-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, aEC9EnFesbeWQ+Ard8ur6Mr7Y+IUSwFVrKdW6bQs6pcYDF+d+/jLBkJZVfNEGrKj wUwPSXXH1MJ/PffXx23SRg== 0000109758-95-000014.txt : 19950814 0000109758-95-000014.hdr.sgml : 19950814 ACCESSION NUMBER: 0000109758-95-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: CSE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERIDIAN CORP CENTRAL INDEX KEY: 0000109758 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER & OFFICE EQUIPMENT [3570] IRS NUMBER: 520278528 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01969 FILM NUMBER: 95561717 BUSINESS ADDRESS: STREET 1: 8100 34TH AVE S CITY: MINNEAPOLIS STATE: MN ZIP: 55425 BUSINESS PHONE: 6128538100 FORMER COMPANY: FORMER CONFORMED NAME: CONTROL DATA CORP /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COMMERCIAL CREDIT CO DATE OF NAME CHANGE: 19680910 10-Q 1 10-Q 06/30/95 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C., 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 Commission file number 1-1969 CERIDIAN CORPORATION (Exact name of registrant as specified in its charter) Delaware 52-0278528 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8100 34th Avenue South, Minneapolis, Minnesota 55425 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (612)853-8100 (Former name, former address and former fiscal year if changed from last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO The number of shares of registrant's Common Stock, par value $.50 per share, outstanding as of July 31, 1995, was 45,696,230. CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q INDEX Pages Part I. Financial Information Item 1. Financial Statements Consolidated Statements of Operations for the three and six month periods ended June 30, 1995 and 1994 ............................. 3 Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994 ................ 4 Consolidated Statements of Cash Flows for the six month periods ended June 30, 1995 and 1994 ......... 5 Notes to Consolidated Financial Statements .............. 6-7 In the opinion of the Company, the unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals, except as set forth in the notes to consolidated financial statements) necessary to present fairly the financial position as of June 30, 1995, and results of operations for the three and six month periods and cash flows for the six month periods ended June 30, 1995 and 1994. The results of operations for the six month period ended June 30, 1995, are not necessarily indicative of the results to be expected for the full year. The consolidated financial statements should be read in conjunction with the notes to consolidated financial statements. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................. 8-16 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders.. 17 Item 6. Exhibits and Reports on Form 8-K .................... 17 Signature ......................................................... 18 - 2 - FORM 10-Q PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF OPERATIONS Ceridian Corporation (Unaudited) and Subsidiaries For Periods Ended June 30, Three Months Six Months 1995 1994 1995 1994 (Dollars in millions, except per share data) Revenue Product sales $ 135.1 $ 124.3 $ 273.3 $ 236.8 Services 118.4 94.2 238.0 203.0 Total 253.5 218.5 511.3 439.8 Cost of revenue Product sales 100.6 99.0 208.1 189.3 Services 59.0 44.5 110.1 92.8 Total 159.6 143.5 318.2 282.1 Gross profit 93.9 75.0 193.1 157.7 Operating expenses Selling, general and administrative 55.4 48.2 110.2 97.0 Technical expense 16.1 11.7 32.3 22.6 Other expense (income) 0.7 0.1 0.2 0.5 Earnings before interest and taxes 21.7 15.0 50.4 37.6 Interest income 2.8 3.2 5.5 5.1 Interest expense (0.4) (0.4) (0.7) (0.8) Earnings before income taxes 24.1 17.8 55.2 41.9 Income tax provision 2.1 1.4 4.8 3.3 Net earnings $ 22.0 $ 16.4 $ 50.4 $ 38.6 Primary earnings per share $ 0.40 $ 0.29 $ 0.94 $ 0.70 Fully diluted earnings per share $ 0.38 $ 0.29 $ 0.88 $ 0.69 Weighted average common shares and equivalents (000's) Primary 47,068 45,840 46,944 45,716 Fully diluted 57,452 56,224 57,328 56,100 See notes to consolidated financial statements.
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FORM 10-Q CONSOLIDATED Ceridian Corporation BALANCE SHEETS (Unaudited) and Subsidiaries June 30, December 31, Assets 1995 1994 (In Millions) Cash and equivalents $ 114.0 $ 116.8 Short-term investments 84.5 54.6 Trade and other receivables, net 157.3 141.4 Inventories 28.3 25.8 Other current assets 23.8 7.5 Total current assets 407.9 346.1 Investments and advances 5.3 14.5 Property, plant and equipment, net 102.9 97.8 Prepaid pension cost 83.6 78.0 Goodwill and other intangibles 123.8 128.0 Capitalized software and other noncurrent assets 40.7 25.9 Total assets $ 764.2 $ 690.3 Liabilities And Stockholders' Equity Short-term debt and current portion of long-term obligations $ 1.5 $ 1.2 Accounts payable 28.2 30.7 Customer advances 58.9 17.1 Deferred income 76.6 68.6 Accrued taxes 57.9 56.9 Employee compensation and benefits 44.4 53.5 Restructure reserves, current portion 17.3 18.8 Other accrued expenses 61.9 60.0 Total current liabilities 346.7 306.8 Long-term obligations, less current portion 12.9 17.5 Deferred income taxes 8.6 7.7 Restructure reserves, less current portion 55.7 69.5 Employee benefit plans 81.4 80.5 Deferred income and other noncurrent liabilities 21.8 21.8 Stockholders' equity 237.1 186.5 Total liabilities and stockholders' equity $ 764.2 $ 690.3 See notes to consolidated financial statements.
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FORM 10-Q CONSOLIDATED STATEMENTS OF Ceridian Corporation CASH FLOWS (Unaudited) and Subsidiaries For Periods Ended June 30, Six Months 1995 1994 (In Millions) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 50.4 $ 38.6 Adjustments to reconcile net earnings to net cash provided by (used for) operating activities: Depreciation 15.9 12.6 Amortization of deferred assets 6.5 1.8 Restructure reserves utilized (15.6) (34.7) Net change in working capital items: Trade and other receivables (16.0) (5.6) Inventories (2.5) 3.6 Other current assets (6.3) 1.6 Accounts payable 5.2 (4.8) Customer advances 41.7 (38.8) Deferred income 8.1 26.6 Other current liabilities (6.2) 8.0 Other 1.0 -- Net cash provided by (used for) operating activities 82.2 8.9 CASH FLOWS FROM INVESTING ACTIVITIES Expended for capital assets and software (38.4) (20.3) Expended for business acquisitions (9.8) (56.3) Short-term investments (29.9) 39.7 Proceeds from sales of businesses, investments and capital assets -- 33.5 Other 0.3 0.2 Net cash provided by (used for) investing activities (77.8) (3.2) CASH FLOWS FROM FINANCING ACTIVITIES Short-term debt, net -- (1.6) Repayment of other debt (4.0) -- Proceeds from sale of 5-1/2% Preferred Stock -- 15.5 Preferred stock dividends (6.5) (6.5) Exercise of stock options and other 3.1 3.6 Net cash provided by (used for) financing activities (7.4) 11.0 Effect of exchange rate changes on cash 0.2 (0.3) NET CASH PROVIDED (USED) (2.8) 16.4 Cash and equivalents at beginning of period 116.8 112.4 Cash and equivalents at end of period $ 114.0 $ 128.8 See notes to consolidated financial statements.
- 5 - FORM 10-Q CERIDIAN CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1995 (Dollars in millions) (Unaudited)
RECEIVABLES June 30, December 31, 1995 1994 Trade and Other Receivables, Net: Trade, less allowance of $6.1 and $6.2 $ 76.8 $ 73.9 Unbilled 73.6 57.3 Other 6.9 10.2 Total $ 157.3 $ 141.4
FOREIGN CURRENCY FORWARD CONTRACTS In March 1995, the Company's subsidiary in the United Kingdom ("CDCL UK") entered into an agreement with its principal bank to purchase U.S. dollars, for an aggregate amount of 5,150,256 pounds sterling, at specified dates, generally on a monthly basis, between November 1995 and September 1998. The U.S. dollar value of these contracts at June 30, 1995 was $8.0 which was not materially different from the value at inception, and no amount of deferred gain or loss had been amortized to operations. The forward contracts will serve as a hedge of an identifiable foreign currency commitment; namely, the delivery of goods manufactured in a U.S. facility of the Company to satisfy a customer contract of CDCL UK. The forward contracts are intended to eliminate economic and accounting risks arising from fluctuations in the exchange rate between the two currencies by matching forward contract maturities to customer contract performance. Any gain or loss on the forward contracts, measured by the difference between the contract rate and the spot rate at the current balance sheet date, will be deferred (unless the deferral is expected to lead to recognizing losses in future periods) and included in cost of sales along with the related inventoried costs, effectively converting the dollar costs to pounds. - 6 - FORM 10-Q CERIDIAN CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements June 30, 1995 (Dollars in millions) (Unaudited)
STOCKHOLDERS' EQUITY June 30, December 31, 1995 1994 5-1/2% Cumulative Convertible Exchangeable Preferred Stock, $100 par value (liquidation preference of $236.0) Shares issued and outstanding 47,200 $ 4.7 $ 4.7 Common Stock Par value - $.50 Shares authorized - 100,000,000 Shares issued - 45,720,195 and 45,515,123 22.9 22.8 Shares outstanding - 45,665,955 and 45,401,593 Additional paid-in capital 859.4 849.6 Accumulated deficit (620.2) (664.2) Foreign currency translation adjustments (2.1) (2.2) Restricted stock awards (22.3) (17.6) Pension liability adjustment (4.2) (4.2) Treasury stock, at cost (54,240 and 113,530 common shares) (1.1) (2.4) Total stockholders' equity $ 237.1 $ 186.5
INTEREST RATE COLLARS AND SWAPS During second quarter 1995, Ceridian executed a series of six interest rate collar transactions of $100.0 each for the purpose of hedging interest rate risk on invested customer deposits held in its tax filing trust. The counterparties to these arrangements are domestic commercial banks with debt ratings of A or better. Under current accounting standards, neither the collar arrangements nor the related trust investments and offsetting liability to customers are reflected in the Company's balance sheet. These arrangements, which do not require collateral, provide for the bank to pay Ceridian the amount by which a certain index of short-term interest rates falls below a floor strike level (5% or 5.5%). Alternatively, when that index exceeds a cap strike level (ranging from 6.15% to 8.47% and averaging 7.45%), Ceridian pays out the excess above the cap strike level. The remaining terms of the collars range from 11 to 41 months. In addition to the collar arrangements, the Company continued to hold at June 30, 1995, three interest rate swap agreements, maturing in the first half of 1996, with an A-rated financial institution for an aggregate notional amount of $75.0 with no collateral required. The risk of accounting loss through non-performance by the counterparties under any of these arrangements is considered negligible. - 7 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations For the quarter ended June 30, 1995, Ceridian Corporation (the "Company") reported net earnings of $22.0 million, or $.38 per fully diluted share of common stock, on revenue of $253.5 million, compared to net earnings of $16.4 million, or $.29 per fully diluted common share, on revenue of $218.5 million for the second quarter 1994. For the six months ended June 30, 1995, the Company reported net earnings of $50.4 million, or $.88 per fully diluted share of common stock, on revenue of $511.3 million, compared to net earnings of $38.6 million, or $.69 per fully diluted common share, on revenue of $439.8 million for the first half of 1994. The following table sets forth revenue for the Company, its two industry segments and the businesses that comprise those segments for the three and six month periods ended June 30, 1995 and June 30, 1994, respectively: For Periods Ended June 30, Three Months Six Months 1995 1994 1995 1994 (Dollars in millions) Information Services Segment Arbitron $ 36.4 $ 31.3 $ 64.6 $ 59.7 Ceridian Employer Services 90.0 65.9 190.4 143.3 Other Services (1) -- 0.8 -- 5.4 Total Information Services 126.4 98.0 255.0 208.4 Defense Electronics Segment Computing Devices International 127.1 120.5 256.3 231.4 Total Revenue $ 253.5 $ 218.5 $ 511.3 $ 439.8 (1) Primarily consists of revenue from TeleMoney Services and the Company's related network and computer center operations, which were sold in May 1994. - 8 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations (cont.) The following table sets forth the percentage of the Company's total revenue by industry segment, the gross profit of each of the Company's industry segments as a percentage of that segment's revenue, and certain items in the consolidated statements of operations as a percentage of total revenue, for the periods indicated. For Periods Ended June 30, Three Months Six Months 1995 1994 1995 1994 Revenue: Information Services 49.9% 44.8% 49.9% 47.4% Defense Electronics 50.1% 55.2% 50.1% 52.6% Total revenue 100.0% 100.0% 100.0% 100.0% Gross profit: Information Services 52.8% 52.3% 55.3% 53.9% Defense Electronics 21.4% 19.8% 20.3% 19.6% Total gross profit 37.0% 34.4% 37.8% 35.9% Operating expenses Selling, general and administrative 21.9% 22.1% 21.6% 22.1% Technical expense 6.4% 5.4% 6.3% 5.1% Other expense (income) 0.3% 0.0% 0.0% 0.1% Total operating expenses 28.5% 27.5% 27.9% 27.3% Earnings before interest and taxes 8.6% 6.9% 9.9% 8.5% Interest income (expense) 0.9% 1.3% 0.9% 1.0% Earnings before taxes 9.5% 8.1% 10.8% 9.5% Income tax provision 0.8% 0.6% 0.9% 0.8% Net earnings 8.7% 7.5% 9.9% 8.8% Revenue. The Company's revenue growth of 16.0% and 16.3% in the quarterly and six month periods, respectively, was primarily due to Information Services, whose revenue increased 28.9% in the quarterly comparison and 22.4% in the six month comparison. Employer Services was the most significant contributor to this increase, reporting revenue growth of 36.6% and 32.9% in the respective quarterly and year-to-date comparisons. Almost 40% of Employer Services' revenue growth in quarterly and year-to-date comparisons was due to acquisitions made during 1994, principally Tesseract Corporation ("Tesseract") and User Technology Services, Inc. Apart from acquisitions, Employer Services' revenue - 9 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations (cont.) increased 20% in the year-to-date comparison, which included an increase in the average annual yield on the investment of payroll tax filing deposits of 188 basis points. Excluding additional revenue derived from increased investment yields, Employer Services' revenue increased 13% in the year-to- date comparison. This internal revenue growth was primarily due to new customer installations for payroll processing services and a 20% increase in average invested tax filing balances to $1.1 billion, reflecting growth in the tax filing customer base. The annualized revenue value of orders received by Employer Services during the first half of 1995 increased by more than 20% compared to the year earlier period, although such growth could moderate if significant numbers of potential payroll processing customers elect to defer placing an order until the introduction of Employer Services' enhanced payroll processing system in 1996. Because of the significance to Employer Services' revenue of investment income from tax filing deposits, and the interest rate sensitivity of that income, the Company entered into a series of six interest rate collar transactions, each with a notional amount of $100 million, during the second quarter 1995. These transactions, along with three interest rate swap transactions with an aggregate notional amount of $75 million, are described more fully in the financial statement note entitled "Interest Rate Swaps and Collars." On July 13, 1995, the Company announced that it had agreed to acquire Resumix, Inc., which provides skills management software and services that enable an organization to manage large volumes of incoming resume data to identify qualified candidates for hire and match them with available staffing needs, and to manage the skills of its existing work force by placing current employees in new jobs or projects. Resumix's 1994 revenue was $21 million. Consideration for the acquisition, which is subject to the approval of Resumix's shareholders, will be shares of the Company's common stock. The Company expects to account for the transaction as a pooling of interests. Arbitron's second quarter 1995 revenue increased 16.0% from the year earlier quarter, which also resulted in an 8.3% revenue increase in the six month comparison. Revenue from radio audience measurement services and analytical software increased 10.9% and 9.6% in the quarterly and year-to- date comparisons, respectively, due to an increased rate of customer renewals (which in 1995 have also tended to occur earlier in the year), a higher percentage of syndicated ratings customers also subscribing for analytical software applications, and price increases related to increases in the sample size for radio surveys. In the second quarter 1995, the revenue increase from radio was complemented by a revenue increase resulting from the Company's year-end 1994 exchange of its interest in the Competitive Media Reporting ("CMR") joint venture for an interest in the Scarborough Research Partnership ("SRP"). As a result of this transaction, Arbitron no longer derives revenue from the sale of commercial - 10 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations (cont.) monitoring services provided by CMR, but SRP's results are consolidated with Arbitron's. SRP's revenue is heavily weighted toward the second, third and fourth quarters of each year, coinciding with deliveries of the Scarborough Report. Computing Devices' revenue increased 5.5% in the quarterly comparison and 10.8% in the six month comparison, due to 18% and 27% revenue increases in the respective periods in its international operations, principally Canada. Although about 60% of the year-to-date revenue increase from international operations was attributable to the Iris contract to provide a communications system to the Canadian defense department, performance under that contract has progressed to the point that the Company does not expect it to be the source of revenue increases in future periods. The balance of the revenue increase from international operations was primarily attributable to ground systems products of the Canadian operations, particularly a $105 million, multi-year contract to develop and produce a light armored vehicle reconnaissance system, and to reconnaissance and avionics contracts in the United Kingdom operations. Revenue from Computing Devices' U.S. operations declined about 5% in the year-to-date comparison. For all of 1995, Computing Devices expects its orders to be about 15% below the level achieved in 1994, when it achieved its highest order year ever. Gross Margin. The Company's gross margin improvement in the quarterly and year-to-date comparisons reflected margin improvements in each of industry segments and the relatively greater revenue growth in the Information Services segment, which has higher gross margins than the Defense Electronics segment. The improvement in Information Services primarily reflected the very low gross margin for TeleMoney prior to its sale in May 1994, and an increase in the gross margin in Arbitron in both the quarterly and year-to-date comparisons. Arbitron's improvement was primarily a function of revenue mix, as low margin revenue from the sale of commercial monitoring services provided by CMR did not continue in 1995 as a result of the CMR/SRP transaction, and higher margin revenue from radio audience measurement services and analytical software increased. Employer Services' gross margin increased only a small amount in the quarterly and year-to-date comparisons, as improvements that would otherwise have been expected to result from higher business volume were mostly offset by incremental costs associated with the transition of customers to a national telephone customer support center (a transition that was completed in the second quarter 1995), and with ongoing projects to establish a centralized payroll data processing system and to upgrade Employer Services' management information systems. Incremental costs associated with the centralization of payroll processing, particularly to provide duplicate processing of payrolls at district offices and at the centralized facilities while customers are transitioned to the enhanced payroll processing software, are expected to put pressure on Employer Services' margins in future periods. - 11 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations (cont.) The increase in Computing Devices' gross margin in the quarterly and year-to-date comparisons was primarily due to improved gross margins in Computing Devices' U.S. operations in both comparative periods and an increase in the gross margin on the Iris contract in the second quarter 1995. The margin improvement in the U.S. operations reflected the completion of certain contracts, the movement of other contracts from the development phase into the production phase, and the benefits of reduced employment levels. The margin increase in connection with the Iris contract reflected the achievement of certain contract milestones and the corresponding release of certain holdbacks. Partially offsetting these improvements were increased costs in the United Kingdom operations in the second quarter 1995 reflecting provisions for additional costs to complete the development contract for the Eurofighter 2000 aircraft and for consolidating facilities. Operating Expenses. The Company's operating expenses (selling, general and administrative ("SG&A") expenses, technical expense and other expense) increased in both the three and six month comparisons at a faster rate than its revenue increase. This was true in both industry segments, with the greatest increase as a percentage of revenue occurring in technical expense. Information Services' technical expense as a percentage of revenue increased from 4.9% and 4.7% of revenue in the second quarter and first half of 1994, respectively, to 6.1% and 6.6% of revenue in the comparable 1995 periods. Virtually all of this segment's increase in technical expense, both in dollars and as a percentage of revenue, was in Employer Services, reflecting the June 1994 acquisition of Tesseract and spending in connection with the enhancement of its payroll processing software. An increase in research and development expenses in Computing Devices was the primary factor in causing its technical expense to increase from 5.8% and 5.5% of revenue in the second quarter and first half of 1994, respectively, to 6.6% and 6.1% of revenue in the comparable 1995 periods. SG&A expenses for the Company as a whole decreased somewhat as a percentage of revenue in the three and six month comparisons, even though such expenses increased somewhat as a percentage of revenue for each industry segment in the quarterly comparison (from 33.6% to 33.9% for Information Services and from 7.2% to 7.8% for Defense Electronics) and were little changed as a percentage of revenue in the six month comparison (Information Services decreased from 33.5% to 33.4% and Defense Electronics increased from 7.6% to 7.8%). This primarily reflects certain expenses, such as the compensation expense associated with the Company's performance restricted stock plan, that were not allocated to either industry segment in the first half of 1994 but were so allocated in the first half of 1995. Apart from this factor, Information Services' selling expense decreased as a percentage of revenue, primarily reflecting the portion of Employer Services' increased revenue with which there is associated a lesser percentage of selling expense, such as revenue attributable to increased interest rates on tax filing deposits and from acquisitions made during - 12 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations (cont.) 1994. General and administrative expenses increased as a percentage of revenue in Information Services, largely due to amortization of goodwill and other intangible assets associated with acquisitions made during 1994. Other expense in the second quarter 1995 primarily consisted of the other partner's share of SRP's income, and in the first half 1995 primarily consisted of the Company's share of the loss incurred by an entity in which it has a minority investment. Other expense during the 1994 periods primarily consisted of the Company's share of CMR's loss. Earnings Before Interest and Taxes. The Company's earnings before interest and taxes ("EBIT") increased $6.7 million, or 44%, in the quarterly comparison and $12.8 million, or 34%, in the year-to-date comparison. The cumulative EBIT increases for the Company's two industry segments are not as large as for the Company as a whole because of the previously mentioned operating expenses that were not allocated to the industry segments in the 1994 periods. Information Services' EBIT increased $2.0 million, or 14.8%, in the quarterly comparison, and $6.6 million, or 20.6%, in the year-to-date comparison. As a percentage of revenue, however, Information Services' EBIT decreased from 13.7% to 12.2% in the quarterly comparison, and from 15.5% to 15.3% in the year-to-date comparison. Computing Devices' EBIT increased $0.7 million, or 9.0%, in the quarterly comparison, and $1.4 million, or 9.3%, in the year-to-date comparison. As a percentage of revenue, Computing Devices' EBIT increased from 6.7% to 6.9% in the three month comparison, but declined from 6.4% to 6.3% in the six month comparison. Interest Income and Expense and Taxes. The increase in interest income in the six month comparison reflected higher interest rates in the first half of 1995, although a decrease in the balances of cash and short- term investments through most of the second quarter 1995 caused a decrease in interest income in the quarterly comparison. The provisions for income taxes for the first half of 1994 and 1995 primarily represent tax charges related to the Company's international operations. Financial Condition The Company's cash and short-term investments increased from $171.4 million at December 31, 1994 to $198.5 million at June 30, 1995. Although none of the December 31 balance was subject to any restrictions, $1.1 million of the June 30, 1995 balance was subject to restriction in connection with standby letters of credit issued on behalf of Computing Devices' Canadian operations to serve as performance guarantees. In addition, approximately $80 million of the Company's cash and short-term investments at June 30, 1995 were the U.S. dollar equivalent of unhedged - 13 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition (cont.) Canadian dollar cash and short-term investments held by the Company's Canadian subsidiary. The Company does not expect that this balance in Canada will decrease appreciably during the remainder of 1995. During the first six months of 1995, operating cash flows provided $82.2 million of cash, after having provided $8.9 million of cash in the first half of 1994. Net earnings adjusted to a cash basis provided cash of $73.8 million in the first half of 1995 and $53.0 million in the first half of 1994. A decrease in working capital provided $24.0 million of cash in the first half of 1995, while an increase in working capital utilized $9.4 million of cash in the 1994 period. Reflected in the first half 1995 cash provided in connection with working capital items was a $49.8 million increase in customer advances and deferred income, primarily reflecting the June 1995 receipt of a customer advance as a result of Computing Devices achieving a significant milestone under the Iris contract. Reflected in cash utilized in the first half of 1994 in connection with working capital items was a $12.2 million reduction in customer advances and deferred income, primarily reflecting the utilization of the last in a series of semiannual customer advances in connection with the Iris contract. Although the Company no longer receives regular, semiannual customer advances under that contract, additional customer advances tied to the achievement of significant contractual milestones may be received from time to time in the future. Partially offsetting the 1995 cash provided by working capital items was a $16.0 million increase in trade and other receivables, primarily reflecting increases in Computing Devices' unbilled receivables, principally related to the Iris contract. Payments of restructure liabilities were $15.6 million and $34.7 million in the first half of 1995 and 1994, respectively. The following table summarizes estimated restructure payments during 1995, first half 1995 restructure payments, and restructure payments expected during the remainder of 1995: Expected Estimated Payments Payments Payments First Second Category 1995 Half 1995 Half 1995 Severance and Related Costs $ 4.3 $ 3.7 $0.6 Equipment Lease Termination 1.7 0.5 1.2 Vacant Space 9.1 4.9 4.2 Costs to Dispose of Businesses 0.5 0.2 0.3 Legal Costs 1.2 0.7 0.5 Environmental Costs 1.3 0.7 0.6 Duplicate Processing/Support 5.5 4.9 0.6 Total $23.6 $15.6 $8.0 At June 30, 1995, the Company reported accrued restructure liabilities of $73.0 million, which is expected to decline to $65.0 million by the end of - 14 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition (cont.) 1995. The 1995 estimated payments shown in the table represent a $4.8 million increase over the comparable estimate at year end 1994, with about a third of the increase in each of vacant space and duplicate processing, and most of the balance in environmental and severance and related costs. The increase represents accelerated usage of such reserves rather than adjustments to the amount of existing reserves. Restructure payments during 1995 generally involve obligations (most significantly for vacant space) related to past restructuring actions not involving the Company's ongoing businesses, and to actions in Employer Services to centralize customer service capabilities and consolidate payroll processing. Investing activities utilized $77.8 million of cash during the first half of 1995 and utilized $3.2 million of cash during the first half of 1994. The net use of cash during the first half of 1995 included an increase of $29.9 million in short-term investments, as the Company's independent investment manager increased average maturities in that period, and expenditures of $38.4 million for capital assets and software and $9.8 million paid to acquire businesses, primarily as a result of transactions that occurred near the end of 1994. Cash utilized for investing activities during the first half of 1994 included $56.3 million expended for business acquisitions, principally the acquisition of Tesseract during June 1994, and $20.3 million expended for capital assets and software. Offsetting most of these expenditures was $39.7 million of cash received from the liquidation of short-term investments in the first six months of 1994, as the Company's independent investment manager reduced average maturities during the period, and $33.5 million of cash received from the sale of businesses and investments, primarily the sale of TeleMoney and the final settlement of obligations under a tax matters agreement relating to the 1986 sale of Commercial Credit Company. The largest portion of the increase in expenditures for capital assets and software in the six month comparison involved Employer Services, and reflected equipment to expand and improve communications and service delivery capabilities, the acquisition of Tesseract, and ongoing projects to introduce enhanced payroll processing software and human resource software applications. Financing activities utilized $7.4 million of cash during the first half of 1995, reflecting the $3.2 million prepayment of a mortgage and $6.5 million in preferred stock dividends. During the first half of 1994, financing activities provided $11.0 million of cash, primarily reflecting the receipt of an additional $15.5 million in net cash proceeds from the sale by the Company of additional shares of preferred stock as a result of the underwriters' exercise of their over-allotment option. During May 1995, the Company concluded a one year extension (to May 29, 1996) of its unsecured $35 million domestic revolving credit facility. Under the terms of the extension, the Company will be able to obtain revolving loans or standby letters of credit which may not have a final expiration date later than May 29, 1997. At June 30, 1995, there were $1.6 - 15 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition (cont.) million in letters of credit and no revolving loans outstanding under the facility. Under the terms of the extended facility, the Company must maintain a minimum consolidated net worth which is subject to increase based on the Company's net earnings after December 31, 1993 and certain equity contributions to the Company after the same date. As of June 30, 1995, the Company was in compliance with this covenant by $41.6 million. The Company is also subject to additional covenants which prescribe a fixed charge coverage ratio of 2.25 to 1 on a rolling four quarters basis, and which limit debt, liens, contingent obligations, operating leases and divestitures. The Company continues to be in compliance with all covenants associated with this credit facility. The Company expects to meet its operating cash needs (including accrued restructure liabilities), expenditures for capital assets and software, dividend obligations with respect to its 5 1/2% preferred stock and expenditures to repurchase common stock from its existing cash balances, cash flow from operations and proceeds from the exercise of stock options. The Company has also utilized and may in the future utilize cash from these sources to make acquisitions. The Company expects to remain active in this regard and to concentrate its acquisitions in areas related to or which complement the Company's current businesses, with a primary emphasis on its Information Services segment. In structuring any such acquisitions, the Company would seek to emphasize the use of its common stock as acquisition consideration in order to make pooling of interests accounting treatment available. - 16 - CERIDIAN CORPORATION AND SUBSIDIARIES FORM 10-Q June 30, 1995 Part II. Other Information Item 4. Submission of Matters to a Vote of Security Holders The Company's annual meeting of stockholders was held on May 10, 1995. Of the 45,585,022 shares of the Company's common stock entitled to vote at the meeting, 38,572,989 shares were present at the meeting in person or by proxy. The ten people designated by the Company's Board of Directors as nominees for director were elected, with voting as follows: Total Votes Total Votes Nominee For Withheld Ruth M. Davis 38,475,009 97,980 Allen W. Dawson 38,478,544 94,445 Ronald James 38,477,347 95,642 Richard G. Lareau 38,221,555 351,434 George R. Lewis 38,483,571 89,418 Charles Marshall 38,478,088 94,901 Lawrence Perlman 38,479,213 93,776 Carole J. Uhrich 38,485,198 87,791 Richard W. Vieser 38,477,479 95,510 Paul S. Walsh 38,483,984 89,005 Stockholders voted to approve the Ceridian Amended and Restated 1993 Long-Term Incentive Plan. There were 26,670,807 votes cast for the Plan, 9,203,186 votes against the Plan, 484,378 shares specifically abstained from voting on the matter. In addition, 2,214,618 shares present at the meeting were the subject of broker non-votes on this matter. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. Exhibit Description 10.01 Second Amended and Restated Credit Agreement, dated as of May 23, 1995, among the Registrant, Bank of America N.T. & S.A., as Agent and the Other Financial Institutions Parties Thereto (the "Credit Agreement") 11 Statement re computation of per share earnings - 17 - SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q for the period ended June 30, 1995, to be signed on its behalf by the undersigned thereunto duly authorized. CERIDIAN CORPORATION Registrant Date: August 11, 1995 /s/L. D. Gross L. D. Gross Vice President and Corporate Controller (Principal Accounting Officer) - 18 - EXHIBIT INDEX Exhibit Description Code 10.01 Second Amended and Restated Credit Agreement, dated as of May 23, 1995, among the Registrant, Bank of America N.T. & S.A., as Agent and the Other Financial Institutions Parties Thereto (the "Credit Agreement") E 11 Statement re computation of per share earnings E Legend: (E) Electronic Filing (IBR) Incorporated by reference from previous filing (P) Printed material EX-10.01 2 AMENDED AND RESTATED CREDIT AGREEMENT SECOND AMENDED AND RESTATED CREDIT AGREEMENT Dated as of May 23, 1995, Amending and Restating the Amended and Restated Credit Agreement Dated as of May 13, 1994 and the Credit Agreement Dated as of June 30, 1993, as amended, among CERIDIAN CORPORATION, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION as Agent and THE OTHER FINANCIAL INSTITUTIONS PARTIES HERETO TABLE OF CONTENTS Section Page ARTICLE I DEFINITIONS 1.01 Defined Terms ......................................... 1 1.02 Other Interpretive Provisions ......................... 18 (a) Defined Terms .................................. 18 (b) The Agreement .................................. 18 1.03 Accounting Principles ................................. 18 ARTICLE II THE CREDITS 2.01 Amount and Terms of Commitments ....................... 18 (a) The Loans ...................................... 18 (b) The Letters of Credit .......................... 19 (c) Participation; Old Letters of Credit ........... 19 2.02 Notes ................................................. 19 2.03 Procedure for Borrowing ............................... 20 2.04 Letter of Credit Requests ............................. 21 2.05 Extension Letters of Credit ........................... 21 2.06 Conversion and Continuation Elections ................. 22 2.07 Voluntary Termination or Reduction of Commitments ..... 23 2.08 Optional Prepayments .................................. 24 2.09 [Reserved] ............................................ 24 2.10 Repayment ............................................. 24 2.11 Repayment of Letter of Credit Drawings ................ 24 2.12 Default in Reimbursement of Issuing Bank .............. 26 2.13 Interest .............................................. 27 2.14 Fees .................................................. 27 (a) Fees Payable to BofA and the Agent ............. 27 (b) Commitment Fees ................................ 27 (c) Letter of Credit Fees .......................... 28 (d) Fees under the Existing Credit Agreement ....... 29 2.15 Computation of Fees and Interest ...................... 29 2.16 Payments by the Company ............................... 29 2.17 Payments by the Banks to the Agent .................... 30 2.18 Sharing of Payments, Etc .............................. 31 2.19 Pro Rata Treatmentc ................................... 31 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 3.01 Taxes ................................................. 32 Document 00010273.10 Section Page 3.02 Illegality ............................................ 34 3.03 Increased Costs and Reduction of Return ............... 35 3.04 Funding Losses ........................................ 35 3.05 Inability to Determine Rates .......................... 36 3.06 Substitution of Banks ................................. 36 3.07 Survival .............................................. 37 ARTICLE IV CONDITIONS PRECEDENT 4.01 Conditions of Initial Loans ........................... 37 (a) Second Amended and Restated Credit Agreement ... 37 (b) Notes .......................................... 37 (c) Resolutions; Incumbency ........................ 37 (d) Articles of Incorporation; By-laws ............. 37 (e) Opinion of Counsel to the Company .............. 38 (f) Payment of Fees and Expenses ................... 38 (g) Other Documents ................................ 38 (h) Cancelled Notes ................................ 38 4.02 Conditions to All Credit Extensions ................... 38 (a) Notice of Borrowing or Continuation/Conversion . 38 (b) Letter of Credit Request ....................... 38 (c) Continuation of Representations and Warranties . 38 (d) No Existing Default ............................ 38 ARTICLE V REPRESENTATIONS AND WARRANTIES 5.01 Corporate Existence and Power ......................... 39 5.02 Corporate Authorization; No Contravention ............. 40 5.03 Governmental Authorization ............................ 40 5.04 Binding Effect ........................................ 40 5.05 Litigation ............................................ 40 5.06 No Default ............................................ 41 5.07 ERISA Compliance ...................................... 41 5.08 Title to Properties ................................... 42 5.09 Taxes ................................................. 42 5.10 Financial Condition ................................... 42 5.11 Environmental Matters ................................. 43 5.12 Regulated Entities .................................... 43 5.13 No Burdensome Restrictions ............................ 43 5.14 Solvency .............................................. 43 5.15 Labor Relations ....................................... 43 5.16 Copyrights, Patents, Trademarks and Licenses, etc. .... 44 5.17 Material Subsidiaries and Equity Investments .......... 44 5.18 Insurance ............................................. 44 5.19 Full Disclosure ....................................... 44 Document 00010273.10 Section Page ARTICLE VI AFFIRMATIVE COVENANTS 6.01 Financial Statements .................................. 45 6.02 Certificates; Other Information ....................... 45 6.03 Notices ............................................... 46 6.04 Preservation of Corporate Existence, Etc. ............. 47 6.05 Maintenance of Property ............................... 47 6.06 Insurance ............................................. 48 6.07 Payment of Obligations ................................ 48 6.08 Compliance with Laws .................................. 48 6.09 Inspection of Property and Books and Records .......... 48 6.10 Environmental Laws .................................... 49 6.11 Use of Proceeds ....................................... 49 6.12 Further Assurances .................................... 49 ARTICLE VII NEGATIVE COVENANTS 7.01 Limitation on Liens ................................... 50 7.02 Mergers, Consolidations and Dispositions of Assets .... 51 7.03 Cash Investments ...................................... 53 7.04 Indebtedness .......................................... 53 7.05 Contingent Obligations ................................ 53 7.06 Use of Proceeds ....................................... 53 7.07 [Reserved] ............................................ 54 7.08 Lease Obligations ..................................... 54 7.09 [Reserved] ............................................ 54 7.10 Consolidated Net Worth ................................ 54 7.11 [Reserved] ............................................ 54 7.12 Fixed Charge Coverage Ratio ........................... 54 7.13 Change in Business .................................... 54 7.14 [Reserved] ............................................ 54 7.15 Accounting Changes .................................... 54 7.16 Contracts of Subsidiaries ............................. 54 ARTICLE VIII EVENTS OF DEFAULT 8.01 Event of Default ...................................... 55 (a) Non-Payment .................................... 55 (b) Representation or Warranty ..................... 55 (c) Specific Defaults .............................. 55 (d) Other Defaults ................................. 55 (e) Cross-Default .................................. 55 (f) Insolvency; Voluntary Proceedings .............. 56 Document 00010273.10 Section Page (g) Involuntary Proceedings ........................ 56 (h) ERISA .......................................... 56 (i) Monetary Judgments ............................. 57 (j) Ownership ...................................... 57 8.02 Remedies .............................................. 57 8.03 Rights Not Exclusive .................................. 58 ARTICLE IX THE AGENT 9.01 Appointment and Authorization ......................... 58 9.02 Delegation of Duties .................................. 58 9.03 Liability of Agent .................................... 58 9.04 Reliance by Agent ..................................... 59 9.05 Notice of Default .....................................59 9.06 Credit Decision ....................................... 60 9.07 Indemnification ....................................... 60 9.08 Agent in Individual Capacity .......................... 61 9.09 Successor Agent ....................................... 61 ARTICLE X MISCELLANEOUS 10.01 Amendments and Waivers ................................ 62 10.02 Notices ............................................... 63 10.03 No Waiver; Cumulative Remedies ........................ 63 10.04 Costs and Expenses .................................... 64 10.05 Indemnity ............................................. 64 (a) General Indemnity .............................. 64 (b) Survival; Defense ............................... 65 10.06 Marshalling; Payments Set Aside ....................... 65 10.07 Successors and Assigns................................. 65 10.08 Assignments, Participations, etc ...................... 65 10.09 Set-off ............................................... 68 10.10 Automatic Debits of Fees .............................. 68 10.11 Notification of Addresses, Lending Offices, Etc ....... 68 10.12 Counterparts .......................................... 69 10.13 Severability .......................................... 69 10.14 No Third Parties Benefited ............................ 69 10.15 Time .................................................. 69 10.16 Governing Law and Jurisdiction ........................ 69 10.17 Waiver of Jury Trial................................... 69 10.18 Entire Agreement....................................... 70 10.19 Interpretation ........................................ 70 10.20 Term of Agreement ..................................... 70 10.21 Foreign Currency Conversion ........................... 70 Document 00010273.10 SCHEDULES Schedule 1.01 Old Letters of Credit Schedule 2.01 Bank Commitments and Percentages Schedule 5.05 Litigation Schedule 5.07 ERISA Disclosures Schedule 5.10 Contingent Obligations and Partnerships Schedule 5.11 Environmental Matters Schedule 7.02 Assets Permitted to be Disposed of as of the Closing Date EXHIBITS Exhibit A Compliance Certificate Exhibit B Letter of Credit Application Exhibit C Note Exhibit D Notice of Borrowing Exhibit E Notice of Conversion/Continuation Exhibit F Opinion of Counsel to Company Document 00010273.10 SECOND AMENDED AND RESTATED CREDIT AGREEMENT This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of May 23, 1995, among Ceridian Corporation, a Delaware corporation (the "Company"), the several financial institutions party to this Agreement (collectively, the "Banks"; individually, a "Bank"), and Bank of America National Trust and Savings Association, as agent for the Banks. WHEREAS, the Company, the Banks (other than BAI) and the Agent are parties to that certain Amended and Restated Credit Agreement dated as of May 13, 1994, which amended and restated that certain Credit Agreement dated as of June 30, 1993, as amended (the "Existing Credit Agreement"); and WHEREAS, the parties to the Existing Credit Agreement desire to amend certain terms of the Existing Credit Agreement; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the Company, the Banks and the Agent hereby agree that the Existing Credit Agreement shall, effective as of the Closing Date, be amended and restated in its entirety as follows: ARTICLE I DEFINITIONS 1.01 Defined Terms. In addition to the terms defined elsewhere in this Agreement, the following terms have the following meanings: "Affected Bank" has the meaning specified in Section 3.06. "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract or otherwise. Without limitation, any director, executive officer or beneficial owner of 15% or more of the voting equity of a Person shall for the purposes of this Agreement, be deemed to control the other Person. "Agent" means BofA in its capacity as agent for the Banks hereunder, and any successor agent. "Agent-Related Persons" means BofA and any successor agent arising under Section 9.09, together with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Agent's Payment Office" means the address for payments set forth on the signature page hereto in relation to the Agent or such other address as the Agent may from time to time specify in accordance with Section 10.02. "Aggregate Commitment" means the combined Commitments of the Banks, in the initial amount of Thirty-Five Million Dollars ($35,000,000), as such amount may be reduced from time to time pursuant to this Agreement. "Agreement" means this Second Amended and Restated Credit Agreement, as amended from time to time in accordance with the terms hereof. "Applicable Margin" means (i) with respect to Base Rate Loans, 0%; and (ii) with respect to Offshore Rate Loans, 0.75%. "Arranger" means BA Securities, Inc. "Assignee" has the meaning specified in subsection 10.08(a). "Attorney Costs" means and includes all fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel. "BAI" means Bank of America Illinois, an Illinois chartered bank. "Bank" (i) has the meaning specified in the introductory clause hereto and (ii) also includes any financial institution becoming a party hereto by execution of an assignment and acceptance agreement in accordance with Section 10.08. "Bank Affiliate" means a Person engaged primarily in the business of commercial banking and that is a Subsidiary of a Bank or of a Person of which a Bank is a Subsidiary. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (12 U.S.C. S 101, et seq.). "Base Rate" means the higher of: (a) the rate of interest publicly announced from time to time by BofA in San Francisco, California, as its 2 "reference rate." It is a rate set by BofA based upon various factors including BofA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate; and (b) 0.50% per annum above the latest Federal Funds Rate. Any change in the reference rate announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Loan" means a Loan that bears interest based on the Base Rate. "BofA" means Bank of America National Trust and Savings Association, a national banking association. "Borrowing" means a borrowing hereunder consisting of Loans made to the Company on the same day by the Banks pursuant to Article II. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such a day on which dealings are carried on in the applicable offshore dollar interbank market. "Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. "Capital Expenditures" means, for any period, the aggregate of all expenditures by the Company and its Subsidiaries for the acquisition of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) as shown in the Company's consolidated statements of cash flow for such period in accordance with GAAP. "Capital Lease" has the meaning specified in the definition of Capital Lease Obligations. "Capital Lease Obligations" means all monetary obligations of the Company or any of its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease ("Capital Lease"). 3 "Cash Equivalents" means: (a) securities issued or fully guaranteed or insured by the United States Government or any agency thereof having maturities of not more than six months from the date of acquisition; (b) certificates of deposit, time deposits, Eurodollar time deposits, repurchase agreements, reverse repurchase agreements, or bankers' acceptances, having in each case a tenor of not more than six months, issued by any Bank, or by any U.S. commercial or investment bank or broker having combined capital and surplus of not less than $100,000,000 whose short term securities are rated at least A-1 by Standard & Poor's Corporation and P-1 by Moody's Investors Service, Inc.; commercial paper or promissory note of an (c) issuer rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service Inc. and in either case having a tenor of not more than three months. "Closing Date" means the date on which all conditions precedent set forth in Section 4.01 are satisfied or waived by all Banks. "Co-Applicant" means, with respect to any Letter of Credit, a Subsidiary of the Company which together with the Company signs a Letter of Credit Application. "Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder as from time to time in effect. "Commitment" means, (a) as to each Bank executing this Agreement on the Closing Date, its commitment to extend credit to the Company in the amount set opposite its name on Schedule 2.01 (as such amount may be reduced from time to time in accordance with Section 2.07 or Section 10.08) and (b) as to each financial institution becoming a Bank hereunder pursuant to Section 10.08, its commitment to extend credit in the amount agreed upon in the assignment and acceptance agreement entered into by it in accordance with Section 10.08. "Commitment Percentage" means, as to any Bank, the percentage derived by dividing such Bank's Commitment by the Aggregate Commitment. "Compliance Certificate" means a certificate delivered to the Agent by the Company pursuant to Section 6.02(a), substantially in the form of Exhibit A. 4 "Consolidated Fixed Charges" means, at any time, (a) Consolidated Interest Expense for the four fiscal quarters ending on or before the date of determination plus (b) Current Maturities of Long Term Debt measured as of the last day of the fiscal quarter ending on or before the date of determination (but excluding principal payable under the Loan Documents), as determined in accordance with GAAP. "Consolidated Indebtedness" means, at any time, all amounts which would be included as Indebtedness on a consolidated balance sheet of the Company and its Subsidiaries as of such time. "Consolidated Interest Expense" means, for any period, gross consolidated interest expense for such period (including all commissions, discounts, fees and other charges in connection with Letters of Credit) for the Company and its Subsidiaries. "Consolidated Net Income (Loss)" means, for any period, all amounts which would, in accordance with GAAP, be included in net income (loss) on the consolidated income statement of the Company and its Subsidiaries for such period minus dividends payable by the Company with respect to the Preferred Stock for such period. "Consolidated Net Worth" means, at any time, with respect to the Company and its Subsidiaries shareholders' equity on the date of determination as determined in accordance with GAAP (except that the effects of direct charges or credits to shareholders' equity related to accounting for pensions ("FAS 87") and foreign currency translation ("FAS 52") are to be disregarded), including, without duplication, 100% of the net proceeds from the issuance of the Preferred Stock. "Consolidated Total Assets" means, at any time, the total consolidated assets of the Company and its Subsidiaries measured as of the last day of the fiscal quarter ending on or before the date of determination, as determined in accordance with GAAP. "Contingent Obligation" means, as to the Company or any of its Subsidiaries, (a) any Guaranty Obligation of that Person; (b) any reimbursement obligation of that Person with respect to a standby letter of credit, surety bond, banker's acceptance or similar instrument; (c) any obligation of that Person to purchase any materials, supplies or other property from, or to obtain the services of, another Person (other than the Company or one of its Subsidiaries) if the relevant contract or other related document or obligation requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether delivery of such materials, supplies or other property is ever made or tendered, or such services are ever performed or tendered; and 5 (d) all Indebtedness (other than that of the Company or any of its Subsidiaries) secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by the Company or any such Subsidiary; but in all events excluding obligations of the type described in clauses (a) through (d) above to the extent that reserves or liabilities have been established therefor in the Company's consolidated financial statements. "Contractual Obligations" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "Conversion Date" means any date on which the Company elects to convert a Base Rate Loan to an Offshore Rate Loan or to convert an Offshore Rate Loan to a Base Rate Loan. "Credit Extension" means a Borrowing, a continuance or conversion of Loans or the issuance of or purchase of a participation under Section 2.01(c) in a Letter of Credit. "Credit Extension Date" means the date on which a Credit Extension is made. "Current Maturities of Long Term Debt" means the principal portion of any Indebtedness with a maturity date in excess of one year that is due within the next 12 months. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Disposition" means (i) the sale, lease, conveyance or other disposition of property, other than sales or other dispositions expressly permitted under Section 7.02 and (ii) the sale or transfer by the Company or any Subsidiary of the Company of any equity securities issued by any Subsidiary of the Company and held by such transferor Person. "Dollars", "dollars" and "$" each mean lawful money of the United States. "Domestic Lending Office" means, with respect to each Bank, the office of that Bank designated as such in the signature pages hereto or such other office of the Bank as it may from time to time specify to the Company and the Agent. "EBIT" means, for any period, for the Company and its Subsidiaries determined in accordance with GAAP, the sum 6 of (a) Consolidated Net Income (Loss), plus (b) Consolidated Interest Expense, plus (c) provision for income taxes to the extent included in the determination of Consolidated Net Income (Loss), plus (d) Restructure Loss, minus (e) interest income, and minus (f) Restructure Gain, all determined on a consolidated basis for the Company and its Subsidiaries; provided, however, that Consolidated Net Income (Loss) shall be computed for these purposes without giving effect to extraordinary losses or gains or losses or gains from discontinued operations. "EBITDA" means, for any period, for the Company and its Subsidiaries on a consolidated basis, determined in accordance with GAAP, the sum of (a) EBIT and (b) depreciation and amortization expenses. "Eligible Assignee" means (i) a commercial bank organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $100,000,000; (ii) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least $100,000,000, provided that such bank is acting through a branch or agency located in the United States; and (iii) any Bank Affiliate. "Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon (a) the alleged or actual presence, placement, migration, spillage, leakage, disposal, discharge, emission or release of any Hazardous Material at, in, or from property, whether or not owned by the Company, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations, registration requirements and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental and land use matters or health and safety matters involving Hazardous Materials. 7 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder as from time to time in effect. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which would reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate. "Eurodollar Reserve Percentage" has the meaning specified in the definition of "Offshore Rate". "Event of Default" means any of the events or circumstances specified in Section 8.01. "Exchange Act" means the Securities Exchange Act of 1934, and regulations promulgated thereunder. "Existing Credit Agreement" has the meaning specified in the introduction of this Agreement. "Extension" has the meaning specified in Section 2.05. "Extension Refusal Date" has the meaning specified in Section 2.05. "Federal Funds Rate" means, for any period, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds 8 (Effective)". If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotation") for such day under the caption "Federal Funds Effective Rate". If on any relevant day the appropriate rate for such previous day is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Agent. "Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any successor thereto. "Financial L/C" means, with respect to any Letter of Credit, a "financial standby letter of credit" as such term is defined in the Adequacy Guidelines For Bank Holding Companies: Risk-Based Measure, 12 C.F.R. Part 225, Appendix A, III.D (1993) and as the definition of such term may be amended from time to time prior to issuance of any such Letter of Credit. Such term is described in the 1993 Code of Federal Regulations as "irrevocable obligations of the banking organization to pay a third-party beneficiary when a customer (account party) fails to repay an outstanding loan or debt instrument (direct credit substitute)." "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the U.S. accounting profession, which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guaranty Obligation" means, as applied to the Company or any of its Subsidiaries, any agreement of the 9 Company or any such Subsidiary to guarantee the Indebtedness of a Person other than the Company or any of its Subsidiaries (the "primary obligor"), or any obligation or undertaking of the Company or any such Subsidiary which, in economic effect, is substantially equivalent to a guarantee of the primary obligor's Indebtedness ("primary obligations"), including any obligation of the Company or any such Subsidiary, whether or not contingent, (a) to purchase, repurchase or otherwise acquire such primary obligations or any property constituting direct or indirect security therefor, or (b) to advance or provide funds (i) for the payment or discharge of any such primary obligation, or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, or to purchase property, securities or services primarily for (c) the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (d) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect thereof. "Hazardous Materials" means all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, hazardous chemicals, special waste, hazardous substance, hazardous material, regulated substance, or toxic substance, or petroleum or petroleum derived substance or waste. "Indebtedness" of any Person means, without duplication, (a) all indebtedness for borrowed money; (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the Ordinary Course of Business pursuant to ordinary terms); (c) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (d) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property); and (e) all Capital Lease Obligations. Indebtedness owed to the Company by its Subsidiaries, by one Subsidiary to another or by the Company to a Subsidiary shall not count as Indebtedness. "Indemnified Person" has the meaning specified in subsection 10.05(a). 10 "Indemnified Liabilities" has the meaning specified in subsection 10.05(a). "Insolvency Proceeding" means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or foreign law, including the Bankruptcy Code. "Interest Payment Date" means, with respect to any Offshore Rate Loan, the last day of each Interest Period applicable to such Loan and, with respect to Base Rate Loans, (a) the first Business Day of January, April, July and October for Base Rate Loans outstanding during the preceding quarter, (b) the Termination Date and (c) each date a Base Rate Loan is converted into an Offshore Rate Loan, provided, however, that if any Interest Period for an Offshore Rate Loan exceeds three months, interest shall also be paid on the date which falls three months after the beginning of such Interest Period. "Interest Period" means, with respect to any Offshore Rate Loan, the period commencing on the Business Day the Loan is disbursed or continued or on the Conversion Date on which the Loan is converted to the Offshore Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation; provided that: (a) if any Interest Period pertaining to an Offshore Rate Loan would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (b) any Interest Period pertaining to an Offshore Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (c) no Interest Period shall extend beyond the Termination Date. 11 "Issuing Bank" means, with respect to each Letter of Credit, BAI (or any of its Affiliates including BofA) or such other Bank which may issue a Letter of Credit. "IRS" means the Internal Revenue Service or any entity succeeding to any of its principal functions under the Code. "Lending Office" means, with respect to any Bank, the office or offices of the Bank specified as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as the case may be, opposite its name on the applicable signature page hereto, or such other office or offices of the Bank as it may from time to time notify the Company and the Agent. "Letter of Credit" means (i) a standby letter of credit issued under this Agreement by the Issuing Bank for the account of the Company and (ii) any Old Letter of Credit outstanding on the Closing Date, including an Extension of any letter of credit. "Letter of Credit Application" means a letter of credit application and agreement in form and substance satisfactory to the Issuing Bank. Attached hereto as Exhibit B is the initial form of Letter of Credit Application. "Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or other security interest (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease Obligation, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement naming the owner of the asset to which such lien relates as debtor, under the UCC or any comparable law) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an Operating Lease. "Loan" means an extension of credit by a Bank to the Company pursuant to Article II, and may be a Base Rate Loan or an Offshore Rate Loan. "Loan Documents" means this Agreement, the Notes, the Letter of Credit Applications, and all documents delivered to the Agent in connection therewith, as such instruments, agreements and documents may be amended, supplemented, restated, modified or renewed from time to time. "Majority Banks" means at any time Banks then holding 51% or more of the then aggregate unpaid principal amount of the Credit Extensions, or, if no Credit Extensions are then outstanding, Banks then having 51% or more of the Commitments. 12 "Margin Stock" means "margin stock" as such term is defined in Regulation G, T, U or X of the Federal Reserve Board. "Material Adverse Effect" means a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole. "Material Subsidiary" means at any time any Subsidiary of the Company the assets of which are 10% or more of Consolidated Total Assets (or the equivalent thereof in another currency). "Multiemployer Plan" means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "Note" means a promissory note of the Company payable to the order of a Bank, substantially in the form of Exhibit C, evidencing the aggregate indebtedness of the Company to such Bank resulting from Loans made by such Bank. "Notice of Borrowing" means a notice given by the Company to the Agent pursuant to Section 2.03, in substantially the form of Exhibit D. "Notice of Conversion/Continuation" means a notice given by the Company to the Agent pursuant to Section 2.06, in substantially the form of Exhibit E. "Notice of Lien" means any "notice of lien" or similar document intended to be filed or recorded with any court, registry, recorder's office, central filing office or other Governmental Authority for the purpose of evidencing, creating, perfecting or preserving the priority of a Lien securing obligations owing to a Governmental Authority. "Obligations" means all Loans, and other Indebtedness, advances, debts, liabilities, obligations, covenants and duties owing by the Company to any Bank, the Agent, or any other Person required to be indemnified under any Loan Document, of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, arising under this Agreement or under any other Loan Document, whether or not for the payment of money, whether arising by reason of an extension of credit, the issuance of a Letter of Credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired 13 by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. "Offshore Lending Office" means with respect to each Bank, the office of such Bank designated as such in the signature pages hereto or such other office of such Bank as such Bank may from time to time specify to the Company and the Agent. "Offshore Rate" means, for each Interest Period in respect of Offshore Rate Loans comprising part of the same Borrowing, an interest rate per annum (rounded upward to the nearest 1/16th of 1%) determined pursuant to the following formula: Offshore Rate = IBOR 1.00 - Eurodollar Reserve Percentage Where, "Eurodollar Reserve Percentage" means the maximum reserve percentage (expressed as a decimal, rounded upward to the nearest 1/100th of 1%) in effect on the date IBOR for such Interest Period is determined (whether or not applicable to any Bank) under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities") having a term comparable to such Interest Period; and "IBOR" means the rate of interest per annum determined by the Agent as the rate at which dollar deposits in the approximate amount of BofA's Offshore Rate Loan and having a maturity comparable to such Interest Period would be offered by BofA's Grand Cayman Branch, Grand Cayman B.W.I., to major banks in the offshore dollar interbank market upon request of such banks at approximately 11:00 a.m. (New York City time) two Business Days prior to the commencement of such Interest Period. The Offshore Rate shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage. "Offshore Rate Loan" means a Loan that bears interest based on the Offshore Rate. "Old Agreement" means that certain Third Amended and Restated Credit Agreement, dated as of June 1, 1991, among the Company (under the name of Control Data Corporation), the Agent, as agent thereunder, and the other banks party thereto, as such agreement was amended from time to time. 14 "Old Letters of Credit" means letters of credit issued by BofA or BankAmerica International under the Old Agreement or the Existing Credit Agreement and outstanding on the Closing Date, which are listed on Schedule 1.01 attached hereto. "Operating Lease" means, as applied to any Person, any lease of property which is not a Capital Lease. "Ordinary Course of Business" means, in respect of any transaction involving the Company or any Subsidiary of the Company, the ordinary course of such Person's business, as conducted by any such Person in accordance with past practice and undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Loan Document. "Organization Documents" means, for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, and all applicable resolutions of the board of directors (or any committee thereof) of such corporation. "Other Taxes" has the meaning specified in subsection 3.01(b). "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any of its principal functions under ERISA. "Participant" has the meaning specified in subsection 10.08(d). "Pension Plan" means a pension plan, as defined in Section 3(2) of ERISA, subject to Title IV of ERISA, which the Company or any ERISA Affiliate sponsors or maintains, or to which the Company or any ERISA Affiliate makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan, as described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years; but excluding in all cases any Multiemployer Plan. "Performance L/C" means, with respect to any Letter of Credit, a "performance standby letter of credit" as such term is defined in the Adequacy Guidelines For Bank Holding Companies: Risk-Based Measure, 12 C.F.R. Part 225, Appendix A, III.D (1993) as the definition of such term may be amended from time to time prior to issuance of any such Letter of Credit. Such term is described in the 1993 Code of Federal Regulations as "irrevocable obligations of the banking organization to pay a third-party beneficiary when a customer 15 (account party) fails to perform some other contractual non-financial obligation." "Permitted Liens" has the meaning specified in Section 7.01. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority. "Plan" means an employee benefit plan, as defined in Section 3(3) of ERISA, which the Company or any ERISA Affiliate sponsors or maintains, or to which the Company or any ERISA Affiliate makes, is making, or is obligated to make contributions; and includes any Pension Plan or Multiemployer Plan. "Preferred Stock" means the Company's 5 1/2% Cumulative Convertible Exchangeable Preferred Stock, par value $100 per share. "Rate Contracts" means interest rate and currency swap agreements, cap, floor and collar agreements, interest rate insurance, currency spot and forward contracts and other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates. "Replacement Bank" has the meaning specified in Section 3.06. "Reportable Event" means any of the events set forth in Section 4043(b) of ERISA or the regulations promulgated thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Responsible Officer" means the chief executive officer, the chief financial officer, the president, any executive vice president, the controller or the treasurer of the Company. "Restructure Loss (Gain)" means restructure loss or restructure gain as such terms are used in the Company's 1993 annual report to shareholders, computed in a manner consistent with the treatment in such annual report. "SEC" means the Securities and Exchange Commission, or any successor thereto. "Solvent" means, as to any Person at any time, that the fair value of the property of such Person is greater (a) than the fair value of such Person's liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the 16 alternative, for purposes of the Uniform Fraudulent Conveyances Act (as enacted in the State of New York); (b) the present fair saleable value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital. "Stated Amount" means, with respect to any Letter of Credit, at any date of determination thereof, the maximum aggregate amount available for drawing thereunder plus the aggregate amount of all unreimbursed payments and disbursements under such Letter of Credit. "Subsidiary" of a Person means any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. "Taxes" has the meaning specified in subsection 3.01(a). "Termination Date" means the earlier to occur of: (a) May 28, 1996; and (b) the date on which the Aggregate Commitment terminates in accordance with Section 2.07 or Section 8.02. "Transferee" has the meaning specified in subsection 10.08(e). "UCC" means the Uniform Commercial Code as in effect in the State of New York. "United States" and "U.S." each means the United States of America. "Wholly-Owned Subsidiary" means any corporation in which (other than directors' qualifying shares required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case, at the time as of which any determination is being 17 made, is owned, beneficially and of record, by the Company, or by one or more of the other Wholly-Owned Subsidiaries, or both. 1.02 Other Interpretive Provisions. (a) Defined Terms. Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto. The meaning of defined terms shall be equally applicable to the singular and plural forms of the defined terms. Terms (including uncapitalized terms) not otherwise defined herein and that are defined in the UCC shall have the meanings therein described. The Agreement. The words "hereof", "herein", (b) "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, section, schedule and exhibit references are to this Agreement unless otherwise specified. 1.03 Accounting Principles. Unless the context otherwise clearly requires, all (a) accounting terms not expressly defined herein shall be construed in accordance with GAAP as in effect from time to time, but all financial computations required under this Agreement shall be made in accordance with GAAP as in effect and applied by the Company on March 31, 1995, consistently applied, except to the extent otherwise agreed upon by the parties hereto. References herein to "fiscal year" and "fiscal (b) quarter" refer to such fiscal periods of the Company. ARTICLE II THE CREDITS 2.01 Amount and Terms of Commitments. Within the limits of each Bank's Commitment, and subject to the other terms and conditions hereof, the Company may borrow, repay and reborrow Loans and obtain the issuance of Letters of Credit. (a) The Loans. During the period from the Closing Date to the Termination Date, each Bank severally agrees, on the terms and conditions hereinafter set forth, to make Loans to the Company in an amount not in excess at any time of such Bank's Commitment Percentage of the difference between: (i) the Aggregate Commitment, and (ii) the sum of (a) all outstanding Loans, (b) the undrawn face amount of all outstanding Letters of Credit and (c) that portion of drawings made under Letters of Credit for which the Issuing Bank has not yet been reimbursed. 18 (b) The Letters of Credit. The Issuing Bank agrees, on the terms and conditions hereinafter set forth, on or prior to the Termination Date, to issue Letters of Credit for the account of the Company and, if applicable, a Co-Applicant, in an amount not in excess at any time of the Aggregate Commitment, minus the sum of (a) all outstanding Loans, (b) the undrawn face amount of all outstanding Letters of Credit and (c) that portion of drawings made under Letters of Credit for which the Issuing Bank has not yet been reimbursed; provided, however, that in no event may the Stated Amount of Letters of Credit issued to support workmen's compensation obligations of the Company and its Subsidiaries exceed $10,000,000 at any one time. BAI may, at its option, fulfill its Commitment to issue Letters of Credit by arranging for the issuance of Letters of Credit by BankAmerica International. Any Letter of Credit issued by BankAmerica International shall be deemed to be issued by BAI for the purpose of BAI's fulfilling its Commitment and retaining a proportionate interest in Letters of Credit pursuant to subsection (c) of this Section 2.01. (c) Participation; Old Letters of Credit. Each Bank (other than the Issuing Bank) agrees to purchase a participation (i) in each Letter of Credit on the date of issuance of such Letter of Credit and (ii) in each amendment increasing the face amount of a Letter of Credit after the issuance thereof, on the date of such amendment, in an amount equal to its Commitment Percentage. The Issuing Bank retains a proportionate interest in the amount of its Commitment Percentage in each Letter of Credit after such purchase of participations. With respect to Old Letters of Credit, each Bank (other than the Issuing Bank) is deemed to have purchased a participation in the amount of its Commitment Percentage in such Old Letters of Credit. 2.02 Notes. (a) The Loans made by each Bank shall be evidenced by a Note payable to the order of that Bank in an amount equal to its Commitment. (b) Each Bank shall endorse on the schedules annexed to its Note the date, amount and maturity of each Loan made by it and the amount of each payment of principal made by the Company with respect thereto. Each Bank is irrevocably authorized by the Company to make such endorsements, and its Note and each Bank's record shall be conclusive, absent manifest error; provided, however, that the failure of a Bank to make, or an error in making, a notation thereon with respect to any Loan shall not limit or otherwise affect the obligations of the Company hereunder or under any such Note to such Bank. 19 2.03 Procedure for Borrowing. (a) Each Borrowing shall be made upon the Company's irrevocable written notice (or telephonic notice, promptly confirmed by a writing) delivered to the Agent in the form of a Notice of Borrowing (which notice must be received by the Agent prior to Noon (New York time) (i) three Business Days prior to the requested Borrowing date, in the case of Offshore Rate Loans and one Business Day prior to the requested Borrowing date, (ii) in the case of Base Rate Loans, specifying: (A) the amount of the Borrowing, which shall be in an aggregate minimum principal amount of Three Million Dollars ($3,000,000) or any multiple of One Million Dollars ($1,000,000) in excess thereof; (B) the requested Borrowing date, which shall be a Business Day; (C) whether the Borrowing is to be comprised of Offshore Rate Loans or Base Rate Loans; and (D) the duration of the Interest Period applicable to such Loans included in such notice. If the Notice of Borrowing fails to specify the duration of the Interest Period for any Borrowing, such Borrowing shall consist of Base Rate Loans, regardless of the type of Loans requested by the Company. (b) Upon receipt of the Notice of Borrowing, the Agent will promptly notify each Bank thereof and of the amount of such Bank's Commitment Percentage of the Borrowing. (c) Each Bank will make the amount of its Commitment Percentage of the Borrowing available to the Agent for the account of the Company at the Agent's Payment Office by 11:00 a.m. (New York time) on the Borrowing date requested by the Company in funds immediately available to the Agent. The proceeds of all such Loans will then be made available to the Company by the Agent at such office by crediting the account of the Company on the books of BofA with the aggregate of the amounts made available to the Agent by the Banks and in like funds as received by the Agent. (d) Unless the Majority Banks shall otherwise agree, during the existence of a Default or Event of Default, the Company may not elect to have a Loan be made as, converted into or continued as an Offshore Rate Loan. (e) After giving effect to any Borrowing, conversion or continuation, there shall not be more than ten different Interest Periods in effect. 20 2.04 Letter of Credit Requests. (a) Whenever the Company wishes to have the Issuing Bank issue a Letter of Credit, the Company shall deliver to the Issuing Bank a Letter of Credit Application with appropriate insertions, signed by the Company, and, if such Letter of Credit is also to be issued for the account of a Co-Applicant, signed by the Co-Applicant. Such Letter of Credit Application shall be delivered at least two and not more than fifteen Business Days prior to the requested date of issuance, except as provided in clause (iv) in the proviso to Section 2.05. Requests for amendments to Letters of Credit shall be submitted in writing at least two and not more than fifteen Business Days prior to the requested amendment date. If at any time the Issuing Bank is not the Agent, a copy of such Letter of Credit Application shall be delivered to the Agent as well. The Agent shall deliver notice of the request for the issuance of a Letter of Credit to all other Banks and copies thereof to all such Banks which have requested such copies. In each Letter of Credit Application, the Company shall designate whether the Letter of Credit is a Financial L/C or a Performance L/C and whether, if it is a Financial L/C, it is being issued to support workmen's compensation obligations of the Company and its Subsidiaries. The determination of the Issuing Bank and the Agent as to such designation shall be made at or prior to the time such Letter of Credit is issued, shall be conclusive in the event of any disagreement with the Company with respect thereto and shall govern during the term of this Agreement, notwithstanding any subsequent change in the definition of any such term in the applicable regulations. (b) Letters of Credit may be Financial L/Cs or Performance L/Cs, and all Letters of Credit shall be denominated in Dollars. No Letter of Credit shall have a final expiration date later than May 28, 1997. (c) The Agent shall deliver to the Company a copy of each Letter of Credit issued and each amendment thereto and shall also promptly deliver a copy thereof to each other Bank which has requested such a copy. Each Letter of Credit shall provide that payment thereunder shall not be made earlier than three Business Days after receipt of any documents demanding payment thereunder. 2.05 Extension Letters of Credit. If (a) any Letter of Credit provides that the term thereof will be automatically extended or renewed (by issuance of a substitute Letter of Credit or otherwise) unless notice is given by the Issuing Bank on or before a specified date (hereinafter called the "Extension Refusal Date") that such Issuing Bank will not permit such extension or renewal or (b) the Company requests the extension or renewal of any other Letter of Credit, then for purposes of Sections 2.01, 2.04, and 4.02 of this Agreement, any such renewal or extension granted by the Issuing Bank (hereinafter called an "Extension") shall be deemed to be the issuance of a new Letter of Credit and such 21 issuance shall be deemed to occur on the Extension Refusal Date in the case of a Letter of Credit described in clause (a) above, or the date of such request in the case of a Letter of Credit described in clause (b) above; provided, however, that (i) such extension shall not cause the respective Letter of Credit to expire after May 28, 1997; (ii) no Extension may take place after the Termination Date, notwithstanding the provisions of Section 2.04(b); (iii) the Extension shall not be deemed to cause any duplication of the amount of such Letter of Credit for purposes of determining compliance with Section 2.01(b); (iv) the Issuing Bank shall receive at least ten but not more than thirty Business Days' written notice of such Extension, and the accompanying Letter of Credit Application shall state that it relates to such Extension and shall specify the related Extension Refusal Date, if any; and (v) no document need be delivered by the Issuing Bank pursuant to Section 2.04(c) with respect to any Letter of Credit described in clause (a) above unless the terms of such Letter of Credit so require. 2.06 Conversion and Continuation Elections. (a) Prior to the Termination Date, the Company may upon irrevocable written notice (or telephonic notice, promptly confirmed by a writing) to the Agent in accordance with subsection 2.06(b): (i) elect to convert on any Business Day, any Base Rate Loans (or any part thereof in an amount not less than $3,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into Offshore Rate Loans; or (ii) elect to convert on any Interest Payment Date any Offshore Rate Loans maturing on such Interest Payment Date (or any part thereof in an amount not less than $3,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into Base Rate Loans; or (iii) elect to renew on any Interest Payment Date any Offshore Rate Loans maturing on such Interest Payment Date (or any part thereof in an amount not less than $3,000,000, or that is in an integral multiple of $1,000,000 in excess thereof); provided, that if the aggregate amount of Offshore Rate Loans has been reduced, by payment, prepayment, or conversion of part thereof to be less than $3,000,000, such Offshore Rate Loans shall automatically convert into Base Rate Loans, and on and after such date the right of the Company to continue such Loans as, and convert such Loans into, Offshore Rate Loans shall terminate. 22 (b) The Company shall deliver a Notice of Conversion/Continuation in accordance with Section 10.02 to be received by the Agent not later than Noon (New York time) at least (i) three Business Days in advance of the Conversion Date or continuation date, if the Loans are to be converted into or continued as Offshore Rate Loans; and (ii) one Business Day in advance of the Conversion Date, if the Loans are to be converted into Base Rate Loans; specifying: (A) the proposed Conversion Date or continuation date; (B) the aggregate amount of Loans to be converted or renewed; (C) the nature of the proposed conversion or continuation; and (D) the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to Offshore Rate Loans, the Company has failed to select a new Interest Period to be applicable to such Offshore Rate Loans or if any Default or Event of Default shall then exist, the Company shall be deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans effective as of the expiration date of such current Interest Period. (d) Upon receipt of a Notice of Conversion/ Continuation, the Agent will promptly notify each Bank thereof, or, if no timely notice is provided by the Company, the Agent will promptly notify each Bank of the details of any automatic conversion. All conversions and continuations shall be made pro rata according to the respective outstanding principal amounts of the Loans with respect to which the notice was given held by each Bank. (e) Unless the Majority Banks shall otherwise agree, during the existence of a Default or Event of Default, the Company may not elect to have a Loan converted into or continued as an Offshore Rate Loan. 2.07 Voluntary Termination or Reduction of Commitments. The Company may, upon not less than five Business Days' prior written or telephonic (promptly confirmed with a writing) notice to the Agent, terminate or permanently reduce the Aggregate Commitment by an aggregate minimum amount of $3,000,000; provided that no such reduction or termination shall be permitted if, after giving effect thereto and to any prepayments of the Loans made on the effective date thereof, the sum of the then outstanding principal amount of the Loans and the Stated Amount of the Letters of Credit would exceed the Aggregate Commitment then in effect and, provided, further, that once reduced in accordance with this Section 2.07, 23 the Aggregate Commitment may not be increased. Any reduction of the Aggregate Commitment shall be applied to each Bank's Commitment in accordance with such Bank's Commitment Percentage. All accrued commitment fees to, but not including the effective date of any reduction or termination of Commitments, shall be paid on the effective date of such reduction or termination. 2.08 Optional Prepayments Subject to Section 3.04, the Company may, at any time or from time to time, upon at least one Business Day's notice to the Agent with respect to Base Rate Loans and at least three Business Days' notice to the Agent with respect to Offshore Rate Loans, ratably prepay Loans in whole or in part, in an aggregate amount of $3,000,000 or any multiple of $1,000,000 in excess thereof. Each such notice shall be delivered no later than Noon (New York time). Such notice of prepayment shall specify the date and amount of such prepayment and the type of Loans being prepaid. Such notice shall not thereafter be revocable by the Company and the Agent will promptly notify each Bank thereof and of such Bank's Commitment Percentage of such prepayment. Such notice may be given by telephone, promptly confirmed by a writing. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 3.04. 2.09 [Reserved]. 2.10 Repayment. The Company shall repay to the Banks in full on the Termination Date the aggregate principal amount of the Loans outstanding on the Termination Date. 2.11 Repayment of Letter of Credit Drawings. With respect to each Letter of Credit, (a) i) when a draft or other demand for payment is received by the Issuing Bank, it shall promptly give notice thereof by telecopy or telephone to the Agent and the Company; (ii) when a payment is made by the Issuing Bank, it shall promptly give notice thereof to the Company and the Agent by telephone or telecopy; and (iii) the Company agrees, and shall cause each Co- Applicant through its execution of a Letter of Credit Application to agree, to promptly reimburse the Issuing Bank (by making payment to the Agent for the account of such Issuing Bank) on the date of any payment or disbursement made by such Issuing Bank under such Letter of Credit for such payment or 24 disbursement; provided, however, that the Company shall not be deemed to be in default of this Section 2.11(a) or Section 8.01(a) with respect to any such reimbursement obligation prior to the second Business Day after it has been notified that the related payment or disbursement has been made by the Issuing Bank. Any amount not reimbursed (by making payment to the Issuing Bank) on the date of such payment or distribution by the Issuing Bank shall bear interest from and including the date of such payment or disbursement to but not including the date the Issuing Bank is reimbursed by the Company therefor, payable on demand, at a rate per annum equal to (x) the Base Rate from time to time in effect for each day through the third Business Day after the Company's receipt of the notice provided for in subsection (a)(i) above, and (y) the Base Rate plus 2% per annum for each day thereafter. (b) Subject to the terms and conditions of this Agreement, the Company may use the proceeds of a Loan hereunder to so reimburse the Issuing Bank. If on or before the first Business Day after receipt of the notice required pursuant to Section 2.11(a)(i), the Company requests a Loan to which it is entitled under the terms of this Agreement for the purpose of paying the related reimbursement obligation and in an amount sufficient to fully pay such reimbursement obligation, then the Company shall not be deemed to be in default of its reimbursement obligations under this section or Section 8.01(a) even though such Loan is not made until a subsequent Business Day (pursuant to the notice provisions of Section 2.03). (c) The Company's obligation to reimburse the Issuing Bank for payments and disbursements made by the Issuing Bank under any Letter of Credit shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Company or a Co-Applicant may have or have had against the Issuing Bank (or the Agent or any other Bank), including, without limitation, failure of the Issuing Bank to comply with subsections (a)(i) and (ii) of this section, any defense based on the failure of the demand for payment under such Letter of Credit to conform to the terms of such Letter of Credit or the legality, validity, regularity or enforceability of such Letter of Credit or any defense based on the identity of the transferee of such Letter of Credit or the sufficiency of the transfer if such Letter of Credit is transferable; provided, however, that the Company shall not be obligated to reimburse such Issuing Bank for any wrongful payment or disbursement made under any Letter of Credit as a result of acts or omissions constituting gross negligence or willful misconduct on the part of the Issuing Bank or any of its officers, employees or agents. 25 (d) The Company agrees that it will promptly examine the copy of each Letter of Credit (and any amendments thereto) sent to it by the Issuing Bank, as well as any and all instruments and documents delivered to the Company from time to time, and in the event the Company has any claim of non-compliance with the Company's instructions or of discrepancies or other irregularity, the Company will promptly notify the Issuing Bank and the Agent thereof in writing, and the Company and any Co-Applicant shall be deemed by their execution and delivery of the related Letter of Credit Application to have waived any such claim against the Issuing Bank unless such prompt notice is given. (e) Unless specified to the contrary in the relevant Letter of Credit Application, or any amendment to a Letter of Credit, the Company and each Co-Applicant agree by their execution of such application that the Issuing Bank and its correspondents may receive and accept (i) any item drawn or presented under such Letter of Credit or other document otherwise in order, issued or purportedly issued by an agent, executor, trustee in bankruptcy, receiver or other representative of the party who is authorized under such Letter of Credit to issue such item or other document, as complying with the terms of such Letter of Credit and (ii) documents which on their face appear to comply with the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500 or by later Uniform Customs and Practice fixed by later Congresses of the International Chamber of Commerce as in effect on the date the related Letter of Credit is issued. 2.12 Default in Reimbursement of Issuing Bank. (a) If the Issuing Bank is not reimbursed by the Company for any payment or disbursement under a Letter of Credit, the Agent shall promptly notify each of the other Banks of such unreimbursed payment or disbursement, and upon such notice the other Banks shall promptly on the same day (or the next Business Day if such notice is received after 11:00 a.m., New York time) provide the Agent with immediately available funds in Dollars for the account of such Issuing Bank, covering such Bank's Commitment Percentage of such payment or disbursement. If the Agent subsequently receives from the Company or any Co-Applicant any reimbursement of such payment or disbursement, the Agent shall promptly remit to each Bank its Commitment Percentage of such reimbursement. All interest payments received by the Issuing Bank or the Agent on account of reimbursements under this Agreement shall be promptly distributed by the Agent to the Issuing Bank and the other Banks pro rata according to their respective Commitment Percentages (except to the extent that the Issuing Bank was not promptly reimbursed by any such Bank). (b) The obligation of each Bank to provide the Agent with such Bank's pro rata share of the amount of any payment or disbursement made by the Issuing Bank under any outstanding Letter of Credit shall be absolute and unconditional under any and all 26 circumstances and irrespective of any setoff, counterclaim or defense to payment which such Bank may have or have had against the Issuing Bank (or the Agent or any other Bank), including, without limitation, any defense based on the failure of the demand for payment under such Letter of Credit to conform to the terms of such Letter of Credit or the legality, validity, regularity or enforceability of such Letter of Credit or any defense based on the identity of the transferee of such Letter of Credit or the sufficiency of the transfer if such Letter of Credit is transferable; provided, however, that the Banks shall not be obligated to reimburse such Issuing Bank for any wrongful payment or disbursement made under any Letter of Credit as a result of acts or omissions constituting gross negligence or willful misconduct on the part of such Issuing Bank or any of its officers, employees or agents. 2.13 Interest. (a) Subject to subsection 2.13(c), each Loan shall bear interest on the outstanding principal amount thereof from the date when made until it becomes due at a rate per annum equal to the Offshore Rate or the Base Rate, as the case may be, plus the Applicable Margin. (b) Interest on each Loan shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of Loans pursuant to Section 2.08 for the portion of the Loans so prepaid and upon payment (including prepayment) in full thereof and, during the existence of any Event of Default, interest shall be paid on demand. (c) While any Event of Default exists or after acceleration, the Company shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all Obligations due and unpaid at a rate per annum equal to the Base Rate plus 2%. 2.14 Fees. (a) Fees Payable to BofA and the Agent. The Company shall pay to the Agent for the Arranger's and the Agent's own account fees in the amounts and at the times set forth in a letter agreement between the Company, BofA and the Arranger dated April 19, 1995. (b) Commitment Fees. The Company shall pay to the Agent for the account of each Bank a commitment fee of 0.20 percent per annum on the average daily unused portion of such Bank's Commitment, computed as of the end of each calendar quarter in arrears based upon the daily utilization for that quarter as calculated by the Agent. Such commitment fee shall accrue from the Closing Date to the Termination Date and shall be due and payable quarterly in arrears on the fifteenth day after the end of each calendar quarter through the Termination Date, with the first 27 payment due on July 15, 1995 and the final payment to be made on the Termination Date; provided that, (i) in connection with any reduction of Commitments pursuant to Section 2.07, the accrued commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction, with the next succeeding quarterly payment being calculated on the basis of the period from the reduction date to the end of the quarter in which such reduction occurs and (ii) in connection with any termination of the Commitments pursuant to Section 2.07 or Article VIII, the accrued commitment fee shall be paid on the date on which the termination takes place. The commitment fees provided in this subsection shall accrue at all times after the Closing Date, including at any time during which one or more conditions in Article IV are not met. (c) Letter of Credit Fees. (i) The Company shall pay to the Agent for the account of the Banks, pro rata, a fee, according to their respective Commitment Percentages, with respect to all Letters of Credit issued for the account of the Company. Such fee shall be computed as of the end of each calendar quarter as follows: (x) With respect to all Financial L/Cs, 0.75 percent per annum of the daily average Stated Amount of each such Letter of Credit; and (y) With respect to Performance L/Cs, 0.375 percent per annum of the daily average Stated Amount of such Performance L/Cs. Such Letter of Credit fees shall be payable in arrears on the fifteenth day after the end of each calendar quarter for Letters of Credit outstanding during such quarter, with the first such payment due on July 15, 1995, and on the expiration of the last Letter of Credit outstanding under this Agreement. (ii) The Company shall pay to the Issuing Bank for its sole account: (x) In arrears on the fifteenth day after the end of each calendar quarter, with the first such payment due on July 15, 1995, and on the expiration of the last Letter of Credit issued by the Issuing Bank and outstanding under this Agreement, an issuance fee of 0.10 percent per annum of the daily average Stated Amount of all 28 Letters of Credit issued by the Issuing Bank and outstanding during the preceding calendar quarter; and (y) From time to time, upon the amendment of any Letter of Credit, such fees as the Issuing Bank customarily charges in connection therewith at the times customarily charged by the Issuing Bank. (d) Fees under the Existing Credit Agreement. On the Closing Date, the Company shall pay to the Agent the fees owed under the Existing Credit Agreement which have not heretofore been paid. 2.15 Computation of Fees and Interest. (a) All computations of interest payable in respect of Base Rate Loans at all times as the Base Rate is determined by BofA's "reference rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest under this Agreement shall be made on the basis of a 360-day year and actual days elapsed. (b) The Agent will, with reasonable promptness, notify the Company and the Banks of each determination of an Offshore Rate; provided that any failure to do so shall not relieve the Company of any liability hereunder or provide the basis for any claim against the Agent. Any change in the interest rate on a Loan resulting from a change in the Eurodollar Reserve Percentage shall become effective as of the opening of business on the day on which such change in the Eurodollar Reserve Percentage becomes effective. The Agent will with reasonable promptness notify the Company and the Banks of the effective date and the amount of each such change, provided that any failure to do so shall not relieve the Company of any liability hereunder or provide the basis for any claim against the Agent. (c) Each determination of an interest rate by the Agent pursuant hereto shall be conclusive and binding on the Company and the Banks in the absence of manifest error. 2.16 Payments by the Company. (a) All payments (including prepayments) to be made by the Company on account of principal, interest, fees and other amounts required hereunder, including reimbursement of drawings under Letters of Credit, shall be made without set-off, recoupment or counterclaim and shall, except as otherwise expressly provided herein, be made to the Agent for the ratable account of the Banks at the Agent's Payment Office, in dollars and in immediately available funds, no later than 1:00 p.m. (New York time) on the dates specified herein. The Agent will promptly distribute to each Bank its Commitment Percentage (or other applicable share as 29 expressly provided herein) of such principal, interest, fees or other amounts, in like funds as received. Any payment which is received by the Agent later than 1:00 p.m. (New York time) shall be deemed to have been received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue. (b) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be; subject to the provisions set forth in the definition of "Interest Period" herein. (c) Unless the Agent shall have received notice from the Company prior to the date on which any payment is due to the Banks hereunder that the Company will not make such payment in full as and when required hereunder, the Agent may assume that the Company has made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent the Company shall not have made such payment in full to the Agent, each Bank shall repay to the Agent on demand such amount distributed to such Bank, together with interest thereon for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate as in effect for each such day. 2.17 Payments by the Banks to the Agent. (a) Unless the Agent shall have received notice from a Bank on the Closing Date or, with respect to each Borrowing after the Closing Date, at least one Business Day prior to the date of any proposed Borrowing, that such Bank will not make available to the Agent as and when required hereunder for the account of the Company the amount of that Bank's Commitment Percentage of the Borrowing, the Agent may assume that each Bank has made such amount available to the Agent in immediately available funds on the Borrowing date and the Agent may (but shall not be so required), in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent any Bank shall not have made its full amount available to the Agent in immediately available funds and the Agent in such circumstances has made available to the Company such amount, that Bank shall on the next Business Day following the date of such Borrowing make such amount available to the Agent, together with interest at the Federal Funds Rate for and determined as of each day during such period. A notice of the Agent submitted to any Bank with respect to amounts owing under this subsection 2.17(a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Agent shall constitute such Bank's Loan on the date of borrowing for all purposes of this Agreement. If such amount is not made available to the Agent on the next Business Day following 30 the date of such Borrowing, the Agent shall notify the Company of such failure to fund and, upon demand by the Agent, the Company shall pay such amount to the Agent for the Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing. (b) The failure of any Bank to make any Loan on any date of borrowing shall not relieve any other Bank of any obligation hereunder to make a Loan on the date of such borrowing, but no Bank shall be responsible for the failure of any other Bank to make the Loan to be made by such other Bank on the date of any borrowing. 2.18 Sharing of Payments, Etc. If, other than as expressly provided elsewhere herein, any Bank shall obtain on account of any Credit Extension made by it any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Commitment Percentage of payments on account of the Credit Extensions obtained by all the Banks, such Bank shall forthwith (a) notify the Agent of such fact, and (b) purchase from the other Banks such participations in the Credit Extensions made by them as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Bank, such purchase shall to that extent be rescinded and each other Bank shall repay to the purchasing Bank the purchase price paid therefor, together with an amount equal to such paying Bank's Commitment Percentage (according to the proportion of (i) the amount of such paying Bank's required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered. The Company agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 2.18 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.09) with respect to such participation as fully as if such Bank were the direct creditor of the Company in the amount of such participation. The Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased pursuant to this Section 2.18 and will in each case notify the Banks following any such purchases or repayments. 2.19 Pro Rata Treatment. All Borrowings and repayments shall be effected so that after giving effect thereto all Loans shall be pro rata among the Banks according to their Commitment Percentages. All participations and Letters of Credit shall be effected so that after giving effect thereto all participations in each Letter of Credit shall be pro rata among the Banks according to their Commitment Percentages. 31 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 3.01 Taxes. (a) Subject to subsection 3.01(g), any and all payments by the Company to each Bank or the Agent under this Agreement shall be made free and clear of, and without deduction or withholding for, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Bank and the Agent, such taxes (including income taxes or franchise taxes) imposed on or measured by each Bank's net income (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). (b) In addition, the Company shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents (hereinafter referred to as "Other Taxes"). (c) Subject to subsection 3.01(g), the Company shall indemnify and hold harmless each Bank and the Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 3.01) paid by the Bank or the Agent and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days from the date the Bank or the Agent makes written demand therefor, except that the Company shall not be required to make such payment within 30 days if (i) no Default or Event of Default has occurred and is continuing and (ii) the Company is diligently contesting such Taxes or Other Taxes and has agreed in writing to the satisfaction of each Bank, the Issuing Bank and the Agent to pay to each such Bank, the Issuing Bank and the Agent all such penalties, fines and interest incurred by such Bank, the Issuing Bank and the Agent as a result of the Company's actions and the resulting delay in payment. Notwithstanding the foregoing, if at any time a Default or Event of Default occurs and is continuing, each Bank may request the Company, and the Company shall, make payment under this indemnification within 10 days from the date the Bank, the Issuing Bank or the Agent makes written demand therefor. In any event, the obligations owed by the Company under this subsection (c) shall be paid not later than the Termination Date, unless otherwise agreed by the affected Bank and the Company. (d) If the Company shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum 32 payable hereunder to any Bank or the Agent, then, subject to subsection 3.01(g): (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.01) such Bank or the Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made; (ii) the Company shall make such deductions, and (iii) the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (e) Within 30 days after the date of any payment by the Company of Taxes or Other Taxes, the Company shall furnish to the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Agent. (f) Each Bank which is a foreign person (i.e., a person other than a United States person for United States Federal income tax purposes) agrees no later than the Closing Date (or, in the case of a Bank which becomes a party hereto pursuant to Section 10.08 after the Closing Date, the date upon which the Bank becomes a party hereto) to deliver to the Company through the Agent two accurate and complete signed originals of Internal Revenue Service Form 1001, 4224 or any successor thereto, as appropriate, in each case indicating that the Bank is on the date of delivery thereof entitled to receive payments under this Agreement free from withholding of United States Federal income tax. (g) The Company will not be required to pay any additional amounts in respect of United States Federal income tax pursuant to subsection 3.01(d) to any Bank for the account of any Lending Office of such Bank: (i) if the obligation to pay such additional amounts would not have arisen but for a failure by such Bank to comply with its obligations under subsection 3.01(f) in respect of such Lending Office; or (ii) if such Bank shall have delivered to the Company the forms referred to in subsection 3.01(f), and such Bank shall not at any time be entitled to exemption from deduction or withholding of United States Federal income tax in respect of payments by the Company hereunder for the account of such Lending 33 Office for any reason other than a change in United States law or regulations or in the official interpretation of such law or regulations by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such forms. (h) If the Company is required to pay additional amounts to any Bank or the Agent pursuant to subsection 3.01(d), then such Bank shall use its reasonable best efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Company which may thereafter accrue if such change in the judgment of such Bank is not otherwise disadvantageous to the tax planning of such Bank. 3.02 Illegality. (a) If any Bank determines that the introduction of any law or regulation, or any change in any law or regulation or in the interpretation or administration thereof, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Bank or its Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank to the Company through the Agent, the obligation of that Bank to make Offshore Rate Loans shall be suspended until the Bank shall have notified the Agent and the Company that the circumstances giving rise to such determination no longer exists. (b) If a Bank determines that it is unlawful to maintain any Offshore Rate Loan, the Company shall prepay in full all Offshore Rate Loans of that Bank then outstanding, together with interest accrued thereon, either on the last day of the Interest Period thereof if the Bank may lawfully continue to maintain such Offshore Rate Loans to such day, or immediately, if the Bank may not lawfully continue to maintain such Offshore Rate Loans, together with any amounts required to be paid in connection therewith pursuant to Section 3.04. (c) If the Company is required to prepay any Offshore Rate Loan immediately as provided in subsection 3.02(b), then concurrently with such prepayment, the Company shall borrow from the affected Bank, in the amount of such repayment, a Base Rate Loan. (d) Before giving any notice to the Agent pursuant to this Section 3.02, the affected Bank shall designate a different Lending Office with respect to its Offshore Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Bank, be illegal or otherwise disadvantageous to the Bank. 34 3.03 Increased Costs and Reduction of Return (a) If any Bank determines that, due to either (i) the introduction of or any change (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the Offshore Rate) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there is any increase in the cost to such Bank of agreeing to make or making, funding or maintaining any Offshore Rate Loans or issuing or participating in any Letter of Credit, then the Company shall be liable for, and shall from time to time, upon demand therefor by such Bank (with a copy of such demand to the Agent), pay to the Agent for the account of such Bank, upon receipt of a certificate from such Bank, additional amounts as are sufficient to compensate such Bank for such increased costs. Such certificate shall set forth the amount owed to such Bank by the Company under this subsection (a), shall explain the reason the payment is required and shall be conclusive absent manifest error. (b) If any Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Bank (or its Lending Office) or any corporation controlling the Bank, with any Capital Adequacy Regulation; reduces or would reduce the rate of return on such Bank's capital as a consequence of its Commitment, the Loans, the Letters of Credit or its participation therein to a level below that which such Bank could have achieved but for such introduction, change or compliance (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy) then, upon demand of such Bank (with a copy to the Agent), the Company shall pay to the Bank, from time to time as specified by the Bank, upon receipt of a certificate from such Bank, additional amounts sufficient to compensate the Bank for such reduction. Such certificate shall set forth the amount owed to such Bank by the Company under this subsection (b), shall explain the reason the payment is required and shall be conclusive absent manifest error. 3.04 Funding Losses. The Company agrees to reimburse each Bank and to hold each Bank harmless from any loss or expense which the Bank may sustain or incur as a consequence of: (a) the failure of the Company to make any payment or required prepayment of principal of any Offshore Rate Loan (including payments made after any acceleration thereof); (b) the failure of the Company to borrow, continue or convert a Loan after the Company has given a Notice of Borrowing or a Notice of Conversion/Continuation; 35 (c) the failure of the Company to make any prepayment after the Company has given a notice in accordance with Section 2.08; (d) the prepayment of an Offshore Rate Loan on a day which is not the last day of the Interest Period with respect thereto; or (e) the conversion pursuant to Section 2.06 of any Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the respective Interest Period; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans hereunder or from fees payable to terminate the deposits from which such funds were obtained. Solely for purposes of calculating amounts payable by the Company to the Banks under this Section 3.04, each Offshore Rate Loan made by a Bank (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the IBOR rate used in determining the Offshore Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Offshore Rate Loan is in fact so funded. 3.05 Inability to Determine Rates. If the Agent determines that for any reason adequate and reasonable means do not exist for ascertaining the Offshore Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan or that the Offshore Rate applicable pursuant to subsection 2.13(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly reflect the cost to the Banks of funding such Loan, the Agent will forthwith give notice of such determination to the Company and each Bank. Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans hereunder shall be suspended until the Agent revokes such notice in writing. Upon receipt of such notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation. If the Company does not revoke such notice, the Banks shall make, convert or continue the Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Loans instead of Offshore Rate Loans. 3.06 Substitution of Banks. Upon the receipt by the Company from any Bank (an "Affected Bank") of a claim for compensation pursuant to Sections 3.01, 3.02 or 3.03, the Company may: (i) request one or more of the other Banks to acquire and assume all or part of such Affected Bank's Loans and Commitments but no Bank shall be required to do so; or (ii) designate a replacement bank or financial institution satisfactory to the Company to acquire and assume all or part of such Affected Bank's Loans and Commitments (a "Replacement Bank"). Any such designation of a Replacement Bank under clause (ii) shall be subject to the prior 36 written consent of the Agent, and such Replacement Bank shall comply with Section 10.08 as if it were an Assignee. 3.07 Survival. The agreements and obligations of the Company in this Article III shall survive the payment of all other Obligations. ARTICLE IV CONDITIONS PRECEDENT 4.01 Conditions of Initial Loans. This Agreement shall not be effective until (i) the Agent shall have received on or before the Closing Date the items set forth in subsections (a) through (g) in form and substance satisfactory to the Agent and each Bank in sufficient copies for each Bank and (ii) the condition that the events set forth in subsection (h) shall have been completed to the satisfaction of the Company: (a) Second Amended and Restated Credit Agreement. This Agreement, executed by the Company, the Agent and each of the Banks (provided that the Agent may accept a facsimile transmitted signature page from any Bank which shall bind such Bank with the same force and effect as an originally executed signature page from such Bank); (b) Notes. The Notes, executed by the Company; (c) Resolutions; Incumbency. (i) Copies of the resolutions of the board of directors of the Company or any duly authorized committee thereof approving and authorizing the execution, delivery and performance by the Company of this Agreement and the other Loan Documents to be delivered by the Company hereunder, and authorizing the Credit Extensions, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Company; and (ii) A certificate of the Secretary or Assistant Secretary of the Company, certifying the names and true signatures of the officers of the Company authorized to execute, deliver and perform, as applicable, this Agreement and all other Loan Documents to be delivered by each such Person hereunder; (d) Articles of Incorporation; By-laws. The articles or certificate of incorporation and bylaws of the Company as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of the Company as of the Closing Date; 37 (e) Opinion of Counsel to the Company. An opinion of John A. Haveman, counsel to the Company, addressed to the Agent and the Banks, substantially in the form of Exhibit F; (f) Payment of Fees and Expenses. The Company shall have paid all fees due on the Closing Date, together with the Agent's Attorney Costs incurred up to and including the Closing Date; (g) Other Documents. Such other approvals, opinions or documents as the Agent or any Bank may request; and (h) Cancelled Notes. Receipt by the Company of cancelled Notes that were executed by the Company pursuant to the Existing Credit Agreement (provided that the Agent may deliver such cancelled Notes to the Company promptly after the Closing Date). 4.02 Conditions to All Credit Extensions. The obligation of each Bank to make any Credit Extension to be made by it hereunder is subject to the satisfaction of the following conditions precedent on the date of the relevant Credit Extension: (a) Notice of Borrowing or Continuation/Conversion. With respect to each Borrowing, the Agent shall have received a Notice of Borrowing or a Notice of Continuation/Conversion, as applicable; (b) Letter of Credit Request. With respect to each request for the issuance or amendment of a Letter of Credit, the Issuing Bank shall have received (and in the event the Issuing Bank is not the Agent, the Agent shall have received) (i) a Letter of Credit Application, with all blanks completed, signed by the Company and any Subsidiary of the Company also requesting the issuance of such Letter of Credit and (ii) a written certificate signed by a Responsible Officer, designating the Letter of Credit as a Financial L/C or a Performance L/C and indicating whether such Letter of Credit supports workmen's compensation obligations; (c) Continuation of Representations and Warranties. The representations and warranties made by the Company contained in Article V shall be true and correct on and as of such Credit Extension Date with the same effect as if made on and as of such date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date); and (d) No Existing Default. No Default or Event of Default shall exist or shall result from such Credit Extension. Each Notice of Borrowing, Notice of Continuation/Conversion or Letter of Credit Application submitted by the Company hereunder shall constitute a representation and warranty by the Company hereunder, as of the date of each such notice or application and as 38 of the date of each Credit Extension that the conditions in Section 4.02 are satisfied. ARTICLE V REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Agent and each Bank that: 5.01 Corporate Existence and Power. (a) Each of the Company and its Material Subsidiaries: (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (ii) has the power and authority and all material governmental licenses, authorizations, consents and approvals to own its assets and carry on its business; (iii) is duly qualified as a foreign corporation, licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification, except where the failure to be so qualified, licensed or in good standing would not adversely affect the business or operations of the Company or such Subsidiary in any significant manner; and (iv) is in compliance with all material requirements of laws and regulations applicable to it. (b) Each of the Company's other Subsidiaries: (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (ii) has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, carry on its business; (iii) is duly qualified as a foreign corporation, licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the 39 conduct of its business requires such qualification; and (iv) is in compliance with all material requirements of laws and regulations applicable to it; except where any failure to comply with the requirements of this subsection (b) would not, individually or in the aggregate, result in a Material Adverse Effect. 5.02 Corporate Authorization; No Contravention. The Company has the power and authority to execute, deliver and perform its obligations under the Loan Documents. The execution, delivery and performance by the Company of this Agreement and any other Loan Document have been duly authorized by all necessary corporate action, and do not and will not: (a) contravene the terms of any of the Company's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which the Company is a party or any order, injunction, writ or decree of any Governmental Authority to which the Company or its property is subject; or (c) violate any law or regulation applicable to the Company. 5.03 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Company of the Agreement or any other Loan Document. 5.04 Binding Effect. This Agreement and each other Loan Document to which the Company is a party, when executed and delivered, will constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except (a) as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability and (b) for any limitations on the enforceability of the Obligations to a Bank which has not complied with the requirements of the Minnesota Business Activity Law, Section 290.371 of the Minnesota Revised Statutes, for the relevant period. 5.05 Litigation. Attached hereto as Schedule 5.05 is a list of all material litigation in which the Company or any Subsidiary is a plaintiff or a defendant as of the Closing Date. As of the Closing Date and except as provided in Schedule 5.05, there are no 40 actions, suits, proceedings, claims or disputes pending, or to the best knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company, or its Subsidiaries or any of their respective Properties which: (a) purport to affect or pertain to this Agreement, or any other Loan Document, or any of the transactions contemplated hereby or thereby; or (b) if determined adversely to the Company, or its Subsidiaries, would reasonably be expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery and performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided. 5.06 No Default. No Default or Event of Default exists or would result from the incurring of any Obligations by the Company. Neither the Company nor any of its Subsidiaries is in default under or with respect to any Contractual Obligation in any respect which, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect. 5.07 ERISA Compliance. Except as referenced or provided for in either Schedule 5.05 or 5.07: (a) To the best knowledge of the Company, no facts or circumstances exist which would reasonably be expected to have a Material Adverse Effect in connection with the failure of any Plan, or the failure of the Company, an ERISA Affiliate or any Person with regard to the Plan, to comply with the applicable provisions of ERISA, the Code and other Federal or state law. The Company and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (b) There are no pending or, to the best knowledge of Company, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or would, if determined adversely to the Company or any Plan, reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or would reasonably be expected to result in a Material Adverse Effect. (c) To the best knowledge of the Company (i) no ERISA Event has occurred or is reasonably expected to occur; (ii) neither the Company nor any ERISA Affiliate has incurred, nor reasonably 41 expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iii) neither the Company nor any ERISA Affiliate has incurred, nor reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (iv) neither the Company nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 5.08 Title to Properties. As of the Closing Date, the property of the Company and its Subsidiaries is subject to no Liens, other than Permitted Liens. 5.09 Taxes. The Company and its Subsidiaries have filed all Federal and other material tax returns and reports required to be filed, and have paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their Properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP and no Notice of Lien has been filed or recorded. There is no proposed tax assessment against the Company or any of its Subsidiaries which would, if the assessment were made, have a Material Adverse Effect. 5.10 Financial Condition. (a) The audited consolidated financial statements of the Company and its Subsidiaries dated December 31, 1994 and the unaudited consolidated financial statements of the Company and its Subsidiaries dated March 31, 1995: (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (ii) are complete, accurate and fairly present the financial condition of the Company and its Subsidiaries as of the date thereof and results of operations for the period covered thereby. (b) Since March 31, 1995, there has been no Material Adverse Effect. (c) Attached hereto as Schedule 5.10 is a list of (i) Contingent Obligations of the Company and its consolidated Subsidiaries as of the Closing Date and (ii) general partnership interests owned by the Company and its consolidated Subsidiaries as of the Closing Date, showing the aggregate liabilities of such partnerships and Contingent Obligations as of March 31, 1995. 42 5.11 Environmental Matters. (a) As of the Closing Date, except as specifically disclosed in Schedule 5.11, the on-going operations of the Company and each of its Subsidiaries comply in all respects with all Environmental Laws, except such non-compliance which would not (if enforced in accordance with applicable law) result in liability that would reasonably be expected to have a Material Adverse Effect. (b) As of the Closing Date, except as specifically disclosed in Schedule 5.11, none of the Company, any of its Subsidiaries or any of their respective present property or operations is subject to any outstanding written order from or agreement with any Governmental Authority nor subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material. (c) Except as specifically disclosed in Schedule 5.11, there are no Hazardous Materials or other conditions or circumstances existing with respect to any property, or arising from operations prior to the Closing Date, of the Company or any of its Subsidiaries that would reasonably be expected to give rise to Environmental Claims with a potential liability of the Company and its Subsidiaries that in the aggregate for any such condition, circumstance or property would reasonably be expected to have a Material Adverse Effect. 5.12 Regulated Entities. None of the Company, any Person controlling the Company, or any Subsidiary of the Company, is (a) an "investment company" within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness, except that certain Persons who may be deemed to control the Company are registered investment companies within the meaning of the Investment Company Act of 1940. 5.13 No Burdensome Restrictions. Neither the Company nor any of its Subsidiaries is a party to or bound by any Contractual Obligation, or subject to any charter or corporate restriction, or any requirement of law, which could reasonably be expected to have a Material Adverse Effect. 5.14 Solvency. The Company and each of its Material Subsidiaries are Solvent. 5.15 Labor Relations. As of the Closing Date, there are no strikes, lockouts or other labor disputes against the Company or any of its Subsidiaries, or, to the best of the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries, and no significant unfair labor practice complaint is pending against the Company or any of its Subsidiaries 43 or, to the best knowledge of the Company, threatened against any of them before any Governmental Authority. 5.16 Copyrights, Patents, Trademarks and Licenses, etc. The Company or its Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, franchises, authorizations and other rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of the Company, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed by the Company or any of its Subsidiaries infringes upon any rights held by any other Person; except as specifically disclosed in Schedule 5.05, no claim or litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Company, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. 5.17 Material Subsidiaries and Equity Investments. As of the Closing Date, the Company has no Material Subsidiaries other than Computing Devices Canada Ltd. and has no equity investment in any other corporation or entity which exceeds 10% of Consolidated Total Assets. 5.18 Insurance. As of the Closing Date, the properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Company or such Subsidiary operates. 5.19 Full Disclosure. None of the representations or warranties made by the Company or any of its Subsidiaries in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in each exhibit, report, statement or certificate furnished by or on behalf of the Company in connection with the Loan Documents as of the date such statements are made or deemed made, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading. ARTICLE VI AFFIRMATIVE COVENANTS The Company covenants and agrees that, so long as any Bank shall have any Commitment hereunder, or any Loan or other 44 Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in writing: 6.01 Financial Statements. The Company shall deliver to the Agent in form and detail satisfactory to the Agent and the Majority Banks, with sufficient copies for each Bank: (a) as soon as available, but not later than 120 days after the end of each fiscal year, a copy of the audited consolidated financial statements of the Company as of the end of such fiscal year, setting forth in each case in comparative form the figures for the previous year, and accompanied by the opinion of KPMG Peat Marwick LLP or another nationally-recognized independent public accounting firm which report shall state that such consolidated financial statements present fairly in all material respects the financial position of the Company and its Subsidiaries as of the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP. Such opinion shall not be qualified or limited for any reason, including, without limitation, because of a restricted or limited examination by such accountant of any material portion of the Company's or any Subsidiary's records; and (b) as soon as available, but not later than 60 days after the end of each calendar quarter, a copy of the Company's quarterly report on Form 10-Q filed with the SEC with respect to such fiscal quarter and an operating report similar to that provided by the Company under the Existing Credit Agreement showing the relevant data by business unit of the Company. 6.02 Certificates; Other Information. The Company shall furnish to the Agent, with sufficient copies for each Bank: (a) concurrently with the delivery of the financial statements referred to in subsections 6.01(a) and (b) above, a Compliance Certificate, signed by a Responsible Officer; (b) copies of each registration statement of the Company other than with respect to employee benefit plans, each periodic report regarding the Company required pursuant to Section 13 of the Exchange Act, each annual report, each proxy statement and any amendments to any of the above filed or reported by the Company with or to any securities exchange or the Securities and Exchange Commission, of each communication from the Company or any Subsidiary to the Company's shareholders generally, promptly upon the filing or making thereof and copies of such other filings, reports and communications with the Company's shareholders as the Agent may from time to time request; (c) upon release, copies of all financially material press releases; (d) promptly after the creation or Acquisition of any Material Subsidiary, the name of such Subsidiary, a description of 45 its business, the price paid for the stock or assets of such Subsidiary, its net worth and the value of its assets; and (e) promptly, such additional business, financial, corporate affairs and other information as the Agent, at the request of any Bank, may from time to time reasonably request. 6.03 Notices. The Company shall promptly notify the Agent and each Bank upon a Responsible Officer of the Company obtaining knowledge: (a) of the occurrence of any Default or Event of Default; (b) of (i) any breach or non-performance of, or any default under, any Contractual Obligation of the Company or any of its Subsidiaries which would reasonably be expected to result in a Material Adverse Effect; and (ii) any dispute, litigation, investigation, proceeding or suspension which may exist at any time between the Company or any of its Subsidiaries and any Governmental Authority which would reasonably be expected to result in a Material Adverse Effect; (c) of the commencement of, or any material development in, any litigation or proceeding affecting the Company or any Subsidiary (i) which, if adversely determined, would reasonably be expected to have a Material Adverse Effect, or (ii) in which the relief sought is an injunction or other stay of the performance of this Agreement or any Loan Document; (d) of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted or threatened against the Company or any of its Subsidiaries or any of their respective Properties pursuant to any applicable Environmental Laws, (ii) all other Environmental Claims, and (iii) any environmental or similar condition on any real property adjoining or in the vicinity of the property of the Company or any Subsidiary that could reasonably be anticipated to cause the property of the Company or any of its Subsidiaries or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws, if, individually or in the aggregate, the events or conditions described or the amount claimed in clauses (i), (ii) and (iii) would reasonably be expected to result in a Material Adverse Effect; (e) of the occurrence of any ERISA Event affecting the Company or any ERISA Affiliate, and deliver to the Agent and each Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Company or any ERISA Affiliate with respect to such event; 46 (f) any Material Adverse Effect subsequent to the date of the most recent audited financial statements of the Company delivered to the Banks pursuant to subsection 6.01(a); and (g) of any labor controversy resulting in or threatening to result in any strike, work stoppage, boycott, shutdown or other labor disruption against or involving the Company or any of its Subsidiaries. Each notice pursuant to this Section shall be accompanied by a written statement by a Responsible Officer of the Company setting forth details of the occurrence referred to therein, and stating what action the Company proposes to take with respect thereto and at what time. Each notice under subsection 6.03(a) shall describe with particularity any and all clauses or provisions of this Agreement or other Loan Document that have been breached or violated. 6.04 Preservation of Corporate Existence, Etc. The Company shall, and shall cause each of its Subsidiaries to: (a) except as permitted in Section 7.02, preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b) preserve and maintain in full force and effect all material rights, privileges, qualifications, permits, licenses and franchises necessary or desirable in the normal conduct of its business except in connection with transactions permitted by Section 7.02; (c) use its reasonable efforts, in the Ordinary Course of Business, to preserve its business organization and preserve the goodwill and business of the customers, suppliers and others having material business relations with it; and (d) preserve or renew all of its registered trademarks, trade names and service marks, the non-preservation of which would reasonably be expected to have a Material Adverse Effect, provided, however, that the Company shall not be deemed to be in default under this Section 6.04 if a Subsidiary (other than a Material Subsidiary) fails to comply herewith so long as such failure is not material. 6.05 Maintenance of Property. The Company shall maintain, and shall cause each of its Subsidiaries to maintain, and preserve all its property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted, make all necessary repairs thereto and renewals and replacements thereof, and to keep such property free of any Hazardous Materials, except where the failure to do so would not reasonably be expected to result in a Material Adverse Effect, except as permitted by 47 Section 7.02. The Company shall use at least the standard of care typical in the industry in the operation of its facilities. 6.06 Insurance. The Company shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable independent insurers, insurance with respect to its Properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons; including workers' compensation insurance, public liability and property and casualty insurance. Upon request of the Agent or any Bank, the Company shall furnish the Agent, with sufficient copies for each Bank, at reasonable intervals (but not more than once per calendar year) a certificate of a Responsible Officer of the Company (and, if requested by the Agent, any insurance broker of the Company) setting forth the nature and extent of all insurance maintained by the Company and its Subsidiaries in accordance with this Section 6.06 or any Collateral Documents (and which, in the case of a certificate of a broker, were placed through such broker). 6.07 Payment of Obligations. The Company shall, and shall cause its Subsidiaries to, pay and discharge as the same shall become due and payable, all their respective obligations and liabilities, including: (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness; provided, however, that the Company and its Subsidiaries shall not be deemed to be in default under this Section 6.07 if failure to comply herewith would not result in a Material Adverse Effect. 6.08 Compliance with Laws. The Company shall comply, and shall cause each of its Subsidiaries to comply, in all material respects with all material regulations and requirements of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act), except such as may be contested in good faith or as to which a bona fide dispute may exist. 6.09 Inspection of Property and Books and Records. The Company shall maintain and shall cause each of its Subsidiaries to 48 maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company and such Subsidiaries. The Company shall permit, and shall cause each of its Subsidiaries to permit, representatives and independent contractors of the Agent or any Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; provided, however, when a Default exists, (i) the Agent or any Bank may do any of the foregoing at any time during normal business hours and without advance notice and (ii) such inspection, examination and meetings shall be at the Company's expense. 6.10 Environmental Laws. (a) The Company shall, and shall cause each of its Subsidiaries to, conduct its operations and keep and maintain its property in compliance in all material respects with all Environmental Laws. (b) Upon the written request of the Agent or any Bank, the Company shall submit to the Agent with sufficient copies for each Bank, at the Company's sole cost and expense, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report required pursuant to subsection 6.03(d). 6.11 Use of Proceeds. The Company shall use the proceeds of the Loans and the Letters of Credit solely for working capital and other general lawful corporate purposes. 6.12 Further Assurances. (a) The Company shall ensure that all written information, exhibits and reports furnished to the Agent or the Banks do not and will not contain any untrue statement of a material fact and do not and will not omit to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and will promptly disclose to the Agent and the Banks and correct any defect or error that may be discovered therein or in any Loan Document or in the execution, acknowledgement or recordation thereof. (b) Promptly upon request by the Agent or the Majority Banks, the Company shall (and shall cause any of its Subsidiaries to) do, execute, acknowledge and deliver any and all such further acts, certificates, assurances and other instruments as the Agent or such Banks, as the case may be, may reasonably require from time to time in order (i) to carry out more effectively the purposes of 49 this Agreement or any other Loan Document, and (ii) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Agent and Banks the rights granted or now or hereafter intended to be granted to the Banks under any Loan Document or under any other document executed in connection therewith. ARTICLE VII NEGATIVE COVENANTS The Company hereby covenants and agrees that, so long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in writing: 7.01 Limitation on Liens. The Company shall not, and shall not suffer or permit any of its Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following ("Permitted Liens"): (a) any Lien created under any Loan Document; (b) Liens for taxes, fees, assessments or other governmental charges or statutory obligations which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 6.07, provided that no notice of Lien has been filed or recorded under the Code; (c) Liens arising in the Ordinary Course of Business in connection with obligations that are not overdue or which are being contested in good faith and by appropriate proceedings, including, but not limited to Liens under bid, performance and other surety bonds, supersedeas and appeal bonds, Liens on advance or progress payments received from customers under contracts for the sale, lease or license of goods, software or services and upon the products being sold or licensed, in each case securing performance of the underlying contract or the repayment of such advances in the event final acceptance of performance under such contracts does not occur; and Liens upon funds collected temporarily from others pending payment or remittance on their behalf; (d) Liens (other than any Lien imposed by ERISA) required in the Ordinary Course of Business in connection with workers' compensation, unemployment insurance and other social security legislation; (e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the Ordinary Course of Business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the 50 property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Subsidiaries; (f) purchase money security interests on any property acquired or held by the Company or its Subsidiaries in the Ordinary Course of Business securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property to the extent permitted under Section 7.04; provided that (i) any such Lien attaches to such property concurrently with or within 20 days after the acquisition thereof, (ii) such Lien attaches solely to the property so acquired in such transaction, and (iii) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property; (g) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board, and (ii) such deposit account is not intended by the Company or any of its Subsidiaries to provide collateral to the depository institution; (h) any Lien on any asset existing at the time such asset is acquired by the Company or one of its Subsidiaries or is merged into or consolidated with the Company or one of its Subsidiaries and not created in contemplation of such event and any replacement Lien arising out of the extension, renewal or replacement of the related obligation secured by such Lien, so long as any such replacement Lien does not extend to property not covered by the Lien replaced or renewed; and (i) any Lien (not otherwise permitted by this Section 7.01) securing an obligation of the Company or any Subsidiary if the aggregate amount of all such obligations secured by all such Liens does not exceed 15% of Consolidated Total Assets. 7.02 Mergers, Consolidations and Dispositions of Assets. (a) Except as provided in Section 7.02(b), the Company shall not, and shall not permit any of its Subsidiaries to: (i) sell, assign, lease, convey, transfer or otherwise dispose of (whether in one or a series of related transactions) any property or assets (including accounts and notes receivable, with or without recourse) (collectively, "transfer") to any Person except in the Ordinary Course of Business; (ii) transfer to any Person other than the Company or a Subsidiary any outstanding capital stock that has been issued by any Subsidiary; or (iii) consolidate with or merge into any other Person. (b) Section 7.02(a) shall not apply to or restrict: 51 (i) the merger or consolidation of any Subsidiary into the Company, or with or into any other Subsidiaries, provided that if any such transaction is between a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary is the continuing or surviving corporation; (ii) the transfer by any Subsidiary of the Company of any assets (upon voluntary liquidation or otherwise) to the Company or a Wholly-Owned Subsidiary of the Company; (iii) transfers of real estate not used or useful in the business of the Company and its Subsidiaries, any bulk sale of inventory not representing a then current product line of the Company or its Subsidiaries, or any sale of property or assets used in connection with discontinued or abandoned product lines of the Company or its Subsidiaries; (iv) the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; (v) (i) the transfer of assets by the Company to any of its Subsidiaries in the Ordinary Course of Business or to any of its Subsidiaries incorporated in a jurisdiction outside of the United States, if such transfer is a sale for fair market value and the consideration received by the Company is cash and (ii) the transfer of the business and assets of the Company's Computing Devices International division to a Subsidiary of the Company; (vi) the transfer, merger or consolidation of the assets listed on Schedule 7.02; (vii) any transfer of assets by the Company or any of its Subsidiaries to any Person in connection with the extension of Indebtedness or making an investment or acquisition transaction or business combination otherwise permitted under this Agreement; and 52 (viii)transfers of assets not otherwise permitted hereunder (whether by merger, consolidation or otherwise) occurring after the Closing Date which are made for fair market value; provided, that (i) at the time of any transfer, no Event of Default exists or would result from such transfer and (ii) the aggregate net book value of all assets so transferred by the Company and its Subsidiaries together shall not exceed 10% of Consolidated Total Assets. 7.03 Cash Investments. The Company shall not, and shall not permit any of its Subsidiaries to, invest any assets classified in accordance with GAAP on the Company's consolidated balance sheet as "cash and equivalents" or "short-term investments" in investments other than Cash Equivalents and investment grade marketable securities. 7.04 Indebtedness. The Company shall not permit the ratio of (a) Consolidated Indebtedness, to (b) EBITDA, minus Capital Expenditures to exceed 3.0 to 1, all calculated for the preceding four fiscal quarters of the Company. 7.05 Contingent Obligations. The Company shall not, and shall not suffer or permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Contingent Obligations except: (a) Contingent Obligations incurred pursuant to this Agreement; (b) endorsements for collection or deposit in the Ordinary Course of Business; (c) any Contingent Obligations relating to letters of credit, bank guarantees or similar instruments incurred by Computing Devices Canada Ltd. in connection with the IRIS system contract dated April 18, 1991 and in connection with a contract dated as of January 3, 1994 with the Diesel Division of General Motors Canada Limited; and (d) Contingent Obligations of the Company and its Subsidiaries in an aggregate amount not in excess of $40,000,000. 7.06 Use of Proceeds. The Company shall not and shall not suffer or permit any of its Subsidiaries to use any portion of the Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. 53 7.07 [Reserved]. 7.08 Lease Obligations. The Company shall not permit the aggregate minimum non-cancelable payment commitments in respect of Operating Leases for the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP at the end of any fiscal year to exceed, for any subsequent fiscal year, $60,000,000 (exclusive of $16,000,000, or such lesser amount as may be reserved in the Company's consolidated financial statements to pay such commitments). 7.09 [Reserved]. 7.10 Consolidated Net Worth. The Company shall not permit its Consolidated Net Worth at any time to be less than $105,000,000 plus (a) 75% of Consolidated Net Income (not to be reduced by Consolidated Net Losses) subsequent to December 31, 1993, plus (b) 100% of the net proceeds from the issuance of any capital stock by the Company after December 31, 1993 except stock issued to or in connection with employee and director benefit plans. 7.11 [Reserved]. 7.12 Fixed Charge Coverage Ratio. On and after the Closing Date, the Company shall not permit its ratio of (a) EBITDA, plus interest income, minus Capital Expenditures, plus dividends payable on the Preferred Stock to (b) Consolidated Fixed Charges, plus dividends payable on the Preferred Stock to be less than 2.25 to 1, all calculated for the immediately preceding four fiscal quarters of the Company. 7.13 Change in Business. The Company shall not, and shall not permit any of its Subsidiaries to, (i) engage in any material line of business substantially different from those lines of business carried on by the Company and its Subsidiaries on the Closing Date; or (ii) extend any material amount of Indebtedness to or make any material equity investment in any Person which engages in one or more lines of business all of which are substantially different from those lines of business carried on by the Company and its Subsidiaries on the Closing Date; or (iii) enter into any joint venture which engages in a material line of business substantially different from those lines of business carried on by the Company and its Subsidiaries on the Closing Date. 7.14 [Reserved]. 7.15 Accounting Changes. The Company shall not, and shall not suffer or permit any of its Subsidiaries to, make any significant change in accounting treatment or reporting practices, except as required or permitted by GAAP, or change the fiscal year of the Company or of any of its consolidated Subsidiaries. 7.16 Contracts of Subsidiaries. The Company shall not permit any of its Subsidiaries (other than Computing Devices Canada Ltd. 54 and Computing Devices Company Ltd. and its Subsidiaries) to enter into any contract restricting the ability of such Subsidiary to pay dividends to the Company. ARTICLE VIII EVENTS OF DEFAULT 8.01 Event of Default. Any of the following shall constitute an "Event of Default": (a) Non-Payment. The Company fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or any reimbursement obligation in respect of a Letter of Credit, or (ii) within 5 days after the same shall become due, any interest, fee or any other amount payable hereunder or pursuant to any other Loan Document; or (b) Representation or Warranty. Any representation or warranty by the Company or any of its Subsidiaries made or deemed made herein, in any Loan Document, or which is contained in any certificate, document or financial or other statement by the Company, any of its Subsidiaries, or their respective Responsible Officers, furnished at any time under this Agreement, or in or under any Loan Document, shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) Specific Defaults. The Company fails to perform or observe any term, covenant or agreement contained in Section 6.03 or 6.09 or in Article VII; or the Company fails to perform or observe any term, covenant or agreement contained in Section 6.01 or 6.02, and such default continues unremedied for a period of 10 days; or (d) Other Defaults. The Company fails to perform or observe any other term or covenant contained in this Agreement or any Loan Document, and such default continues unremedied for a period of 20 days; or (e) Cross-Default. The Company or any of its Subsidiaries (i) fails to make any required payment when due in respect of any Indebtedness or Contingent Obligation having a principal or face amount of $7,500,000 or more when due or any Rate Contract having a notional amount of $7,500,000 or more when due (whether at scheduled maturity or required prepayment or by acceleration, demand, or otherwise); or (ii) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness or Contingent Obligation, and such failure continues after the applicable grace or notice period, if any, specified in the document relating thereto on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness 55 or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity, or such Contingent Obligation to become payable or cash collateral in respect thereof to be demanded; or (f) Insolvency; Voluntary Proceedings. The Company or any other Subsidiary of the Company (i) ceases or fails to be Solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; provided, however, that it shall not be an Event of Default under this subsection (f) if any Subsidiary of the Company to which this subsection applies does not have annual revenues in excess of 1% of the consolidated revenues of the Company or net worth which constitutes more than 5% of the Consolidated Net Worth of the Company in the fiscal year immediately preceding the date this subsection first becomes applicable to such Subsidiary; or (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company or any other Subsidiary of the Company, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's or any of its Subsidiaries' Properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Company or any of its Subsidiaries admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any of its Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; provided, however, that it shall not be an Event of Default under this subsection (g) if any Subsidiary of the Company to which this subsection applies does not have annual revenues in excess of 1% of the consolidated revenues of the Company or net worth which constitutes more than 5% of the Consolidated Net Worth of the Company in the fiscal year immediately preceding the date this subsection first becomes applicable to such Subsidiary; or (h) ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan or Multiemployer Plan which has resulted or would reasonably be expected to result in liability of the Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount which would reasonably be expected to 56 result in a Material Adverse Effect; or (ii) the Company or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount which would reasonably be expected to result in a Material Adverse Effect; or (i) Monetary Judgments. One or more final (non-interlocutory) judgments, orders or decrees shall be entered against the Company or any of its Subsidiaries involving in the aggregate a liability (not fully covered by independent third-party insurance) as to any single or related series of transactions, incidents or conditions, of $10,000,000 or more, and the same shall remain unvacated and unstayed pending appeal for a period of 10 days after the entry thereof; or (j) Ownership. Any Person or group of Persons is the beneficial owner of 30 percent or more of the voting power of the Company for a period of 30 days or more. For purposes of this subsection (j), the terms "group" and "beneficial owner" shall have the meanings given to those terms in Section 13 of the Securities Exchange Act of 1934, as amended. 8.02 Remedies. If any Event of Default occurs, the Agent shall, at the request of, or may, with the consent of, the Majority Banks, (a) declare the Commitment of each Bank to make Loans and purchase participations in Letters of Credit and of the Issuing Bank to issue Letters of Credit to be terminated, whereupon such Commitments shall forthwith be terminated; (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and (c) exercise on behalf of itself and the Banks all rights and remedies available to it and the Banks under the Loan Documents or applicable law; provided, however, that upon the occurrence of any event specified in paragraph (f) or (g) of Section 8.01 above (in the case of clause (i) of paragraph (g) upon the expiration of the 60-day period mentioned therein), the obligation of each Bank to make Loans and purchase participations in Letters of Credit and of the Issuing Bank to issue Letters of Credit shall automatically terminate without notice to the Company and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Agent or any Bank and without notice to the Company. If at the time an Event of Default occurs, Letters of 57 Credit are issued and unexpired, the Company shall deposit with the Agent cash in an amount equal to the Stated Amount of all Letters of Credit. 8.03 Rights Not Exclusive. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. ARTICLE IX THE AGENT 9.01 Appointment and Authorization. Each Bank hereby irrevocably appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. 9.02 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 9.03 Liability of Agent. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Banks for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or for the value of any collateral or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Company or any other party to any Loan Document to perform its 58 obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Properties, books or records of the Company or any of the Company's Subsidiaries or Affiliates. 9.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority Banks as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Majority Banks and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Banks. (b) For purposes of determining compliance with the conditions specified in Sections 4.01 and 4.02, each Bank that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter either sent by the Agent to such Bank for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Bank, unless an officer of the Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from the Bank prior to the initial Borrowing specifying its objection thereto and either such objection shall not have been withdrawn by notice to the Agent to that effect or the Bank shall not have made available to the Agent the Bank's ratable portion of such Borrowing. 9.05 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Banks, unless the Agent shall have received written notice from a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give notice thereof 59 to the Banks. The Agent shall take such action with respect to such Default or Event of Default as shall be requested by the Majority Banks in accordance with Article VIII; provided, however, that unless and until the Agent shall have received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Banks. 9.06 Credit Decision. Each Bank expressly acknowledges that none of the Agent-Related Persons has made any representation or warranty to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Company and its Subsidiaries shall be deemed to constitute any representation or warranty by the Agent to any Bank. Each Bank represents to the Agent that it has, independently and without reliance upon the Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated thereby, and made its own decision to enter into this Agreement and extend credit to the Company hereunder. Each Bank also represents that it will, independently and without reliance upon the Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Banks by the Agent, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Company which may come into the possession of any of the Agent-Related Persons. 9.07 Indemnification. Whether or not the transactions contemplated hereby shall be consummated, the Banks shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), ratably from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time (including at any time following the repayment of the Loans and the termination or resignation of the related Agent) be imposed on, incurred by or asserted against any such Person any way relating to or arising out of this Agreement or any document contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any such Person under or in connection with any of the foregoing; provided, however, that no Bank shall be 60 liable for the payment to the Agent-Related Persons of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Company. Without limiting the generality of the foregoing, if the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Bank (because the appropriate form was not delivered, was not properly executed, or because such Bank failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Bank shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Banks in this Section shall survive the payment of all Obligations hereunder. 9.08 Agent in Individual Capacity. BofA and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Company and its Subsidiaries and Affiliates as though BofA were not the Agent hereunder and without notice to or consent of the Banks. The Banks acknowledge that, pursuant to such activities, BofA or its Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company or such Affiliates) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to its Loans, BofA shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Agent, and the terms "Bank" and "Banks" shall include BofA in its individual capacity. 9.09 Successor Agent. The Agent may, and at the request of the Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent shall resign as Agent under this Agreement, the Majority Banks shall appoint from among the Banks a successor agent for the Banks which successor agent shall be approved by the Company. If no successor agent is appointed prior 61 to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Banks and the Company, a successor agent from among the Banks. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Banks shall perform all of the duties of the Agent hereunder until such time, if any, as the Majority Banks appoint a successor agent as provided for above. ARTICLE X MISCELLANEOUS 10.01 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Company therefrom, shall be effective unless the same shall be in writing and signed by the Majority Banks, the Company and acknowledged by the Agent, and then such waiver shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Banks, the Company and acknowledged by the Agent, do any of the following: (a) increase or extend the Commitment of any Bank (or reinstate any Commitment terminated pursuant to subsection 8.02(a)) or subject any Bank to any additional obligations; (b) postpone or delay any date fixed for any payment of principal, interest, fees or other amounts due to the Banks (or any of them) hereunder or under any Loan Document; (c) reduce the principal of, or the rate of interest specified herein on any Loan, or of any fees or other amounts payable hereunder or under any Loan Document; (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which shall be required for the Banks or any of them to take any action hereunder; or (e) amend this Section 10.01 or Section 2.18; 62 and, provided further, that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Majority Banks or all the Banks, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Loan Document. 10.02 Notices. (a) All notices, requests and other communications provided for hereunder shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on the applicable signature page hereof, and (ii) shall be followed promptly by a hard copy original thereof) and mailed, faxed or delivered, to the address or facsimile number specified for notices on the applicable signature page hereof; or, as directed to the Company or the Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to each other party, at such other address as shall be designated by such party in a written notice to the Company and the Agent. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next day) delivery, or transmitted by facsimile machine, respectively, or if delivered, upon delivery, except that notices pursuant to Article II or IX shall not be effective until actually received by the Agent. (c) The Company acknowledges and agrees that any agreement of the Agent and the Banks in Article II herein to receive certain notices by telephone and facsimile is solely for the convenience and at the request of the Company. The Agent and the Banks shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Agent and the Banks shall not have any liability to the Company or other Person on account of any action taken or not taken by the Agent or the Banks in reliance upon such telephonic or facsimile notice. The obligation of the Company to repay the Loans shall not be affected in any way or to any extent by any failure by the Agent and the Banks to receive written confirmation of any telephonic or facsimile notice or the receipt by the Agent and the Banks of a confirmation which is at variance with the terms understood by the Agent and the Banks to be contained in the telephonic or facsimile notice. 10.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 63 10.04 Costs and Expenses. The Company shall, whether or not the transactions contemplated hereby shall be consummated: (a) pay or reimburse BofA (including in its capacity as Agent) within twenty Business Days after demand (subject to subsection 4.01(i)) for all costs and expenses incurred by BofA (including in its capacity as Agent) in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any Loan Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including the reasonable Attorney Costs incurred by BofA (including in its capacity as Agent) with respect thereto; (b) pay or reimburse each Bank and the Agent within twenty Business Days after demand (subject to subsection 4.01(f)) for all costs and expenses incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies (including in connection with any "workout" or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding) under this Agreement, any other Loan Document, and any such other documents, including Attorney Costs incurred by the Agent and any Bank; and (c) pay or reimburse BofA (including in its capacity as Agent) within twenty Business Days after demand (subject to subsection 4.01(i)) for all audit, environmental inspection and review (including the allocated cost of such internal services), search and filing costs, fees and expenses, incurred or sustained by BofA (including in its capacity as Agent) in connection with the matters referred to under subsections (a) and (b) of this Section. 10.05 Indemnity. Whether or not the transactions contemplated hereby shall be consummated: (a) General Indemnity. The Company shall pay, defend, indemnify, and hold each Bank, the Agent, the Arranger and each of their respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including cleanup costs and engineering consulting costs in respect of Environmental Claims and Attorney Costs) of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement and any other Loan Documents, or the transactions contemplated hereby and thereby, and with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding, Environmental Claim proceedings or appellate proceeding) related to this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided, 64 that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of such Indemnified Person. (b) Survival; Defense. The obligations in this Section 10.05 shall survive payment and cancellation of all other Obligations. At the election of any Indemnified Person, the Company shall defend such Indemnified Person using legal counsel satisfactory to such Indemnified Person in such Person's sole discretion, at the sole cost and expense of the Company; provided, however, that the Company shall only be obligated to hire one counsel to represent all of the Banks unless any Bank advises the Company that its legal counsel has advised it that its interest is materially different from that of the other Banks and it would not be adequately represented without its own separate counsel, in which case the Company shall hire separate counsel for such Bank, satisfactory to such Bank. All amounts owing under this Section 10.05 shall be paid within 30 days after demand. 10.06 Marshalling; Payments Set Aside. Neither the Agent nor the Banks shall be under any obligation to marshall any assets in favor of the Company or any other Person or against or in payment of any or all of the Obligations. To the extent that the Company makes a payment or payments to the Agent or the Banks, or the Agent or the Banks enforce their Liens or exercise their rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party in connection with any Insolvency Proceeding, or otherwise, then to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred. 10.07 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agent and each Bank. 10.08 Assignments, Participations, etc. (a) Any Bank may, with the written consent of the Company at all times other than during the existence of an Event of Default and of the Agent and the Issuing Bank, at any time assign and delegate to one or more Eligible Assignees (provided that no written consent of the Company, the Agent or the Issuing Bank shall be required in connection with any assignment and delegation by a Bank to a Bank Affiliate of such Bank) (each an "Assignee") all, or any ratable part of all, of the Loans, the Commitments and the other rights and obligations of such Bank hereunder, in a minimum 65 amount of $5,000,000; provided, however, that (i) the Company and the Agent may continue to deal solely and directly with such Bank in connection with the interest so assigned to an Assignee until (A) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Company and the Agent by such Bank and the Assignee; (B) such Bank and its Assignee shall have delivered to the Company and the Agent an assignment and acceptance agreement in form and substance satisfactory to the Agent, together with any Notes subject to such assignment and (C) the assignor Bank or Assignee has paid to the Agent a processing fee in the amount of $2,500. The consent of the Company to any such assignment shall not be unreasonably withheld. (b) From and after the date that the Agent notifies the assignor Bank that it has received an executed assignment and acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such assignment and acceptance agreement, shall have the rights and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such assignment and acceptance agreement, relinquish its rights and be released from its obligations under the Loan Documents. (c) Within five Business Days after its receipt of notice by the Agent that it has received an executed assignment and acceptance agreement and payment of the processing fee, the Company shall execute and deliver to the Agent upon receipt of the old Notes owned by the Bank assigning all or a portion of its Commitment, new Notes evidencing such Assignee's assigned Loans and Commitment and, if the assignor Bank has retained a portion of its Loans and its Commitment, replacement Notes in the principal amount of the Revolving Loans retained by the assignor Bank (such Notes to be in exchange for, but not in payment of, the Notes held by such Bank). Immediately upon each Assignee's making its processing fee payment under the assignment and acceptance agreement, this Agreement, shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Bank pro tanto. (d) Any Bank may at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a "Participant") participating interests in any Loans, the Commitment of that Bank and the other interests of that Bank (the "originating Bank") hereunder and under the other Loan Documents; provided, however, that (i) the originating Bank's obligations under this Agreement shall remain unchanged, (ii) the originating Bank shall remain solely responsible for the performance of such obligations, (iii) the Company and the Agent shall continue to deal solely and 66 directly with the originating Bank in connection with the originating Bank's rights and obligations under this Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant any participating interest under which the Participant shall have rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Banks as described in clauses (a), (b) and (c) in the first proviso to Section 10.01. In the case of any such participation, the Participant shall be entitled to the benefit of Sections 3.01, 3.03 and 10.05 as though it were also a Bank hereunder, and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement. (e) Each Bank agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" by the Company and provided to it by the Company or any Subsidiary of the Company, or by the Agent on such Company's or Subsidiary's behalf, in connection with this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any such information for any purpose or in any manner other than pursuant to the terms contemplated by this Agreement; except to the extent such information (i) was or becomes generally available to the public other than as a result of a disclosure by the Bank, or (ii) was or becomes available on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company known to the Bank; provided further, however, that any Bank may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an examination of such Bank by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable requirement of law; and (D) to such Bank's independent auditors and other professional advisors. Notwithstanding the foregoing, the Company authorizes each Bank to disclose to any Participant or Assignee (each, a "Transferee") and to any prospective Transferee, such financial and other information in such Bank's possession concerning the Company or its Subsidiaries which has been delivered to Agent or the Banks pursuant to this Agreement or which has been delivered to the Agent or the Banks by the Company in connection with the Banks' credit evaluation of the Company prior to entering into this Agreement; provided that, unless otherwise agreed by the Company, such Transferee agrees in writing to such Bank to keep such information confidential to the same extent required of the Banks hereunder. 67 (f) Notwithstanding any other provision contained in this Agreement or any other Loan Document to the contrary, any Bank may assign all or any portion of the Loans or Notes held by it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Loans or Notes made by the Company to or for the account of the assigning or pledging Bank in accordance with the terms of this Agreement shall satisfy the Company's obligations hereunder in respect to such assigned Loans or Notes to the extent of such payment. No such assignment shall release the assigning Bank from its obligations hereunder. 10.09 Set-off. In addition to any rights and remedies of the Banks provided by law, if an Event of Default exists, each Bank is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company to the fullest extent permitted by law, to set off and apply any and all Company deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing to, such Bank to or for the credit or the account of the Company against any and all Obligations owing to such Bank, now or hereafter existing, irrespective of whether or not the Agent or such Bank shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees promptly to notify the Company and the Agent after any such set-off and application made by such Bank; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Bank under this Section 10.09 are in addition to the other rights and remedies (including other rights of set-off) which the Bank may have. 10.10 Automatic Debits of Fees. With respect to any fee, or any other cost or expense (including Attorney Costs) due and payable to the Agent or BofA under the Credit Documents, the Company hereby irrevocably authorizes BofA to debit any deposit account of the Company with BofA in an amount such that the aggregate amount debited from all such deposit accounts does not exceed such fee or other cost or expense. If there are insufficient funds in such deposit accounts to cover the amount of the fee or other cost or expense then due, such debits will be reversed (in whole or in part, in BofA's sole discretion) and such amount not debited shall be deemed to be unpaid. No such debit under this Section 10.10 shall be deemed a setoff. 10.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall notify the Agent in writing of any changes in the address to which notices to the Bank should be directed, of addresses of its Offshore Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Agent shall reasonably request. 68 10.12 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Agent. 10.13 Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder. 10.14 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Banks and the Agent, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. Neither the Agent nor any Bank shall have any obligation to any Person not a party to this Agreement or other Loan Documents. 10.15 Time. Time is of the essence as to each term or provision of this Agreement and each of the other Loan Documents. 10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW. 10.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS 69 CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 10.18 Entire Agreement. This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Company, the Banks and the Agent, and supersedes all prior or contemporaneous Agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof, except for the letter agreement between the Agent, the Arranger and the Company described in subsection 2.14(a). 10.19 Interpretation. This Agreement is the result of negotiations between and has been reviewed by counsel to the Agent, the Company and other parties, and is the product of all parties hereto. Accordingly, this Agreement and the other Loan Documents shall not be construed against the Banks or the Agent merely because of the Agent's or Banks' involvement in the preparation of such documents and agreements. 10.20 Term of Agreement. This Agreement shall not terminate until all Obligations (other than inchoate obligations under Article III and Section 10.05 which survive the termination of this Agreement) have been paid to the Agent and the Banks, even though the Termination Date may have occurred. 10.21 Foreign Currency Conversion. If for the purpose of (a) determining the amount owed to an Issuing Bank in respect of payments made under a Letter of Credit or (b) obtaining judgment in any court, it is necessary to convert a sum due hereunder in another currency into U.S. Dollars, the Company agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase such other currency with U.S. Dollars at San Francisco, California on the Business Day preceding that on which the reimbursement amount in respect of the Letter of Credit is due or final judgment is given. 70 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. CERIDIAN CORPORATION /s/John Grierson By: John Grierson Title: Vice President and Treasurer Address for notices: 8100 34th Avenue South Minneapolis, Minnesota 55425 Attention: Treasury Department Facsimile: (612) 853-3932 Telephone: (612) 853-5265 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent /s/Matthew A. Gabel By: Matthew A. Gabel Title: Vice President Address for notices: 1455 Market Street, 12th Floor San Francisco, California 94103 Attn: Agency Management Services #5596 Re: Ceridian Facsimile: (415) 622-4894 Telephone: (415) 953-4370 Address for payment: Bank of America NT&SA ABA No. 121-000-358 Attn: Agency Management Services No. 5596 Credit to Account No. 12339-15086 Ref: Ceridian Corporation 71 BANK OF AMERICA ILLINOIS, as an Issuing Bank and as a Bank /s/Margaret Detrick By: Margaret Detrick Title: Vice President LENDING OFFICES For Base Rate Loans: Bank of America-Account Administration 1850 Gateway Boulevard Concord, CA 94520 Attention: Peggy Sanders Facsimile: (510) 675-7531 Telephone: (510) 675-7732 For Offshore Rate Loans: Bank of America-Account Administration 1850 Gateway Boulevard Concord, CA 94520 Attention: Peggy Sanders Facsimile: (510) 675-7531 Telephone: (510) 675-7732 Address for notices: Bank of America-Account Administration 1850 Gateway Boulevard Concord, CA 94520 Attention: Peggy Sanders Facsimile: (510) 675-7531 Telephone: (510) 675-7732 With a copy to: Bank of America Illinois 231 South LaSalle Street (9Q) Chicago, IL 60697 Attention: Margaret Detrick Facsimile: (312) 987-1276 Telephone: (312) 828-5201 72 THE BANK OF NEW YORK /s/Richard A. Raffetto By: Richard A. Raffetto Title: Assistant Vice President LENDING OFFICES For Base Rate Loans and Non-Letter of Credit Fees: 101 Barclay Street New York, New York 10007 Attention: Commercial Loan Servicing Department Facsimile: (212) 635-1208 Telephone: (212) 635-6691 For Offshore Rate Loans: 101 Barclay Street New York, New York 10007 Attention: Eurodollar/Cayman Funding Area Facsimile: (212) 635-1208 Telephone: (212) 635-6691 For Letters of Credit: 101 Barclay Street New York, New York 10007 Attention: Trade Services Dept. Facsimile: (212) 635-1208 Telephone: (212) 635-6691 Address for notices: One Wall Street 19th Floor New York, New York 10286 Attention: Yvonne Forbes Facsimile: (212) 635-1208 Telephone: (212) 635-6691 73 MORGAN GUARANTY TRUST COMPANY OF NEW YORK /s/Kit C. Wong By: Kit C. Wong Title: Vice President LENDING OFFICES For Base Rate Loans: Morgan Christiana 500 Stanton Christiana Road Newark, Delaware 19713 Attention: Lou Morano/Antoniette Wilson Facsimile: (302) 634-1094 Telephone: (302) 634-1800 For Offshore Rate Loans: Morgan Christiana 500 Stanton Christiana Road Newark, Delaware 19713 Attention: Lou Morano/Antoniette Wilson Facsimile: (302) 634-1094 Telephone: (302) 634-1800 Addresses for notices: 60 Wall Street New York, New York 10260-0060 Attention: Kit Wong Facsimile: (212) 648-5336 Telephone: (212) 648-7340 74 CHEMICAL BANK /s/John J. Huber By: John J. Huber Title: Managing Director LENDING OFFICES For Base Rate Loans: 270 Park Avenue New York, New York 10017 Attention: Miranda Chin/Loan Products Facsimile: (212) 818-1456 Telephone: (212) 270-4994 For Offshore Rate Loans: 270 Park Avenue New York, New York 10017 Attention: Miranda Chin/Loan Products Facsimile: (212) 818-1456 Telephone: (212) 270-4994 Address for notices: 270 Park Avenue New York, New York 10017 Attention: Miranda Chin/Loan Products Facsimile: (212) 818-1456 Telephone: (212) 270-4994 75 FIRST BANK NATIONAL ASSOCIATION /s/Todd W. Nelson By: Todd W. Nelson Title: Vice President LENDING OFFICES For Base Rate Loans: 601 2nd Avenue South Minneapolis, Minnesota 55402-4302 Attention: Karen Johnson Facsimile: (612) 973-0824 Telephone: (612) 973-0546 For Offshore Rate Loans: 601 2nd Avenue South Minneapolis, Minnesota 55402-4302 Attention: Karen Johnson Facsimile: (612) 973-0824 Telephone: (612) 973-0546 Address for notices: First Bank Place 601 2nd Avenue, South Minneapolis, Minnesota 55402-4302 Attention: Todd W. Nelson Facsimile: (612) 973-0824 Telephone: (612) 973-0550 76 BankAmerica International and BofA are parties to this Agreement solely as an Issuing Bank with respect to Letters of Credit. BankAmerica International and BofA shall have no commitment to make Loans, to hold or purchase a participation in any Letter of Credit, or to issue any additional Letters of Credit hereunder. Notwithstanding the foregoing, BankAmerica International and BofA shall be a "Bank", under the provisions of this Agreement, with a Commitment Percentage of zero percent (0%). BANKAMERICA INTERNATIONAL /s/Dennis Dubois By: Dennis Dubois Title: Vice President Address for payment: c/o Bank of America Illinois 200 West Jackson Boulevard, 17th Floor Chicago, IL 60697 Attention: Dennis Dubois Facsimile: (312) 987-3362 Telephone: (312) 828-3180 Address for notices: c/o Bank of America Illinois 200 West Jackson Boulevard, 17th Floor Chicago, IL 60697 Attention: Dennis Dubois Facsimile: (312) 987-3362 Telephone: (312) 828-3180 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION /s/Margaret Detrick By: Margaret Detrick Title: Vice President Address for payment: Bank of America-Account Administration 1850 Gateway Boulevard Concord, CA 94520 Attention: Peggy Sanders Facsimile: (510) 675-7531 Telephone: (510) 675-7732 Address for notices: Bank of America-Account Administration 1850 Gateway Boulevard Concord, CA 94520 Attention: Peggy Sanders Facsimile: (510) 675-7531 Telephone: (510) 675-7732 2Amcrag 77 EX-11 3 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS Exhibit 11 CERIDIAN CORPORATION AND SUBSIDIARIES STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (Amounts in millions, except per share data) Three Months For the periods ended June 30, 1995 1994 Net earnings available to common stockholders - primary $ 18.8 $ 13.2 Restore dividends on convertible preferred stock 3.2 3.2 Net earnings for fully diluted earnings per share $ 22.0 $ 16.4 Weighted average common shares outstanding 44.8 44.5 Common share equivalents from stock options and restricted stock awards 2.3 1.3 Weighted average common shares and equivalents outstanding - primary 47.1 45.8 Shares issuable assuming conversion of preferred stock 10.4 10.4 Weighted average common shares and equivalents outstanding - adjusted for full dilution 57.5 56.2 Net earnings available to common stockholders - primary $ 18.8 $ 13.2 Weighted average common shares and equivalents outstanding - primary 47.1 45.8 Primary earnings per share $ 0.40 $ 0.29 Net earnings for fully diluted earnings per share $ 22.0 $ 16.4 Weighted average common shares and equivalents outstanding - adjusted for full dilution 57.5 56.2 Fully diluted earnings per share $ 0.38 $ 0.29 Exhibit 11 cont. CERIDIAN CORPORATION AND SUBSIDIARIES STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (Amounts in millions, except per share data) Six Months For the periods ended June 30, 1995 1994 Net earnings available to common stockholders - primary $ 43.9 $ 32.1 Restore dividends on convertible preferred stock 6.5 6.5 Net earnings for fully diluted earnings per share $ 50.4 $ 38.6 Weighted average common shares outstanding 44.7 44.4 Common share equivalents from stock options and restricted stock awards 2.2 1.3 Weighted average common shares and equivalents outstanding - primary 46.9 45.7 Shares issuable assuming conversion of preferred stock 10.4 10.4 Weighted average common shares and equivalents outstanding - adjusted for full dilution 57.3 56.1 Net earnings available to common stockholders - primary $ 43.9 $ 32.1 Weighted average common shares and equivalents outstanding - primary 46.9 45.7 Primary earnings per share $ 0.94 $ 0.70 Net earnings for fully diluted earnings per share $ 50.4 $ 38.6 Weighted average common shares and equivalents outstanding - adjusted for full dilution 57.3 56.1 Fully diluted earnings per share $ 0.88 $ 0.69 EX-27 4 ART. 5 FDS FOR 2ND QUARTER 10-Q WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 1000 6-MOS Dec-31-1995 Jun-30-1995 114,000 84,500 163,400 6,100 28,300 407,900 0 0 764,200 346,700 12,900 22,900 0 4,700 209,500 764,200 273,300 511,300 208,100 318,200 200 0 700 55,200 4,800 50,400 0.94 0.88
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