amount of the required payment. A
payment must be received by the Agent or an instruction must be given the Agent
to debit one or more deposit accounts of one or more of Borrowers and having
collected balances sufficient to make such payment no later than 2:00 p.m.,
Charlotte, North Carolina, time, in order to be credited to Borrowers on the day
of receipt. Except as expressly provided otherwise herein, all computations of
interest and fees shall be
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made on the basis of actual number of days elapsed over a year of 360 days,
except with respect to computation of interest on Base Rate Loans and Employee
Loans which (unless such rate is determined by reference to the Federal Funds
Rate) shall be calculated based on a year of 365 or 366 days, as appropriate.
Secion 2.11 APPLICATION OF COLLECTIONS.
(a) DISTRIBUTION TO BANKS. All payments of principal, interest, fees,
and costs or expenses by Borrowers prior to the occurrence and continuance
of an Event of Default under Article VIII hereof, or by the issuer of an
Employee Note prior to the occurrence and continuance of a default under
such Employee Note, shall be distributed to the Banks by Agent as provided
in this Section. If any other Bank shall at any time receive payment on any
Loans directly or indirectly from any assets of any Borrower (including,
without limitation, through exercise of setoff rights under Section 8.3
hereof) or the maker of any Employee Note in a greater amount than the
proportionate amount of principal and interest due it under this Agreement,
then such Bank shall purchase for cash (immediately prior to such payment,
if necessary) a ratable proportion of the Revolving Credit Loans or the
amounts outstanding under Employee Loan Participations held by the other
Banks, including Agent, so that all recoveries of principal and interest
shall be shared by Banks in accordance with their Ratable Shares. If all or
any portion of such excess payment is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest.
(b) APPLICATION. Prior to the occurrence and continuance of an Event
of Default hereunder or of a default under an Employee Note, Agent shall
apply all Collections to the payment of costs or expenses, interest, fees,
and principal attributable to the Notes to which the Collections apply, in
that order. After the occurrence and continuance of any Event of Default
hereunder or a default under an Employee Note, all such applications shall
be made in accordance with the terms of Section 9.6. Agent shall remit to
the Banks in immediately available funds, or retain for its own account, as
applicable: (i) out of the principal portion of any such Collections, each
Bank's, including Agent's, Ratable Share thereof; (ii) out of the fees
portion of any such Collections each Bank's, including Agent's, Ratable
Share thereof; (iii) out of the interest portion of any such Collections,
each Bank's, including Agent's, Ratable Share thereof; and (iv) out of the
costs or expenses portion of any such Collections, each Bank's, including
Agent's, costs or expenses, pursuant to Section 10.6 hereof, as incurred.
All remittances of principal, interest, fees, and costs or expenses
hereunder to each of the other Banks shall be made as soon as practicable,
but in no instance later than the Business Day of their receipt by Agent in
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immediately available funds, if such receipt occurs no later than 12:00
noon Charlotte, North Carolina time, or the next Business Day, if such
receipt occurs later than 12:00 noon, and all such remittances shall be
effected by Agent's initiating wire transfers or by such other means as are
agreed in writing by both Agent and such Bank. Unless otherwise dictated by
a court of competent jurisdiction, Agent shall, however, have no obligation
to pay any Bank any amounts except out of those amounts actually received
in collected funds for application to the Obligations, except as otherwise
specifically provided in Section 9.12.
Section 2.12 CAPITAL ADEQUACY. If, after the date hereof, any Bank has
determined that the adoption or the becoming effective of, or any change in, or
any change by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof in the interpretation
or administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such Bank could
have achieved but for such adoption, effectiveness, change or compliance (taking
into consideration such Bank's policies with respect to capital adequacy), then,
upon notice from such Bank to the Borrowers, the Borrowers shall be obligated to
pay to such Bank such additional amount or amounts as will compensate such Bank
for such reduction. Each determination by any such Bank of amounts owing under
this Section shall, absent manifest error, be conclusive and binding on the
parties hereto.
Section 2.13 INABILITY TO DETERMINE INTEREST RATE. If prior to the first
day of any Interest Period, the Agent shall have determined (which determination
shall be conclusive and binding upon the Borrowers, absent manifest error) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, the Agent shall give telecopy or telephonic notice thereof to
the Borrowers and the Banks as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (y) any Revolving Credit Loans
that were to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base Rate
Loans and (z) any outstanding Eurodollar Loans shall be converted, on the first
day of such Interest Period, to Base Rate Loans. Until such notice has been
withdrawn by the Agent, no further Eurodollar Loans shall be made or continued
as such, nor shall the Borrowers have the right to convert Base Rate Loans to
Eurodollar Loans.
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Section 2.14 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the Closing Date shall make it unlawful for
any Bank to make or maintain Eurodollar Loans as contemplated by this Credit
Agreement, (a) such Bank shall promptly give written notice of such
circumstances to the Borrowers and the Agent (which notice shall be withdrawn
whenever such circumstances no longer exist), (b) the commitment of such Bank
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and,
until such time as it shall no longer be unlawful for such Bank to make or
maintain Eurodollar Loans, such Bank shall then have a commitment only to make a
Base Rate Loan when a Eurodollar Loan is requested and (c) such Bank's Loans
then outstanding as Eurodollar Loans, if any, shall be converted automatically
to Base Rate Loans on the respective last days or the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Loan occurs on a day which is not
the last day of the then current Interest Period with respect thereto, the
Borrowers shall pay to such Bank such amounts, if any, as may be required
pursuant to Section 2.17.
Section 2.15 REQUIREMENTS OF LAW. If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof applicable to
any Bank, or compliance by any Bank with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if later, the
date on which such Bank becomes a Bank):
(a) shall subject such Bank to any tax of any kind whatsoever with
respect to any Letter of Credit or any Eurodollar Loans made by it or its
obligation to make Eurodollar Loans, or change the basis of taxation of
payments to such Bank in respect thereof (except for Non-Excluded Taxes
covered by Section 2.16 (including Non-Excluded Taxes imposed solely by
reason of any failure of such Bank to comply with its obligations under
Section 2.16) and changes in taxes measured by or imposed upon the overall
net income, or franchise tax (imposed in lieu of such net income tax), of
such Bank or its applicable lending office, branch, or any affiliate
thereof);
(b) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Bank which is not otherwise included in the determination of
the Eurodollar Rate hereunder; or
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(c) shall impose on such Bank any other condition (excluding any tax
of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such
Bank, by an amount which such Bank deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or to reduce
any amount receivable hereunder in respect thereof, then, in any such case,
upon notice to the Borrowers from such Bank, through the Agent, in
accordance herewith, the Borrowers shall be obligated to promptly pay such
Bank, upon its demand, any additional amounts necessary to compensate such
Bank for such increased cost or reduced amount receivable, PROVIDED that,
in any such case, the Borrowers may elect to convert the Eurodollar Loans
made by such Bank hereunder to Base Rate Loans by giving the Agent at least
one Business Day's notice of such election, in which case the Borrowers
shall promptly pay to such Bank, upon demand, without duplication, such
amounts, if any, as may be required pursuant to Section 2.17. If any Bank
becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Borrowers,
through the Agent, certifying (x) that one of the events described in this
paragraph (a) has occurred and describing in reasonable detail the nature
of such event, (y) as to the increased cost or reduced amount resulting
from such event and (z) as to the additional amount demanded by such Bank
and a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this
subsection submitted by such Bank, through the Agent, to the Borrowers
shall be conclusive and binding on the parties hereto in the absence of
manifest error. This covenant shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable
hereunder.
Section 2.16. Taxes
(a) Except as provided below in this subsection, all payments made by
any Borrowers under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any court, or governmental body, agency
or other official, excluding taxes measured by or imposed upon the overall
net income of any Bank or its applicable lending office, or any branch or
affiliate thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of any Bank or its
applicable lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes, imposed: (i) by the jurisdiction under
the laws of which such Bank, applicable lending office, branch or affiliate
is organized or is located, or
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in which its principal executive office is located, or any nation within
which such jurisdiction is located or any political subdivision thereof; or
(ii) by reason of any connection between the jurisdiction imposing such tax
and such Bank, applicable lending office, branch or affiliate other than a
connection arising solely from such Bank having executed, delivered or
performed its obligations, or received payment under or enforced, this
Agreement. If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Agent or any Bank
hereunder, (A) the amounts so payable to the Agent or such Bank shall be
increased to the extent necessary to yield to the Agent or such Bank (after
payment of all NON-EXCLUDED TAXES) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this
Agreement, PROVIDED, HOWEVER, that the Borrowers shall be entitled to
deduct and withhold any Non-Excluded Taxes and shall not be required to
increase any such amounts payable to any Bank that is not organized under
the laws of the United States of America or a state thereof if such Bank
fails to comply with the requirements of paragraph (b) of this subsection
whenever any Non-Excluded Taxes are payable by the Borrowers, and (B) as
promptly as possible thereafter the Borrowers shall send to the Agent for
its own account or for the account of such Bank, as the case may be, a
certified copy of an original official receipt received by the Borrowers
showing payment thereof. If the Borrowers fail to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fail to remit to the
Agent the required receipts or other required documentary evidence, the
Borrowers shall indemnify the Agent and the Banks for any incremental
taxes, interest or penalties that may become payable by the Agent or any
Bank as a result of any such failure. The agreements in this subsection
shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
(b) Each Bank that is not incorporated under the laws of the United
States of America or a state thereof shall:
(X) (i) on or before the date of any payment by the Borrowers
under this Agreement to such Bank, deliver to the Borrowers and the
Agent (A) two (2) duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, or successor applicable form, as
the case may be, certifying that it is entitled to receive payments
under this Agreement without deduction or withholding of any United
States federal income taxes and (B) an Internal Revenue Service Form
W-8 or W-9, or successor applicable form, as the case may be,
certifying that it is entitled to an exemption from United States
backup withholding tax;
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(ii) deliver to the Borrowers and the Agent two (2) further
copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by the
Borrowers or the Agent; or
(Y) in the case of any such Bank that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (i)
represent to the Borrowers (for the benefit of the Borrowers and the
Agent) that it is not a bank within the meaning of Section
881(c)(3)(A) of the Internal Revenue Code, (ii) agree to furnish to
the Borrowers on or before the date of any payment by any Borrowers,
with a copy to the Agent two (2) accurate and complete original signed
copies of Internal Revenue Service Form W-8, or successor applicable
form certifying to such Bank's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Internal Revenue Code with respect
to payments to be made under this Agreement (and to deliver to the
Borrowers and the Agent two (2) further copies of such form on or
before the date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recently
provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrowers or the Agent for filing and
completing such forms), and (iii) agree, to the extent legally
entitled to do so, upon reasonable request by the Borrowers, to
provide to the Borrowers (for the benefit of the Borrowers and the
Agent) such other forms as may be reasonably required in order to
establish the legal entitlement of such Bank to an exemption from
withholding with respect to payments under this Agreement;
unless in any such case any change in treaty, law or regulation has
occurred after the date such Person becomes a Bank hereunder which
renders all such forms inapplicable or which would prevent such Bank
from duly completing and delivering any such form with respect to it
and such Bank so advises the Borrowers and the Agent. Each Person that
shall become a Bank or a participant of a Bank pursuant to Section
10.2 shall, upon the effectiveness of the related transfer, be
required to provide all of the forms, certifications and statements
required pursuant to this subsection, PROVIDED that in the case of a
participant of a Bank
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the obligations of such participant of a Bank pursuant to this
subsection (b) shall be determined as if the participant of a Bank
were a Bank except that such participant of a Bank shall furnish all
such required forms, certifications and statements to the Bank from
which the related participation shall have been purchased.
Section 2.17. INDEMNITY. The Borrowers, jointly and severally, promise to
indemnify each Bank and to hold each Bank harmless from any loss or expense
which such Bank may sustain or incur (other than through such Bank's gross
negligence or willful misconduct) as a consequence of (a) default by the
Borrowers in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrowers have given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Borrowers
in making any prepayment of a Eurodollar Loan after the Borrowers have given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day which is not the last day of
an Interest Period with respect thereto. With respect to Revolving Credit Loans
that are Eurodollar Loans, such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the case of a
failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Eurodollar Loans provided for herein (excluding, however, the
Applicable Percentage included therein, if any) over (ii) the amount of interest
(as reasonably determined by such Bank) which would have accrued to such Bank on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
ARTICLE III. SECURITY
Section 3.1. SECURITY INTERESTS. In order to secure the Loans and all other
obligations of the Borrowers under this Agreement, the Guaranty as identified in
Section 3.4, the Notes and any Interest Rate Protection Agreement (collectively,
the "SECURED OBLIGATIONS"), Borrowers hereby reaffirm their prior grants and
further grant to (i) the Agent, as agent for itself and for the other Banks with
respect to the Revolving Credit Loans, (ii) NationsBank and the Banks, as
participants, with respect to the Employee Loans, and (iii) any Interest Swap
Provider (collectively, the "SECURED PARTIES"), on a pro rata basis, a
first-priority security interest in all of their accounts receivable, including
all rights of Borrowers to payment
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for goods sold or leased or services rendered, whether or not earned by
performance, whether or not billed or evidenced by an instrument or chattel
paper, whether or not reduced to judgment, and whether now existing or hereafter
arising, together with all cash and non-cash proceeds thereof, including,
without limitation, all instruments issued to it by any account debtor (all
collateral in which the Borrowers herein grant and reaffirm prior grants of
security interests and in which the Borrowers cause any Subsidiary to grant
security interests, and all Additional Collateral in which any Borrower may
grant NationsBank and the Banks, as participants, security interests in
accordance with Section 2.8(b)(iii), is, collectively, the "COLLATERAL").
Section 3.2. PERFECTION AND ADMINISTRATION. In order to perfect the rights
of the Secured Parties in the security interests and liens granted and to be
granted hereunder and to assure to the Secured Parties the further protection
and effective administration of their interests hereunder, each Borrower agrees
that all financing statements and assignments filed in the United States and
Canada pursuant to the Prior Agreement remain in full force and effect with
respect to this Agreement, and each Borrower shall
(a) execute and deliver to the Agent, for the benefit of the Secured
Parties, for filing such financing statements, amendments, and continuation
statements as the Agent may, from time to time, present to such Borrower,
and any assignment, endorsement, hypothecation agreement, instrument,
estoppel certificate or other writing that the Agent may determine to be
necessary or reasonably appropriate in order to perfect or protect the
Agent's security interests in, or liens on, or, upon the occurrence and
during the continuance of an Event of Default, to facilitate the collection
of, the Collateral, or otherwise to carry out the terms of this Agreement;
PROVIDED THAT, the Agent presently proposes to cause the filing of
financing statements or other documents to effect or maintain perfection
only in filing offices in the United States and in British Columbia,
Ontario, and Quebec;
(b) permit the Banks, or their agents access, upon reasonable request
therefor and during normal business hours, but not more than twice annually
in the absence of any Event of Default or Incipient Default (PROVIDED that
the Banks shall make reasonable efforts to coordinate their exercise of
rights hereunder in order to avoid excessive disruption to such Borrower),
to the books, records, receipts, and all other data of such Borrower
pertaining to the Collateral and the Employee Loans hereunder or relating
to contracts, accounts receivable, or any other transaction affecting the
Banks' interests hereunder and thereunder, and to examine all such data,
contracts, and accounts and make extracts from the records thereof;
PROVIDED, that the Banks may exercise their rights hereunder more than
twice annually, as they may choose in their sole discretion,
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during the existence of any Event of Default or Incipient Default; and
(c) cause appropriate administrative officials of such Borrower to
meet with the Banks as the Banks may reasonably request, including without
limitation in connection with any examination or extraction of data,
contracts, accounts, receipts, books, or records under subsection 3.2(b)
above.
Section 3.3. POWER OF ATTORNEY; NOTICE. Each Borrower irrevocably appoints
the Agent its true and lawful attorney with full power of substitution, after
the occurrence and continuance of an Event of Default or Incipient Default, to
issue bills or invoices for unbilled Eligible Receivables and to endorse or
negotiate in such Borrower's name any checks or other instruments of payment
constituting proceeds of the Collateral and to take any action which the Agent
reasonably deems necessary to perfect, protect or preserve the liens and
security interests of the Agent and the Banks on and in the Collateral in the
United States, Quebec, British Columbia and Ontario, or any portion thereof, or,
after the occurrence and continuance of an Event of Default, to enforce any of
the Agent's or the Banks' other rights in the Collateral, including, without
limitation, notification to account debtors of the Agent's and the Banks'
security interest and/or direction to such account debtors to make payments
directly to the Agent. Each Borrower irrevocably appoints the Agent as its true
and lawful attorney and agent, with full power of substitution, effective upon
the occurrence of an Event of Default or Incipient Default, to execute and file
on its behalf, Uniform Commercial Code financing statements in any appropriate
public office.
Section 3.4. GUARANTY. All Employee Loans shall be unconditionally
guaranteed by the Borrowers under a guaranty in the form of EXHIBIT C in the
full amount of the Employee Loans (the "GUARANTY").
Section 3.5. PLEDGE AGREEMENTS; PLEDGED SHARES.
(a) PLEDGE AGREEMENTS. All common stock of Wyatt purchased or
refinanced with the proceeds of the Employee Loans (the "PLEDGED SHARES")
shall be pledged to NationsBank and the Banks, to the extent of their
participations, by the purchasers of the Pledged Shares pursuant to stock
pledge letter agreements ("PLEDGE AGREEMENTS") substantially in the form of
Exhibit D-1 (for individual purchasers) or D-2 (for personal holding
companies).
(b) DELIVERY OF CERTIFICATES; BOOK ENTRIES. (i) The Borrowers shall
cause all certificates and any other instruments or documents evidencing
ownership of Pledged Shares, if any, to be delivered to NationsBank at the
address specified in Section 10.8 hereof promptly upon the funding of the
related Employee Loans, shall cause all such certificates to be accompanied
by executed assignments
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separate from the certificates in blank in the form of EXHIBIT E hereto
("STOCK POWERS"), and shall cause the following legend to be placed on all
such certificates:
"In the event the shares represented by this certificate are
sold, the purchaser may be required to remit the purchase price
directly to the Company to be applied in payment of certain
indebtedness of the registered holder to NationsBank, N.A., as agent
for itself and certain other banks."
(ii) With respect to all Pledged Shares that consist of uncertificated
securities, Wyatt shall, or shall cause its transfer agent to, (A) register
on its books the pledges to NationsBank of such Pledged Shares promptly
upon the funding of the related Employee Loans, (B) identify on all initial
and periodic statements and all other statements or notices respecting the
Pledged Shares the pledges to NationsBank of the Pledged Shares and the
restriction that any purchaser of the Pledged Shares may be required to
remit the purchase price directly to Wyatt to be applied in payment of the
related Employee Loan, and (C) have all pledgee notices and statements
respecting the Pledged Shares delivered to NationsBank at the address
specified in Section 10.8 hereof.
(c) SALES. Upon the occurrence of any event giving NationsBank the
option to accelerate the maturity date under any Employee Note or the
termination of employment of the maker of any Employee Note as provided in
Section 9.4 of Wyatt's Bylaws, Wyatt may treat such event or termination as
an offer to sell to Wyatt or to one or more Eligible Purchasers (as defined
in Section 9.9(a) of Wyatt's Bylaws) the Pledged Shares affected thereby or
pledged pursuant to the Employee Note affected thereby under the terms and
conditions of Section 9.4 of Wyatt's Bylaws. In the event that any or all
Pledged Shares are sold to one or more Eligible Purchasers prior to
repayment of the associated Employee Loan, Wyatt shall direct such Eligible
Purchasers to remit the purchase price directly to Wyatt. Wyatt shall apply
the proceeds of any sale of Pledged Shares (i) first, to pay any remaining
balance under the Employee Note secured by the Pledged Shares sold
(including principal, interest, and collection expenses), (ii) second, to
pay any other amounts required by applicable law, and (iii) third, to the
maker of the related Employee Note to the extent, if any, of any surplus
proceeds. Upon payment by the Borrowers of the remaining amounts owed under
the Employee Note secured by the Pledged Shares sold, NationsBank shall
return such Pledged Shares to Wyatt.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
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In order to induce the Agent and the Banks to enter into this Agreement,
each Borrower hereby warrants and represents to the Agent and each of the Banks,
as of the Closing Date and as of the date of funding of each Loan, as follows:
Section 4.1. ORGANIZATION. Such Borrower and each of its Material
Subsidiaries, if any (all of each Borrower's Subsidiaries being identified on
SCHEDULE 1), is a corporation, limited liability company or limited partnership,
validly existing and in good standing under the laws of the jurisdiction of its
organization, is duly qualified to do business in every jurisdiction where such
qualification is necessary (except for jurisdictions the failure in which to
qualify would have no material adverse impact upon such Borrower's operations,
properties, or financial condition, on a consolidated basis), will promptly
correct any failure to qualify upon receipt of notice of such failure, has the
power and authority to own its assets and transact the business in which it is
engaged, and has obtained all necessary certificates, franchises, and licenses
(collectively "LICENSES") for the operation of the business in which it is
engaged, except for Licenses the absence of which would have no material adverse
impact upon such Borrower's operations, properties, or financial condition, on a
consolidated basis.
Section 4.2. AUTHORIZATION
(a) The execution, delivery and performance of this Agreement, the
Revolving Credit Notes, the Guaranty, the Pledge Agreements, and such other
documents as are required to be delivered by it hereunder
(i) are within the organizational powers of such Borrower;
(ii) have been duly authorized by all necessary organizational
action;
(iii) do not violate any provision of the Articles of
Incorporation, Bylaws, Limited Liability Company Certificate or
Agreement, or Limited Partnership Certificate or Agreement of such
Borrower, as applicable, or of any law or material rule, regulation
(including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect and
having applicability to such Borrower;
(iv) are not in conflict with and do not result in a breach of or
constitute a default under any material indenture, loan or credit
agreement, or any other material agreement, lease or instrument to
which such Borrower is a party or by which it or its properties may be
bound or affected; and
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(v) do not result in, or require the creation or imposition of,
any mortgage, deed of trust, pledge, lien, security, interest or other
charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by such Borrower, except
for the encumbrances granted or to be granted to the Agent, for the
benefit of the Banks, under Article III.
(b) Except as listed on SCHEDULE 2, each of such Borrowers and its
Material Subsidiaries (if any) is in compliance with all applicable laws,
rules, regulations, writs, judgments, orders, injunctions, decrees,
determinations or awards applicable to it and is not materially in default
under any indenture, agreement, lease or instrument, where such
noncompliance or default would have a material adverse effect on the
financial condition, properties or operations of such Borrower, on a
consolidated basis, or its ability to perform its obligations hereunder
(the term "default" as used herein includes any Event of Default or
Incipient Default, as defined in Sections 8.1 and 5.2(a), respectively).
Section 4.3. VALIDITY. This Agreement, the Revolving Credit Notes, the
Guaranty, and (with respect to Wyatt only) the Pledge Agreements have been or
shall be duly executed and delivered by such Borrower under the terms of this
Agreement, and, when so executed, constitute the legal, valid and binding
obligations of such Borrower, enforceable against such Borrower and the
Collateral in accordance with their terms, except as such enforcement may be
limited by applicable bankruptcy, reorganization, or similar laws affecting the
enforceability of creditors' rights in general and except for generally
applicable principles of equity (collectively, the "GENERAL EXCEPTIONS").
Section 4.4. GOVERNMENTAL APPROVALS. No filing with or action or approval
of any Governmental Authority is or will be required under existing law in
connection with the valid execution, delivery or performance by such Borrower of
this Agreement, the Revolving Credit Notes, the Guaranty, or (with respect to
Wyatt only) the Pledge Agreements, or in connection with the validity and
enforceability of the security interests in the Collateral, except as has been
accomplished or obtained and none of which has been or is threatened to be
rejected or revoked, and except for the filing of the financing statements
required under Section 3.2.
Section 4.5. LITIGATION. Except as identified on SCHEDULE 3, there are no
actions, suits, investigations or other proceedings pending or, to the knowledge
of such Borrower, threatened against or affecting such Borrower or any of its
Subsidiaries or any of their properties before any court or Governmental
Authority which, if determined adversely to such Borrower or any Subsidiary,
would have a material adverse effect on the financial condition, properties or
operations of such
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Borrower, on a consolidated basis, or its ability to perform its obligations
hereunder.
Section 4.6. FINANCIAL CONDITION
(a) The financial statements delivered to the Agent pursuant to
Section 5.1(i) fairly present the financial condition of Wyatt, on a
consolidated basis, as of the dates stated therein, and the results of the
operations of Wyatt, on such basis, for the accounting periods covered
therein; except as stated on SCHEDULE 2, as of the Closing Date such
Borrower has no material contingent tax or other liability not disclosed by
or reserved against in the balance sheets delivered as part of such
financial statements; there are no material unrealized or anticipated
losses from any commitment of such Borrower; and there has been no material
adverse change in the financial condition or results of operations of such
Borrower since the date and period covered by such financial statements.
(b) As of the Closing Date, each of the Borrowers had a positive net
worth of at least one dollar.
Section 4.7. RECORDS AND BUSINESS LOCATION. The chief executive office and
principal place of business of such Borrower and the office where such Borrower
keeps its corporate and accounting records (including records relating to the
Collateral) is and, in the absence of 15 days' prior written notice to the Agent
will remain, located at 601 13th Street, N.W., Suite 1000, Washington, D.C.
20005 or 1850 M Street, N.W., Seventh Floor, Washington, D.C. 20036.
Section 4.8. SECURITY INTERESTS. This Agreement and the Prior Agreement,
together with financing statements and such other documents as are executed and
delivered hereunder or thereunder, create valid and, assuming timely filing in
all the jurisdictions other than England identified on SCHEDULE 4 and in British
Columbia and Quebec, perfected first-priority security interests and liens in,
on and to all of the Collateral relating to account debtors located in the
United States, British Columbia, Ontario and Quebec (the "LOCAL COLLATERAL"),
enforceable against the Local Collateral in accordance with the terms hereof and
thereof, except for the General Exceptions.
Section 4.9. ENCUMBRANCES. None of the Local Collateral is subject to any
assignment, lien, security interest, charge or encumbrance, except for security
interests in favor of the Agent for the benefit of the Banks pursuant hereto. No
effective financing statement or other instrument similar in effect covering any
of the Local Collateral is on file in any recording office, except such as have
been or will promptly be filed in favor of the Agent relating to this Agreement
or the Prior Agreement and as permitted under Section 7.2(b).
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Section 4.10. ERISA. With respect to any employee benefit plan for the
benefit of employees of such Borrower or any of its subsidiaries ("PLAN") that
is subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and regulations issued pursuant to ERISA, each of such Borrower and
its Material Subsidiaries (if any) is in compliance in all material respects
with the applicable provisions of ERISA, except as stated in SCHEDULE 2; no Plan
maintained by such Borrower has incurred any "accumulated funding deficiency" as
defined in Section 302 of ERISA or Section 412 of the Internal Revenue Code; no
Reportable Event as defined in Section 4043(b) of ERISA that requires
notification of the Pension Benefit Guaranty Corporation ("PBGC") has occurred
with respect to any Plan; and no provision of this Agreement will result in a
Reportable Event or violation of ERISA.
Section 4.11. MARGIN STOCK. Such Borrower is not and will not be engaged in
the business of purchasing, carrying, or extending credit for the purpose of
purchasing or carrying "margin stock," as defined by Regulation U, the Pledged
Shares are not "margin stock" as defined by Regulation U, and no proceeds of any
Loan hereunder will be used for the purpose of purchasing or carrying margin
stock or extending credit for such purpose.
Section 4.12. TAXES. Such Borrower, on a consolidated basis, has filed all
United States income tax returns and all state and municipal tax returns which
are required to be filed, and has paid, or made provision for the payment of,
all taxes which have become due pursuant to said returns or pursuant to any
assessment received by such Borrower, except such taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided.
Section 4.13. BURDENSOME DOCUMENTS. Except as identified on SCHEDULE 5,
neither such Borrower nor any of its Material Subsidiaries, if any, is a party
to or bound by, nor are any of their respective properties or operations
materially affected by, any agreement, ordinance, decree, regulation, order,
injunction, award or judgment that, to the actual knowledge of Wyatt's Vice
President and Chief Financial Officer or General Counsel, as defined in Wyatt's
Bylaws, would materially adversely affect the assets, properties or operations
of such Borrower, on a consolidated basis or its ability to perform its
obligations hereunder.
Section 4.14. ENVIRONMENTAL MATTERS. Such Borrower does not own any real
property except as listed on SCHEDULE 6. Neither Wyatt's Vice President and
Chief Financial Officer nor its General Counsel has received any actual notice
that any property owned, leased or operated by such Borrower has been listed or
proposed for listing on the National Priorities List established by the United
States Environmental Protection Agency, or on any other list developed or
maintained by any federal, state or local governmental entity and purporting to
identify
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properties posing the threat of pollution or contamination due to the presence
of hazardous substances, nor has either received notice or knowledge of such
pollution or contamination of any property owned, leased, or operated by such
Borrower.
Secion 4.15. EMPLOYEE LOANS; STOCK PLAN; QUALIFIED EMPLOYEE STATUS. Wyatt's
annual stock purchase plan for Qualified Employees (the "STOCK PLAN"), and the
Qualified Employee loan program offered in connection therewith under the terms
and provisions of this Agreement and the Employee Notes (the "EMPLOYEE LOAN
PROGRAM") comply in all material respects with all applicable laws. Wyatt has
lawfully and fully disclosed to the Qualified Employees the attendant risks and
burdens of purchasing Wyatt common stock under the Stock Plan. Each person
receiving an Employee Loan, was at the time of the making thereof, a Qualified
Employee.
ARTICLE V. CONDITIONS PRECEDENT
Section 5.1. CONDITIONS PRECEDENT TO CLOSING. The Banks' obligations under
this Agreement are subject to the receipt by the Agent, in form and substance
satisfactory to the Agent and its counsel, of each of the following:
(a) the Revolving Credit Notes, executed by each Borrower;
(b) this Agreement, with all Exhibits and Schedules, executed by each
Borrower;
(c) the Guaranty, executed by each Borrower;
(d) financing statements executed by appropriate officers of the
Borrowers and covering the Collateral;
(e) a certificate of good standing issued by the appropriate state
officer with respect to the good standing of each Borrower and its
organizational documents on file;
(f) copies, certified by its Secretary or other authorized
representative of each Borrower's organizational documents, with any
amendments thereto;
(g) resolutions of the Board of Directors or other appropriate
authorizations of each Borrower, certified by its Secretary or other
authorized representative authorizing the execution, delivery and
performance, as applicable, of this Agreement, the Revolving Credit Notes,
the Guaranty, and all other documents necessary for performance of the
obligations of such Borrower under this Agreement, and identifying by title
all officers or other authorized representatives of such Borrower
authorized to execute requests for Loans under Section 5.2;
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(h) favorable opinions of counsel (including Canadian counsel as to
perfection of the Canadian Eligible Receivables) for each Borrower;
(i) financial statements of Wyatt, as follows: (i) a balance sheet and
statements of cash flow, net worth, and income, all prepared on a
consolidated basis and in accordance with GAAP and all certified as to fair
and complete presentation by an Authorized Financial Officer as of the
close of and for the first quarter of the current fiscal year of Borrowers,
(ii) financial statements prepared on a consolidated basis, in accordance
with GAAP and certified as to fair and complete presentation by an
Authorized Financial Officer and by independent accountants of recognized
standing acceptable to the Agent and containing no material qualifications,
as of the close of and for the last fiscal year of Borrowers; and (iii) a
statement of projected net worth and income for the Borrowers' 1996 fiscal
year, prepared on a consolidated basis and certified as to fair and
complete presentation by an Authorized Financial Officer;
(j) certificates, executed by the Secretary or other authorized
representative of each Borrower, as to the incumbency and authenticity of
signatures of the officers or other authorized representatives of such
Borrower executing this Agreement and any other documents required as
conditions precedent under this Section and containing specimen signatures
of all officers or other authorized representatives identified by such
Borrower under subsection 5.1(g) above;
(k) a solvency certificate of each Borrower, executed by its chief
financial officer or other authorized representative, substantially in the
form of EXHIBIT L; and
(l) such other documents as the Agent may reasonably request.
Section 5.2. CONDITIONS PRECEDENT TO LOANS AND ISSUANCE OF LETTERS OF
CREDIT. Letters of Credit.
(a) ALL LOANS AND LETTERS OF CREDIT. As a condition precedent to the
funding of a Loan or the issuance of a Letter of Credit hereunder (a
"CREDIT EVENT"), (i) there shall exist no Event of Default or event (an
"INCIPIENT DEFAULT") which, with notice or lapse of time, or both, would
constitute an Event of Default, either immediately prior to, or after
giving effect to such Credit Event (ii) Borrowers shall have complied with
all of the conditions stated in Section 5.1, (iii) a Margin Stock Event
shall not have occurred, (iv) all necessary deliveries and filings to
perfect the Agent's security interests in the Local Collateral shall have
been accomplished, and (v) the representations and warranties of each of
the Borrowers set
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forth in Article IV hereof shall be true and correct as if made and
restated on the date of such Credit Event. Each request by Borrowers for
Loans pursuant to Section 5.2(b) and (c) or a Letter of Credit pursuant to
Section 2.5 shall be deemed to be a certification and warranty by each
Borrower to the effect of the foregoing, and that the requested Loans or
Letter of Credit, as the case may be, are within the availability under the
Borrowing Base, as shown in the latest certificate in the form of EXHIBIT G
("BORROWING BASE CERTIFICATE") delivered by Borrowers (which shall be as of
a date no more than 61 days prior to any such request).
(b) REVOLVING CREDIT LOANS. As a further condition precedent to the
funding of a Revolving Credit Loan, Borrowers shall request a Revolving
Credit Loan borrowing by written notice (or telephone notice promptly
confirmed in writing) to the Agent not later than 12:00 noon (Charlotte,
North Carolina time) on the Business Day of the requested borrowing in the
case of Base Rate Loans, and on the third Business Day prior to the date of
the requested borrowing in the case of Eurodollar Loans. Each such request
for a borrowing (a "NOTICE OF BORROWING") shall be irrevocable and shall
specify (A) that a Revolving Credit Loan is requested, (B) the date of the
requested borrowing (which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, and (D) whether the borrowing shall be
comprised of Base Rate Loans, Eurodollar Loans or a combination thereof,
and if Eurodollar Loans are requested, the Interest Period(s) therefor. If
the Borrowers shall fail to specify in any such Notice of Borrowing (I) an
applicable Interest Period in the case of a Eurodollar Loan, then such
notice shall be deemed to be a request for an Interest Period of one month,
or (II) the type of Revolving Credit Loan requested, then such notice shall
be deemed to be a request for a Base Rate Loan hereunder.
(c) EMPLOYEE LOANS. As a further condition precedent to the funding of
any Employee Loan, Wyatt shall deliver to NationsBank, (i) not less than
five Business Days prior to the requested funding date, preliminary notice
that Employee Loans will be requested and specifying the aggregate amount
anticipated to be borrowed and (ii) not later than 12:00 noon (Charlotte,
North Carolina time) on the requested funding date, an appropriate Notice
of Borrowing specifying that the funding of Employee Loans is requested and
confirming the amount thereof.
As an additional condition precedent to the funding of any Employee
Loan, (A) NationsBank shall have received from each of the other Banks such
Bank's Ratable Share of the requested Employee Loan in accordance with this
Agreement and (B) for each requested Employee Loan, Wyatt and/or its
transfer agent shall have received from the Qualified Employee (or personal
holding company) to whom the Employee
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Loan is to be made, such additional pledge instruction, if any, as Wyatt
and/or its transfer agent may require in order to register on its books the
pledge to NationsBank of the Pledged Shares.
ARTICLE VI. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, until all of its obligations
hereunder and under the Notes have been satisfied in full, and in the absence of
prior written consent of the Agent:
Section 6.1. PAYMENTS HEREUNDER. Borrowers shall make all payments of
principal, interest, fees, and all other payments required hereunder, under the
Revolving Credit Notes, under the Guaranty and under any other agreements with
any of the Banks to which the Borrowers are party, as and when due. All
obligations of the Borrowers to make payments hereunder are joint and several.
Section 6.2. EXISTENCE AND GOOD STANDING; INSURANCE; CONDUCT. Such Borrower
shall do or cause to be done all things necessary, with respect to itself and
each of its Material Subsidiaries, (a) to preserve and keep in full force and
effect its existence, employee stock plans, rights, licenses, permits, and
franchises and comply with all applicable laws and all rules, regulations and
orders of federal, state and local regulatory bodies having jurisdiction
applicable to it noncompliance with which would have a material adverse effect
upon the financial condition, properties, or operations of such Borrower on a
consolidated basis; (b) to maintain and protect its material assets or
properties used or useful in the conduct of its operations in a prudent manner
including, without limitation, the maintenance at all times of such insurance
upon its insurable properties, operations and professional services with
reputable insurers as would be prudent for companies in the same or similar
business as such Borrower; (c) to conduct its operations and continue the
conduct of its business without any substantial change in the general nature of
such operations or business from that in effect on the Closing Date; and (d) in
the case of such Borrower, to maintain its material places of business as set
forth in SCHEDULE 4, except that, upon 15 days' prior written notice to the
Agent, such Borrower may change any such places of business.
Section 6.3. TAXES AND CHARGES. Such Borrower shall, and shall cause each
of its Subsidiaries to, timely file returns and pay and discharge all material
taxes, assessments and governmental fees, charges or levies imposed upon it or
its income or profits or upon its properties or any part thereof, before the
same shall be in default, as well as all lawful claims which, if unpaid, might
become a lien or charge upon such properties or any part thereof; PROVIDED,
HOWEVER, that such Borrower shall not be required to pay and discharge or cause
to be paid and discharged any such tax, assessment, charge, levy or claim so
long as the
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validity or amount thereof shall be contested in good faith by appropriate
proceedings and such Borrower shall have set aside on its books adequate
reserves therefor.
Section 6.4. FINANCIAL STATEMENTS. Such Borrower shall deliver or cause to
be delivered to the Agent and the Banks,
(a) within 120 days after the end of each fiscal year of Borrowers,
(i) Wyatt's annual financial statements, on a consolidated basis,
containing a balance sheet as at the end of such fiscal year and statements
of income, cash flows, and changes in stockholders' equity for such fiscal
year, prepared in accordance with GAAP, certified as to fair and complete
presentation by an Authorized Financial Officer and certified by
independent accountants of recognized standing acceptable to the Agent,
which accountants shall also include an opinion stating that their
examination of the financial statements was conducted in accordance with
generally accepted auditing standards and, if they have prepared a
management letter as part of their responsibilities to Wyatt, a copy of
such management letter promptly upon completion of such letter; and (ii)
calculations, reviewed and certified by an Authorized Financial Officer,
showing Wyatt's compliance with the applicable financial standards
contained in Section 7.6;
(b) within 50 days after the end of each of the first three quarters
of each fiscal year of the Borrowers (except with respect to item (b)(ii)
below, which shall be required to be delivered within 50 days after the end
of each of the second and third quarters of each fiscal year of the
Borrowers only) (i) a balance sheet and statements of income, cash flow,
and net worth, all prepared on a consolidated basis and in accordance with
GAAP, and all certified as to fair and complete presentation by an
Authorized Financial Officer as of the close of and for such period; (ii) a
statement of projected net worth and income, prepared on a consolidated
basis and certified as to fair and complete presentation by an Authorized
Financial Officer of Wyatt for the Borrowers' then-current fiscal year; and
(iii) calculations, reviewed and certified by an Authorized Financial
Officer, showing the Borrowers' compliance with the applicable financial
standards contained in Section 7.6 hereof;
(c) within 30 days after the end of each calendar month a statement,
reviewed and certified by an Authorized Financial Officer, showing the
agings of Wyatt's consolidated accounts receivable for such month and for
the month that is immediately prior to such month and also for the month
that is twelve months prior to such immediately prior month, showing net
operating income, determined in accordance with Wyatt's internal accounting
procedures, for each office where any Borrower is located substantially as
shown on the monthly statements of Wyatt previously
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delivered to the Agent and the Banks under the Prior Agreement;
(d) no later than 30 days after the close of each calendar month, a
Borrowing Base Certificate, substantially in the form of EXHIBIT E,
containing calculations reviewed and certified by an Authorized Financial
Officer;
(e) no later than 150 days after the commencement of each fiscal year
of Borrowers, a projected balance sheet and income statement for such
fiscal year, on a consolidated basis;
(f) no later than 30 days after the close of each calendar month, a
certificate as to Wyatt's compliance with clause (y) of Section 7.5(a) and
specifying the aggregate balance (i) credited to all Separation Allowance
Accounts and (ii) the aggregate balance of Permitted CSAP Loans, reviewed
and certified by an Authorized Financial Officer;
(g) upon the written request of the Agent and with reasonable notice,
such other financial statements and reports as the Agent may reasonably
deem necessary to provide current financial information; and
(h) concurrently with the delivery of the financial statements and
calculations required under subsections (a)-(g) of this Section, a
certificate of an Authorized Financial Officer certifying the fair and
complete presentation of the data and information used in making the
calculations and stating that such annual financial statements have been
prepared in accordance with GAAP and that there exists no Event of Default
or Incipient Default hereunder.
Section 6.5. REPORTS. Each Borrower shall deliver to the Agent and the
Banks:
(a) as soon as reasonably possible, and, in any event, within five
Business Days after such Borrower receives notice or knowledge thereof or
learns facts which would lead a reasonable Person to undertake diligent
inquiry, a report or statement executed by a senior officer of such
Borrower with respect to (i) the occurrence of any Reportable Event as
defined by ERISA and regulations thereunder that requires notification to
the PBGC, (ii) the occurrence of any Event of Default or Incipient Default
or the material failure to observe or perform any covenant set forth herein
or in any other agreement with any of the Banks to which such Borrower is a
party, and any action taken or contemplated with respect thereto, and (iii)
(A) any pending or threatened litigation or administrative proceedings or
investigations against or affecting such Borrower or any of its
Subsidiaries which, if determined adversely to such Borrower would have a
material adverse effect upon the financial
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condition or operations of such Borrower, on a consolidated basis, and (B)
any reserves set aside or to be set aside in connection with such
proceedings, in accordance with GAAP; and
(b) such other reports as the Agent may, from time to time, reasonably
request in writing from the Borrowers.
Section 6.6. LOAN BALANCES
(a) REVOLVING CREDIT NOTES. The aggregate outstanding principal
balance under the Revolving Credit Notes, plus LOC Obligations will, at no
time, exceed an amount equal to the lesser of (i) $55,000,000 (except only
as such amount may be increased to a maximum of $62,500,000, with a
corresponding decrease in the Employee Loan Commitment, pursuant to Section
2.8(d) or decreased pursuant to Section 2.8(e)) or (ii) the Borrowing Base
as shown on the latest Borrowing Base Certificate delivered to the Agent,
plus the Additional Collateral provided in accordance with Section
2.8(b)(iii), if any, net of the aggregate amount outstanding under the
Employee Loans at such time;
(b) EMPLOYEE NOTES. The aggregate outstanding principal balance under
the Employee Notes will, at no time, exceed an amount equal to the lesser
of (i) $25,000,000 (except only as such amount may be increased to a
maximum of $32,500,000, with a corresponding decrease in the Aggregate
Revolving Credit Commitment, pursuant to Section 2.8(d) or decreased
pursuant to Section 2.8(e)) or (ii) the Borrowing Base as shown on the
latest Borrowing Base Certificate delivered to the Agent, plus the
Additional Collateral provided in accordance with Section 2.8(b)(iii), if
any, net of the aggregate amount outstanding under the Revolving Credit
Loans, plus LOC Obligations; and
(c) AGGREGATE TOTAL COMMITMENTS. The aggregate outstanding balance
under the Revolving Credit Notes and the Employee Notes, PLUS the LOC
Obligations will, at no time, exceed the lesser of (i) $80,000,000 (except
only as such amount may be decreased pursuant to Section 2.8(e)) and (ii)
the Borrowing Base as shown on the latest Borrowing Base Certificate, plus
the Additional Collateral provided in accordance with Section 2.8(b)(iii),
if any; PROVIDED that, if the Borrowers are delinquent with respect to the
timely delivery of one (if more than one, the Borrowing Base shall be
deemed to be zero) Borrowing Base Certificate pursuant to Section 6.4(d),
the Borrowing Base at any such time shall be reduced to 75 percent of the
Borrowing Base as shown on the last Borrowing Base Certificate delivered
until the date of delivery to the Agent of a Borrowing Base Certificate as
of a date no more than 61 days prior to such delivery.
Section 6.7. UNCERTIFICATED SECURITIES. With respect to all Pledged Shares
that consist of uncertificated securities,
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Wyatt shall, or shall cause its transfer agent to, at all times and without
limitation of any other requirements imposed by applicable laws comply with an
issuer's obligations and duties regarding uncertificated securities and pledges
thereof or security interests therein under Articles 8 and 9 of the Uniform
Commercial Code as in effect in North Carolina (the "U.C.C."), including without
limitation Article 8, Sections 207 (Rights and Duties of Issuer with Respect to
Registered Owners and Registered Pledgees), 401 (Duty of Issuer to Register
Transfer, Pledge, or Release), and 408 (Statements of Uncertificated
Securities). All statements of uncertificated securities as required by Sections
8-408(1), (2) and (7) of the U.C.C. shall be substantially in the forms of
EXHIBITS H and I, as applicable. Such other statements of uncertificated
securities as are required by Section 8-408 of the U.C.C. or may from time to
time be properly issued by Wyatt and/or its transfer agent shall conform
generally to the forms of EXHIBITS H and I, as appropriate.
Section 6.8. POSITIVE NET WORTH. Each of the Borrowers shall maintain at
all times a positive net worth of at least one dollar.
Section 6.9. NOTIFICATION TO EMPLOYEES. Wyatt shall provide to the Agent
within 45 days of the Closing Date evidence satisfactory to the Agent that all
makers of the Employee Notes in existence on the Closing Date have been duly
notified of the revised interest rates to be applicable under all Employee Notes
from and after the Closing Date and have accepted in writing such change to
their respective Employee Notes.
ARTICLE VII. NEGATIVE COVENANTS
Each Borrower covenants and agrees that, until such time as all obligations
hereunder and under the Notes have been satisfied in full, and in the absence of
prior written consent of the Agent, which shall be given only in accordance with
Section 9.2(d):
Section 7.1. MERGERS AND RELATED TRANSACTIONS. Such Borrower shall not, nor
shall any of its Material Subsidiaries, (a) merge into or consolidate with or
into any other Person, except that (i) in any fiscal year one or more Persons
having liabilities not exceeding $15,000,000 in the aggregate may, in one or
more mergers, merge into Wyatt (with Wyatt as the surviving corporation) and
(ii) any wholly-owned Subsidiary of a Borrower may merge into or consolidate
with or into such Borrower or Wyatt or any other wholly-owned Subsidiary of such
Borrower or Wyatt (so long as in the case of a Borrower or Wyatt, such Borrower
or Wyatt is the surviving corporation); PROVIDED, HOWEVER, that before and after
giving effect to any such merger, no Incipient Default or Event of Default shall
then exist; (b) in the case of Wyatt, alter or amend its existing capital
structure in a manner changing its status as an employee-owned corporation, or
(c) acquire or create any one or more Subsidiaries, except
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that (i) Wyatt may acquire or create one or more Subsidiaries PROVIDED that
related acquisition costs or, as applicable to creation, capitalization, shall,
in any fiscal year, not exceed $10,000,000 in the aggregate, and (ii) Wyatt may
further acquire or create during the fiscal year ending June 30, 1995 (A) with
R. Watson and Son ("WATSON"), a European Subsidiary and holding company to be
known as Watson Wyatt Holdings (Europe) Limited ("WWH(E)L"), PROVIDED that
initial capitalization of WWH(E)L by Wyatt shall not exceed $13.0 million in
principal indebtedness to be owed to Wyatt by WWH(E)L and $6.0 million in equity
capitalization (inclusive of the assets and liabilities of Wyatt's existing
European Subsidiaries that are transferred to WWH(E)L in the fiscal year ending
June 30, 1995) and (B) a ten percent beneficial general partnership interest in
Watson for an amount to exceed neither twenty percent of Watson's capital nor
$12 million.
Section 7.2. ENCUMBRANCES AND LOANS. Such Borrower shall not, nor shall it
cause or suffer any of its Material Subsidiaries to,
(a) create, assume, incur or suffer to exist any Funded Debt or any
other type of indebtedness other than (i) as outstanding on the Closing
Date (including any refinancing not increased in amount) and as listed on
SCHEDULE 8, (ii) to the Banks hereunder or any Interest Swap Provider,
(iii) (A) unsecured indebtedness of such Borrower to Subsidiaries and (B)
Investments (including debt and equity) of such Borrower in Subsidiaries as
provided in Section 7.5, (iv) guaranty and other contingent obligations,
excluding contingencies arising out of office and equipment leases and the
Guaranty, which shall not be greater than $5,000,000 in the aggregate at
the end of any fiscal quarter, and (v) indebtedness, not to exceed in the
aggregate as to all Borrowers $10,000,000 outstanding at any one time,
incurred on account of excess cash of such Borrowers held in foreign banks
and used to reduce the outstanding principal balance under the Revolving
Credit Loans; or
(b) create, incur, assume or suffer to exist any mortgage, deed of
trust, lien or other encumbrance, not in existence on the Closing Date,
upon any of its real or personal properties or assets, whether now owned or
hereafter acquired, except for (i) encumbrances granted to the Agent and
the Banks hereunder; (ii) encumbrances for taxes not yet due or contested
in good faith by appropriate proceedings; (iii) encumbrances arising out of
equipment leases in the ordinary course of business; (iv) encumbrances
arising out of the purchase of equipment in the ordinary course of business
and limited to the specific equipment purchased; (v) pledges or deposits in
the ordinary course of business in connection with worker's compensation or
other forms of governmental insurance or benefits or to secure performance
of statutory obligations, leases and contracts
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(other than for borrowed money) entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds; (vi)
encumbrances of mechanics and other similar encumbrances arising in the
ordinary course of business in respect of obligations not delinquent or
being contested in good faith and by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with
GAAP; and (vii) encumbrances arising in the ordinary course of business for
sums being contested in good faith and by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance with
GAAP, or for sums not due, and in either case not involving any deposits or
advances for borrowed money or the deferred purchase price of property or
services.
Section 7.3. SALES AND DISPOSITIONS. Such Borrower shall not, nor shall it
cause or suffer any Material Subsidiary to, sell, transfer, lease, assign or
otherwise dispose of all or any material part of its assets to any Person.
Section 7.4. FISCAL YEAR; GOVERNING DOCUMENTS. Such Borrower shall not (a)
change its fiscal year, unless (i) required to do so by law, (ii) 60 days'
advance written notice thereof is given to the Agent, and (iii) covenants and
agreements in this Agreement are amended as appropriate to accommodate such
change, (b) materially amend or alter its certificate of incorporation, limited
liability company certificate, or limited partnership certificate, as
applicable, or (c) materially amend or alter any provision of its Bylaws,
limited liability company agreement or limited partnership agreement, as
applicable (including without limitation, in the case of Wyatt, Section 9 of its
Bylaws) relating in any way to such Borrower's representations and warranties or
ability fully and timely to comply with all of its obligations under this
Agreement.
Section 7.5. INVESTMENTS. Such Borrower shall not make any Investment (a)
except, in the case of Wyatt, (i) in Asset Services, (ii) in WWH(E)L in an
aggregate amount not to exceed $7.0 million in any fiscal year, (iii) in Watson
in an aggregate amount not to exceed $6.0 million in any fiscal year, (iv) in
any one or more other Subsidiaries in an aggregate amount not to exceed
$13,000,000 in any fiscal year, (v) in any fiscal year, in any one or more
Persons other than a Subsidiary in an aggregate amount not to exceed $50,000;
PROVIDED that Wyatt shall be allowed to make (x)(A) loans for any lawful purpose
to employees in an amount not to exceed $200,000 with respect to each such loan
and (B) short-term loans to new or relocating employees to cover moving and
other relocation costs in an amount not to exceed $500,000 with respect to each
such loan, which loans under both clauses (A) and (B) shall not exceed in the
aggregate at any one time outstanding $2,500,000 and (y) Permitted CSAP Loans,
which loans under this clause (y) shall not exceed in the aggregate at any one
time outstanding $5,000,000, and (vi) as permitted in Section 7.1(c), (b)
except, in the case of Wyatt and
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Asset Services, in WPC-LLC and WPC-LP, and (c) in the case of each Borrower,
except Investments in (i) demand deposits in Selected Banks; (ii) marketable
obligations of the United States or Canada; (iii) marketable obligations
guaranteed by or insured by the United States or Canada, or those for which the
full faith and credit of the United States or Canada is pledged for the
repayment of principal and interest thereon; (iv) marketable obligations issued,
guaranteed, or fully insured by any agency, instrumentality, or corporation of
the United States or Canada established or to be established by the Congress or
Parliament, respectively, for which the credit of such agency, instrumentality,
or corporation is pledged for the repayment of the principal and interest
thereof; (v) marketable general obligations of a state, a territory or a
possession of the United States, or any political subdivision of any of the
foregoing, or the District of Columbia (each, in this subsection, an "ENTITY"),
unconditionally secured by the full faith and credit of such Entity, if such
Entity has general taxing authority and the power to levy such taxes as may be
required for the payment of principal and interest thereof, and that such
obligations have a credit rating equal to at least Baa issued by Standard &
Poor's Corporation ("S&P") or BBB issued by Moody's Investors Service, Inc.
("MOODY'S"); (vi) domestic and LIBOR, negotiable time and variable rate
certificates of deposit issued by Selected Banks; (vii) marketable bankers'
acceptances and finance bills accepted by Selected Banks; (viii) prime
commercial paper having a credit rating equal to at least A-2 issued by S&P, P-2
issued by Moody's, or Duff-2 issued by Duff & Phelps Inc.; (ix) marketable
corporate debt securities having an A credit rating issued by either S&P or
Moody's; and (x) repurchase, reverse repurchase agreements and security lending
agreements collateralized by securities of the type described in subsections
(c)(ii), (iv), (viii) and (ix).
Section 7.6. FINANCIAL REQUIREMENTS. Wyatt, on a consolidated basis, shall
not:quirements
(a) cause or suffer its Net Worth to be (i) less than $68,462,400 at
any time during the period beginning on the Closing Date and ending June
30, 1996, and (ii) at any time during any annual period from July 1 to June
30 (a "NET WORTH TEST YEAR") commencing after June 30, 1996, less than an
amount that is equal to the minimum net worth requirement for the prior Net
Worth Test Year plus 40% of net income (not to be less than zero) reported
for the fiscal year ending immediately prior to the first day of the Net
Worth Test Year to which the new minimum net worth requirement is to be
applied (for example, the minimum net worth requirement for the 1996-1997
Net Worth Test Year (July 1, 1996 to June 30, 1997) shall be $68,462,400,
plus 40% of net income reported for the fiscal year ending June 30, 1996);
(b) cause or suffer its Fixed Charge Coverage Ratio to be (i) less
than or equal to 1.4 to 1 for the immediately preceding four fiscal
quarters as of each Calculation Date
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prior to and including June 30, 1996 and (ii) less than 1.5 to 1 for the
immediately preceding four fiscal quarters as of each Calculation Date
thereafter; or
(c) cause or suffer its Debt to Cash Flow Ratio to be greater than 2.5
to 1 for the immediately preceding four fiscal quarters as of each
Calculation Date.
Section 7.7. FRANCHISES. Such Borrower shall not, nor shall any of its
Material Subsidiaries, suffer the final revocation, suspension, material
amendment or termination of any franchise, agreement, permit, or license as a
result of which it is reasonably likely to suffer a material adverse effect upon
its financial condition, properties or operations on a consolidated basis.
Section 7.8. CERTIFICATED SECURITIES. Wyatt shall issue no certificates for
any Pledged Shares except upon 30 days' prior written notice to the Agent.
Section 7.9. CAPITAL EXPENDITURES. Wyatt, on a consolidated basis, shall
not incur Capital Expenditures in excess of (i) $60,000,000 in the aggregate in
the fiscal year ending June 30, 1996 and (ii) $50,000,000 in the aggregate in
each fiscal year thereafter.
Section 7.10. TRANSACTION WITH AFFILIATES. None of the Borrowers will enter
into or permit to exist any transaction or series of transactions with any
officer, director, shareholder, Subsidiary or Affiliate of such Person other
than (a) transactions permitted by Section 7.1, Section 7.2, Section 7.3 or
Section 7.5, (b) normal compensation and reimbursement of expenses of officers
and directors, (c) provision of financial and other services and the sharing of
know-how, technology and office space in the ordinary course of business, and
(d) except as otherwise specifically limited in this Agreement, other
transactions which are entered into in the ordinary course of such Person's
business on terms and conditions substantially as favorable to such Person as
would be obtainable by it in a comparable arms-length transactions with a Person
other than an officer, director, shareholder, Subsidiary or Affiliate.
Section 7.11. LIMITATION ON RESTRICTIONS ON SUBSIDIARY DIVIDENDS AND OTHER
DISTRIBUTIONS, ETC. None of the Borrowers will, directly or indirectly, create
or otherwise cause, incur, assume, suffer or permit to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any such
Person to (a) pay dividends or make any other distribution on any of such
Person's capital stock, (b) subject to subordination provisions, pay any
indebtedness owed to the Borrower or any other Borrowers, (c) make loans or
advances to any other Borrowers or (d) transfer any of its property to any other
Borrowers, except for encumbrances or restrictions existing under or by reason
of (i) customary non-assignment provisions in any lease governing a leasehold
interest, (ii) any agreement or
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other instrument of a Person existing at the time it becomes a Subsidiary of a
Borrower in accordance with Section 7.5, PROVIDED that such encumbrance or
restriction is not applicable to any other Person, or any property of any other
Person, other than such Person becoming a Subsidiary of such Borrower and was
not entered into in contemplation of such Person becoming a Subsidiary of such
Borrower and (iii) this Agreement and the other Loan Documents.
Section 7.12. ISSUANCE AND SALE OF SUBSIDIARY STOCK. None of the Borrowers
will, except to qualify directors where required by applicable law, sell,
transfer or otherwise dispose of, any shares of capital stock of any of its
Subsidiaries or permit any of its Subsidiaries to issue, sell or otherwise
dispose of, any shares of capital stock of any of its Subsidiaries to any Person
other than a Borrower or its Subsidiaries.
ARTICLE VIII. DEFAULT
Section 8.1. EVENTS OF DEFAULT. Each of the following events shall
constitute an "EVENT OF DEFAULT" hereunder if such event shall not be remedied
within the time period set forth below:
(a) The Borrowers shall fail to pay (i) any amount of principal
(except required prepayments) hereunder or under the Revolving Credit Notes
when due and payable, or (ii) any amount of interest or required prepayment
of principal or fee required to be paid hereunder, within five days after
the date when due and payable;
(b) Any Borrower or any of such Borrower's Subsidiaries shall fail to
pay any indebtedness in excess of $3,000,000 (other than under this
Agreement) when due (whether by scheduled maturity, by required prepayment,
by acceleration, by demand or otherwise), shall fail to meet its
obligations under the terms of the Guaranty or any other material guaranty
when called upon to do so, or shall fail to perform any material term,
covenant or agreement on its part to be performed under any agreement or
instrument evidencing or securing or relating to any such indebtedness or
guaranty when required to be performed, if the effect of any such failure
is to accelerate, or to permit the holder or holders of such indebtedness
or the trustee under any such agreement or instrument to accelerate, the
maturity of such indebtedness or of any obligation guaranteed by such
Borrower, and such Borrower has not cured such failure within the grace
period provided by the applicable agreement or instrument, whether or not
such holders or trustees elect to exercise such remedy or to waive such
failure;
(c) Any representation or warranty made by any Borrower herein or in
any certificate, agreement, instrument, report or statement contemplated by
or made or
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delivered pursuant to or in connection herewith or any other agreement with
any of the Banks to which such Borrower is a party, shall be, at the time
of the making or deemed making of such representation or warranty,
incorrect in any material respect;
(d) Any Borrower shall fail to observe or perform any covenant or
agreement contained in (i) Section 2.6 (as it pertains to Employee Notes),
Section 2.8(b), the organizational existence clause of Section 6.2(a),
Section 6.4, Section 6.5(a) or Sections 7.1, 7.2, 7.3, 7.5 and 7.6, or (ii)
any other Section of this Agreement and such failure shall continue for
more than 20 days after such Borrower shall have notice, knowledge or
reason to know of any cause giving rise to such failure;
(e) Any Borrower or any of such Borrower's Material Subsidiaries shall
generally not pay its debts as they become due or admit in writing its
inability generally so to pay its debts, make a material assignment for the
benefit of creditors, seek an order for relief in bankruptcy, become
insolvent within the meaning of the Federal Bankruptcy Code, petition or
apply to any tribunal for the appointment of any receiver, custodian,
liquidator, trustee, or similar official (hereinafter "OFFICIAL") for it or
any substantial part of its property, commence any proceeding relating to
it under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction (including,
without limitation, the Federal Bankruptcy Code) or there shall be
commenced against such Borrower any such proceeding which remains unstayed
or undismissed for a period of 60 days, or such Borrower shall consent to,
approve of or acquiesce in any such proceeding or the appointment of any
such Official;
(f) Any Borrower or any of such Borrower's Subsidiaries shall suffer
the entry of judgment against it by any court of record having jurisdiction
over it or any of its properties for the payment of money, if the aggregate
of all such judgments outstanding against Wyatt, on a consolidated basis,
is in excess of $3,000,000, or shall suffer the issuance of a writ of
attachment of any material portion of its assets, and such Borrower shall
not discharge the same, fully bond or insure against its discharge, provide
for its discharge in accordance with its terms, or procure a stay of
execution thereon within 45 days from the date of entry thereof, unless
execution thereon is effectively stayed pending further proceedings;
(g) Any security interest or lien granted or reaffirmed herein in any
material portion of the Local Collateral shall, in any material respect,
for any reason cease to be a valid and perfected security interest,
encumbrance or lien having first priority as provided in Section 3.1;
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(h) Any Reportable Event (as defined in Section 4043 of ERISA) that
requires notification to the PBGC and which the Agent determines in good
faith might constitute grounds for the termination of any Plan covered by
Title IV of ERISA or for the appointment by the appropriate United States
District Court of a trustee to administer any such Plan shall have occurred
and be continuing 45 days after written notice to such effect shall have
been given to the Borrowers by the Agent, or any such Plan shall be
terminated, or a trustee shall be appointed by an appropriate United States
District Court to administer any such Plan, or the PBGC shall institute
proceedings to terminate any such Plan or to appoint a trustee to
administer any such Plan, and in any such case the aggregate amount of
vested unfunded liabilities under such Plan shall exceed $3,000,000;
(i) Defaults under all or substantially all of the Employee Notes have
occurred and are continuing; or
(j) The Guaranty shall be held invalid or unenforceable against any
Borrower, or any Borrower shall deny or disaffirm its obligations
thereunder.
Section 8.2. ACCELERATION. Upon the occurrence of any Event of Default, the
Majority Banks, by written notice to the Agent and the Borrowers, may terminate
the Total Commitments and instruct the Agent to declare the entire indebtedness
of the Borrowers then outstanding hereunder or under the Notes immediately due
and payable without presentment, demand, protest, notice of protest or any other
notice of any kind, all of which are hereby expressly waived. Notwithstanding
the foregoing provisions of this section, the entire indebtedness of Borrowers
then outstanding hereunder or under the Notes shall become immediately due and
payable and the Total Commitments terminated without notice or election of any
kind and without need for any action by the Banks or the Agent if any Borrower
shall file a voluntary petition for any order for relief in bankruptcy, for an
arrangement with its unsecured creditors or for corporate reorganization under
any bankruptcy or similar statute. The Banks shall have no obligation to make
any Loans or disburse any loan proceeds during the existence of any Event of
Default or Incipient Default.
Section 8.3. RIGHT OF SETOFF. Upon the occurrence and during the
continuance of any Event of Default not cured in accordance with this Agreement,
each of the Banks is hereby authorized at any time and from time to time,
without notice to any Borrower (any such notice being hereby expressly waived by
each Borrower), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held, and any other
indebtedness at any time owing, by such Bank to or for the credit or the account
of such Borrower against all of the obligations of such Borrower, irrespective
of whether or not the Agent shall have made any demand under this Agreement or
the Notes, and although such obligations may be unmatured.
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All amounts set off by a Bank pursuant to this Section shall be applied to all
of such Borrower's obligations to such Bank, including those under or in
connection with this Agreement, and to such Bank's Employee Loan Participation
pro rata in accordance with the amount then outstanding under each such
obligation. For purposes of this Section, each of the Banks shall be considered
to be a "creditor" under the Federal Bankruptcy Code with respect to this
Agreement, the Revolving Credit Notes, the Employee Notes and the Guaranty. The
Banks agree to act in good faith and promptly to notify the affected Borrower
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of the Banks under this Section are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Banks may
have.
Section 8.4. RIGHTS TO COLLATERAL. Upon the occurrence and continuance of
any Event of Default, the Agent on behalf of the Banks shall have all rights
with respect to the Collateral hereunder as are available to secured parties
under the Uniform Commercial Code and other applicable law in effect in North
Carolina, and in any jurisdiction in which any portion of the Collateral is
located (including without limitation the right to repossession without judicial
process as set forth in Section 9-503 of the Uniform Commercial Code), and the
Agent on behalf of the Banks may sell, assign and deliver all, or any part of,
the Collateral at any public or private sale, as the Majority Banks may elect in
accordance with Section 9.4, either for cash or on credit, and for present or
future delivery without assumption of any credit risk, and without either
demand, advertisement or notice of any kind, all of which are expressly waived.
The Agent may at any time after the occurrence and continuance of any Event of
Default notify account debtors on any Collateral that the Collateral has been
assigned to the Agent and that proceeds shall be paid to the Agent on behalf of
the Banks. Upon request by the Agent after the occurrence and continuance of any
Event of Default, each Borrower agrees to so notify account debtors and to
indicate on all account billings that the accounts are payable to the Agent on
behalf of the Banks. In any event, each Borrower agrees that any notice of sale
or other action given by the Agent at least five Business Days prior to such
action shall constitute reasonable notice. The Agent may, after the occurrence
and continuance of any Event of Default, require the Borrowers to assemble the
Collateral or any portion thereof and make such Collateral available to the
Agent at a place reasonably designated by the Agent. In the event of any sale
hereunder, the Agent shall apply the proceeds of such sale in accordance with
Section 9.6; PROVIDED that if the proceeds are insufficient to pay all
Liquidation Costs, interest, principal, and fees due hereunder and under the
Notes, the Borrowers shall remain liable for any deficiency. Upon the occurrence
and continuance of any Event of Default, the Agent is further authorized to
transfer any Collateral to its own name or that of its nominees. Neither the
Agent nor any of the Banks shall have any duty with reference to any Collateral
in its possession other than to use reasonable
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care in the custody and preservation of such Collateral, which duty shall not
include any steps to preserve rights against prior parties or to send notices,
perform services, or take any action in connection with the management of the
Collateral. The Borrowers shall bear all risks of diminution or depreciation of
the Collateral upon and after the occurrence of any Event of Default, and Agent
and the Banks shall have the right, in their sole discretion, to delay the sale
or other disposition of the Collateral.
ARTICLE IX. BANKS AND AGENT
Section 9.1. APPOINTMENT OF AGENT. The Agent is hereby appointed by each
Bank and authorized to act as Agent for the Banks in matters relating to this
Agreement, under the terms and conditions herein set forth, until such time as
all amounts owed by the Borrowers under this Agreement, the Revolving Credit
Notes and the Guaranty and by Qualified Employees under the Employee Notes (the
"OBLIGATIONS") shall have been paid in full.
Section 9.2. RESPONSIBILITIES AND POWERS OF AGENT
(a) The Agent shall have such powers as are specifically delegated to
it in this Agreement and other documents required to be delivered in
connection herewith, together with such other powers as are reasonably
incidental thereto. The Agent shall have no duties or responsibilities
except as specifically set forth herein and in such documents and shall
not, by reason of anything contained in this Agreement, be a trustee for
any Bank or for any Borrower.
(b) All documents relating to the Loans, excepting the Revolving
Credit Note issued by the Borrowers to and to be held by each Bank, shall
be held by Agent and dealt with by Agent in its own name. Copies thereof
shall be furnished by Agent to the other Banks at their request.
(c) Agent shall exercise its functions hereunder in accordance with
its usual practice in managing its own affairs in the ordinary course of
business; PROVIDED that Agent shall not be liable for any error of judgment
or for any action taken or omitted to be taken by Agent, except through its
gross negligence or willful misconduct. Without limiting the generality of
the foregoing, Agent (i) may consult with legal counsel, including counsel
for the Borrowers, independent public accountants and other experts
selected by Agent, and shall not be liable for any action taken or omitted
to be taken by Agent in good faith in accordance with the advice of such
counsel (in the case of the Borrowers' counsel, the Agent may rely only on
its opinion delivered at the execution of this Agreement and opinions
thereafter delivered with respect to the capacity and authorization of each
Borrower to conduct its business
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and contract with others, including, without limitation, Agent),
accountants or experts; (ii) makes no warranty or representation, express
or implied, and shall not be responsible for any statement, warranty or
representation made in or in connection with this Agreement or any document
related thereto, as to the financial condition of any Borrower or any maker
of an Employee Note, or the value of any Collateral or Pledged Shares, or
the due execution, legality, validity, enforceability, genuineness,
sufficiency or collectibility of this Agreement, the Guaranty, the Notes,
or any Collateral or Pledged Shares; (iii) shall not be responsible for the
performance or observance of any of the terms, covenants or conditions of
this Agreement on the part of any Borrower or of the Pledge Agreements or
Employee Notes on the part of the makers of such notes, and shall not have
any duty to inspect the property (including the books and records) of any
Borrower or such makers; and (iv) shall incur no liability under or in
respect of this Agreement, any document related thereto or any Collateral
by reason of having acted upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable or telex) believed
by Agent to be genuine and signed or sent by the proper party.
(d) Subject to Section 9.4 and except as otherwise expressly provided
herein, the approval of the Majority Banks shall be required for the Agent
to consent to any action or failure to act by any Borrower or the maker of
any Employee Note, and for the Agent to exercise or refrain from exercising
any power or right which the Agent or the Banks may have under or in
respect to this Agreement, the Notes, any other document related thereto or
any Collateral or Pledged Shares, including, without limitation, the right
to enforce the obligations of any Borrower or any other party, except that
the prior written consent of all of the other Banks shall be required for
the Agent to exercise any such right which would (A) reduce the aggregate
obligation of the Borrowers or the makers of Employee Notes for payment of
principal or interest under the Notes, postpone or extend the Maturity Date
or any other date fixed for payment of interest or otherwise vary the terms
of the Notes in any material respect, (B) amend, modify, or supplement this
Agreement in any material respect, (C) give any Borrower consent to incur
additional or other indebtedness pursuant to Section 7.2(a) of this
Agreement, (D) modify, subordinate, or release any material portion of the
Collateral or Pledged Shares before all amounts owed by Borrowers or the
Qualified Employees under this Agreement or the Notes and secured by such
Collateral or Pledged Shares have been paid in full, (E) waive the
Borrowing Base limitations stated in Section 2.1(a) and (d), (F) amend,
modify or waive any provision of this Section 9.2(d) or the definition of
"Majority Banks", or (G) waive any requirement contained in Section 7.2(a).
No provision of this Article
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IX may be waived, amended or modified without the prior written consent of
the Agent.
(e) With respect to its Total Commitment, Revolving Credit Commitment,
Employee Loan Participation, Revolving Credit Loans, and participations in
Employee Loans, the Agent in its capacity as a Bank hereunder shall have
the same rights and powers hereunder as any other Bank and may exercise the
same as though it were not acting as Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its affiliates may (without having to
account therefor to any Bank) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with any
Borrower or its affiliates, as if it were not acting as the Agent, and the
Agent may accept the Agent's Fee and may accept other consideration from
any Borrower or its affiliates for services unrelated to this Agreement
without having to account for the same to the Banks.
Secion 9.3. NO ACTION BY INDIVIDUAL BANKS. Except where other Banks have
direct rights expressly stated under this Agreement, all rights and powers
granted to the Agent hereunder may be exercised only by the Agent pursuant to
the provisions hereof, and may not be exercised by any other Bank or Banks in
its or their individual capacity.
Section 9.4. OCCURRENCE OF AN EVENT OF DEFAULT
(a) Should any Bank obtain knowledge of an Event of Default or
Incipient Default under Article VIII of this Agreement, such Bank shall
promptly notify the Agent of the same and the Agent in turn shall promptly
notify each other Bank and the Borrowers; PROVIDED that, the Agent's
failure to inform the Borrowers shall not affect the rights of the Agent or
the Banks hereunder.
(b) The Agent shall not be under any duty to ascertain or inquire as
to the performance of any Borrower or the maker of any Employee Note of any
of its or their obligations under this Agreement, the Notes, the Pledge
Agreements, or any agreement respecting Collateral or Pledged Shares, and
shall be entitled to assume that no Event of Default or Incipient Default
or default under the Employee Notes or Pledge Agreements has occurred and
is continuing unless the Agent has actual knowledge of such fact or has
been notified by any other Bank that such Bank considers that such an Event
of Default, Incipient Default, or default has occurred and is continuing
and specifying the nature thereof. Once the Agent has such actual knowledge
or receives such a notice, the Agent will promptly notify each other Bank,
and, in such notice, request instructions from each such Bank as to what
actions, if any, the Agent should take with respect thereto.
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(c) The Agent shall thereupon take such action as instructed by an
instruction of the Majority Banks at such time; PROVIDED, HOWEVER, that if
Agent has not received such instruction within 10 days of its giving of
notice as set forth in (b) above, Agent shall act in such manner as it
shall in good faith determine, and shall not be liable or responsible to
any other Bank for any action so taken; and PROVIDED FURTHER, HOWEVER, that
Agent shall exercise its right to make demand at any time on the Notes upon
the written request of the Majority Banks.
Section 9.5. PROCEDURE ON DEFAULT. If the Agent or the Banks, as provided
herein, shall determine that an Event of Default has occurred under this
Agreement and is continuing, or that a default has occurred under an Employee
Note and is continuing (PROVIDED that an Event of Default under this Agreement
shall constitute a default under each of the Employee Notes) then the Agent, as
provided herein, may declare the Note to which the Event of Default or the
default relates to be accelerated and the Borrowers' account (or the account of
the maker of the related Employee Note, as appropriate) to be in liquidation. At
such time, Agent shall give notice thereof to all of the Banks.
Section 9.6. LIQUIDATION. After demand or declaration of acceleration by
the Agent under Section 8.2 and 9.5, all Collections, and all other monies
received or held by the Agent for the account of the Banks, including Agent, in
connection with the Loans or the Notes to which the demand or declaration
relates shall, with respect to the Loans or Notes to which the demand or
declaration relates, and in the absence of agreement to the contrary by all of
the Banks, be applied to the following categories, in the following order and in
accordance with each Bank's Ratable Share: (i) all Liquidation Costs; (ii) all
accrued and unpaid interest and fees; (iii) the entire unpaid principal balance
of the Notes to which the Collections relate; and (iv) all remaining obligations
of any Borrower or the maker of an Employee Note, as appropriate, to any of the
Banks ratably in accordance with the respective amount outstanding on each.
Section 9.7. NOTICE OF ACTIONS. The Agent agrees to use its reasonable best
efforts to give the other Banks notice of all material actions to be taken with
respect to all Collections upon the occurrence and during the continuance of any
Event of Default by the Borrowers with respect to the Loans or the Notes or of
any default by the maker of an Employee Note with respect to such Note and with
respect to any exercise of its rights on default as provided herein; PROVIDED,
HOWEVER, that no failure to give any Bank any such notice shall result in any
liability of Agent in the absence of gross negligence or willful misconduct on
the part of Agent.
Section 9.8. INDEMNIFICATION. Each Bank hereby severally agrees to
indemnify the Agent according to its respective Ratable Share from and against
all liabilities, obligations, losses,
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damages, penalties, actions, judgments, suits, costs (including, without
limitation, Liquidation Costs), expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this Agreement or any action taken or
omitted by Agent under or in connection with this Agreement; PROVIDED that no
other Bank shall be liable for any portion of any such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence or willful misconduct.
Without limitation of the foregoing, each other Bank hereby severally agrees to
reimburse Agent promptly upon demand for its Ratable Share of any reasonable
out-of-pocket expenses (including attorney fees) incurred by Agent in connection
with the execution, administration, enforcement or realization of or upon the
Collateral or the Pledged Shares or the preservation of any rights relating to
or arising out of this Agreement, to the extent that Agent is not reimbursed for
such expenses by the Borrowers. In the event that Agent subsequently collects
from the Borrowers or the maker of any Employee Note indemnification or
reimbursement, in whole or in part, of any liabilities, obligations, losses,
damages, penalties, actions, judgments, costs, expenses, or disbursements as set
forth herein for which any Bank has previously provided Agent with
indemnification or reimbursement pursuant to this Section then, in accordance
with the procedures set forth in Section 2.11, the Agent shall refund to each
such Bank, without interest, its Ratable Share of such amounts as are
subsequently collected from the Borrowers; PROVIDED, HOWEVER, that the Agent's
refund obligations hereunder are specifically limited to amounts actually
collected from the Borrowers or the maker of the Employee Note or from
Collections.
Section 9.9. RESIGNATION. The Agent may resign as such at any time by
giving thirty (30) Business Days' prior written notice to the Borrowers and to
the other Banks. In such event, the Majority Banks shall appoint a successor
agent from among the other Banks reasonably acceptable to the Borrowers. If a
successor is not so appointed at least five Business Days before such
resignation is to become effective, the Borrowers shall appoint a temporary
successor from among the Banks to act until such appointment by the Banks is
made. Agent shall, upon the designation of a successor agent by the other Banks
or the Borrowers under this Section, resign as Agent upon the expiration of the
30 Business Day notice period hereunder, assign all its rights, powers and
privileges as Agent to such successor and execute any nonrecourse assignments of
or amendments to this Agreement and all related documents as may be appropriate
to effectuate such a transfer, and shall deliver all documents relating to the
Loans to the successor agent. No such assignment or transfer shall relieve the
Agent of any unsatisfied liabilities it may have previously incurred under
Section 9.2.
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Section 9.10. DEFAULT BY AGENT
(a) The Agent shall be in default under this Agreement upon the
occurrence of any one or more of the following events: (i) the Agent shall
consent to the appointment of a trustee, conservator, or receiver for all
or a substantial portion of its property; (ii) the Agent shall institute
with respect to itself (by petition, application, answer, consent, or
otherwise) any dissolution, liquidation, or similar proceeding under the
laws of any state or federal jurisdiction within the United States; (iii) a
receiver, trustee, conservator, or similar person shall be appointed for
the Agent or for all or a substantial part of its property without its
application or consent and such appointment shall continue undischarged for
a period of 60 days, or any dissolution, liquidation, or similar proceeding
shall be instituted (by petition, application, or otherwise) against the
Agent and shall remain undismissed for a period of 60 days; (iv) the Agent
shall fail to remit to any other Bank within five days of its receipt by
Agent such Bank's Ratable Share of any and all Collections in accordance
with Section 2.11 hereof; or (v) the Agent shall be determined, in an
arbitration ruling made under the Commercial Arbitration Rules of the
American Arbitration Association in an arbitration proceeding conducted as
expeditiously as is reasonably possible, to have committed gross negligence
or willful misconduct in the performance of any terms, provisions or
conditions of this Agreement.
(b) Upon default by the Agent under Section 9.10(a), the other Banks
shall select a successor agent reasonably acceptable to the Borrowers
pursuant to the provisions of Section 9.9 hereof. The Agent shall assign
all of its rights, powers, and privileges as Agent to the successor agent,
and shall execute any nonrecourse assignments of or amendments to this
Agreement and all related documents as may be appropriate to effectuate
such a transfer, and shall deliver all documents relating to the Loans to
the successor agent. No such assignment or transfer shall relieve the Agent
of any unsatisfied liabilities it may have previously incurred under
Section 9.2.
Section 9.11. DEFAULTS BY BANKS
(a) A Bank shall be in default under this Agreement upon the
occurrence of any one or more of the following events; PROVIDED, HOWEVER,
that nothing in this Article IX is intended to create rights or claims of
any Borrower against Agent or any Bank: (i) such Bank shall consent to the
appointment of a trustee, conservator or receiver for all or a substantial
portion of its property; (ii) such Bank shall institute with respect to
itself (by petition, application, answer, consent, or otherwise) any
dissolution, liquidation, or similar proceeding under the laws of any state
or federal jurisdiction within the United States;
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(iii) a receiver, trustee, conservator, or similar person shall be
appointed for such Bank or for all or a substantial part of its property
without the application or consent of such Bank, and such appointment shall
continue undischarged for a period of 60 days, or any dissolution,
liquidation, or similar proceeding shall be instituted (by petition,
application, or otherwise) against such Bank and shall remain undismissed
for a period of 60 days; (iv) such Bank, other than Agent, shall fail to
remit to Agent within five days after its due date its Ratable Share of any
and all Loans made by the Agent to or at the request of the Borrowers or
the maker of an Employee Note hereunder, or any refund or restoration or
any reimbursable expense; or (v) such Bank shall assign or otherwise
dispose of all or any part of its interest under this Agreement, except as
provided for herein.
(b) Upon such a default by any Bank (other than a Bank that is also
acting as Agent hereunder), Agent shall have the right but not any
obligation to purchase any percentage of the Revolving Credit Loan or
participation in Employee Loans of the defaulting Bank for the same
percentage of the outstanding principal balance of such Revolving Credit
Loan or participation in Employee Loans plus all accrued but unpaid
interest and fees (after deduction of any applicable Agency Fee)
attributable thereto. In the event that any portion of such defaulting
Bank's Revolving Credit Loan or participation in Employee Loans is not
purchased by the Agent (or in the event of a default by a Bank that is also
acting as Agent hereunder), any unpurchased portion of such defaulting
Bank's Revolving Credit Loan or participation in Employee Loans may be
purchased by any of the other Banks for the same percentage of the
outstanding principal balance of such Revolving Credit Loan or
participation in Employee Loans plus all accrued but unpaid interest and
fees (after deduction of any applicable Agent's Fee) attributable thereto.
If more than one nondefaulting Bank desires to purchase a percentage of
such portion of such defaulting Bank's Revolving Credit Loan or
participation in Employee Loans, nondefaulting Banks shall purchase such
interest in the proportion that each nondefaulting Bank's Ratable Share
hereunder bears to the sum of the Ratable Shares of all nondefaulting Banks
desiring to purchase such interest, or as such nondefaulting Banks desiring
to purchase such interest may otherwise agree.
(c) In the event that the Agent or any nondefaulting Bank shall elect
to purchase any portion of such defaulting Bank's Revolving Credit Loan or
participation in Employee Loans, the following terms and conditions shall
apply to the purchase and sale of such interest: (i) the Agent or the
nondefaulting Bank shall notify the defaulting Bank within 30 days of the
defaulting Bank's default of its election to purchase the defaulting Bank's
interest in this Agreement; (ii) the purchase price shall be paid in
immediately
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available funds to an account designated in writing by the defaulting Bank;
and (iii) concurrently with the payment of the purchase price the
defaulting Bank shall assign all of its right, title, and interest in this
Agreement, the Notes, the Guaranty, any other documents related thereto,
and the Collateral and Pledged Shares. The sale shall be made without
recourse and without any warranty, express or implied, whether by operation
of law or otherwise, except that the defaulting Bank shall warrant that it
has good title to the interest in the documents it is transferring, that
such interest is free from all liens, encumbrances, and other claims of
third parties, and that to the knowledge of the defaulting Bank, such
interest is not subject to any claims, defenses, offsets, counter-claims,
or demands of any kind whatsoever.
Section 9.12. OTHER OBLIGATIONS. Except as expressly stated to the contrary
in this Agreement, each Bank shall have the right, without obligation to the
other Banks hereto, to engage in other banking and trust business with any
Borrower and to accept payment in respect of all obligations it may from time to
time have outstanding to such Borrower not under or arising out of this
Agreement or the Notes, whether or not an Event of Default, default or demand
has occurred under this Agreement or the Notes. In the absence of an Event of
Default, default or demand with respect to this Agreement or the Notes, each
Bank shall have the right to apply such payments against the obligation for
which they are tendered. If an Event of Default under this Agreement shall have
occurred and be continuing, or if a default shall have occurred and be
continuing under one or more Employee Notes, any voluntary payments received
from any Borrower (or, with respect to payments received by NationsBank only,
payments received from a maker of an Employee Note in default) (other than
proceeds of the Collateral or Pledged Shares) shall be applied to all of such
Borrower's (or such maker's) obligations, respectively, to such Bank, including
those under or in connection with this Agreement, pro rata in accordance with
the amount then outstanding under each such obligation. Payments received by a
Bank from any Borrower during the occurrence of an Event of Default hereunder
may be applied in accordance with this Section to such Borrower's obligations
under the Revolving Credit Notes or the obligations under any Employee Note as
such Bank may in its sole discretion determine. Payments received by NationsBank
from the maker of an Employee Note in default shall be applied in accordance
with this Section only to the obligations of the maker of the Employee Note from
whom such payments are received. Such pro rata application of voluntary payments
shall be made by the Banks notwithstanding any instructions from any Borrower or
the maker to apply such payments in another fashion. No such application shall
serve to reduce any obligation of any Borrower or the maker to a Bank except
that obligation to which the Bank has applied it, regardless of whether the
obligation to which it was applied was a secured or an unsecured obligation. All
proceeds of specific collateral other than the Collateral for permitted
obligations
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hereunder of a Borrower to one of the Banks or other than the
Pledged Shares for obligations of the makers of the Employee Notes in default to
NationsBank (in either case, other than under or in connection with this
Agreement) shall be applied to reduce the specific obligation secured until such
obligation shall be satisfied in full. Each Bank shall remit to the Agent
promptly that portion of any payment or proceeds allocable to obligations under
or in connection with this Agreement, and the Agent shall apply such amounts in
accordance with Section 9.6. Nothing herein shall confer upon any Bank any
interest in, or subject any Bank to any liability for, the assets or liabilities
of any other Bank, except as stated herein.
Section 9.13. RESCISSION OF PAYMENTS. If any payment received by Agent or
by any other Bank on account of the Notes or any application of any payment made
by Agent to the Notes is rescinded or must otherwise be returned for any reason,
including, without limitation, orders of a court in bankruptcy or
reorganization, each Bank will, upon notice from Agent, forthwith pay over to
Agent the portion it received of the amount so returned.
Section 9.14. APPLICATION OF COLLATERAL PROCEEDS. Agent shall be the sole
recipient of all proceeds of the Collateral and the Pledged Shares and other
Collections. Each Bank shall have a right to share in the proceeds of any
Collateral and Pledged Shares applied to payment of the obligations to the
extent of its Ratable Share thereof. No Bank shall, however, have any interest
in any property other than the Collateral and Pledged Shares taken by another
Bank as collateral for its loans or extensions of credit to the Borrowers or the
makers of Employee Notes not with respect to this Agreement, which may be or
become available for payment of the obligations of such Borrower or such makers
to such Bank under or in connection with this Agreement or the Pledge Agreements
simply by reason of the general description of secured obligations contained in
any security agreement or other agreement or instrument held by such Bank,
provided only that if any such property or the proceeds thereof shall be applied
by such Bank in reduction of amounts outstanding on account of Loans under or
otherwise in connection herewith, then the full amount of such application shall
be remitted to Agent for distribution to all of the Banks in accordance with the
terms of this Agreement.
Section 9.15. REPRESENTATIONS OF BANKS. Each of the other Banks hereby
represents to the Agent that it has independently and without reliance upon
Agent (but rather based upon such financial statements and other documents and
information as each such Bank has chosen to review), made its own credit
analysis and decision to enter into this Agreement. Each such Bank also hereby
represents to and agrees with Agent that it will, independently and without
reliance upon Agent (but rather based upon such documents and information as it
shall choose to review from time to time) continue to make its own credit
decisions in connection herewith. To this end, Agent agrees that it will
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continue to provide to each of the other Banks all financial statements and
other material documentation delivered to it as Agent by the Borrowers or the
makers of the Employee Notes under the terms of this Agreement, the Notes, or
the Pledge Agreements, PROVIDED, that the Agent assumes no responsibility with
respect to the authenticity, validity, accuracy or completeness of any such
documents or information.
Section 9.16. TERMINATION OF COMMITMENTS. Each Bank's Total Commitment
shall terminate on the Maturity Date, except as otherwise expressly provided
herein to the contrary.
Section 9.17. ROUNDING. Any purchase, remittance, distribution, refund,
reimbursement, indemnification or other payment hereunder to, from or among the
Banks and the Agent in ratable proportions or based on or according to a Bank's
or the Banks' Ratable Shares shall be rounded to the nearest whole cent.
Section 9.18. INTEREST SWAP PROVIDER. No Bank shall be accorded separate or
additional rights under this Agreement, with respect to voting, consents or
otherwise, by virtue of its status as an Interest Swap Provider.
ARTICLE X. MISCELLANEOUS
Section 10.1. RIGHTS AND WAIVERS. All rights, remedies and powers granted
to the Agent or the Banks herein or in the Notes, the Guaranty, the Pledge
Agreements or any other instrument or document delivered or to be delivered
hereunder (collectively, the "LOAN DOCUMENTS"), whether express or implied,
shall be cumulative and may be exercised singly or concurrently with such other
rights as the Agent or the Banks may have, and shall include, without
limitation, the right to apply to a court of equity for any injunction to
restrain a breach or threatened breach of this Agreement and all rights as
stated in Article VIII hereof. No failure or delay on the part of the Agent or
the Banks in exercising any right, power or privilege hereunder or under the
Notes, the Guaranty, the Pledge Agreements or any other instrument or document
delivered or to be delivered in connection herewith, or under applicable law,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. No waiver or modification of any right, power or privilege of the
Agent or the Banks or of any obligation of any Borrower shall be effective
unless such waiver or modification is in writing, signed by the Agent or the
Banks, as required herein, and then only to the extent set forth therein. A
waiver by the Agent or the Banks of any right, power or privilege hereunder or
under the Notes, the Guaranty or the Pledge Agreements on any one occasion shall
not be construed as a bar to, or a waiver of, any such right, power or privilege
which the Agent or the Banks otherwise would have on any subsequent occasion.
Neither the Agent nor the Banks shall have any liability to any Borrower for
failure to fund any loan on the
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date set for such funding if such failure is due to forces or circumstances
beyond the control of the Banks, including, without limitation, Acts of God,
concerted work stoppages, or delays in wire transfer systems.
Section 10.2. BINDING EFFECT; ASSIGNMENT
(a) This Agreement shall bind and inure to the benefit of the parties,
their legal representatives, successors and assigns, except that no
Borrower may assign or transfer its rights hereunder or any interests
herein without the prior written consent of the Majority Banks.
(b) Each Bank may, subject to the prior written consent of the
Borrowers and the Majority Banks in the case of assignment by a Bank to any
Person other than a Bank (except for an assignment by a Bank to an
Affiliate of such Bank that is a commercial bank), which consent, in either
case, shall not be unreasonably withheld, at any time assign to any
commercial bank or other financial institution all or any part of such
Bank's rights and obligations under this Agreement. Each assignment shall
be in an amount equal to or in excess of $5,000,000. Upon receipt by such
Bank of the Borrowers' written consent, the execution and delivery to the
Agent of an assignment agreement between such Bank and the assignee, and
the making of any payment by the assignee required by such Bank, this
Agreement shall be deemed to be amended to the extent, and only to the
extent, necessary to reflect the addition of such assignee, and the
assignee shall for all purposes be a Bank party hereto and shall have, to
the extent of such assignment, the same rights and obligations as a Bank
hereunder. Upon the consummation of any assignment, the assigning Bank
shall be relieved from its obligations hereunder to the extent of the
obligations so assigned.
(c) Each Bank may grant participations in all or any part of its
Revolving Credit Loans and may grant subparticipations in all or any part
of its Employee Loan Participations to any commercial bank or other
financial institution. Each participation shall be in an amount equal to or
in excess of $5,000,000. A participant shall not have any rights under this
Agreement or any other document delivered in connection herewith (the
participant's rights against the Bank in respect of such participation to
be those set forth in the agreement executed by the Bank in favor of the
participant relating thereto, which agreement with respect to such
participation shall not restrict the Bank's ability to make any
modification, amendment or waiver to this Agreement without the consent of
the participant, except that the Bank may agree with any participant that
the Bank will not, without such participant's consent, (i) extend or
increase the amount of the Revolving Credit Commitments or the Employee
Loan Participations, (ii) agree to extend the final maturity of the Notes,
(iii) agree to
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reduce the principal amount of, or rate of interest on, the Notes, or (iv)
agree to release any material portion of the collateral or Pledged Shares).
All amounts payable by the Borrowers under this Agreement shall be
determined as if a Bank had not sold such participation. The Borrowers
acknowledge and agree that any participant described in this Section 10.2
will, for purposes of Section 2.11, be deemed to be a Bank hereunder,
provided that such participant shall not be entitled to receive any more
than the Bank would have received had such participation not been made. In
the event of any such sale by a Bank of participating interests to a
participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any obligation for all
purposes under this Agreement, and the Borrowers shall continue to deal
solely and directly with such Bank in connection with the Bank's rights and
obligations under this Agreement.
Section 10.3. SEVERABILITY. Any provision of this Agreement prohibited by
the laws of any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, or modified to conform with such laws, without
invalidating the remaining provisions of this Agreement, and any such
prohibition in any jurisdiction shall not invalidate such provisions in any
other jurisdiction.
Secion 10.4. INTERPRETATION. All parties have participated in the drafting
of this Agreement, and this Agreement shall be interpreted without reference to
any rule of construction providing for interpretation of documents against the
Persons drafting them.
Section 10.5. GOVERNING LAW; JURY TRIAL. This Agreement, the Guaranty, the
Pledge Agreements and the Notes shall be construed in accordance with and
governed by the internal laws of the State of North Carolina, excluding its
choice of law rules. The parties hereto (a) individually with respect to each
instance and each issue as to which the right to a trial by jury would otherwise
accrue, waive and elect not to assert their right to trial by jury on any issue
triable of right by a jury to the full extent that any such right shall now or
hereafter exist, and certify that no representative or agent of the Agent or the
Banks (including without limitation the Agent's counsel) has represented,
expressly or otherwise, to any Borrower that the Agent or the Banks will not
seek to enforce this waiver of right to jury trial provision, (b) consent to the
jurisdiction of the courts of the State of North Carolina, including its federal
district courts, and (c) consent to service of process by registered mail,
return receipt requested.
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Section 10.6. PAYMENT OF EXPENSES AND TAXES; INDEMNIFICATION
(a) Borrowers jointly and severally agree to pay all out of pocket
costs and expenses of the Agent, including the reasonable fees and
disbursements of special counsel for the Agent, in connection with the
negotiation, preparation, execution and delivery of this Agreement, the
Notes, the Guaranty, the Pledge Agreements, and any other related
documents, to pay all reasonable out of pocket costs and expenses of the
Banks in connection with the enforcement of this Agreement, the Notes, and
any other related documents delivered or to be delivered hereunder,
including reasonable attorneys' fees and disbursements arising in
connection therewith (whether or not suit is instituted), and also to pay
all reasonable actual out-of-pocket costs of the Banks in connection with
any inspections, investigations, or examinations performed under Section
3.2(b).
(b) Borrowers jointly and severally agree to indemnify the Agent and
the Banks from and against any and all liabilities, losses, damages,
penalties, actions, judgments, costs, expenses (including, without
limitation, reasonable attorneys' fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent and the Banks in any litigation, proceeding or
investigation instituted or conducted by any Person other than one or more
of the Borrowers with respect to any aspect of, or any transaction
contemplated by, or referred to in, or any matter related to, any Loans
made hereunder, including, without limitation, in connection with Wyatt's
servicing role hereunder and any consumer lending or securities law
violations arising from or related to the Employee Loans. Borrowers also
jointly and severally agree to pay, and to save the Banks harmless from any
delay in paying, all stamp and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of
this Agreement, the Notes, the Guaranty, the Pledge Agreements, and any
other related documents, or any modification hereof or thereof, and all
filing and recording fees in connection therewith.
Section 10.7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement and in any certificates or
other documents delivered pursuant hereto shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder, and the
provisions of Section 10.6 shall survive payment of the Notes.
Section 10.8. NOTICES. All notices, requests and demands to or upon any
party hereto shall be deemed to have been given or made when delivered by hand,
when sent by telecopier or telegram or when mailed, first-class, postage
prepaid, addressed to such
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party as follows or to such other address as may be hereafter designated in
writing by such party to the other parties hereto:
(a) if to the Agent, to:
NationsBank, N.A.
Corporate Bank
6th Floor
6610 Rockledge Drive
Bethesda, Maryland 20817
Attention: Michael R. Heredia
Vice President
with a copy to:
Jeff Strickland
Team Leader, Agency Services
NationsBank, N.A.
101 North Tryon Street
15th Floor
Charlotte, NC 28255
(b) if to the Borrowers, to:
THE WYATT COMPANY (d/b/a Watson Wyatt Worldwide)
Suite 900
601 13th Street, N.W.
Washington, D.C. 20005
Attention: Eric B. Schweizer,
Treasurer
with copies to:
Walter W. Bardenwerper, Esq.
at the same address
(c) if to any Bank, to its address set forth below its name on
the signature pages hereof, with a copy to the Agent.
Section 10.9. EXECUTION. This Agreement may be executed by the parties
hereto individually or in any combination of the parties hereto in several
separate counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same Agreement.
Section 10.10. AMENDMENTS. This Agreement and its Schedules and Exhibits,
together with the provisions of the Notes and other documents identified herein
constitute the entire agreement between and among the parties hereto with
respect to the subject matter hereof, and no amendment or waiver of any
provision of this Agreement or the Notes nor consent to any departure by any
Borrower therefrom shall in any event be effective unless the
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same shall be in writing and signed by the Agent and the Borrowers, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
Section 10.11. RELATIONSHIP OF THE PARTIES. This Agreement provides for the
making of loans by the Banks, in their capacity as lenders, to the Borrowers, in
their capacities as borrowers, and for the payment of interest and repayment of
principal by the Borrowers to the Banks. The relationship between the Banks
(including, throughout this Section, the Agent) and the Borrowers is limited to
that of creditors/secured parties, on the one hand, and debtors, on the other
hand. The provisions herein for compliance with financial covenants, delivery of
financial statements, and financial inspections, investigations, audits, or
examinations are intended solely for the benefit of the Banks to protect their
interests as lenders in assuring payments of interest and repayment of
principal, and nothing contained in this Agreement shall be construed as
permitting or obligating the Banks to act as financial or business advisors or
consultants to the Borrowers, as permitting or obligating any Bank to control
the Borrowers or to conduct the Borrowers' operations, as creating any fiduciary
obligation on the part of the Banks to the Borrowers, or as creating any joint
venture, agency, or other relationship between the parties other than as
explicitly and specifically stated in this Agreement. Each Borrower acknowledges
that it has had the opportunity to obtain the advice of experienced counsel of
its own choosing in connection with the negotiation and execution of this
Agreement and to obtain the advice of such counsel with respect to all matters
contained herein, including, without limitation, the provision in Section 10.5
for waiver of trial by jury. Such Borrower further acknowledges that it is
experienced with respect to financial and credit matters and has made its own
independent decision to apply to the Banks for credit and to execute and deliver
this Agreement.
Section 10.12. LIMITATION ON JOINT OBLIGATIONS. Notwithstanding any
provision to the contrary contained herein or in any other of the Loan
Documents, to the extent the joint obligations of a Borrower shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each Borrower
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
Section 10.13. RIGHTS OF CONTRIBUTION. The Borrowers hereby agree, as among
themselves, that if any Borrower shall become an Excess Funding Borrower (as
defined below), each other Borrower shall, on demand of such Excess Funding
Borrower (but subject to the next sentence hereof and to subsection (b) below),
pay to such Excess Funding Borrower an amount equal to such Borrower's Pro Rata
Share (as defined below and determined, for this
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purpose, without reference to the properties, assets, liabilities and debts of
such Excess Funding Borrower) of such Excess Payment (as defined below). The
payment obligation of any Borrower to any Excess Funding Borrower under this
Section 10.13 shall be subordinate and subject in right of payment to the prior
payment in full of the obligations of such Borrower under the other provisions
of this Agreement, and such Excess Funding Borrower shall not exercise any right
or remedy with respect to such excess until payment and satisfaction in full of
all of such obligations. For purposes hereof, (i) "EXCESS FUNDING BORROWER"
shall mean, in respect of any obligations arising under the other provisions of
this Agreement (hereafter, the "JOINT OBLIGATIONS"), a Borrower that has paid an
amount in excess of its Pro Rata Share of the Joint Obligations; (ii) "EXCESS
PAYMENT" shall mean, in respect of any Joint Obligations, the amount paid by an
Excess Funding Borrower in excess of its Pro Rata Share of such Joint
Obligations; and (iii) "PRO RATA SHARE", for the purposes of this Section 10.13,
shall mean, for any Borrower, the ratio (expressed as a percentage) of (a) the
amount by which the aggregate present fair saleable value of all of its assets
and properties exceeds the amount of all debts and liabilities of such Borrower
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Borrower hereunder) to (b) the amount by
which the aggregate present fair saleable value of all assets and other
properties of the Borrower and all of the Borrowers exceeds the amount of all of
the debts and liabilities (including contingent, subordinated, unmatured, and
unliquidated liabilities, but excluding the obligations of the Borrower and the
Borrowers hereunder) of the Borrower and all of the Borrowers, all as of the
Closing Date (if any Borrower becomes a party hereto subsequent to the Closing
Date, then for the purposes of this Section 10.13 such subsequent Borrower shall
be deemed to have been a Borrower as of the Closing Date and the information
pertaining to, and only pertaining to, such Borrower as of the date such
Borrower became a Borrower shall be deemed true as of the Closing Date).
Section 10.14. ASSET SERVICES NO LONGER A PARTY. The parties hereby agree
that from and after the date hereof, Asset Services shall no longer be a party
to this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date stated on the first page hereof.
THE WYATT COMPANY (d/b/a
Watson Wyatt Worldwide)
ATTEST: /S/Walter W. Bardenwerper By: /S/Barbara L. Landes
-------------------------- --------------------------
Name: Walter W. Bardenwerper Name: Barbara L. Landes
Title: Secretary Title: Vice President and
Chief Financial
Officer
WYATT PREFERRED CHOICE, LLC
ATTEST: /S/Cynthia W. Boyle By: /S/Walter W. Bardenwerper
-------------------------- -------------------------
Name: Cynthia W. Boyle Name: Walter W. Bardenwerper
Title: Assistant Secretary Title: Chairman
WYATT PREFERRED CHOICE, L.P.
By: THE WYATT COMPANY (d/b/a
Watson Wyatt Worldwide),
Its General Partner
ATTEST: /S/Walter W. Bardenwerper By: /S/Barbara L. Landes
------------------------- --------------------------
Name: Walter W. Bardenwerper Name: Barbara L. Landes
Title: Secretary Title: Vice President and
Chief Financial
Officer
WYATT INVESTMENT
CONSULTING, INC.
WITNESS: /S/ Cynthia W. Boyle By: /S/ Walter W. Bardenwerper
------------------------- ---------------------------
Name: Cynthia W. Boyle Name: Walter W. Bardenwerper
Title:____________________ Title: Secretary
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NATIONSBANK, N.A., as a Bank
and as Agent
BY: /S/ John D. Mindnich
---------------------------
John D. Mindnich
Senior Vice President
Corporate Bank
6th Floor
6610 Rockledge Drive
Bethesda, Maryland 20817
Revolving Credit Commitment: $27,227,723
Employee Loan Participation: $12,376,237
Total Commitment: $39,603,960
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MELLON BANK, N.A.
BY: /S/ Michael A. Moore
--------------------------
Michael A. Moore
First Vice President
Plymouth Meeting
Executive Campus
610 West Germantown Pike
Suite 200
Plymouth Meeting, PA 19462
Revolving Credit Commitment: $16,336,633
Employee Loan Participation: $ 7,425,743
Total Commitment: $23,762,376
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NBD BANK
By: /S/ D. Andrew Bateman
-------------------------
Name: D. Andrew Bateman
Title: First Vice President
611 Woodward Avenue
Detroit, Michigan 48226
Revolving Credit Commitment: $11,435,644
Employee Loan Participation: $ 5,198,020
Total Commitment: $16,633,664
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The undersigned, as of the date hereof, hereby confirms and agrees that it shall
no longer be a party to the foregoing Credit Agreement.
WYATT ASSET SERVICES, INC.
ATTEST: /S/ Cynthia W. Boyle By: /S/ Walter W. Bardenwerper
-------------------------- ----------------------------
Name: Cynthia W. Boyle Name: Walter W. Bardenwerper
Title: Assistant Clerk Title: Chairman
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EXHIBIT A
FOURTH REPLACEMENT REVOLVING CREDIT NOTE
$___________.00 Washington, D.C.
January __, 1996
For value received, The Wyatt Company, Wyatt Preferred Choice, LLC (d/b/a
Watson Wyatt Worldwide), Wyatt Preferred Choice, L.P., and Wyatt Investment
Consulting, Inc. (the "Borrowers"), jointly and severally hereby promise to pay
to the order of ______________________________ (the "Bank"), at
_______________________________________, or at such other address as the Bank
shall subsequently state to the Borrowers in writing, on January 5, 2001, in
lawful money of the United States of America, the principal amount of
__________________ Dollars ($____________ .00) or the aggregate unpaid principal
amount of the Revolving Credit Loan made to the Borrowers by the Bank under
Section 2.1(a) of that certain Third Amended and Restated Credit and Security
Agreement dated as of January 5, 1996, as the same may from time to time
hereafter be amended (the "Credit and Security Agreement"), to which the
Borrowers, the Bank, the other Banks signatory thereto, and the Agent as defined
therein are parties, whichever is less. Borrowers further jointly and severally
promise to pay, in like money, at such offices, interest on the outstanding
principal balance hereunder at such times, at such rates and on such terms as
provided for in Sections 2.6, 2.7 and 2.8 of the Credit and Security Agreement.
This Replacement Revolving Credit Note is one of the Revolving Credit Notes
referred to in and issued pursuant to the above referenced Credit and Security
Agreement and is entitled to the benefits thereof, including, without
limitation, security interests and provisions for prepayment, for increases in
the interest rate under certain circumstances, for acceleration of maturity, for
payment of costs of enforcement and collection, and for waiver by Borrowers of
demand, presentment, protest, and other notices, all as provided in the Credit
and Security Agreement.
THE WYATT COMPANY (d/b/a
Watson Wyatt Worldwide)
ATTEST:____________________________ By: _________________________
Name: Walter W. Bardenwerper Name: Barbara L. Landes
Title: Secretary Title: Vice President and
Chief Financial
Officer
<PAGE>
WYATT PREFERRED CHOICE, LLC
ATTEST:___________________________ By: __________________________
Name:______________________ Name: Walter W. Bardenwerper
Title:_____________________ Title: Chairman
WYATT PREFERRED CHOICE, L.P.
By: THE WYATT COMPANY (d/b/a
Watson Wyatt Worldwide),
Its General Partner
ATTEST:____________________________ By: __________________________
Name: Walter W. Bardenwerper Name: Barbara L. Landes
Title: Secretary Title: Vice President and
Chief Financial
Officer
WYATT INVESTMENT
CONSULTING, INC.
ATTEST:___________________________ By: ___________________________
Name:______________________ Name:______________________
Title:_____________________ Title: ____________________
<PAGE>
EXHIBIT B
PROMISSORY NOTE
Name:__________________________ Washington, D.C.
Office:________________________ ____________,19
$______________________________
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
NATIONSBANK, N.A. (the "Agent"), at ______________,
______________________________ or at such other address as the Agent shall
subsequently state to the undersigned in writing, the principal sum of
_________________/100 U.S. DOLLARS (U.S. $________________ ), plus interest on
the unpaid balance thereof at a fluctuating rate per annum equal to the
Applicable Rate. Interest shall be computed on the basis of the actual number of
days elapsed over a year of 365 or 366 days, as the case may be (or if the
Federal Funds Rate (defined below) shall then apply, 360 days), for the period
commencing with the date hereof and ending on the date on which this Note has
been paid in full. Interest shall be payable quarterly in arrears, commencing on
____________________ for the first calendar quarter ending after the date hereof
and continuing on the 3rd business day of the month immediately following each
calendar quarter occurring thereafter, and on the Maturity Date.
For purposes hereof, the "Applicable Rate" means (i) for all periods
prior to January 5, 2001, the Adjusted Base Rate and (ii) for all periods
thereafter, (a) for any quarterly period of calculation, if no Cash Flow
Deficiency existed as of the end of the immediately preceding calendar quarter,
the Adjusted Base Rate and (b) for any quarterly period of calculation, if a
Cash Flow Deficiency existed as of the end of the immediately preceding quarter,
the Prime Rate. "Adjusted Base Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the greater of (a) the Federal Funds Rate in effect on such day plus
1/2 of 1.0% or (b) the Prime Rate in effect on such day, minus 1.0%. If for any
reason the Agent shall have determined (which determination shall be conclusive
absent manifest error) that it is unable after due inquiry to ascertain the
Federal Funds Rate for any reason, including the inability or failure of the
Agent to obtain sufficient quotations in accordance with the terms hereof, the
Adjusted Base Rate shall be determined without regard to clause (a) of the first
sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Adjusted Base Rate due to a change
in the Prime Rate or the Federal Funds Rate shall be effective on the effective
date of such change in the Prime Rate or the Federal Funds Rate, respectively.
"Federal Funds Rate" means, for any day, the rate of interest per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal to
<PAGE>
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 (A) if such day 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 and (B) if no such rate is so published on such
next succeeding business day, the Federal Funds Rate for such day shall be the
average rate quoted to the Agent on such day on such transactions as determined
by the Agent. "Prime Rate" means the per annum rate of interest established from
time to time by the Agent at its principal office in Charlotte, North Carolina
as its Prime Rate. Any change in the interest rate resulting from a change in
the Prime Rate shall become effective as of 12:01 a.m. of the business day on
which each change in the Prime Rate is announced by the Agent. The Prime Rate is
a reference rate used by the Agent in determining interest rates on certain
loans and is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor. A "Cash Flow Deficiency" shall exist at any
time when the Debt to Cash Flow Ratio of The Wyatt Company (d/b/a Watson Wyatt
Worldwide), on a consolidated basis, is 1.5 to 1 or greater, as more fully
described in the Loan Documents referenced below.
Principal hereunder shall be payable in seven consecutive annual
installments of (U.S. $_____________ )each on the 30th day of each September
hereafter beginning September 30, 199__.
This Note shall mature on September 30,_______________ (the "Maturity
Date"); PROVIDED however, that this Note shall mature on the earlier of (a) one
calendar year after termination (whether voluntary or involuntary) of the
undersigned from The Wyatt Company (d/b/a Watson Wyatt Worldwide) or any of its
subsidiaries or affiliates (such termination is, hereinafter, a "Termination"),
or (b) immediately upon the sale of the common stock securing payment of this
Promissory Note, if either such date is earlier than the Maturity Date.
Whenever any principal of or interest on this Note shall not be paid when
due, whether at the stated maturity or by acceleration or otherwise, interest on
such unpaid amounts shall thereafter (and in the case of late principal
payments, 50 days thereafter if no other default shall then exist under this
Note or under any other Loan Document (as such term is defined hereinafter)) be
payable at a rate per annum equal to two (2) percentage points above the stated
rate of interest under this Note until such amounts shall be paid, but in no
event shall the rate of interest payable hereon exceed the highest rate allowed
by law.
Payments shall be made in lawful money of the United States and in
immediately available funds and shall be applied first to interest, then to
principal.
Exhibit B, page 2
<PAGE>
The undersigned may prepay the principal hereof, in whole or in part, at
any time without penalty, provided, however, that any prepayments of principal
shall be applied against the installments of principal hereunder in their
inverse order of maturity.
Whenever this Note, or any other liability of any of the undersigned to the
Agent matures, whether at the stated maturity or by acceleration or otherwise,
the Agent may set-off against the balance hereof any and all credits, money,
stocks, bonds or other security or property of any nature whatsoever on deposit
with or held by, or in the possession of, the Agent, to the credit of or for the
account of the undersigned, without notice to or consent by the undersigned. The
undersigned promptly shall provide such financial, operational or business
information in each instance and in such form as the Agent in its sole
discretion shall require.
This Note is secured by, among other things, common stock of The Wyatt
Company (d/b/a Watson Wyatt Worldwide) purchased or refinanced with the proceeds
of the loan evidenced by this Note and as provided by a certain stock pledge
agreement from the undersigned to the Agent dated this date, and this Note is
entitled to the benefits of said stock pledge agreement, including, without
limitation, waiver by the undersigned of demand, presentment, protest, and other
notices, all as provided in the stock pledge agreement.
Upon failure of the undersigned to pay any payment hereon in full when due,
or the failure of the undersigned to perform or comply with any of the
provisions hereof and/or any of the provisions of any pledge agreement,
guaranty, or any other document previously, simultaneously or hereafter executed
and delivered by the undersigned or by any other party to the Agent in
connection with this Note (collectively, and including without limitation that
certain Third Amended and Restated Credit and Security Agreement dated January
5, 1996, as heretofore or hereafter amended, among The Wyatt Company (d/b/a
Watson Wyatt Worldwide), Wyatt Preferred Choice, LLC, Wyatt Preferred Choice,
L.P., and Wyatt Investment Consulting, Inc., the Agent, and certain other banks,
the "Loan Documents"), or the occurrence of a default on the part of the
undersigned or The Wyatt Company (d/b/a Watson Wyatt Worldwide) under any of the
Loan Documents; or if any information contained in any financial statement,
application, schedule, report or any other document delivered by the undersigned
or any other party in connection with the obligations of the undersigned or such
other party omitted to state any material fact or any fact necessary to make
such information not misleading; or if any judgment shall be entered against the
undersigned; or if an attachment shall be levied against any assets of the
undersigned in the possession of the Agent; or if the undersigned shall become
the subject of any bankruptcy or insolvency proceeding; or if any event other
than Termination shall occur that The Wyatt Company (d/b/a Watson Wyatt
Worldwide) may, under Section 9.4 of its Bylaws, treat as
Exhibit B, page 3
<PAGE>
an offer to sell the shares of common stock securing this Note; or if the Agent
shall in good faith deem itself insecure or unsafe as a result of acts or events
which bear upon the financial condition of the undersigned or the repayment of
this Note, then the entire unpaid principal balance hereof plus accrued and
unpaid interest thereon shall, at the option of the Agent, mature and become
immediately due and payable without presentment, demand, protest, notice of
protest or any other notice of any kind, all of which are hereby expressly
waived.
The undersigned hereby agrees to pay, in addition to all other sums or
money due, all costs of collection and reasonable attorneys' fees, whether suit
be brought or not, if this Note is not paid in full when due, whether at the
stated maturity or by acceleration.
The undersigned hereby certifies to Agent that the proceeds hereof are not
to be used in whole or in part for personal, family or household purposes, but
only for the purpose of financing and/or refinancing the purchase of common
stock of The Wyatt Company (d/b/a Watson Wyatt Worldwide).
This instrument is an instrument under seal and shall be governed in all
respects by the laws of the State of North Carolina, excluding its choice of law
rules. The undersigned hereby consents to the jurisdiction of the courts of
North Carolina, including the federal district court, and consents to service of
process by registered mail, return receipt requested. The undersigned further
specifically consents to venue in Mecklenburg County, North Carolina.
Witness:_______________________ Signed: ________________________ (Seal)
(Signature)
Name:__________________________ Name:___________________________
(Print or Type) (Print or Type)
Exhibit B, page 4
<PAGE>
EXHIBIT C
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of January 5, 1996 (the "GUARANTY"), is
given by
THE WYATT COMPANY (d/b/a Watson Wyatt Worldwide), a Delaware corporation;
WYATT PREFERRED CHOICE, LLC, a Delaware limited liability company; WYATT
PREFERRED CHOICE, L.P., a Delaware limited partnership; and WYATT INVESTMENT
CONSULTING, INC., a Delaware corporation (collectively, the "GUARANTORS" and
each individually, a "GUARANTOR"); to
NATIONSBANK, N.A., a national banking association, as Agent for the Banks
party to the Credit Agreement referred to below (the "AGENT"). All capitalized
terms used and not defined herein have the meanings stated in the Credit
Agreement.
W I T N E S S E T H :
WHEREAS, the Guarantors, as borrowers and otherwise, are parties to that
Third Amended and Restated Credit Agreement, dated as of the date hereof, among
the Guarantors, the Agent and the Banks named therein (as the same may be
amended, modified or extended, the "CREDIT AGREEMENT"); and
WHEREAS, in consideration of and to induce advances made or to be made, or
other financial accommodations from time to time afforded or to be afforded, to
or at the request of the individuals listed on EXHIBIT A attached hereto, as
such Exhibit may be amended from time to time upon the making of additional
advances to or for the benefit of persons employed by The Wyatt Company (d/b/a
Watson Wyatt Worldwide) ("WYATT") or its affiliates or subsidiaries, including
without limitation Wyatt Asset Services, Inc. (each such person individually an
"EMPLOYEE BORROWER" and all collectively the "EMPLOYEE BORROWERS"; in addition,
such term shall mean and include all entities eligible to purchase shares of
Wyatt common stock and to or for the benefit of whom Employee Loans are made
under the Credit Agreement), such advances or other financial accommodations
being for the purpose of financing the purchase from Wyatt of stock of Wyatt,
the Guarantors have agreed to guarantee the performance of the obligations of
the Employee Borrowers under the Employee Notes issued pursuant to the Credit
Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Guarantors hereby agree as follows:
<PAGE>
1. GUARANTY OF LIABILITIES. The Guarantors hereby unconditionally guarantee
and become surety for the full and prompt payment to the Agent and the Banks at
maturity, whether by acceleration or otherwise, and at all times thereafter, and
upon a Default hereunder, of the Employee Loans and all indebtedness,
obligations and liabilities of the Employee Borrowers to the Agent and the
Banks, whether now existing or hereafter created or arising, matured or
unmatured, and whether absolute or contingent, joint, several, or joint and
several, arising out of the financing by the Agent and the Banks of the
acquisition by the Employee Borrowers of any shares of stock issued or to be
issued by Wyatt (all of which are hereinafter called the "GUARANTEED DEBT"). The
Guarantors are jointly and severally liable for all Guaranteed Debt.
In the event any Employee Borrower shall at any time fail to pay the Agent
or any Bank any principal of or interest on or other sums constituting any
Guaranteed Debt at its maturity, whether by acceleration or otherwise, or in the
event of any Default hereunder as defined herein, the Guarantors promise to pay
such amount to the Agent and such Bank forthwith on demand, in the same manner
as if the Guaranteed Debt constituted the direct and primary liability of the
Guarantors, this being a guaranty of payment rather than of collection.
2. IN THE EVENT OF A DEFAULT. In case of the occurrence of a default under
the terms of any Employee Borrower's note evidencing Guaranteed Debt, any
Employee Borrower's pledge agreement providing security for Guaranteed Debt, or
any other document or instrument pertaining thereto, or in case of the death or
incompetence of any Employee Borrower, or in case any dissolution, liquidation,
bankruptcy, reorganization, receivership, assignment, debt arrangement or other
proceeding under any bankruptcy or insolvency law or procedure is instituted by
or against an Employee Borrower, each of such events or occurrences constituting
a "DEFAULT" hereunder, all Guaranteed Debt of such Employee Borrower shall at
the option of the Agent and the Banks immediately become due and payable from
the Guarantors; and in any such event the Guarantors hereby authorize the Agent
and the Banks, without notice or demand, to advance a Revolving Credit Loan, as
defined in the Credit Agreement, for the account of the Guarantors or to
appropriate and apply any property, balances, credits, deposits, accounts or
moneys of a Guarantor then in the possession of the Agent, or standing to the
credit of a Guarantor, to the payment of such Guaranteed Debt. In the event of
the occurrence and continuance of any Event of Default under and as defined in
the Credit Agreement, all Guaranteed Debt of all Employee Borrowers shall at the
option of the Agent and the Banks become immediately due and payable,
irrespective of whether there exists a default under any note issued by a
Employee Borrower.
3. AGREEMENTS AND WAIVERS. Each Guarantor hereby (a) agrees (i) to any
modifications of any terms or conditions of any Guaranteed Debt and/or to any
extensions or renewals of time of
Exhibit C, page 2
<PAGE>
payment or performance by any Employee Borrower or the Guarantors; (ii) that it
shall not be necessary for the Agent to resort to legal remedies against any
Employee Borrower, against any collateral, or against the Guarantors jointly
before proceeding against such Guarantor; and (iii) that no release of any other
Guarantor, whether by operation of law or by any act of the Agent or the Banks,
with or without notice to the Guarantor, shall release the Guarantor; (b) waives
notice of any election, acceptance, demand, protest, notice of protest and
notice of default, presentment for payment, diligence in collection, and waives,
to the extent permitted by law, all benefit of valuation, appraisement, and all
exemptions under the laws of the North Carolina, and/or any other state or
territory of the United States and (iii) ; (c) agrees, if any Guaranteed Debt is
not paid in accordance with the terms hereof, to pay, in addition to all other
sums of money due, all costs of collection including costs of suit and (whether
or not suit is brought) the Agent's and the Banks' reasonable attorneys' fees
and disbursements; (d) agrees that the Agent and the Banks shall have no
obligation to verify the signature of the Employee Borrower on any note, pledge
agreement or other document delivered in connection with any Guaranteed Debt;
and (e) agrees that the Guarantor's liability hereunder shall in no way be
affected or impaired by the failure of such note, pledge agreement or other
document to be valid, binding or enforceable as against such Employee Borrower.
4. CERTAIN RIGHTS OF THE AGENT AND THE BANKS. The Guarantors' joint and
several liability hereunder shall in no way be effected or impaired by any of
the following (any or all of which may be done or omitted by the Agent or the
Banks without notice to anyone and irrespective of whether the Guaranteed Debt
shall be increased or decreased thereby), namely: (a) any acceptance by the
Agent or the Banks of any security or collateral for, or other guarantors or
obligors upon, any Guaranteed Debt; (b) any compromise, settlement, surrender,
release, discharge, renewal, extension, alteration, exchange, sale, pledge or
other disposition of, or substitution for, or indulgence with respect to, or
failure, neglect or omission to realize upon, or to enforce, exercise or perfect
any liens or right of appropriation or other rights with respect to any
Guaranteed Debt or any security or collateral therefor, or any claims against
any person or persons primarily or secondarily liable thereon; (c) the granting
of credit from time to time by the Agent or any Bank to any Employee Borrower in
excess of the amount, if any, to which the right of recovery under this Guaranty
may be limited; or (d) any act of commission or omission of any kind or at any
time upon the part of the Agent or any Bank with respect to any matter
whatsoever other than the execution and delivery by the Agent or any Bank to the
Guarantors of an express written release or cancellation of this Guaranty. The
Agent shall have the right to determine how, when and what application of
payments and credits, if any, whether derived from a Employee Borrower or any
other source, shall be made on the Guaranteed Debt, and this Guaranty shall
apply to and secure any ultimate balance that shall remain owing to the Agent or
any
Exhibit C, page 3
<PAGE>
Bank. This Guaranty is secured by the Collateral as defined in the Credit
Agreement.
5. NO WAIVER, ETC. No postponement or delay on the part of the Agent or any
Bank in the enforcement of any right hereunder shall constitute a waiver of such
right, and all rights of the Agent and the Banks hereunder shall be cumulative
and not alternative and shall be in addition to any other rights granted to the
Agent or any Bank in any other agreement, or by Law. If any provision hereof
shall be or shall be declared to be illegal or unenforceable in any respect,
such illegal or unenforceable provision shall be and become absolutely null and
void and of no force and effect as though such provision were not in fact set
forth herein, but all other covenants, terms, conditions and provisions hereof
shall nevertheless continue to be valid and enforceable and this Guaranty shall
be so construed.
6. CONTINUING GUARANTY. This Guaranty shall continue in force in any event
for so long as any Employee Borrower shall be indebted to the Agent and the
Banks, and thereafter until the Agent and the Banks shall have actually received
written notice of the termination hereof from the Guarantors and until all
Guaranteed Debt incurred or contracted before receipt of such notice shall have
been fully and finally paid plus interest, costs, and attorneys' fees as above
described, it being contemplated that the Employee Borrowers may borrow, repay
and subsequently borrow money from, or become indebted to, the Agent and the
Banks from time to time, and the Guarantors, not having given notice of the
termination hereof as herein provided for, shall be deemed to have permitted
this Guaranty to remain in full force and effect with respect to such additional
or subsequent Guaranteed Debt.
7. AGENT HAS NO DUTY TO ADVISE; WAIVER. The Guarantors assume the risk for
their failure to be and keep informed of the financial condition of the Employee
Borrowers and of all other circumstances bearing upon the risk of nonpayment and
non-performance of the Guaranteed Debt; and the Agent and the Banks shall have
no duty to advise the Guarantors of information known to the Agent or any Bank
regarding such condition or any such circumstances. Furthermore, the Guarantors
hereby waive any defense based on the failure of the Agent to conduct a credit
review of an Employee Borrower prior to making or during the existence of any
Employee Loan.
8. SUBORDINATION; RESCISSION. Each Guarantor agrees that all claims of such
Guarantor against any and all of the Employee Borrowers, whether now existing or
hereafter arising, are and shall be at all times subject and subordinate to the
Guaranteed Debt, for so long as any Guaranteed Debt or such claim or claims
shall exist. Each Guarantor waives all rights of subrogation that it might have
arising out of this Guaranty. Each Guarantor agrees that such Guarantor shall
not, without the prior written consent of the Agent (a) receive any payment of
or collect, in whole or in part, or sue upon, any claim or claims now or
Exhibit C, page 4
<PAGE>
hereafter existing which such Guarantor may hold against the Employee Borrower;
or (b) enforce any lien which such Guarantor may now or in the future have on
any of the Employee Borrowers' properties, real or personal, as security for the
payment of any debt or claim owing by any Employee Borrower to such Guarantor.
The liability of the Guarantors hereunder shall be reinstated and revived and
the rights of the Agent and the Banks shall continue if and to the extent that
for any reason any payment by or on behalf of any Employee Borrower or the
Guarantors is rescinded or must be otherwise restored by the Agent or any Bank,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, PROVIDED, HOWEVER, that if the Agent or any Bank chooses to contest
any such matter at the request of the Guarantors, the Guarantors agree to
indemnify and hold the Agent and any such Bank harmless with respect to all
costs (including, without limitation, attorneys' fees) of such litigation. If
any Employee Borrower becomes a debtor in a case under the Federal Bankruptcy
Code and the Guarantors are "insiders" as defined in such Code, the Guarantors
agree, upon request by a debtor-in-possession or trustee (collectively
"OFFICIAL") for such Employee Borrower, to pay to the estate of such Employee
Borrower an amount equal to any amount of Guaranteed Debt previously paid to the
Agent or any Bank by such Employee Borrower and reasonably contended by such
official to be avoidable under Section 547 of such Code.
9. MISCELLANEOUS. This Guaranty shall be governed in all respects by the
internal laws of the State of North Carolina but excluding its choice of law
rules and shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and assigns. This Guaranty, together with the Credit
Agreement and the other documents executed thereunder (collectively, as the same
may be modified or amended, the "CREDIT DOCUMENTS"), constitute the entire
agreement of the Agent on behalf of itself and the Banks and the Guarantors with
respect to its subject matter, superseding and replacing any previous guaranty
and applicable to all obligations guaranteed by the Guarantors under any
previous guaranty as well as to all subsequently incurred Guaranteed Debt, and
no provision hereof may be modified, altered, amended or waived except by a
writing executed by the person against whom it is sought to be applied or
enforced. All parties have participated in the drafting of this Guaranty, and
this Guaranty shall be interpreted without reference to any rule of construction
providing for interpretation of documents against the Persons drafting them.
This Guaranty may be executed by the parties hereto individually or in any
combination of the parties hereto in several separate counterparts, each of
which shall be an original and all of which taken together shall constitute one
and the same Guaranty.
10. VENUE, ETC. The Guarantors and the Agent agree that, at the option of
the Agent, all litigation arising out of this Guaranty shall be in the local or
federal courts located in the State of North Carolina, and the Guarantors hereby
waive any
Exhibit C, page 5
<PAGE>
defense of inconvenient forum. The Guarantors and the Agent further agree that
process may be served upon any party hereto by certified or registered mail,
return receipt requested, directed to such party at its address stated in the
Credit Agreement, and each party waives any defense of insufficiency of service
with respect to process so served. The Guarantors and the Agent further agree
that, because of the complexities of commercial transactions and the need for
expeditious resolution of disputes, any litigation arising out of this Guaranty
shall be before a court sitting without a jury, and both parties hereby waive
trial by jury in all such litigation, after having received the advice of their
respective independent counsel.
11. LIMITATION ON OBLIGATIONS. Notwithstanding any provision to the
contrary contained herein or in any other of the Credit Documents, to the extent
the obligations of a Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or transfers)
then the obligations of each Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
12. RIGHTS OF CONTRIBUTION. The Guarantors hereby agree, as among
themselves, that if any Guarantor shall become an Excess Funding Guarantor (as
defined below), each other Guarantor shall, on demand of such Excess Funding
Guarantor (but subject to the next sentence hereof and to subsection (b) below),
pay to such Excess Funding Guarantor an amount equal to such Guarantor's Pro
Rata Share (as defined below and determined, for this purpose, without reference
to the properties, assets, liabilities and debts of such Excess Funding
Guarantor) of such Excess Payment (as defined below). The payment obligation of
any Guarantor to any Excess Funding Guarantor under this Section 12 shall be
subordinate and subject in right of payment to the prior payment in full of the
obligations of such Guarantor under the other provisions of this Guaranty, and
such Excess Funding Guarantor shall not exercise any right or remedy with
respect to such excess until payment and satisfaction in full of all of such
obligations. For purposes hereof, (i) "EXCESS FUNDING GUARANTOR" shall mean, in
respect of any obligations arising under the other provisions of this Guaranty
(hereafter, the "GUARANTEED OBLIGATIONS"), a Guarantor that has paid an amount
in excess of its Pro Rata Share of the Guaranteed Obligations; (ii) "EXCESS
PAYMENT" shall mean, in respect of any Guaranteed Obligations, the amount paid
by an Excess Funding Guarantor in excess of its Pro Rata Share of such
Guaranteed Obligations; and (iii) "PRO RATA SHARE", for the purposes of this
Section 12, shall mean, for any Guarantor, the ratio (expressed as a percentage)
of (a) the amount by which the aggregate present fair saleable value of all of
its assets and properties exceeds the amount of all debts and liabilities of
such Guarantor (including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of such Guarantor hereunder) to (b)
the
Exhibit C, page 6
<PAGE>
amount by which the aggregate present fair saleable value of all assets and
other properties of the Borrowers and all of the Guarantors exceeds the amount
of all of the debts and liabilities (including contingent, subordinated,
unmatured, and unliquidated liabilities, but excluding the obligations of the
Borrowers and the Guarantors hereunder) of the Borrowers and all of the
Guarantors, all as of the Closing Date (if any Guarantor becomes a party hereto
subsequent to the Closing Date, then for the purposes of this Section 12 such
subsequent Guarantor shall be deemed to have been a Guarantor as of the Closing
Date and the information pertaining to, and only pertaining to, such Guarantor
as of the date such Guarantor became a Guarantor shall be deemed true as of the
Closing Date).
Exhibit C, page 7
<PAGE>
WITNESS the due execution hereof with the intent of being legally bound as
of the date stated on the first page hereof.
THE WYATT COMPANY (d/b/a
Watson Wyatt Worldwide)
ATTEST:____________________________ By:___________________________
Name: Walter W. Bardenwerper Name: Barbara L. Landes
Title: Secretary Title: Vice President and
Chief Financial
Officer
WYATT PREFERRED CHOICE, LLC
ATTEST:___________________________ By:__________________________
Name:______________________ Name: Walter W. Bardenwerper
Title:_____________________ Title: Chairman
WYATT PREFERRED CHOICE, L.P.
By: THE WYATT COMPANY (d/b/a
Watson Wyatt Worldwide),
Its General Partner
ATTEST:____________________________ By:__________________________
Name: Walter W. Bardenwerper Name: Barbara L. Landes
Title: Secretary Title: Vice President and
Chief Financial
Officer
WYATT INVESTMENT
CONSULTING, INC.
ATTEST:___________________________ By:___________________________
Name:______________________ Name:_________________________
Title:_____________________ Title:________________________
Exhibit C, page 8
<PAGE>
EXHIBIT A
TO
GUARANTY AGREEMENT
[To be supplied by Guarantor)
<PAGE>
EXHIBIT D-1
Name: ______________________
Home Address: ______________________
______________________
______________________
Date: ______________________
The Wyatt Company
Suite 900
601 13th Street, N.W.
Washington, D.C. 20005
Attn: Mr. Walter W. Bardenwerper, General Counsel & Secretary
Gentlemen:
I have issued a promissory note in the principal amount of $_________ to
NationsBank, N.A. (the "AGENT"), as agent for itself and certain other banks.
That note evidences a loan made to me by the Agent to enable me to purchase, or
to refinance the purchase of, ____________ shares of the common stock of The
Wyatt Company (d/b/a Watson Wyatt Worldwide) (the "COMPANY").
As security for the timely satisfaction of my obligations under the note, I
hereby pledge to the Agent all shares purchased or refinanced with the proceeds
of the loan as stated above (the "PLEDGED SHARES"), and grant to the Agent a
lien on and security interest in those shares and all proceeds thereof. I have
not, and I agree that until the note has been paid in full I will not, sell or
otherwise dispose of any of the Pledged Shares or create, incur or permit to
exist any other pledge, lien, encumbrance, or security interest in the Pledged
Shares or their proceeds except as provided in this letter.
The Agent is authorized to remit the proceeds of my loan directly to the
Company. The Company and/or its transfer agent is hereby authorized and
directed, upon disbursement by the Agent of the proceeds of my loan, to register
on its books my pledge to the Agent of the Pledged Shares, to identify said
pledge of the Pledged Shares on all initial and periodic statements and all
other statements or notices respecting the Pledged Shares, and to have all
pledgee notices and statements respecting the Pledged Shares as well as any and
all certificates or any other instruments or documents evidencing my ownership
of the Pledged Shares sent directly to the Agent at the following address:
<PAGE>
NationsBank, N.A.
Corporate Bank
6th Floor
6610 Rockledge Drive
Bethesda, Maryland 20817
Attn: Michael R. Heredia
Vice President
I agree that the Agent shall take and maintain possession of all such
statements, notices, certificates, instruments and documents in its capacity as
pledgee.
In the event of (i) a default under my note, or (ii) my death, termination
of employment, or bankruptcy or the imposition of a lien or attachment on the
Pledged Shares as described in Section 9.4 of the Company's Bylaws before all
principal and interest payments have been made on the note, I agree and direct
that such event may be considered by the Company as an offer to sell the Pledged
Shares to the Company or to one or more Eligible Purchasers as of the date of
such event under the terms and conditions of Section 9.4 of the Company's
Bylaws. ("ELIGIBLE PURCHASER" as used in this letter has the meaning given to
that term in Section 9.9(a) of the Company's Bylaws.) I agree to execute all
necessary or appropriate instruments and documents, including stock powers and
notices or instructions to register stock transfers, to permit the Company to
sell the Pledged Shares in accordance with this letter, and I authorize the
Agent to give notices or instructions to register stock transfers or to return
all certificates for the Pledged Shares, if any, to the Company as necessary to
effect such sale. I further agree and direct that the Company shall apply the
proceeds of any such sale (a) first, to pay any remaining balance on the note
(including principal and interest), (b) second, to pay any other amounts
required by applicable law, and (c) third, to me to the extent, if any, of any
surplus proceeds. In the event of the sale of the Pledged Shares upon
termination of my employment with the Company, the Company may deduct from any
sums then due to me from the Company (including without limitation accrued
salary and vacation pay, if any) the difference, if any, between the remaining
balance on my note and the proceeds of the sale of the Pledged Shares, and the
Company may apply the amount so deducted as provided in (a) and (b) above. I
agree that I will have no right, either against the Company or against the
Agent, to any amounts applied under (a) or (b) above.
In the event that any or all of the Pledged Shares are sold to one or more
Eligible Purchasers prior to repayment of my loan from the Agent, I agree and
direct that such Eligible Purchaser(s) shall be directed to remit the purchase
price to the Company and that the Company shall apply the proceeds of such sale
in the manner provided above. To facilitate the foregoing, I agree and direct
that the Company and/or its transfer agent register on its books and identify on
all transaction and periodic statements respecting the Pledged Shares the
restriction
Exhibit D-1, page 2
<PAGE>
that any purchaser of the Pledged Shares may be required to remit the purchase
price directly to the Company to be applied in payment of my indebtedness to the
Agent, and I further agree and direct that the following legend shall be placed
on all certificates, if any, for the Pledged Shares:
"In the event the shares represented by this certificate are sold, the
purchaser may be required to remit the purchase price directly to the
Company to be applied in payment of certain indebtedness of the
registered holder to NationsBank, N.A., as agent for itself and
certain other banks."
You agree to have such legend removed from any certificate if and when you are
advised in writing by the Agent that my indebtedness to it has been repaid in
full.
Upon the payment in full of all amounts due under my note issued to the
Agent, I understand that with respect to all of the Pledged Shares that have not
been sold or otherwise disposed of under the terms of this letter, the Agent
will direct the Company and/or its transfer agent to register on its books the
release of the Agent's lien on and the foregoing restrictions respecting such
Pledged Shares, and will have delivered to me, at its expense, free of liens and
encumbrances, and without recourse or representation, all certificates, if any,
for such Pledged Shares. I agree that beyond the exercise of reasonable care,
the Agent shall have no duty or liability to preserve rights pertaining to the
Pledged Shares, and shall be relieved of all responsibility for the Pledged
Shares upon issuing a direction to the Company and/or its transfer agent to
register the release of its lien on and the foregoing restriction respecting the
Pledged Shares and upon surrendering or tendering surrender to me of all
certificates, if any, respecting the Pledged Shares.
I agree that all rights, remedies and powers granted to the Agent in this
letter, in my note, in your guaranty of my note, or in any other document
previously, simultaneously or hereafter executed and delivered by me or by any
other party to the Agent in connection with this letter or my note
(collectively, the "LOAN DOCUMENTS"), whether express or implied, shall be
cumulative and may be exercised singly or concurrently with such other rights as
the Agent may have. I also agree that no failure or delay on the part of the
Agent in exercising any right, power or privilege hereunder, under any of the
Loan Documents, or under applicable law, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or thereunder preclude any other or further exercise thereof or the exercise of
any other right, power, or privilege. I further agree that no waiver or
modification of any right, power or privilege of the Agent or of any obligation
of mine shall be effective unless such waiver or modification is in writing,
signed by the Agent, and then only to the extent set forth therein, and I agree
that a waiver by the Agent of any right, power or privilege hereunder on any one
occasion shall not
Exhibit D-1, page 3
<PAGE>
be construed as a bar to, or a waiver of, any such right, power or privilege
which the Agent otherwise would have on any subsequent occasion.
This letter constitutes a security agreement in favor of the Agent, and I
understand that the Agent is entitled to rights and remedies as a secured party
under this agreement and applicable law. I authorize and direct you to provide a
copy of this letter to the Agent, and I understand that the Agent is relying on
this letter, in addition to your guaranty of my note, in making its loan to me.
Witness:_____________________ Signed:_____________________
(Signature)
Name:________________________ Name:_______________________
(Print or Type) (Print or Type)
Tax ID No.:_________________
Exhibit D-1, page 4
<PAGE>
EXHIBIT D-2
Name:_______________________
Address:_______________________
_______________________
_______________________
Date:________________________
The Wyatt Company
Suite 900
601 13th street, N.W.
Washington, D.C. 20005
Attn: Mr. Walter W. Bardenwerper, General Counsel & Secretary
Gentlemen:
The undersigned employee ______[Employee Name]______ (the "EMPLOYEE") has
issued a promissory note in the principal amount of $________ (the "NOTE") to
NationsBank, N.A. (the "AGENT"), as agent for itself and certain other banks.
The Note evidences a loan made to the Employee by the Agent (the "LOAN") for the
purpose of financing or refinancing the purchase by the undersigned personal
holding company [PERSONAL HOLDING COMPANY NAME] (the "HOLDING COMPANY") of
___________ shares of the common stock of The Wyatt Company (d/b/a Watson Wyatt
Worldwide) (the "COMPANY").
As security for the timely satisfaction of all obligations under the Note,
the undersigned hereby pledge to the Agent all shares purchased or refinanced
with the proceeds of the Loan as stated above (the "PLEDGED SHARES"), and grant
to the Agent a lien on and security interest in the Pledged Shares and all
proceeds thereof. The undersigned have not, and agree that until the Note has
been paid in full they will not, sell or otherwise dispose of any of the Pledged
Shares or create, incur or permit to exist any other pledge, lien, encumbrance,
or security interest in the Pledged Shares or their proceeds except as provided
in this letter.
The Agent is authorized to remit the proceeds of the Loan directly to the
Company. The Company and/or its transfer agent is hereby authorized and
directed, upon disbursement by the Agent of the proceeds of the Loan, to
register on its books the undersigned's pledge to the Agent of the Pledged
Shares, to identify said pledge of the Pledged Shares on all initial and
periodic statements and all other statements or notices respecting the Pledged
Shares, and to have all pledgee notices
<PAGE>
and statements respecting the Pledged Shares as well as any and all certificates
or any other instruments or documents evidencing ownership of the Pledged Shares
sent directly to the Agent at the following address:
NationsBank, N.A
Corporate Bank
6th Floor
6610 Rockledge Drive
Bethesda, Maryland 20817
Attn: Michael R. Heredia
Vice President
The undersigned agree that the Agent shall take and maintain possession of any
and all such statements, notices, certificates, instruments and documents in its
capacity as pledgee.
In the event of (i) a default under the Note or (ii) the death, termination
of employment, or bankruptcy of the Employee or the imposition of a lien or
attachment on the Pledged Shares as described in Section 9.4 of the Company's
Bylaws before all principal and interest payments have been made on the Note,
such event may be considered by the Company as an offer to sell the Pledged
Shares to the Company or to one or more Eligible Purchasers as of the date of
such event under the terms and conditions of Section 9.4 of the Company's
Bylaws. ("ELIGIBLE PURCHASER" as used in this letter has the meaning given to
that term in Section 9.9(a) of the Company's Bylaws.) The undersigned agree to
execute all necessary or appropriate instruments and documents, including stock
powers and notices or instructions to register stock transfers, to permit the
Company to sell the Pledged Shares in accordance with this letter, and the Agent
is hereby authorized to give notices or instructions to register stock transfers
or to return all certificates for the Pledged Shares, if any, to the Company as
necessary to effect such sale. The undersigned further agree and direct that the
Company shall apply the proceeds of any such sale (a) first, to pay any
remaining balance on the Note (including principal and interest), (b) second, to
pay any other amounts required by applicable law, and (c) third, to the Employee
to the extent, if any, of any surplus proceeds. In the event of the sale of the
Pledged Shares upon the Employee's termination of employment as described above,
the Company may deduct from any sums then due to the Employee from the Company
(including without limitation accrued salary and vacation pay, if any) the
difference, if any, between the remaining balance on the Note and the proceeds
of the sale of the Pledged Shares, and the Company may apply the amount so
deducted as provided in (a) and (b) above. The undersigned agree that they will
have no right, either against the Company or against the Agent, to any amounts
applied under (a) or (b) above.
In the event that any or all of the Pledged Shares are sold to one or more
Eligible Purchasers prior to repayment of the Loan from the Agent, such Eligible
Purchaser(s) shall be directed to
Exhibit D-2, page 2
<PAGE>
remit the purchase price to the Company and that the Company shall apply the
proceeds of such sale in the manner provided above. To facilitate the foregoing,
the undersigned agree and direct that the Company and/or its transfer agent
register on its books and identify on all transaction and period statements
respecting the Pledged Shares the restriction that any purchaser of the Pledged
Shares may be required to remit the purchase price directly to the Company to be
applied in payment of the Employee's indebtedness to the Agent, and the
undersigned further agree and direct that the following legend shall be placed
on all certificates, if any, for the Pledged Shares:
"In the event the shares represented by this certificate are sold, the
purchaser may be required to remit the purchase price directly to the
Company to be applied in payment of certain indebtedness of the
registered holder to NationsBank, N.A., as agent for itself and
certain other banks."
Such legend shall be removed from any certificate if and when the Company is
advised in writing by the Agent that all indebtedness to the Agent under the
Note has been repaid in full.
Upon the payment in full of all amounts due under the Note issued to the
Agent and with respect to all of the Pledged Shares that have not been sold or
otherwise disposed of under the terms of this letter, the Agent will direct the
Company and/or its transfer agent to register on its books the release of the
Agent's lien on and restriction respecting such Pledged Shares, and will have
delivered to the Holding Company, at its expense, free of liens and
encumbrances, and without recourse or representation, all certificates, if any,
for such Pledged Shares. The undersigned agree that beyond the exercise of
reasonable care, the Agent shall have no duty or liability to preserve rights
pertaining to the Pledged Shares, and shall be relieved of all responsibility
for the Pledged Shares upon issuing a direction to the Company and/or its
transfer agent to register the release of its lien on and the foregoing
restriction respecting the Pledged Shares and upon surrendering or tendering
surrender to the Holding Company of all certificates, if any, respecting the
Pledged Shares.
All rights, remedies and powers granted to the Agent in this letter, in the
Note, in your guaranty of the Note, or in any other document previously,
simultaneously or hereafter executed and delivered by either or both of the
undersigned or by any other party to the Agent in connection with this letter or
the Note (collectively, the "LOAN DOCUMENTS"), whether express or implied, shall
be cumulative and may be exercised singly or concurrently with such other rights
as the Agent may have. No failure or delay on the part of the Agent in
exercising any right, power or privilege hereunder, under any of the Loan
Documents, or under applicable law, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right,
Exhibit D-2, page 3
<PAGE>
power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. No
waiver or modification of any right, power or privilege of the Agent or of any
obligation of either or both of the undersigned shall be effective unless such
waiver or modification is in writing, signed by the Agent, and then only to the
extent set forth therein, and a waiver by the Agent of any right, power or
privilege hereunder on any one occasion shall not be construed as a bar to, or a
waiver of, any such right, power or privilege which the Agent otherwise would
have on any subsequent occasion.
This letter constitutes a security agreement in favor of the Agent, and the
undersigned understand that the Agent is entitled to rights and remedies as a
secured party under this agreement and applicable law. The undersigned authorize
and direct the Company to provide a copy of this letter to the Agent and
understand that the Agent is relying on this letter, in addition to the
Company's guaranty of the Note, in making the Loan.
EMPLOYEE:
Witness:___________________________ Signed:________________________
(Signature) (Employee Signature)
Name:______________________________ Name:___________________________
(Print or Type) (Print or Type)
PERSONAL HOLDING COMPANY:
Witness:___________________________ Signed:__________________________
(Signature) (Name of Personal
Holding Co.)
Name:______________________________ Tax ID No.:_______________________
(Type or Print Name) (Print or Type)
By:_______________________________
(Employee Signature)
Name:_____________________________
(Type or Print
Employee Name)
Exhibit D-2, page 4
<PAGE>
EXHIBIT E
STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of the common stock of The Wyatt Company (d/b/a Watson
Wyatt Worldwide), a Delaware corporation:
NO. OF SHARES CERTIFICATE NO.
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such common stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
The effectiveness of a transfer pursuant to this stock power shall be subject to
any and all transfer restrictions referenced on the face of the certificates
evidencing such interest or in the certificate of incorporation or bylaws of the
subject corporation, to the extent they may from time to time exist.
Date:
___________________________
By:_____________________________
Name:
<PAGE>
EXHIBIT F
TRUTH IN LENDING DISCLOSURE STATEMENT
Creditor: NationsBank, N.A., as Agent (the "AGENT") under that Third
Amended and Restated Credit and Security Agreement dated as of
January 5, 1996 among The Wyatt Company ("WYATT"), Wyatt Asset
Services, Inc., Wyatt Preferred Choice, LLC., Wyatt Preferred
Choice, L.P., and Wyatt Investment Consulting, Inc. (the
"BORROWERS"), the Agent, and Mellon Bank, N.A., NBD Bank and
NationsBank, N.A. (the "BANKS") (as the same may be amended,
modified, extended or restated from time to time, the "CREDIT
AGREEMENT").
ANNUAL
PERCENTAGE RATE FINANCE CHARGE Amount Financed Total of Payments
_______________ ______________ _______________ _________________
The cost of The dollar amount The amount of The amount you will
your credit as The credit will credit provided have paid after you
a yearly rate. cost you. to you or on have made all
your behalf. payments as
scheduled.
__________% $_____________ $____________ $______________
YOUR PAYMENT SCHEDULE WILL BE:
Except as provided below, 27 interest payments with the first
interest payment due April __, 19__ and subsequent interest payments
due on the 3rd business day of each July, October, January and April
thereafter, until this debt is paid in full, and, except as provided
below, seven (7) principal payments of $__________ each, with the
first payment due September 30, 19__ and subsequent payments due on
September 30 of each year thereafter, with the final payment due
September 30, 200__. The amounts of interest payments will vary. Based
on the current ANNUAL PERCENTAGE RATE, the largest interest payment
will be $_________________ and the smallest interest payment will be
$_________________, assuming that principal payments are made in
accordance with the foregoing schedule.
All principal on this loan shall be due on the earlier of (i) one
calendar year after termination (whether voluntary or involuntary) of
your employment with The Wyatt Company or any of its subsidiaries or
affiliates, or (ii) immediately upon the sale of the common stock
securing payment of this loan, if either such date is earlier than
September 30, 200__.
<PAGE>
The annual percentage rate may increase during the term of this transaction
if the Applicable Rate increases. For purposes hereof, the "Applicable Rate"
means (i) for all periods prior to January 5, 2001, the Adjusted Base Rate and
(ii) for all periods thereafter, (a) for any quarterly period of calculation, if
no Cash Flow Deficiency existed as of the end of the immediately preceding
calendar quarter, the Adjusted Base Rate and (b) for any quarterly period of
calculation, if a Cash Flow Deficiency existed as of the end of the immediately
preceding quarter, the Prime Rate. "Adjusted Base Rate" means, for any day, the
rate per annum (rounded upwards, if necessary, to the nearest whole multiple of
1/100 of 1%) equal to the greater of (a) the Federal Funds Rate in effect on
such day PLUS 1/2 of 1.0% or (b) the Prime Rate in effect on such day, MINUS
1.0%. If for any reason the Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable after due inquiry
to ascertain the Federal Funds Rate for any reason, including the inability or
failure of the Agent to obtain sufficient quotations in accordance with the
terms hereof, the Adjusted Base Rate shall be determined without regard to
clause (a) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the Adjusted Base
Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or the Federal
Funds Rate, respectively. "Federal Funds Rate" means, for any day, the rate of
interest per annum (rounded upwards, if necessary, to the nearest whole multiple
of 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 (A) if such
day 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 and (B) if no such
rate is so published on such next succeeding business day, the Federal Funds
Rate for such day shall be the average rate quoted to the Agent on such day on
such transactions as determined by the Agent. "Prime Rate" means the per annum
rate of interest established from time to time by the Agent at its principal
office in Charlotte, North Carolina as its Prime Rate. Any change in the
interest rate resulting from a change in the Prime Rate shall become effective
as of 12:01 a.m. of the business day on which each change in the Prime Rate is
announced by the Agent. The Prime Rate is a reference rate used by the Agent in
determining interest rates on certain loans and is not intended to be the lowest
rate of interest charged on any extension of credit to any debtor. A "Cash Flow
Deficiency" shall exist at any time when the Debt to Cash Flow Ratio of The
Wyatt Company, on a consolidated basis, is 1.5 to 1 or greater, where "Debt to
Cash Flow Ratio" means the ratio of (i) Funded Debt to (ii) EBITDA, "EBITDA"
means, for any period, the sum of (i) net income, plus, to the extent deducted
in the calculation of net income, (ii) interest expense, income taxes,
depreciation and amortization, determined in accordance with GAAP, and "Funded
Exhibit F, page 2
<PAGE>
Debt" means, with respect to any person, without duplication, (i) all
indebtedness of such person for borrowed money, (ii) all purchase money
indebtedness of such person, including without limitation the principal portion
of all obligations of such person under capital leases, (iii) all guaranty and
other contingent obligations of such person with respect to Funded Debt of
another person, (iv) the maximum available amount of all standby letters of
credit or acceptances issued or created for the account of such person and (v)
all Funded Debt of another person secured by an encumbrance on any property of
such person, whether or not such Funded Debt has been assumed.
Any increase in the annual percentage rate will take the form of higher
quarterly interest payments.
If your loan were for $3,000.00 at 8% per year for seven (7) years and the
rate increased to 9% per year after the first interest payment but prior to the
first principal payment, then your quarterly interest payments would increase by
$7.50 until the first principal payment had been made, and by something less
than $7.50 during subsequent years as the principal amount is paid down and the
amount of interest payments decrease.
SECURITY: You are giving a security interest in common stock of the Wyatt
Company purchased or refinanced with the proceeds of this loan.
LATE CHARGE: If an interest payment is late you will be
charged interest on such payment at the Applicable
Rate plus 2%, and if a principal payment is fifty
(50) days or more late, you will be charged interest
on such payment at the Applicable Rate plus 2%.
PREPAYMENT: If you pay off early, you will not have to pay a penalty.
See your contract documents for any additional information about
nonpayment, default, any required repayment in full before the scheduled date,
and prepayment refunds and penalties.
- - --------------------------------------------------------------------------------
ITEMIZATION OF AMOUNT FINANCED
Itemization of Amount Financed of $_________________.
This entire amount will be paid to The Wyatt Company on your
behalf.
- - --------------------------------------------------------------------------------
Exhibit F, page 3
<PAGE>
I acknowledge receipt of the foregoing Truth in Lending Disclosures.
__________________________________
Printed Name:______________________
Date:______________________________
Exhibit F, page 4
<PAGE>
EXHIBIT G
THE WYATT COMPANY
BORROWING BASE CERTIFICATE
Date: ________________
TO: NationsBank, N.A.
Corporate Bank
6610 Rockledge Drive
Sixth Floor
Bethesda, Maryland 20817
ATTN: Michael R. Heredia
Vice President
This Borrowing Base Certificate, including the attached Borrowing Base
Computation (the "COMPUTATION") as of _____________ (the "COMPUTATION DATE"), is
delivered to NationsBank, N.A. ("AGENT"), as Agent for itself and for the other
Banks listed in the Third Amended and Restated Credit and Security Agreement
dated as of January 5, 1996, among The Wyatt Company (d/b/a Watson Wyatt
Worldwide), Wyatt Preferred Choice, LLC, Wyatt Preferred Choice, L.P., Wyatt
Investment Consulting, Inc. (collectively, the "BORROWERS"), the Agent and the
Banks party thereto (the "AGREEMENT"), in order to induce the Banks to make
Loans under the Agreement. Capitalized terms not defined herein have the
definitions provided in the Agreement.
(1) The information shown on the attached Computation is true and
correct as of the Computation Date. "Work in Process" shown on
the Computation has the same meaning as "unbilled Eligible
Receivables" in the Agreement. No amounts are included for
Subsidiaries or for account debtors located elsewhere than the
United States, British Columbia, Ontario and Quebec.
(2) As of the Computation Date, the Borrowers had the following
Material Subsidiaries:
(3) Revolving Credit Loan Facility: The Borrowing Base limit
described in Section 2.1(a)(ii) of the Agreement as of the
Computation Date is $___________, and the Aggregate Revolving
Credit Commitment as of the Computation Date is $___________. The
aggregate amount outstanding under Revolving Credit Loans and LOC
Obligations as of the Computation Date is $__________. The
availability under the Revolving Credit Loan facility is
therefore $_______________.
<PAGE>
(4) Employee Loan Facility: The Borrowing Base limit described in
Section 2.1(d)(i)(B) of the Agreement as of the Computation Date
is $____________ and the Employee Loan Commitment as of the
Computation Date is $______________. The aggregate amount
outstanding under Employee Loans as of the Computation Date is
$____________. The availability under the Employee Loan facility
is therefore $_______________.
(5) As of this date, all representations and warranties of the
Borrowers contained in the Agreement are true and correct in
every material respect and there exists no Event of Default or
Incipient Default under the Agreement.
THE WYATT COMPANY (d/b/a
Watson Wyatt Worldwide)
for itself and each other Borrower
By: ________________________
Name:_______________________
Title:______________________
Exhibit G, page 2
<PAGE>
EXHIBIT H
INITIAL TRANSACTION STATEMENT
Shares of Common Stock of
THE WYATT COMPANY
Par Value $1.00 per Share
1. REGISTERED OWNER: [Name, address, and Tax ID No. of
owner (Qualified Employee, pension
plan or personal holding company, as
applicable)]
2. REGISTERED PLEDGEE: NationsBank, N.A.
Corporate Bank
6th Floor
6610 Rockledge Drive
Bethesda, Maryland 20817
Tax ID No.: 54-0314875
3. DATE OF REGISTRATION OF TRANSFER AND PLEDGE:___________________________
4. NUMBER OF SHARES TRANSFERRED TO REGISTERED OWNER:______________________
5. NUMBER OF SHARES PLEDGED TO REGISTERED PLEDGEE:________________________
6. LIENS, RESTRICTIONS AND ADVERSE CLAIMS: Any purchaser of the subject shares
may be required to remit the purchase price directly to The Wyatt Company
(d/b/a Watson Wyatt Worldwide) to be applied in payment of certain
indebtedness of the Registered Owner to the Registered Pledgee, as agent
for itself and certain other banks.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS
ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
THE WYATT COMPANY (d/b/a Watson
Wyatt Worldwide)
By: ___________________________
Name: ___________________________
Title:___________________________
<PAGE>
EXHIBIT I
PERIODIC TRANSACTION STATEMENT
Dated: ______________
Shares of Common Stock of
THE WYATT COMPANY
Par Value $1.00 per Share
1. REGISTERED OWNER: [Name, address, and Tax ID No. of
owner Qualified Employee, pension
plan or personal holding company, as
applicable)]
2. REGISTERED PLEDGEE: NationsBank, N.A.
Corporate Bank
6th Floor
6610 Rockledge Drive
Bethesda, Maryland 20817
Tax ID No.: 54-0314875
3. NUMBER OF SHARES REGISTERED TO REGISTERED OWNER:
4. NUMBER OF SHARES PLEDGED TO REGISTERED PLEDGES:
5. LIENS, RESTRICTIONS AND ADVERSE CLAIMS: Any purchaser of the subject shares
may be required to remit the purchase price directly to The Wyatt Company
(d/b/a Watson Wyatt Worldwide) to be applied in payment of certain
indebtedness of the Registered Owner to the Registered Pledgee, as agent
for itself and certain other banks.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEE AS OF THE
TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO RIGHTS
ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR A
SECURITY.
THE WYATT COMPANY (d/b/a Watson
Wyatt Worldwide)
By: ___________________________
Name: ___________________________
Title:___________________________
<PAGE>
EXHIBIT J
AGREEMENT TO STOCK PLEDGE AGREEMENTS
In consideration of financial accommodations made by NationsBank, N.A., as
Agent for the Banks party to the Credit Agreement referred to below ("AGENT"),
to or at the request of The Wyatt Company (d/b/a Watson Wyatt Worldwide)
("WYATT"), Wyatt Preferred Choice, LLC, Wyatt Preferred Choice, L.P., and Wyatt
Investment Consulting, Inc. (collectively, the "BORROWERS"), and the mutual
covenants contained in that certain Third Amended and Restated Credit and
Security Agreement, dated as of January 5, 1996, among the Borrowers, the Agent
and the Banks signatory thereto (the "BANKS"), as said agreement may have been
or may be amended from time to time (the "CREDIT AGREEMENT"), and having
reviewed the Pledge Agreements executed and delivered in connection with
Employee Loans as identified on the attached schedule (which schedule identifies
all Pledge Agreements executed and delivered after ___________________), Wyatt
hereby reaffirms its prior acknowledgement of and agreement to certain of the
Pledge Agreements, and hereby further acknowledges and agrees to the terms and
conditions of each and every one of the Pledge Agreements.
This Agreement to Stock Pledge Agreements is executed and delivered with
the intent that Wyatt shall be bound by each of the Pledge Agreements and that
the Agent and the Banks shall rely hereon and thereon in making or participating
in Employee Loans.
Capitalized terms used but not defined herein shall have the meanings
stated in the Credit Agreement. As used herein, "PLEDGE AGREEMENTS" shall
include any and all amendments to the Pledge Agreements.
THE WYATT COMPANY (d/b/a Watson
Wyatt Worldwide)
By: ___________________________
Name: ___________________________
Title:___________________________
<PAGE>
Schedule of Employee Loans
and Pledge Agreements
Name Initial Number of Date
Loan Amount Shares Pledged
____________ ______________ ________________ ____________
<PAGE>
EXHIBIT K
FORM OF NOTICE OF BORROWING
TO: NATIONSBANK, N.A., as Agent
Corporate Bank
6610 Rockledge Drive, Sixth Floor
Bethesda, Maryland 20817
RE: Third Amended and Restated Credit and Security Agreement dated as of
January 5, 1996 among The Wyatt Company (d/b/a Watson Wyatt Worldwide),
Wyatt Preferred Choice, LLC, Wyatt Preferred Choice, L.P., Wyatt
Investment Consulting, Inc. (the "Borrowers"), NationsBank, N.A., as
Agent, Mellon Bank, N.A., NBD Bank and NationsBank, N.A. (as the same
may be amended, modified, extended or restated from time to time, the
"Credit Agreement")
DATE: _____________, 199__
- - --------------------------------------------------------------------------------
1. This Notice of Borrowing is made pursuant to the terms of the Credit
Agreement. All capitalized terms used herein unless otherwise defined
shall have the meanings set forth in the Credit Agreement.
2. Please be advised that:
______ (a) the Borrowers are requesting Revolving
Credit Loans in the amount of $__________ to
be funded on ____________, 199__ at the
interest rate option set forth in paragraph
3 below.
Subsequent to the funding of the requested
Revolving Credit Loans, the aggregate amount
of outstanding Revolving Credit Loans,
together with outstanding LOC Obligations,
will be $_________ which is less than or
equal to both (i) the Aggregate Revolving
Credit Commitment and (ii) the Borrowing
Base amount described in Section 2.1(a)(ii)
of the Credit Agreement, net of Employee
Loans.
______ (b) the Borrowers are requesting that a
portion of the current outstanding Revolving
Credit Loans in the amount of $__________ be
extended or converted at the interest rate
option set forth in paragraph 3 below.
______ (c) on behalf of the Qualified Employees,
the Borrowers are requesting Employee Loans
in the amount of $__________ to be funded on
____________, 199__.
<PAGE>
Subsequent to the funding of the requested Employee
Loans, the aggregate amount of outstanding Employee
Loans will be $_________ which is less than or equal
to both (i) the Employee Loan Commitment and (ii) the
Borrowing Base amount described in Section
2.1(d)(i)(B), net of Revolving Credit Loans and LOC
Obligations.
Subsequent to the funding of each individual Employee
Loan, the amount funded in connection with such
Employee Loan will not exceed the book value of the
shares of stock to be purchased or refinanced with
the proceeds of such Employee Loan, as computed in
accordance with Section 2.1(d) of the Credit
Agreement.
3. The interest rate option applicable to the requested Revolving Credit
Loans (or the extension or conversion of all or part of the existing
Revolving Credit Loans), as set forth above, shall be:
a. ________ the Base Rate
b. ________ the Eurodollar Rate plus the Applicable
Percentage for an Interest Period of:
________ one month
________ two months
________ three months
________ six months
4. The representations and warranties set forth in the Loan Documents are
true and correct in all material respects as if made on the date hereof
and shall be true and correct as of the date of the borrowing (or
continuation or conversion thereof).
5. As of the date hereof, no Incipient Default or Event of Default has
occurred and is continuing or would be caused by this Notice of
Borrowing or the making of Loans requested hereby and no Incipient
Default or Event of Default shall exist as of the date of the borrowing
(or continuation or conversion thereof).
7. No material adverse effect has occurred in the financial condition
of the Borrowers since the Closing Date.
8. No Margin Stock Event has occurred.
Exhibit K, page 2
<PAGE>
THE WYATT COMPANY (d/b/a Watson
Wyatt Worldwide) for
itself and each other Borrower
By:___________________________
Name:________________________
Title:_______________________
Exhibit K, page 3
<PAGE>
EXHIBIT L
SOLVENCY CERTIFICATE
The undersigned treasurer of [NAME OF BORROWER] ("______"), a
_________________, is familiar with the properties, businesses, assets and
liabilities of [NAME OF BORROWER] and is duly authorized to execute this
certificate on behalf of [NAME OF BORROWER].
Reference is made to that Third Amended and Restated Credit and Security
Agreement dated as of January 5, 1996 among The Wyatt Company (d/b/a Watson
Wyatt Worldwide), Wyatt Preferred Choice, LLC, Wyatt Preferred Choice, L.P., and
Wyatt Investment Consulting, Inc. (the "Borrowers"), NationsBank, N.A., as Agent
(the "Agent"), and Mellon Bank, N.A., NBD Bank and NationsBank, N.A. (the
"Banks") (as the same may be amended, modified, extended or restated from time
to time, the "Credit Agreement"). All capitalized terms used and not defined
herein have the meanings stated in the Credit Agreement.
2. The undersigned certifies that he has made such investigation and
inquiries as to the financial condition of [name of Borrower] as he deems
necessary and prudent for the purpose of providing this Certificate. The
undersigned acknowledges that the Agent and the Banks are relying on the truth
and accuracy of this Certificate in connection with making of the Loans under
the Credit Agreement.
3. The undersigned certifies that the financial information, projections
and assumptions which underlie and form the basis for the representations made
in this Certificate were reasonable when made and were made in good faith and
continue to be reasonable as of the date hereof.
BASED ON THE FOREGOING, the undersigned certifies that, both before and
after giving effect to the Loans:
A. [NAME OF BORROWER] has assets having a fair saleable value which
exceeds its liabilities.
B. [NAME OF BORROWER] is able to and anticipates that it will be able to
meet its debts as they mature.
C. [NAME OF BORROWER] has adequate capital to conduct the business in
which it is and proposes to be engaged.
D. The representations and warranties of [NAME OF BORROWER] set forth in
the Credit Agreement are true and correct.
E. No Incipient Default or Event of Default under the Credit Agreement
exists or would exist.
<PAGE>
F. The Financial Statements delivered to the Banks pursuant to Section
5.1(i) of the Credit Agreement fairly and completely present the
financial condition of [NAME OF BORROWER].
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of January, 1996, in his capacity as the treasurer of [NAME OF
BORROWER].
______________________________
[NAME OF TREASURER]
Title: Treasurer of __________
Exhibit L, page 2
<PAGE>
STATE OF ______________ )
)
COUNTY OF _____________ )
VERIFICATION
The undersigned, being first duly sworn, deposes and says that he is
the treasurer of [NAME OF BORROWER], a ________________, that he has read the
foregoing and to his personal knowledge the matters and statements contained
therein are true and accurate.
This the ____ day of January, 1996.
_____________________________
Sworn to and subscribed before me
this ___ day of December, 1995.
__________________________________
Notary Public
My Commission Expires:
__________________________________
<PAGE>
SCHEDULE 1
SUBSIDIARIES OF THE WYATT COMPANY
Ownership
by the
Country Company Company
________ ________ _________
United States (including Puerto Wyatt Data Services, Inc. 100%
Rico), Canada, and Taiwan Wyatt Asset Services, Inc. 100%
Wyatt Investment Consulting, Inc. 100%(1)
Wyatt Software Services, Inc. 100%
David Corporation 100%(2)
Wyatt Preferred Choice, L.L.C. 100%(3)
Wyatt Preferred Choice, L.P. 100%(4)
Argentina The Wyatt Company de Argentina, S.A. 100%
Australia WyComp Pty. Ltd. 100%
Barbados Wyatt Management Company (Barbados)
Limited 100%
Belgium The Wyatt Company, S.A. 50.1%(5)
Canada Wyatt Canadian Holdings Limited I 100%
The Wyatt Company, Limited 100%(6)
Colombia Actuarios Asociados Wyatt S.A. 100%
France The Wyatt Company S.A.R.L. 50.1%(5)
Germany Wyatt Bode Grabner GmbH 50%(7)
The Wyatt Company GmbH 50.1%(5)
Hong Kong and Macau The Wyatt Company (H.K.) Limited 100%
Indonesia P.T. Wyatt Purbajaga 60%(7)
Italy The Wyatt Company, S.r.l. 50.1%(5)
Japan The Wyatt Company K.K. 100%
Korea The Wyatt Company, Limited 100%(8)
<PAGE>
SCHEDULE 1
SUBSIDIARIES OF THE WYATT COMPANY
PAGE 2
Ownership
by the
Country Company Company
Malaysia The Wyatt Company Sendirian Berhad 70%
Mexico Wyatt Consultores, S.A. de C.V. 100%
Netherlands The Wyatt Company B.V. 50.1%(5)
New Zealand The Wyatt Company (NZ) Ltd. 100%
Norway The Wyatt Company A/S 50.1%(5)
Aktuarsoftware A/S 50.1%(5)
Philippines The Wyatt Company (Philippines), Inc. 40%
Portugal The Wyatt Company Holdings Limited 100%(9)
Singapore The Wyatt Company (S.E.A.) Pte. Ltd. 100%
Spain The Wyatt Company de Espana, S.A. 50.1%(5)
Sweden The Wyatt Company AB 50.1%(5)
Switzerland The Wyatt Company S.A. 50.1%(5)
United Kingdom The Wyatt Company Holdings Limited 100%
The Wyatt Company (U.K.) Limited 100%(10)
Wyatt Financial Services Limited 100%(10)
Watson Wyatt Holdings (Europe)Limited 50.1%(11)
- - -----------------------------------------------------------------------
1 1% owned by Wyatt Asset Services, Inc. and 99% owned by the Company
2 100% owned by Wyatt Software Services, Inc.
3 1% owned by Wyatt Asset Services, Inc. and 99% owned by the Company.
4 The Wyatt Company is the sole General Partner and Wyatt Preferred
Choice, L.L.C. is the sole Limited Partner
5 Represents derivative ownership since 100% owned by Watson Wyatt Holdings
(Europe) Limited
6 100% owned (including ownership through one intermediate subsidiary) by
Wyatt Canadian Holdings Limited I
7 Joint Venture
8 Branch office of The Wyatt Company, Limited
9 Branch office of The Wyatt Company Holdings, Limited
10 Owned by The Wyatt Company Holdings Limited
11 49.9% owned by R. Watson & Sons
<PAGE>
SCHEDULE 2
PERMITTED NON-COMPLIANCE
SECTIONS 4.2(B),4.6(A),4.10
None.
<PAGE>
SCHEDULE 3
PERMITTED LITIGATION
SECTION 4.5
None.
<PAGE>
SCHEDULE 4
JURISDICTIONS - PLACES OF BUSINESS
THE WYATT COMPANY
CANADA
CALGARY
First Canadian Centre
2700 West Tower
350-7th Avenue, S.W.
Calgary, Alberta, Canada T2P 3N9
MONTREAL
Suite 2400
600 de Maisonneuve Boulevard West
Montreal, Quebec, Canada H3A 3J2
OTTAWA
112 Kent Street, Suite 1800
Ottawa, Ontario K1P5P2
TORONTO
Suite 1100
One Queen Street East
Toronto, Ontario, Canada M5C 2Y4
VANCOUVER
Suite 700
401 West Georgia Street
Vancouver, British Colimbia, V6B 5A1
UNITED STATES
ATLANTA
Suite 432
4170 Ashford-Dunwoody Road, N.E.
Atlanta, Georgia 30319
BOSTON
80 William Street
Wellesley Hills, Massachusetts 02181
CHICAGO
Suite 2400
303 West Madison Street
Chicago, Illinois 60606-3308
<PAGE>
Page 2
CLEVELAND
Suite 1400
Ohio Savings Plaza
1801 E. 9th Street
Cleveland, Ohio 44114
COLUMBUS
Suite 1000
21 East State Street
Columbus, Ohio 43215
DALLAS
Suite 2400, Lock Box 58
2121 San Jacinto Street
Dallas, Texas 75201
DENVER
Suite 2900
999 Eighteenth Street
Denver, Colorado 80202
DETROIT
Suite 500
One Northwestern Plaza
28411 Northwestern Highway
Southfield, Michigan 48034
GRAND RAPIDS
Suite 200
1001 Medical Park Drive, S.E.
Grand Rapids, Michigan 49546
HONOLULU
Suite 2340
Grosvenor Center
737 Bishop Street
Honolulu, Hawaii 96813
HOUSTON
Suite 500
4800 Sugar Grove Boulevard
Stafford, Texas 77477-2627
IRVINE
Suite 930
One Park Plaza
Irvine, California 92714-5904
<PAGE>
Page 3
LOS ANGELES
Suite 700
15303 Ventura Boulevard
Sherman Oaks, California 91403
MARLBOROUGH
Boston Benefits Administrative Center
500 Nickerson Road
Marlborough, MA 01752-4697
MEMPHIS
6750 Poplar Avenue
Suite 501
Memphis, Tennessee 38138
MIAMI
Suite 210
10689 North Kendall Drive
Miami, Florida 33176
MILWAUKEE
Suite 1140
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
MINNEAPOLIS
Suite 1500
8400 Normandale Lake Boulevard
Minneapolis, Minnesota 55437
NEW JERSEY
Overlook at Great Notch
150 Clove Road
P. O. Box 406
Little Falls, New Jersey 07424
NEW YORK
461 Fifth Avenue
New York, New York 10017-8383
PHILADELPHIA
Suite 1800
1600 Market Street
Philadelphia, Pennsylvania 19103
PHOENIX
Suite 800
100 West Clarendon
Phoenix, Arizona 85013
<PAGE>
Page 4
PORTLAND
Suite 2120
1211 S.W. Fifth Avenue
Portland, Oregon 97204
RICHMOND
1021 East Cary Street
Suite 1801
Richmond, VA 23219
SAN DIEGO
Suite 300
9339 Genesee Avenue
San Diego, California 92121
SAN FRANCISCO
Suite 1400
345 California Street
San Francisco, California 94104
SANTA CLARA
5201 Great American Parkway
Suite 320
Santa Clara, California 95054
SEATTLE
Suite 1910
Columbia Seafirst Center
701 Fifth Avenue
Seattle, Washington 98104-7053
STAMFORD
7th Floor
1055 Washington Boulevard
Stamford, Connecticut 06901
ST. LOUIS
8182 Maryland Avenue
Suite 1001
St. Louis, Missouri 63105-3786
<PAGE>
Page 5
WYATT PREFERRED CHOICE L.L.C.
4170 Ashford-Dunwood Road, N.E., Suite 432
Atlanta, Georgia 30319
80 William Street
Wellesley Hills, Massachusetts 02181
303 West Madison Street, Suite 2400
Chicago, Illinois 60606-3308
1801 E. 9th Street, Suite 1400
Ohio Savings Plaza
Cleveland, Ohio 44114
21 East State Street, Suite 1000
Columbus, Ohio 43215
2121 San Jacinto Street
Suite 2400, Lock Box 58
Dallas, Texas 75201
999 Eighteenth Street, Suite 2900
Denver, Colorado 80202
28411 Northwestern Highway, Suite 500
One Northwestern Plaza
Southfield, Michigan 48034
8000 Bay Meadows Way, Room 4-3-006
Jacksonville, Florida 32256
<PAGE>
Page 6
1850 M. Street, N.W., Suite 750
Washington, D.C. 20036
Grosvenor Center, Suite 2340
737 Bishop Street
Honolulu, Hawaii 96813
4800 Sugar Grove Boulevard, Suite 500
Stafford, Texas 77477-2627
15303 Ventura Boulevard, Suite 7090
Sherman Oaks, California 91403
6750 Poplar Avenue, Suite 501
Memphis, Tennessee 38138
10689 North Kendall Drive, Suite 210
Miami, Florida 33176
411 East Wisconsin Avenue, Suite 505
Milwaukee, Wisconsin 53202
6483 City West Parkway
Eden Prairie, Minnesota 55344-7835
Overlook at Great Notch
P.O. Box 406
150 Clove Road
Little Falls, New Jersey 07424
<PAGE>
Page 7
461 Fifth Avenue
New York, New York 10017-8383
1600 Market Street, Suite 100
Philadelphia, Pennsylvania 19103
100 West Clarendon, Suite 1800
Phoenix, Arizona 85013
1211 S.W. Fifth Avenue, Suite 2120
Portland, Oregon 97204
9339 Genessee Avenue, Suite 300
San Diego, California 92121
345 California Street, Suite 1400
San Francisco, California 94104
5201 Great America Parkway, Suite 300
Santa Clara, California 95054
Columbia Seafirst Center, Suite 1910
701 Fifth Avenue
Seattle, Washington 98104-7053
1055 Washington Boulevard, 7th Floor
Stamford, Connecticut 06901
1500 K. Street, N.W.
Washington, D.C. 20005
<PAGE>
Page 8
1021 East Cary Street
Suite 1801
Richmond, VA 23219
<PAGE>
Page 9
WYATT PREFERRED CHOICE L.P.
80 William Street
Wellesley Hills, Massachusetts 02181
461 Fifth Avenue
New York, New York 10017-8383
Grosvenor Center, Suite 2340
737 Bishop Street
Honolulu, Hawaii 96813
<PAGE>
Page 10
WYATT ASSET SERVICES, INC.
601 13th Street, N.W., Suite 900
Washington, D.C. 20005-3808
<PAGE>
Page 11
WYATT INVESTMENT CONSULTING, INC.
4170 Ashford-Dunwood Road, N.E., Suite 432
Atlanta, Georgia 30319
303 West Madison Street, Suite 2400
Chicago, Illinois 60606-3308
1400 Ohio Savings Plaza
Cleveland, Ohio 44114
345 California Street
Suite 1400
San Francisco, California 94104
80 William Street
Wellesley Hills, Massachusetts 02181
<PAGE>
SCHEDULE 5
BURDENSOME DOCUMENTS
SECTION 4.13
None.
<PAGE>
SCHEDULE 6
REAL PROPERTY
SECTION 4.14
Parque Reforma Piso 2
Campos Eliseos 400
Col. Lomas de Chapultepec
Mexico City, Mexico 11000
(Office condominium on 2nd floor of commercial office building.)
<PAGE>
SCHEDULE 7
INDEBTEDNESS
Section 7.2(a)
Minimum Lease Commitments
As of June 30, 1995
Office Leases $196,598,711
Equipment Leases 3,323,579
___________
Total Aggregate Commitment $199,922,290
