SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 25, 1993
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-7352
Data General Corporation
(Exact name of registrant as specified in its charter)
Delaware 04-2436397
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 Computer Drive, Westboro, Massachusetts 01580
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508)898-5000
Former name, former address and former fiscal year if changed since
last report: Not Applicable
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 shor-
ter 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
Number of shares outstanding of each of the registrant's classes
of common stock, as of January 21, 1994:
Common Stock, par value $.01 35,460,010
(Title of each class) (Number of shares)
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
The condensed consolidated financial statements of Data General
Corporation (the "company"), consisting of condensed consolidated
statements of operations for the quarters ended December 25, 1993 and
December 26, 1992, condensed consolidated balance sheets as of Decem-
ber 25, 1993 and September 25, 1993, condensed consolidated statements
of cash flows for the quarters ended December 25, 1993 and December
26, 1992, and related notes to condensed consolidated financial state-
ments, are incorporated herein by reference to pages 3 through 6 of
the company's First Quarter 1994 Interim Report. The First Quarter
1994 Interim Report has been included as Exhibit 20 to copies of this
Report filed with the Securities and Exchange Commission. Copies of
the Interim Report may be obtained by written request to the company,
Attn: Investor Relations, MS A-235, 4400 Computer Drive, Westboro, MA
01580.
In the current quarter, the company adopted Statement of
Financial Accounting Standards ("SFAS") 109, "Accounting for Income
Taxes". SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the
company's financial statements or tax returns. In estimating future
tax consequences, SFAS 109 generally considers all expected future
events other than enactments of changes in the tax law or rates.
Previously, the company used the SFAS 96 asset and liability approach
that gave no recognition to future events other than the recovery of
assets and settlement of liabilities at their carrying amounts. The
implementation of SFAS 109 did not have a material effect on either
the company's consolidated financial position or results of
operations.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. The following is a summary of the significant components of
the company's deferred tax assets and liabilities as of the date of
adoption:
(Unaudited)
(in millions)
Sept. 26,
Deferred Tax Assets: 1993
Inventory allowances $ 8.5
Operating expenses 22.4
Restructuring 13.8
Intercompany profit in inventory and fixed assets 9.4
Net operating losses 98.9
Tax credits 12.1
Other 13.5
178.6
Valuation allowance (161.7)
Total deferred tax assets 16.9
Deferred Tax Liabilities:
Capitalized software development costs 15.1
Other 2.0
Total deferred tax liabilities 17.1
Net deferred tax liability $ 0.2
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Financial Condition
Cash and temporary cash investments as of December 25, 1993 were
$100.3 million, a decrease of $19.3 million from the end of fiscal
1993. In addition, the company holds $67.7 million in marketable
securities, a net decrease of $4.7 million during the current three
month period. These securities, which supplemented cash and temporary
cash investments, are primarily invested in United States Treasury
bills and notes. Net cash provided from operations for the quarter
ended December 25, 1993 totaled $3.4 million, expenditures for
property, plant, and equipment were $20.9 million, capitalized
software development costs totaled $4.4 million, and cash provided
from stock plans totaled $.6 million. The company also made a $2.0
million investment in an unaffiliated entity during the current
quarter. The effect of foreign currency rate fluctuations on cash and
temporary cash investments was a decrease of $.8 million.
Net receivables decreased $11.3 million from fiscal year-end
1993, primarily as a result of lower revenue billings and the
strengthening of the U.S. dollar in relation to foreign currencies.
Total inventories at December 25, 1993 increased $10.0 million from
fiscal year-end 1993 levels. The increase was primarily due to
increased inventory procurement and lower than expected revenues.
Accounts payable increased $10.6 million from fiscal year-end 1993,
primarily due to the increase in total inventories. Other current
liabilities decreased $16.1 million from fiscal year-end 1993,
primarily as a result of the settlement of certain obligations accrued
as part of restructuring charges recorded in previous years, reduced
headcount related accruals, and the strengthening of the U.S. dollar
in relation to foreign currencies.
During the current quarter, the company maintained a credit
agreement with a group of banks providing for an unsecured $70 million
revolving credit facility. The facility had a duration of 364 days
and provided for automatic renewal on a daily basis. The facility
included certain covenants, including restrictions on the sale or
pledge of certain assets, the declaration of dividends and the
incurrence of other debt. The interest rate on the borrowings under
the facility was 1.5% per annum above the London Interbank Offered
Rate (LIBOR). Commitment fees paid on available funds were not
material and there were $11.4 million of letters of credit secured by
the facility at December 25, 1993. There were no borrowings under
this facility as of December 25, 1993.
Effective December 30, 1993, the company amended its credit
agreement to include two separate facilities. The company now
maintains an unsecured $40 million revolving credit facility and an
unsecured $30 million letter of credit facility with the same group of
banks. The revolving credit facility has a duration of one year; the
letter of credit facility has a duration of 364 days and provides for
automatic renewal on a daily basis.
Results of Operations
Total revenues for the quarter ended December 25, 1993 decreased
7% from the same quarter of the previous year. Domestic revenues,
excluding U.S. direct export sales, were $148.0 million for the cur-
rent quarter, virtually unchanged from the comparable period of fiscal
1993. Domestic revenues were 57% of total revenues in the current
quarter, compared with 53% of total revenues for the first quarter of
fiscal 1993. International revenues, including U.S. direct export
sales, were $113.2 million for the current quarter, a 14% decrease
from $132.1 million for the comparable period in fiscal 1993.
International revenues represented 43% of total revenues in the
current quarter and 47% of total revenues in the comparable prior-year
period. The decrease in total revenues was primarily due to the
decline in demand for the company's proprietary system products, the
strengthening of the U.S. dollar in relation to foreign currencies,
generally weak worldwide economic conditions, particularly in Europe,
and competitive industry-wide pricing pressures.
Product revenues for the current quarter decreased 7% from the
comparable prior-year period. Revenues from the company's AViiON
family of open systems products continued to grow during the current
quarter compared with the first quarter of fiscal 1993. The company's
new line of CLARiiON mass storage systems produced significant revenue
growth compared to the first quarter of fiscal 1993, its initial
quarter of introduction, and comprised 4% of total product revenues.
Proprietary MV system revenues declined more than 50% from the same
period in the prior year. Revenues from personal computers and other
low margin equipment increased 38% over the same quarter of the prior
year.
Domestic product revenues, which were $91.7 million for the
current quarter, increased less than 1% from $91.2 million for the
comparable period in fiscal 1993. Domestic product revenues were 56%
of total product revenues in the current quarter and 52% of total
product revenues in the comparable prior-year period. Domestic
product revenue growth continue to be hindered by increased
competition, continued pricing pressures, and the company's transition
to open systems technology. International product revenues were $72.0
million for the current quarter, a 15% decrease from $84.4 million for
the comparable period in fiscal 1993. International product revenues
represented 44% of total product revenues in the current quarter and
48% of total product revenues in the comparable prior-year period.
U.S. direct export sales, included in international product revenues,
posted strong growth in the first quarter of fiscal 1994 from the
comparable prior-year period, partially offsetting lower revenues from
the European marketplace. Product revenues from the European
marketplace decreased approximately $17 million in the first quarter
of fiscal 1994 when compared to the same prior-year period. The
decrease in international product revenues was primarily due to
generally weak economic conditions, particularly in Europe, a stronger
U.S. dollar in relation to foreign currencies in the current fiscal
quarter when compared to the same prior-year period, and the impact of
transitioning from the company's traditional proprietary product line
to open systems technology.
Service revenues for the current quarter decreased 6% from the
comparable period of fiscal 1993. Domestic service revenues for the
current quarter were $56.4 million, unchanged from the comparable
prior-year period. International service revenues for the current
quarter were $41.2 million, a 14% decrease from $47.7 million for the
comparable prior-year period. The decrease in service revenues
resulted from a stronger U.S. dollar in relation to foreign currencies
in the current quarter when compared to the same prior-year period,
lower prices on service contracts for AViiON systems, and generally
weak economic conditions. The decrease in service contract revenues
has been partially offset by increased revenues from systems
integration and consulting activities.
Cost of product revenues for the current quarter was 68% of prod-
uct revenues, compared with 59% of product revenues in the first quar-
ter of fiscal 1993. Competitive pricing pressures worldwide, and the
continued transition to the lower margin AViiON family of open systems
and CLARiiON family of mass storage systems more than offset the
benefits resulting from the company's continuing cost reduction and
restructuring programs. Cost of service revenues for the current
quarter represented 59% of service revenues, compared with 57% of
service revenues for the first quarter of fiscal 1993. The increase
in cost of service revenues as a percentage of total service revenues
was primarily a result of the increase in revenues from systems
integration activities which yield a lower margin than traditional
service contract revenues.
Research and development expenses for the current quarter de-
creased 9% from the first quarter of fiscal 1993, and represented 9%
of total revenues for both the current quarter and the comparable
prior-year period. The decrease results primarily from the company
continuing to focus its research and development efforts on its core
business technology, multi-user computer systems, servers, and mass
storage devices. In addition, a change in product mix to open systems
architectures has increased the use of industry-standard components
purchased from third parties. This product transition has reduced the
requirement for large investments of research and development in
hardware, allowing the company to dedicate a higher proportion of its
resources to software development.
Selling, general, and administrative expenses for the current
quarter remained relatively unchanged from the comparable period of
fiscal 1993, and represented 33% of total revenues in the current
quarter and 31% in the comparable prior-year period. The company's
cost reduction programs continue to be implemented. At December 25,
1993 the number of employees totaled 6,355, a reduction of 560
employees from December 26, 1992. Of these reductions, 200 occurred
during the current fiscal quarter.
Interest income for the current quarter decreased 33% from the
comparable period of fiscal 1993 primarily due to an overall reduction
in market interest rates and decreased levels of cash and
investments. Interest expense for the current quarter decreased 8%
from the same period of fiscal 1993 primarily due to the retirement
and prepayment of two separate industrial revenue bonds.
The income tax provision for the current quarter was $0.6 million
compared with $1.8 million for the prior-year quarter. The provisions
resulted primarily from foreign and state taxes.
In November 1992, the Financial Accounting Standards Board
("FASB") issued SFAS 112, "Employers' Accounting for Post-Employment
Benefits". In May 1993, the FASB issued SFAS 114 and 115, "Accounting
by Creditors for Impairment of a Loan" and "Accounting for Certain
Investments in Debt and Equity Securities", respectively. SFAS 112
and SFAS 115 are effective for fiscal years beginning after December
15, 1993. SFAS 114 is effective for fiscal years commencing after
December 15, 1994. The company will implement these statements as
required. The future adoption of SFAS 112, SFAS 114 and SFAS 115 are
not expected to have a material effect on the company's consolidated
financial position or results of operations.
Due to the currently poor economic conditions worldwide,
competitive pricing pressures, lower volumes and the changing mix of
products, the company remains very cautious about the remainder of
1994. At this time, the company cannot assess the impact, if any, of
these conditions on the company's future business. In light of first
quarter results, the company is accelerating previously reported
adjustments to its cost structure to further align it with revenue and
margins.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
In a previously reported action, in the U.S. District Court for
the District of Massachusetts, a jury, on January 28, 1993, awarded
the company $52.3 million in damages and related interest from Grumman
Systems Support Corporation ("Grumman") for infringing the company's
copyrights and misappropriating trade secrets relating to the
company's proprietary MV/ADEX diagnostic software. The award includes
approximately $15.9 million in pre-judgment interest. On May 13,
1993, Grumman's motion for judgment notwithstanding the verdict and/or
for a new trial was rejected. Grumman has appealed and on December 8,
1993, has argued its case to the United States First Circuit Court of
Appeals. The company will not recognize the award in its financial
statements until it is received or assured.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10. Amended and restated Revolving Credit Agreement and Letter
of Credit Agreement, both dated December 30, 1993, amending
Revolving Credit Agreement, previously filed as Exhibit
10(a) to the company's Quarterly Report on Form 10-Q for the
quarter ended March 28, 1992.
11. Computation of primary and fully diluted earnings per share.
20. First Quarter 1994 Interim Report of Data General Corpora-
tion.
(b) No reports on Form 8-K were filed during the current quarter
ended December 25, 1993.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
DATA GENERAL CORPORATION
(Registrant)
/s/ Arthur W. DeMelle
Arthur W. DeMelle
Vice President
Chief Financial Officer
Chief Accounting Officer
Dated: February 4, 1994
EXHIBITS
Index to Exhibits.
10. Amended and restated Revolving Credit Agreement and Letter
of Credit Agreement, both dated December 30, 1993, amending
Revolving Credit Agreement, previously filed as Exhibit
10(a) to the company's Quarterly Report on Form 10-Q for
the quarter ended March 28, 1992.
11. Computation of primary and fully diluted earnings per
share.
20. First Quarter 1994 Interim Report of Data General
Corporation.
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated
as of December 30, 1993 (the "Agreement") among the parties
hereto amends the REVOLVING CREDIT AGREEMENT, dated as of
November 22, 1991 (as amended pursuant to the First Amendment
dated as of December 30, 1991, the Second Amendment dated as of
March 31, 1992, the Third Amendment dated as of July 16, 1992,
the Fourth Amendment dated as of April 19, 1993 and the Fifth
Amendment dated as of September 23, 1993, the "Existing Credit
Agreement") by and among DATA GENERAL CORPORATION, a Delaware
corporation (the "Borrower"), NATIONAL WESTMINSTER BANK PLC
("NWB"), THE BANK OF NOVA SCOTIA ("BNS"), FLEET BANK OF
MASSACHUSETTS, NATIONAL ASSOCIATION ("Fleet"), NATIONSBANK,
CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC" and, together with
NWB, BNS, Fleet and NationsBank, the "Lenders") and NWB, as agent
for the Lenders (the "Agent").
PRELIMINARY STATEMENTS
WHEREAS, pursuant to the Existing Credit Agreement, each of
NWB, BNS, Fleet, NationsBank and CIBC has agreed to provide
financing (including the making available of letters of credit)
to the Borrower for general corporate purposes in an aggregate
amount not to exceed the amount set forth opposite each such
Lender's name on the signature pages thereof; and
WHEREAS, pursuant to the Existing Credit Agreement the
aggregate of the Commitments (as hereinafter defined) of NWB,
BNS, Fleet, NationsBank and CIBC is in an amount equal to
$70,000,000; and
WHEREAS, the Borrower, the Agent and the Lenders have agreed
to amend and restate the Existing Credit Agreement in its
entirety on the terms and conditions contained herein to provide
for the making of Advances (as hereinafter defined) and to enter
into a separate agreement to provide for the issuance of letters
of credit; and
WHEREAS, in consideration of the mutual agreements herein
contained, the parties hereto agree that on the Effective Date
(as hereinafter defined): (i) the Existing Credit Agreement shall
be amended and restated in its entirety, as provided herein and
(ii) all references to the Existing Credit Agreement in other
documents shall be deemed a reference to the Amended and Restated
Credit Agreement, unless the context otherwise requires;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITION AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Adjusted LIBOR Rate" means with respect to any Fixed
Period the rate per annum (rounded upwards, if necessary, to
the next higher 1/100 of 1%) determined pursuant to the
following formula:
Adjusted LIBOR Rate = Base LIBOR
(1.00 - Eurodollar Reserve
Percentage)
"Advance" has the meaning set forth in Section 2.01.
"Affiliate" means, as to any Person, any other
Person that, directly or indirectly, is in control of, is
controlled by or is under common control with such Person or
is a director or officer of such Person or of an Affiliate
of such Person.
"Agent's Account" means the account of the Agent main-
tained at the office of National Westminster Bank PLC at 175
Water Street, New York, New York 10038.
"Amortization Fee" means, for any LIBOR Rate Advance
for any Fixed Period (computed without regard to the
maturity of a Fixed Period occurring as a result of the
occurrence of the Facility Termination Date) during which
any payment of Principal of any LIBOR Rate Advance is made
other than on the last day of the Fixed Period for such
Advance, as a result of a payment or as a result of a
prepayment pursuant to Section 2.04 or acceleration of the
maturity of the Notes pursuant to Section 6.01 or for any
other reason, the sum of (x) the amount, if any, by which
(i) the additional Interest (calculated without taking into
account any Amortization Fee) which would have accrued on
such Advance during such Fixed Period (as so computed) if
such Advance had not been so paid exceeds (ii) the income,
if any, received as a result of the investment of the
proceeds of such reduction, plus (y) all additional losses,
costs, expenses and liabilities (including, without
limitation, any interest paid by a Lender to providers of
funds borrowed by it to make or carry its Advances, any fees
paid by such Lender to terminate the deposits from which
such funds were obtained and any loss sustained by such
Lender in connection with the re-employment of such funds)
incurred as a result of such payment.
"Assignment and Acceptance" means an assignment and
acceptance substantially in the form of Exhibit D annexed
hereto entered into by a Lender and an Assignee (as
hereinafter defined in Section 9.07(a)), and accepted by the
Agent.
"Base LIBOR" means with respect to each Fixed Period
the offered quotation to first class banks in the London
Interbank Eurodollar market by the Agent for United States
dollar deposits of amounts comparable to the outstanding
principal amount of the relevant Advance with maturities
comparable to such Fixed Period as of 11:00 A.M. London time
two Business Days prior to the commencement of such Fixed
Period.
"Borrowing" means the incurrence of Advances made from
all the Lenders on a single date and having a single Fixed
Period (with any Prime Rate Advance made pursuant to Section
2.14 being considered a part of the related Borrowing of
LIBOR Rate Advances).
"Business Day" means (i) any day excluding (x)
Saturday, (y) Sunday and (z) any day on which banks in New
York City and Boston are authorized by law to close and (ii)
with respect to all notices and determinations in connection
with, and all payments of principal and interest on,
Eurodollar Loans, any day which is a Business Day described
in clause (i) above and which is also a day for trading by
and between banks in United States dollar deposits in the
London Interbank Eurodollar market.
"Charges" has the meaning specified in Section 2.12(a).
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commitment" means, as to each Lender, the amount of
such Lender's share of the Total Commitment as set forth
opposite such Lender's name on the signature pages hereof,
as such amount may be reduced pursuant to Section 2.03;
provided that at all times on and after the Facility
Termination Date, the Commitment of each Lender shall be
zero.
"Commitment Fee" has the meaning specified in Section
2.10(b).
"Commitment Percentage" shall mean at any time, with
respect to each Lender, the percentage obtained by dividing
its Commitment at such time by the Total Commitment at such
time.
"Consolidated Net Interest Expense" means, with respect
to any fiscal period of the Borrower, the aggregate amount
of interest accrued and payable on all Indebtedness of the
Borrower and its consolidated Subsidiaries less the
aggregate amount of interest earned during such fiscal
period on all investments of the Borrower and its
consolidated Subsidiaries.
"Consolidated Tangible Net Worth" means, at any date as
of which the amount thereof shall be determined, consoli-
dated total assets of the Borrower and its consolidated
Subsidiaries (excluding the effect of any amount in the
cumulative translation adjustment account) minus the sum of
(i) any amounts attributable to (x) goodwill, and (y) other
intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names,
copyrights and research and development expenses except
prepaid expenses and software research and development
required to be capitalized under U.S. GAAP (as hereinafter
defined) and (ii) Consolidated Total Liabilities of the
Borrower and its consolidated Subsidiaries.
"Consolidated Total Liabilities" means, at any date as
of which the amount thereof shall be determined, all
obligations of the Borrower and its consolidated
Subsidiaries that should, in accordance with U.S. GAAP, be
classified as current and long term liabilities on the
consolidated balance sheet of the Borrower and its
consolidated Subsidiaries, including, in any event, all
Indebtedness of the Borrower and its consolidated
Subsidiaries, excluding deferred items.
"Default" means any event that would constitute an
Event of Default but for the requirement that notice be
given or time elapse or both.
"Effective Date" means the date on which the conditions
set forth in Section 3.01 are satisfied.
"Eligible Investments" means (a) direct obligations of,
or obligations the principal of and interest on which are
unconditionally guaranteed by the full faith and credit of,
the United States of America (including obligations issued
or held in book-entry form on the books of the Department of
the Treasury of the United States of America); (b)
commercial or finance paper or other similar obligations
having a rating in the highest rating category from either
S&P or Moody's; and (c) negotiable or non-negotiable
certificates of deposit, time deposits or other similar
banking arrangements issued by any bank (including the
Agent) or trust company, having a commercial paper rating in
the highest rating category from either S&P or Moody's, or
fully insured by the Federal Deposit Insurance Corporation;
and which in each case mature no more than 2 years from the
date of acquisition thereof in the case of direct
obligations of the United States of America, one year from
the date of acquisition thereof in the case of obligations
unconditionally guaranteed by the United States of America
and six months from the date of acquisition thereof in the
case of other Eligible Investments.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) which is a member of a group of which
the Borrower is a member and which is under common control
with the Borrower within the meaning of Section 414(b) or
(c) of the Code and the regulations promulgated and rulings
issued thereunder.
"ERISA Termination Event" means (i) a Reportable Event,
or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year
in which it was a "substantial employer," as such term is
defined in Section 4001(a)(2) of ERISA, or the incurrence of
liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple
Employer Plan, or (iii) providing notice of intent to termi-
nate a Plan pursuant to Section 4041(a)(2) of ERISA or the
treatment of a Plan amendment as a termination under Section
4041 of ERISA, or (iv) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or
(v) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Plan, or
the imposition of any liability under Title IV of ERISA
(other than for the payment of premiums to the PBGC).
"Eurodollar Reserve Percentage" means, for any day,
that percentage, expressed as a decimal, which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without
limitation, any marginal, supplemental or emergency reserve
requirements) for a member bank of the Federal Reserve
System in New York City in respect of "Eurocurrency
Liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on LIBOR Rate Advances is determined or
any category of extensions of credit or other assets which
includes loans by a non-United States office of the Agent to
United States residents). The Adjusted LIBOR Rate shall be
adjusted automatically on and as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Event of Default" has the meaning specified in Section
6.01.
"Facility" means the agreement of the Lenders to make
Advances to the Borrower from time to time pursuant to the
terms hereof.
"Facility Fee" has the meaning specified in Section
2.10(b).
"Facility Limit" means $40,000,000, as such amount may
be reduced pursuant to Section 2.03.
"Facility Termination Date" means December 30, 1994,
provided, however, that after December 1, 1994, the Facility
Termination Date may be extended for an additional 364 day
period upon the unanimous written consent of the Lenders,
provided that, the Agent has received a written request for
such an extension from the Borrower.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not published
for any day which is a Business Day, the average of the
quotations for such day for such transactions received by
NWB from three Federal funds brokers of recognized standing
selected by it.
"Fixed Period" means, for each LIBOR Rate Advance, the
period commencing on the date of such LIBOR Rate Advance and
ending on the last day of the period selected by the
Borrower pursuant to the provisions below and, thereafter,
each subsequent period commencing on the first day of each
such subsequent Fixed Period and ending on the last day of
the period selected by the Borrower pursuant to the
provisions below. The duration of each such Fixed Period
shall be a period of 30, 60, 90, 120, 150 or 180 days, as
the Borrower may select, or such other period as may be
agreed upon by the Borrower and the Agent, in each case upon
the receipt by the Agent of a Notice of Borrowing not later
than 11:00 A.M. (New York City time) three Business Days
prior to the first day of such Fixed Period (or at such
other time and on such other day as the Borrower may request
a LIBOR Rate Advance pursuant to Section 2.02); provided,
however, that:
( i) the Borrower may not select any Fixed
Period for any LIBOR Rate Advances which ends
after the Facility Termination Date;
( ii) whenever the last day of any Fixed
Period would otherwise occur on a day other than a
Business Day, the last day of such Fixed Period
shall be extended to occur on the next succeeding
Business Day; and
( iii) if the Borrower has not selected the
duration of a Fixed Period, and the Borrower and
Agent have not agreed upon a Fixed Period, the
duration of such Fixed Period shall be 30 days.
"Indebtedness" of any Person means any obligation
(whether present or future, actual or contingent, secured or
unsecured, as principal or guarantor or otherwise) for the
payment or repayment of money which would be regarded as
indebtedness in accordance with U.S. GAAP (but excluding
obligations in respect of forward foreign exchange contracts
in an aggregate amount not in excess of $150,000,000).
"Indemnified Party" has the meaning specified in
Section 8.01.
"Insufficiency" means, with respect to any Plan, the
amount, if any, of its unfunded benefit liabilities within
the meaning of Section 4001(a)(18) of ERISA.
"Interest" means (i) for each LIBOR Rate Advance for
any Fixed Period, the product of
LR x P x ED
360
and (ii) for each Prime Rate Advance made pursuant to
Section 2.14 or 2.15, the product of
PR x P x ED
365
where:
LR = the sum of the Adjusted LIBOR Rate for such
Advance for such Fixed Period plus 1.50%.
P = the Principal of such Advance outstanding
during the period for which Interest is being
calculated.
ED = the actual number of days elapsed during the
period for which Interest is being
calculated.
PR = the Prime Rate from time to time.
provided, however, that (x) no provision of this Agreement
or the Notes shall require the payment or permit the
collection of Interest in excess of the maximum permitted by
applicable law; and (y) Interest for any Advance shall not
be considered paid by any distribution if at any time such
distribution is rescinded or must otherwise be returned for
any reason.
"Letter of Credit" means each of the letters of credit
issued for the account of the Borrower pursuant to the
Letter of Credit Agreement.
"Letter of Credit Agreement" means that certain Letter
of Credit Agreement of even date herewith by and among the
Borrower, the Agent and the Lenders pursuant to which the
Fronting Bank (as defined therein) will provide letters of
credit for the account of the Borrower.
"LIBOR Rate Advance" means an Advance which bears
interest based upon the Adjusted LIBOR Rate.
"Lien" has the meaning specified in Section 4.01(b).
"Loan Documents" means this Agreement, the Letter of
Credit Agreement, the Notes and each other instrument or
agreement executed and delivered by the Borrower in
connection herewith.
"Majority Lenders" means at any time Lenders holding at
least 66% of the then aggregate unpaid principal amount of
the Notes if at such time there are four or more Lenders
hereunder (or all of the Lenders, if at such time there are
less than four Lenders hereunder), or, if no such principal
amount is then outstanding, Lenders having at least 66% of
the Commitments if at such time there are four or more
Lenders hereunder (or all of the Lenders, if at such time
there are less than four Lenders hereunder).
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which the Borrower
or any ERISA Affiliate is making or accruing an obligation
to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a Single Employer Plan,
which (i) is maintained for employees of the Borrower or an
ERISA Affiliate and at least one Person other than the
Borrower and its ERISA Affiliates or (ii) was so maintained
and in respect of which the Borrower or an ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"Note" means a promissory note made by the Borrower in
favor of each Lender in substantially the form of Exhibit A
hereto, evidencing the aggregate obligations of the Borrower
to such Lender resulting from the Advances made by such
Lender.
"Notice of Borrowing" has the meaning specified in
Section 2.02(a).
"Overdue Rate" in respect of the rate of interest on
any Advance means a rate of interest equal to the Prime Rate
plus 2% per annum.
"Participation Fee" has the meaning specified in
Section 2.10(d).
"PBGC" means the Pension Benefit Guaranty Corporation,
or any successor agency or entity performing substantially
the same functions.
"Permitted Liens" means (i) Liens incurred and pledges
and deposits made in the ordinary course of business in
connection with workers' compensation, unemployment
insurance, old-age pensions and other social security
benefits other than in respect of employee benefit plans
subject to ERISA; (ii) Liens imposed by law, such as
carriers', warehousemen's, mechanics', materialmen's and
vendors' Liens, incurred in the ordinary course of business
and securing obligations which are not yet due or which are
being contested in good faith by appropriate proceedings;
(iii) Liens securing the payment of taxes, assessments and
governmental charges or levies, either (a) not delinquent or
(b) being contested in good faith by appropriate legal or
administrative proceedings and as to which adequate reserves
shall have been established, but only so long as such
proceedings could not subject the Agent or the Lenders to
any civil or criminal penalty or liability; (iv) purchase
money Liens securing Indebtedness incurred to finance the
purchase price of property acquired in the ordinary course
of business in an aggregate amount not in excess of
$5,000,000 at any one time outstanding; and (v) extensions,
renewals and replacements of Liens referred to in clauses
(i) through (iv) above, provided that any such extension,
renewal or replacement Lien is limited to the property or
assets covered by the Lien extended, renewed or replaced and
does not secure any Indebtedness in addition to that secured
immediately prior to such extension, renewal or replacement.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency
thereof.
"Plan" means a Single Employer Plan or a Multiemployer
Plan.
"Prime Rate" means, with respect to any day, the higher
of (i) 0.50% per annum above the rate of interest announced
by the Agent in New York City as its prime rate for U.S.
Dollar loans as in effect on such day and (ii) 0.50% per
annum above the rate determined by the Agent to be the
average rate at which overnight Federal funds are offered to
it on such day.
"Prime Rate Advance" means an Advance made pursuant to
Section 2.14 or 2.15 which bears interest based upon the
Prime Rate.
"Principal" of any Advance means the original amount
advanced to the Borrower pursuant to Section 2.01, reduced
from time to time by payments in respect thereof; provided,
however, that if such Principal of such Advance shall have
been reduced by any payment and thereafter such payment is
rescinded or must otherwise be returned for any reason, such
Principal of such Advance shall be increased as of the date
of such rescission or return by the amount of such payment,
all as though such payment had not been made.
"Proprietary Information" has the meaning specified in
Section 9.08.
"Reportable Event" means a "reportable event", as such
term is described in Section 4043 of ERISA and the
regulations issued thereunder (other than a "reportable
event" not subject to the provision for 30-day notice to the
PBGC under such regulations) or an event described in
Section 4068(f) of ERISA.
"Significant Subsidiaries" means Data General GmbH,
Data General (Canada), Inc., Data General France SARL, and
Data General Limited.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that is subject to
Title IV of ERISA and (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was so maintained and
in respect of which the Borrower could have liability under
Section 4069 of ERISA in the event such plan has been or
were to be terminated.
"Subsidiary" of any Person means any corporation of
which more than 50% of the issued and outstanding capital
stock or the outstanding capital stock having ordinary
voting power to elect a majority of the Board of Directors
of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such
corporation shall or might have voting power upon the occur-
rence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such
Person and one or more of its other Subsidiaries or by one
or more of such Person's other Subsidiaries.
"Total Commitment" shall mean, at any time, the sum of
the Commitments of each Lender hereunder at such time, which
in the aggregate is equal to $40,000,000, subject to
reduction pursuant to Section 2.03 hereof.
"Type" when used in respect of any Advance or Borrowing
shall refer to the rate by reference to which Interest on
such Advance or on the Advances comprising such Borrowing is
determined.
"Unused Total Commitment" shall mean, at any time, (i)
the Total Commitment less (ii) the aggregate outstanding
principal amount of all Advances.
"U.S. GAAP" has the meaning specified in Section 1.03.
"Withdrawal Liability" has the meaning given such term
under Part 1 of Subtitle E of Part IV of ERISA.
SECTION 1.02. Computation of Time Periods. Unless
otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding."
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles in the United States
("U.S. GAAP") consistently applied.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. Facility. On the terms and conditions
hereinafter set forth, each Lender severally agrees to make
advances (the "Advances") to the Borrower from time to time on
any Business Day during the period from the date hereof to the
Facility Termination Date in an amount not to exceed at any one
time outstanding the amount of such Lender's Commitment as
reduced pursuant to Section 2.03. Under no circumstances shall
any Lender be obligated to make any Advance if, after giving
effect thereto, the aggregate outstanding Principal of Advances
would exceed the Facility Limit. Each Advance shall be repaid
pursuant to the terms hereof. Each Borrowing shall be in an
amount not less than $500,000 and shall consist of Advances made
on the same day by the Lenders ratably according to their
respective Commitments.
SECTION 2.02. Making the Advances. (a) Notwithstanding
anything to the contrary contained in this Agreement and except
as contemplated by Sections 2.14 and 2.15, all Advances shall be
LIBOR Rate Advances as the Borrower may request subject to and in
accordance with this Section. Each Borrowing shall be made on
notice, substantially in the form of Exhibit B hereto (the
"Notice of Borrowing"), given not later than 11:00 A.M. (New York
City time) three Business Days preceding the date of the proposed
Borrowing, from the Borrower to the Agent, which shall give to
each Lender prompt (but in no event later than 11:00 a.m., New
York City time, two Business Days preceding the date of the
proposed Borrowing) notice thereof by telecopier, telex or
cable. Each such Notice of Borrowing shall be transmitted by
telecopier, telex or cable, confirmed immediately in writing,
specifying therein the requested amount, date and duration of the
initial Fixed Period for such Borrowing. If no election of Fixed
Period is specified in any such Notice of Borrowing, such Notice
of Borrowing shall be deemed a request for a Fixed Period of 30
days. Each Lender shall, before 11:00 A.M. (New York City time)
on the date of such Borrowing, make available to the Agent's
Account, in same day funds, such Lenders' ratable portion of such
Borrowing. After the Agent's receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article
III, the Agent will make such funds available to the Borrower at
the Agent's office located at 175 Water Street, New York, New
York.
(b) Unless the Agent shall have received written notice
from a Lender prior to the date of any Borrowing that such Lender
will not make available to the Agent such Lender's ratable
portion of such Borrowing, the Agent may assume that such Lender
has made such portion available to the Agent on the date of such
Borrowing in accordance with subsection (a) of this Section 2.02
and the Agent may, in reliance on such assumption, make available
to the Borrower on such date a corresponding amount. If and to
the extent that such Lender shall not have so made such ratable
portion available to the Agent, such Lender and the Borrower
severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (i) in the case
of the Borrower, the interest rate applicable at the time to
Advances comprising such Borrowing and (ii) in the case of such
Lender, (x) for the first two days following the date such amount
is made available to the Borrower, at a rate per annum equal to
the Federal Funds Rate and (y) thereafter, the Prime Rate plus 2%
per annum. If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such
Lender's Advance as part of such Borrowing for purposes of this
Agreement.
(c) The failure of any Lender to make the Advance to be
made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Advance
on the date of such Borrowing, but no Lender shall be responsible
for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.
(d) Each Lender may fulfill its Commitment with respect to
any Advance by causing any lending office of such Lender to make
such Advance. Each Lender shall, subject to its overall policy
considerations, use reasonable efforts (but shall not be
obligated) to select a lending office which will not result in
the payment of increased costs by the Borrower pursuant to
Section 2.11.
SECTION 2.03. Termination or Reduction of the Commitments.
The Borrower may, upon at least five Business Days' notice to the
Agent, terminate in whole or reduce ratably in part the unused
portion of the respective Commitments of the Lenders; provided,
however, that each partial reduction shall be in a minimum amount
equal to $5,000,000 and in an integral multiple of $1,000,000 in
each case in the aggregate.
SECTION 2.04. Prepayments. The Borrower may at any time,
upon at least five Business Days' notice to the Agent stating the
proposed date and aggregate Principal amount of the prepayment,
and if such notice is given the Borrower shall, prepay the
outstanding Principal of the Advances comprising part of the same
Borrowing or Borrowings, in whole or in part, together with
Interest accrued to the date of such prepayment on the Principal
prepaid and all accrued and unpaid fees, costs and expenses at
the time due and payable by the Borrower under the Loan
Documents; provided, that (i) each partial prepayment shall be in
an aggregate Principal amount not less than $500,000 and (ii) no
such partial prepayment shall be permitted hereunder if, giving
effect thereto, the outstanding aggregate Principal amount of all
Advances would be less than $500,000 in the aggregate.
SECTION 2.05. Payment of Interest. (a) The Borrower
shall pay Interest on the unpaid Principal amount of each LIBOR
Rate Advance on the last day of each Fixed Period therefor, on
the date of any prepayment or refinancing thereof (on the amount
prepaid or refinanced), at maturity (whether by acceleration or
otherwise) and after such maturity on demand, provided that with
respect to LIBOR Rate Advances with a Fixed Period which is
longer than 30 days, interest shall also be paid on each date
which occurs at intervals of one month after the first day of
such Fixed Period. The Borrower shall pay Interest on the unpaid
Principal amount of each Prime Rate Advance made pursuant to
Section 2.14 or 2.15 monthly in arrears on the last day of each
month, on the date of any prepayment or refinancing thereof (on
the amount prepaid or refinanced), at maturity (whether by
acceleration or otherwise) and after such maturity on demand.
Interest shall be calculated as set forth in the definition of
such term. Upon receipt of such funds by the Agent, the Agent
shall distribute them to the Lenders in payment of the accrued
Interest on such Advance.
(b) Any amount in respect of any Advance, or any Interest
thereon or any other amount required to be paid hereunder or
under any other Loan Document which is not paid when due (whether
at stated maturity, by acceleration or otherwise), shall bear
interest payable on demand, from the due date for such amount
until such amount is paid in full at the Overdue Rate.
SECTION 2.06. Repayment. The Borrower shall repay to the
Agent for the account of the Lenders the outstanding Principal of
and Interest accrued and unpaid on the Advances on the Facility
Termination Date.
SECTION 2.07. Refinancing of Advances. The Borrower shall
have the right, at any time, on three Business Days' prior
irrevocable notice to the Agent (which notice, to be effective,
must be received by the Agent not later than 11:00 a.m., New York
City time, on the third Business Day preceding the date of any
refinancing), to refinance any outstanding Borrowing of LIBOR
Rate Advances for an additional Fixed Period, subject to the
following:
(a) no Event of Default shall have occurred and be
continuing at the time of such refinancing;
(b) if less than a full Borrowing of Advances shall be
refinanced, such refinancing shall be made pro rata among the
Lenders in accordance with the respective principal amounts of
the Advances comprising such Borrowings held by the Lenders
immediately prior to such refinancing;
(c) the aggregate principal amount of Advances being
refinanced shall be at least $500,000;
(d) each Lender shall effect each refinancing by
applying the proceeds of its new Advance to its Advance being
refinanced, and accrued interest on the Advance (or portion
thereof) being refinanced shall be paid by the Borrower at the
time of refinancing;
(e) the Fixed Period with respect to a refinancing
shall commence on the date of refinancing or the expiration of
the current Fixed Period applicable to the Borrowing being
refinanced;
(f) a Borrowing of LIBOR Rate Advances may be
refinanced only on the last day of a Fixed Period applicable
thereto; and
(g) each request for a refinancing which fails to
state an applicable Fixed Period shall be deemed to be a request
for a Fixed Period of 30 days.
In the event that the Borrower shall not give notice to refinance
any Borrowing of LIBOR Rate Advances, or to continue such
Borrowing as LIBOR Rate Advances, in each case as provided above,
such Borrowing shall automatically be refinanced with a Borrowing
of LIBOR Rate Advances for a fixed period of 30 days. The Agent
shall, after it receives notice from the Borrower, promptly (but
in no event later than 11:00 a.m., New York City time, two
Business Days preceding the date of the proposed refinancing)
give each Lender notice of any refinancing, in whole or in part,
of any Advance made by such Lender.
SECTION 2.08. Payments and Computations, Etc. (a) All
amounts to be paid or deposited by the Borrower hereunder shall
be paid or deposited in accordance with the terms hereof no later
than 1:00 P.M. (New York City time) on the day when due in lawful
money of the United States of America in same day funds to the
Agent's Account. Amounts received by the Agent after 1:00 P.M.
(New York City time) on any Business Day shall be deemed to have
been received on the next Business Day. The Agent will promptly
thereafter cause to be distributed like funds relating to the
payment of Principal or Interest or Commitment Fees or Facility
Fees ratably (other than amounts payable pursuant to Sections
2.11, 2.12 or 2.13) to the Lenders, and like funds relating to
the payment of any other amount payable to any Lender to such
Lender, in each case to be applied in accordance with the terms
of this Agreement.
(b) All computations of Interest and fees hereunder shall
be made on the basis of a year of 360 days (365 days in the case
of interest which is calculated with reference to the Prime Rate)
for the actual number of days (including the first but excluding
the last day) elapsed. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(c) Whenever any payment hereunder or under any Note 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 payment of Interest or fees.
(d) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the
Lenders hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent may, in
reliance on such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due
such Lender. If and to the extent the Borrower shall not have so
made such payment in full to the Agent, each Lender shall repay
to the Agent forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the day
such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds
Rate.
SECTION 2.09. Evidence of Advances. The Borrower's obliga-
tion to pay resulting from each Advance made hereunder by each
Lender shall be evidenced by a single Note of the Borrower
payable to such Lender which shall (i) be dated the date of the
initial Borrowing, (ii) be in a stated Principal amount equal to
such Lender's Commitment, mature on the Facility Termination Date
and bear interest as provided in Section 2.05 and (iii) be
substantially in the form of Exhibit A annexed hereto with blanks
appropriately completed in conformity herewith. Each Lender
shall, prior to any transfer thereof, record on the grid attached
to its Note the following: (x) the date and amount of each
Advance made hereunder, (y) the date and amount of each payment
of Principal hereunder, and (z) the date and amount of any
prepayment, provided that any failure to record any such
information shall not limit or otherwise affect the Borrower's
obligation to repay all Advances hereunder, together with accrued
Interest thereon.
SECTION 2.10. Fees. (a) From and after the date hereof
until the later of the Facility Termination Date and the date on
which no Advances shall be outstanding and all obligations of the
Borrower hereunder shall be paid in full, the Borrower shall, on
the last day of each Fixed Period for each LIBOR Rate Advance any
amount of which was reduced for any reason during such Fixed
Period, pay to the Agent for the account of the Lenders an amount
equal to the Amortization Fee (if any) for such Advance for such
Fixed Period.
(b) From and after the date hereof until the later of the
Facility Termination Date and the date on which no Advances shall
be outstanding and all obligations of the Borrower hereunder
shall be paid in full, the Borrower shall pay the following fees:
(i) to the Agent, for the account of each Lender,
a commitment fee (the "Commitment Fee") equal to the
product of (x) the average daily unused portion of such
Lender's Commitment and (y) the per annum rate of .375
of 1%;
(ii) to the Agent for the account of each Lender a fee
per each Lender's Commitment (the "Facility Fee") equal to
the product of (x) the total Facility Limit (whether used or
unused) and (y) the per annum rate of .375 of 1%; and
(iii) to the Agent for its own account a fee of $10,000
per annum (the "Agency Fee").
(c) The Commitment Fee and the Facility Fee shall be
payable in arrears quarterly on the last Business Day of each
November, February, May and August during the term of this
Agreement and on the later of the Facility Termination Date and
the date on which no Advances shall be outstanding and all
obligations of the Borrower hereunder shall be paid in full. The
Agency Fee shall be payable on the date of execution of this
Agreement and on each anniversary thereof.
SECTION 2.11. Increased Costs. (a) If, on or after the
date of this Agreement, the adoption of any law or regulation, or
any change therein, or any change in the interpretation or
administration thereof by any court, administrative or
governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance
by any Lender with any request or directive issued after the date
hereof (whether or not having the force of law) of any such
authority, central bank or comparable agency shall either:
(i) impose, modify or deem applicable any
reserve, special deposit or similar requirement against any
extension of credit, or assets of, or any deposits or other
liabilities of, any Lender, or
(ii) impose on any Lender or on the money markets
any other condition regarding this Agreement or the LIBOR
Rate Advances or the Lender's obligation to make LIBOR Rate
Advances,
and the result of any event referred to in clause (i) or (ii)
above shall be to increase the cost to such Lender of making any
LIBOR Rate Advance or to reduce the amounts receivable by such
Lender hereunder (which increase in cost or reduction in amounts
receivable shall be the result of such Lender's reasonable
allocation of the aggregate of such cost increases or reductions
resulting from such events), then, upon demand by such Lender,
the Borrower shall be obligated to immediately pay to such
Lender, from time to time as specified by such Lender, additional
amounts which in the aggregate shall be sufficient to compensate
such Lender for such increased cost or reduction. A certificate
setting forth in reasonable detail such increased cost incurred
or reduction in amounts receivable by such Lender as a result of
any event mentioned in clause (i) or (ii) of this subsection,
submitted by such Lender to the Borrower, shall, unless otherwise
required by law, be conclusive, absent manifest error, as to the
amount thereof.
(b) If any of the events requiring payments of additional
amounts by the Borrower under subsection (a) occurs, such Lender
shall take such steps as may be reasonable to avoid the Borrower
being required to pay any additional amounts and shall consult
with the Borrower in good faith with a view to agreeing to
alternative arrangements whereby any such requirement can be
avoided or mitigated, including, without limitation, fulfilling
such Lender's obligations through another branch or affiliate in
the United States.
SECTION 2.12. Taxes. (a) All payments made by the
Borrower under this Agreement shall be made free and clear of,
and without reduction for or on account of, any present or future
stamp or other taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, restrictions or conditions of any
nature whatsoever now or hereafter imposed, levied, collected,
withheld or assessed by any country (or by any political
subdivision or taxing authority thereof or therein), excluding
any income, franchise and withholding taxes now or hereafter
imposed on any Lender (such nonexcluded taxes being called
"Charges"). If any Charges are required to be withheld from any
amounts payable to any Lender hereunder, the amounts so payable
to such Lender shall be increased to the extent necessary to
yield to such Lender (after payment of all Charges) interest or
any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement. Whenever any Charges are
payable by the Borrower, as promptly as possible thereafter, the
Borrower shall send to such Lender an original official receipt
showing payment thereof.
(b) The parties acknowledge that the Borrower will be
obligated to comply with applicable United States withholding tax
requirements, and in that regard each Lender that is not a United
States Person (as such term is defined in 7701(a)(30) of the
Code) shall complete and deliver to the Borrower, prior to the
date on which the first payment to such Lender is due hereunder,
an Internal Revenue Service Form 1001, certifying that it is
entitled to complete exemption from United States withholding tax
under an income tax treaty to which the United States is a party,
or an Internal Revenue Service Form 4224 in duplicate, certifying
that the payments to be received under this Agreement are
effectively connected with the conduct of a trade or business of
such Lender in the United States, as appropriate. Each Lender
further agrees to complete and deliver to the Borrower from time
to time any successor or additional form or certificate required
by the Internal Revenue Service in order to secure complete
exemption from United States withholding taxes. If for any
reason during the term of this Agreement a Lender becomes unable
to submit the forms or certificate referred to above or the
information or representations contained therein is no longer
accurate in any material respect, such Lender shall promptly upon
discovery thereof immediately notify the Borrower in writing to
that effect so that the Borrower is not in violation of
applicable United States withholding tax requirements.
(c) Each Lender agrees to use reasonable efforts to avoid
the imposition of any Charges on payments hereunder or under the
other Loan Documents or to minimize any amounts which might
otherwise be payable pursuant to this Section 2.12; provided,
however, that such efforts shall not cause the imposition on such
Lender of any additional costs or legal expenses not reimbursable
hereunder or regulatory burden deemed by the Lender to be
material.
(d) If the Borrower makes any additional payment to any
Lender pursuant to this Section 2.12 in respect of any Charges,
and such Lender determines that it has received (i) a refund of
such Charges, or (ii) a credit against, relief or remission for,
or a reduction in the amount of, any tax or other governmental
charge solely as a result of any deduction or credit for any
Charges with respect to which it has received payments under this
Section 2.12, such Lender shall, to the extent that it can do so
without prejudice to the retention of such refund, credit,
relief, remission or reduction, pay to the Borrower such amount
as shall be reasonably determined by such Lender to be solely
attributable to the deduction or withholding of such Charges. If
such Lender later determines that it was not entitled to such
refund, credit, relief, remission or reduction to the full extent
of any payment made pursuant to the first sentence of this
Section 2.12(d), the Borrower shall upon demand of such Lender
promptly repay the amount of such overpayment. Nothing in this
Section 2.12(d) shall be construed as requiring such Lender to
conduct its business or to arrange or alter in any respect its
tax or financial affairs so that it is entitled to receive such a
refund, credit or reduction or as allowing any Person to inspect
any records, including tax returns, of such Lender.
SECTION 2.13. Capital Adequacy. If any Lender shall have
determined that on or after the date hereof, the adoption of any
applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any
request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Lender as a consequence of
the Advances or its obligations hereunder to a level below that
which such Lender could have achieved but for such adoption,
change or compliance (taking into consideration the policies of
such Lender with respect to capital adequacy) by an amount deemed
by such Lender to be material, then from time to time, within 15
days after demand by such Lender which demand shall set forth the
basis therefor in reasonable detail, provided, however, that no
Lender will be obligated to provide such detail to the extent
same would compromise the confidentiality of such Lender's
calculations concerning its cost of capital or its method of
calculating same, the Borrower shall be obligated to pay or cause
to be paid to such Lender such additional amount or amounts as
will compensate for such reduction.
SECTION 2.14. Unavailability of LIBOR Rate Advances. If
with respect to any LIBOR Rate Advance requested by the Borrower:
(a) deposits in dollars (in the applicable amounts)
are not being offered to any Lender in the relevant market
for such LIBOR Rate Advance, or
(b) any Lender determines that the Adjusted LIBOR Rate
will not adequately and fairly reflect the cost to such
Lender of funding such LIBOR Rate Advance,
such Lender shall forthwith give notice thereof to the Agent
(which shall so notify the Borrower), whereupon until such Lender
notifies the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Lender to make
LIBOR Rate Advances shall be suspended. Unless the Borrower
notifies the Agent on or prior to the proposed borrowing date for
such LIBOR Rate Advance that it elects not to borrow on such
date, the Advance made on such date by such Lender shall instead
be a Prime Rate Advance.
SECTION 2.15. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Lender with any request or directive of any such authority,
central bank or comparable agency shall make it unlawful or
impossible for such Lender to make, maintain or fund LIBOR Rate
Advances, such Lender shall so notify the Borrower, whereupon
until such Lender notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligation of
such Lender to make LIBOR Rate Advances shall be suspended (and
each Lender shall use reasonable efforts to notify the Borrower
promptly after learning that such circumstances no longer
exist). If such Lender shall determine that it may not lawfully
continue to maintain and fund any of its outstanding LIBOR Rate
Advances to maturity and shall so specify in such notice, the
Borrower shall immediately prepay in full the then outstanding
Principal amount of each such LIBOR Rate Advance, together with
accrued Interest thereon and any additional amount owing under
Section 2.10(a) hereof. Concurrently with prepaying each such
LIBOR Rate Advance, the Borrower may at its option borrow a Prime
Rate Advance in an equal principal amount from such Lender, and
such Lender shall make such a Prime Rate Advance.
SECTION 2.16. Use of Proceeds. The proceeds of the
Advances shall be used for general corporate purposes (including
the reimbursement of draws under Letter of Credit issued pursuant
to the Letter of Credit Agreement).
SECTION 2.17. Sharing of Payments, Etc. If any Lender
shall obtain any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) on account of
the Advances made by it (other than pursuant to Section 2.11,
2.12, 2.13 or 2.15) in excess of its ratable share of payments on
account of the Advances obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such
participation in the Advances made by them as shall be necessary
to cause such purchasing Lender 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 such
purchasing Lender, such purchase from each Lender shall be
rescinded and such Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with
an amount equal to such Lender's ratable share (according to the
proportion of (i) the amount of such Lender's required repayment
to (ii) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.17 may exercise all its rights
of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor
of the Borrower in the amount of such participation.
SECTION 2.18. Reduction of Rate of Interest. The Lenders
and the Agent hereby agree that if the Borrower's long term
senior debt rating is upgraded to BBB by Standard & Poors and to
Baa2 by Moody's Investor Services, then from and after the date
on which such upgrade occurs (i) the margin in excess of the
Adjusted LIBOR Rate at which interest on LIBOR Rate Advances is
calculated shall be reduced from 1.50% to 1.25%, and (ii) the
margin in excess of the Prime Rate at which Interest on Prime
Rate Advances is calculated shall be reduced from 0.50% to 0.25%.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Effective Date.
The occurrence of the Effective Date shall be subject to the
satisfaction of the following conditions precedent:
(a) There shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in any court or
before any arbitrator or governmental instrumentality that would
be reasonably likely to have a material adverse effect on (i) the
condition (financial or otherwise), business, operations, proper-
ties or prospects of the Borrower or (ii) the transactions
contemplated by the Loan Documents.
(b) All accrued fees and expenses (including the fees and
expenses of counsel to the Agent) under and with respect to the
transactions contemplated by the Loan Documents shall have been
paid.
(c) Each of the documents and instruments delivered
pursuant to this Section 3.01 hereto shall be in full force and
effect, and no default shall exist thereunder.
(d) All governmental and third party consents and approvals
necessary in connection with the transactions contemplated by the
Loan Documents shall have been obtained and remain in effect.
(e) The Borrower shall have delivered to the Agent a
certificate of the Borrower stating that each of the conditions
precedent set forth in this Section 3.01 has been satisfied.
(f) The Agent shall have received the following, each dated
the Effective Date, and in form and substance satisfactory to the
Agent and (except for the Notes and the Letter of Credit
Agreement) in sufficient copies for each Lender:
(i) A Note to the order of each Lender.
(ii) A certified copy of the certificate of
incorporation of the Borrower as amended, certified as of a
recent date by the Secretary of State of the State of
Delaware.
(iii) An executed and effective Letter of Credit
Agreement.
(iv) A certificate of such Secretary of
State, dated as of a recent date, as to the good standing of
and payment of taxes by, the Borrower and as to the charter
documents on file in the office of such Secretary of State.
(v) A certified copy of the resolutions of the
Board of Directors of the Borrower approving (A) this
Agreement, the Notes and the transactions contemplated
thereby, and (B) all documents evidencing other corporate
action with respect thereto.
(vi) A Certificate of the Secretary or
Assistant Secretary of the Borrower certifying as to the
by-laws and the names and true signatures of the officers of
the Borrower authorized to sign the Loan Documents and the
other documents to be delivered hereunder to which such
Borrower is a party.
(vii) A favorable opinion of Fulbright & Jaworski,
counsel to the Borrower, in substantially the form of
Exhibit C hereto.
(viii) Other such approvals, opinions or documents
as the Agent may reasonably request.
SECTION 3.02. Conditions Precedent to Each Borrowing. The
obligation of each Lender to make an Advance on the occasion of
each Borrowing (including the initial Borrowing) shall be subject
to the further conditions precedent that on the date of such
Borrowing the Effective Date shall have occurred and the
following statements shall be true (and the acceptance by the
Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of
such Borrowing, such statements are true):
( i) The representations and warranties of the Borrower
contained in Section 4.01 hereof and in the other Loan
Documents are correct on and as of the date of such
Borrowing or issuance, before and after giving effect to
such Borrowing or issuance and to the application of the
proceeds therefrom, as though made on and as of such date,
except to the extent such representations and warranties
relate solely to an earlier date (in which case such
representations and warranties shall be true and correct on
and as of such earlier date); and
( ii) No event has occurred and is continuing, or would
result from such Borrowing or from the application of the
proceeds therefrom or such issuance, which constitutes an
Event of Default or Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Borrower. The Borrower represents and warrants as follows:
(a) The Borrower (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in
which the failure to so qualify would have a material
adverse effect on the condition (financial or otherwise),
business, operations, properties or prospects of the
Borrower; (ii) has the requisite corporate power and
authority to effect the transactions contemplated hereby, by
the other Loan Documents to which it is a party; and (iii)
has all requisite corporate power and authority and the
legal right to own, pledge, mortgage and operate its
properties, and to conduct its business as now or currently
proposed to be conducted.
(b) The execution, delivery and performance by the
Borrower of each of this Agreement, the Notes and any other
Loan Documents, (i) are within the corporate powers of the
Borrower, have been duly authorized by all necessary
corporate action, including the consent of shareholders where
required, and do not (A) contravene the certificate
of incorporation or by-laws of the Borrower, (B)
violate any law (including, without limitation, the
Securities Exchange Act of 1934) or regulation, or any order
or decree of any court or governmental instrumentality,
(C) conflict with or result in the breach of, or constitute
a default under, any indenture, mortgage or deed of
trust or any material lease, agreement or other instrument
binding on or affecting the Borrower, or any of its properties,
or (D) result in or require the creation or imposition
of any lien, charge, security interest, encumbrance or
any other type of preferential arrangement (any of the
foregoing being referred to herein as a "Lien") upon
any of the property of the Borrower; and (ii) do not
require the consent, authorization by or approval of or
notice to or filing or registration with any govern-
mental body, agency, authority, regulatory body or any
other Person other than those which have been obtained
and copies of which have been delivered pursuant to
Section 3.01 to the Agent, each of which is in full
force and effect. This Agreement has been duly
executed and delivered by the Borrower. This Agreement
is, and each of the other Loan Documents to which the
Borrower is a party when delivered hereunder or
pursuant hereto, will be, legal, valid and binding
obligations of the Borrower, enforceable against the
Borrower, in accordance with their respective terms,
except as such enforceability may be limited by
bankruptcy, insolvency and other similar laws
applicable to creditors' rights generally.
(c) No written statement prepared or furnished by the
Borrower to the Agent or to any governmental authority in
connection with any Loan Document or any financial statement
delivered pursuant hereto or thereto (other than to the
extent any such statements constitute projections) contains
any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained
herein or therein not misleading; and, to the extent that
any such written statements constitute projections, such
projections were prepared in good faith on the basis of
assumptions, methods, data, tests and information believed
by the Borrower to be valid and accurate at the time such
projections were furnished to the Agent or such governmental
authority, as the case may be.
(d) Each exhibit, financial statement, book, record,
report or other document and any other information furnished
at any time by the Borrower to the Lenders in connection
with this Agreement will be accurate in all material
respects as to its date and as of the date so furnished, and
no such document or information will contain any material
misstatement of fact or omit to state a material fact or any
fact necessary to make the statements contained therein not
misleading and since September 28, 1991, there has been no
material adverse change in the condition (financial or
otherwise), prospects, property or business of the Borrower.
(e) The operations of the Borrower comply in all
material respects with all applicable environmental, health
and safety statutes and regulations, including, without
limitation, regulations promulgated under the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.),
none of the operations of the Borrower is the subject of any
Federal or state investigation evaluating whether any
remedial action involving a material expenditure is needed
to respond to a release of any Hazardous Waste or Hazardous
Substance (as such terms are defined in any applicable state
or Federal environmental law or regulations) into the
environment, and the Borrower does not have any material
contingent liability in connection with any release of any
Hazardous Waste or Hazardous Substance into the environment.
(f) There is no pending or, to the Borrower's
knowledge after due inquiry, threatened action or proceeding
against the Borrower before any court, governmental agency
or arbitrator, that may reasonably be expected to materially
and adversely affect the condition (financial or otherwise),
business, operations, properties or prospects of the
Borrower or that purports to affect the legality, validity
or enforceability of any Loan Document and none of the
transactions contemplated by any of the foregoing is or to
the Borrower's knowledge is threatened to be restrained or
enjoined (temporarily, preliminarily or permanently).
(g) No proceeds of any Advance will be used to
purchase or carry any margin stock (as defined in Regulation
U of the Board of Governors of the Federal Reserve System)
in violation of Regulation U or X of the Board of Governors
of the Federal Reserve System.
(h) The Borrower is not a party to any contract,
agreement, lease or instrument the performance of which,
either unconditionally or upon the happening of any event,
will result in or require the creation of a Lien on the
property or assets of the Borrower or otherwise result in a
violation of this Agreement.
(i) (i) The Borrower is not a party to any indenture,
loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate
restriction that could reasonably be expected to have, and
no provision of applicable law or governmental regulation
could reasonably be expected to have, a material adverse
effect on the condition (financial or otherwise), business,
operations, properties or prospects of the Borrower, or may
reasonably be expected to have such an effect on the ability
of the Borrower to carry out its obligations under this
Agreement, Notes or any other Loan Documents, and (ii) the
Borrower is not in default under or with respect to any
contract, agreement, lease or other instrument to which the
Borrower is a party and which is material to the Borrower's
condition (financial or otherwise), business, operations,
properties or prospects, and the Borrower has not delivered
or received any notice of default thereunder.
(j) The Borrower is not an "investment company," or an
"affiliated person" of, or "promoter" or "principal under-
writer" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
The making of the Advances by the Lenders, the application
of the proceeds and repayment thereof by the Borrower and
the consummation of the transactions contemplated by this
Agreement, the Notes and the other Loan Documents will not
violate any provision of such Act or any rule, regulation or
order issued by the Securities and Exchange Commission
thereunder.
(k) As of the date of the initial Advances, no broker
or finder brought about the obtaining, making or closing of
the Advances made pursuant to this Agreement and neither the
Borrower nor any of its Affiliates has any obligation to any
Person in respect of any finder's, broker's or investment
banker's fee in connection with the Advances contemplated by
this Agreement.
(l) No event requiring notice to the PBGC under
Section 302(f)(4)(A) of ERISA has occurred or is reasonably
expected to occur with respect to any Plan.
(m) No amendment with respect to which security is
required under Section 307 of ERISA has been made or is
reasonably expected to be made to any Plan.
(n) Neither the Borrower nor any ERISA Affiliate has
incurred or is reasonably expected to incur any material
Withdrawal Liability to any Multiemployer Plan.
(o) Neither the Borrower nor any ERISA Affiliate has
been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, if the
effect of such reorganization or termination would be
material to the Borrower and its ERISA Affiliates taken as a
whole, and, to the best of the Borrower's knowledge, no
Multiemployer Plan is reasonably expected to be in reorgani-
zation or to be terminated, within the meaning of Title IV
of ERISA, if the effect of such reorganization or
termination would be material to the Borrower and its ERISA
Affiliates taken as a whole.
(p) ( i) No ERISA Termination Event has occurred or is
reasonably expected to occur with respect to any Plan the
effect of which would be material to the Borrower and its
ERISA Affiliates taken as a whole. If any Plan were to be
terminated as of the date hereof, no liability would be
incurred under Title IV of ERISA which would be material to
the Borrower and its ERISA Affiliates taken as a whole.
( ii) There are no pending claims or
lawsuits asserted or instituted against the assets of
any Plan trust or against any fiduciary of a Plan with
respect to the operation of such Plan which are likely
to have a material adverse effect on the condition
(financial or otherwise), business, operations,
properties or prospects of the Borrower or its ERISA
Affiliates taken as a whole.
( iii) There are no strikes or other labor
disputes or grievances pending against the Borrower
which are likely to have a material adverse effect on
the condition (financial or otherwise), business,
operations, properties or prospects of the Borrower.
All payments due from the Borrower pursuant to the
provisions of any collective bargaining agreement have
been paid or accrued as a liability on the books of the
Borrower, to the extent required by U.S. GAAP.
(q) The Borrower has filed, or caused to be filed or
be included in, all tax returns and reports (Federal, state,
local and foreign) required to be filed and paid all amounts
of taxes, including interest and penalties required to be
paid, except for such taxes (i) as are being contested in
good faith and by proper proceedings and (ii) against which
appropriate reserves are being maintained, but only so long
as the proceedings referred to in clause (i) above could not
subject the Agent or the Lenders to any civil or criminal
penalty or liability.
(r) All of the Subsidiaries of the Borrower are listed
on Schedule I annexed hereto.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. Until the later of
the Facility Termination Date and the date on which no Advances
shall be outstanding and all obligations of the Borrower
hereunder shall be paid in full, the Borrower will, unless the
Majority Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply and cause all
of its Significant Subsidiaries to comply in all material
respects with all applicable laws, rules, regulations and
orders with respect to it, its business and properties, such
compliance to include, without limitation, compliance with
(i) ERISA and all applicable rules, regulations and orders
thereunder and (ii) all applicable environmental laws,
rules, regulations and orders.
(b) Preservation of Corporate Existence. Preserve and
maintain in all material respects its corporate existence,
corporate rights (charter and statutory), and corporate
franchises.
(c) Visitation Rights. At any reasonable time during
normal business hours and from time to time, permit the
Agent or any Lender or any agents or representatives thereof
to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the
Borrower and to discuss the affairs, finances and accounts
of the Borrower with any of its officers or directors and
with its independent certified public accountants and advise
such accountants that the Agent and the Lenders have been
authorized to review and discuss with such accountants any
and all financial statements and other information of any
kind that they may have with respect to the Borrower and
direct such accountants to comply with any reasonable
request of the Agent or the Lenders for such information.
(d) Keeping of Books. Keep proper books of record and
account, which shall be maintained or caused to be
maintained by the Borrower and shall be separate and apart
from those of any Affiliate of the Borrower, in which full
and correct entries shall be made of all financial
transactions and the assets and business of the Borrower in
accordance with U.S. GAAP.
(e) Payment of Taxes, Etc. Pay and discharge and
cause all of its Significant Subsidiaries to pay and
discharge before the same shall become delinquent, (A) all
material taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (B) all
lawful claims that, if unpaid, might by law become a Lien
upon its property, provided, however, that the Borrower
shall not be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good
faith and by proper proceedings; and maintain appropriate
reserves in respect of taxes, assessments, governmental
charges and levies.
(f) Maintenance of Properties, Etc. Maintain and
preserve and cause all of its Significant Subsidiaries to
maintain and preserve in good working order and condition,
ordinary wear and tear excepted, all of its properties that
are used or useful in the conduct of its business (and
maintain all necessary insurance) with respect to which
failure to so maintain and preserve would have a material
adverse effect on the condition (financial or otherwise),
business, operations, properties or prospects of the Borrower.
(g) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within
45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, an
unaudited consolidated balance sheet of the Borrower as
of the end of such quarter and consolidated unaudited
statements of earnings and retained earnings and of
source and application of funds of the Borrower for the
period commencing at the end of the previous fiscal
year and ending with the end of such quarter, all in
reasonable detail and duly certified by the chief
financial officer of the Borrower (subject to year-end
audit adjustments) as having been prepared in
accordance with U.S. GAAP consistent (except as
expressly noted therein) with those applied in the
preparation of the financial statements, if any,
previously delivered pursuant to this Section 5.01(g),
together with a certificate of said officer stating
that no Event of Default or Default has occurred and is
continuing or, if such an Event of Default or Default
has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower
proposes to take with respect thereto;
(ii) as soon as available and in any event within
90 days after the end of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower
as of the end of such year and statements of income and
retained earnings and of source and application of
funds of the Borrower for the period commencing at the
end of the previous fiscal year and ending with the end
of such year, certified in a manner satisfactory to the
Majority Lenders by Price Waterhouse or other
nationally recognized independent public accountants
reasonably acceptable to the Majority Lenders, together
with (a) a certificate of such accounting firm stating
that in the course of the regular audit of the business
of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards
in the United States, such accounting firm has obtained
no knowledge that an Event of Default or Default has
occurred and is continuing, or if, in the opinion of
such accounting firm, such an Event of Default or
Default has occurred and is continuing, a statement as
to the nature thereof and (b) a certificate of the
chief financial officer of the Company stating that no
Event of Default or Default has occurred and is
continuing or, if such an Event of Default of Default
has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower
proposes to take with respect thereto;
(iii) as soon as available and in any event (A)
within 30 days after the Borrower or any of its ERISA
Affiliates knows or has reason to know that any ERISA
Termination Event described in clause (i) of the defin-
ition of ERISA Termination Event with respect to any
Plan of the Borrower or such ERISA Affiliate has
occurred and (B) within 10 days after the Borrower or
any of its ERISA Affiliates knows or has reason to know
that any other ERISA Termination Event with respect to
any such Plan has occurred, a statement of the chief
financial officer of the Borrower describing such ERISA
Termination Event and the action, if any, which the
Borrower or such ERISA Affiliate proposes to take with
respect thereto;
(iv) promptly and in any event within 10 days
after receipt thereof by the Borrower or any of its
ERISA Affiliates from the PBGC copies of each notice
received by the Borrower or any such ERISA Affiliate of
the PBGC's intention to terminate any Plan of the
Borrower or such ERISA Affiliate or to have a trustee
appointed to administer any Plan;
(v) promptly and in any event within 30 days
after the filing thereof with the Internal Revenue
Service, copies of each Schedule B (Actuarial Informa-
tion) to the annual report (Form 5500 Series) with
respect to each Plan of the Borrower or any of its
ERISA Affiliates;
(vi) within 10 days after notice is given or
required to be given to the PBGC under Section
302(f)(4)(A) of ERISA of the failure to make timely
payments to a Plan, a copy of any such notice filed and
a statement of the chief financial officer of the
Borrower setting forth (A) sufficient information
necessary to determine the amount of the lien under
Section 302(f)(3), (B) the reason for the failure to
make the required payments and (C) the action, if any,
which the Borrower or any of its ERISA Affiliates
proposes to take with respect thereto;
(vii) promptly and in any event within 10 days
after receipt thereof by the Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor, a copy of
each notice received by the Borrower or any ERISA
Affiliate concerning (A) the imposition of Withdrawal
Liability by a Multiemployer Plan, (B) the determination
that a Multiemployer Plan is, or is expected to be,
in reorganization within the meaning of Title IV of
ERISA, (C) the termination of a Multiemployer Plan within
the meaning of Title IV of ERISA, or (D) the
amount of liability incurred, or which may be incurred,
by the Borrower or any ERISA Affiliate in connection
with any event described in clause (A),(B) or (C) above;
(viii) promptly after the commencement thereof,
notice of all actions, suits and proceedings before any
court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower, of the type described in
Section 4.01(f);
(ix) promptly and in any event within three
Business Days after the Borrower becomes aware of the
existence thereof, telephonic, telex or telecopied
notice (confirmed in writing) specifying the nature of
any Event of Default or Default, any breach or
non-performance of any other Loan Document, or any
development or other information which is reasonably
likely to materially and adversely affect the condition
(financial or otherwise), business, operations, proper-
ties or prospects of the Borrower or the ability of the
Borrower to perform its obligations under this
Agreement, the Notes, or any other Loan Document, and
stating the action which the Borrower proposes to take
with respect thereto;
(x) within 10 days upon its request, copies of
all federal, and access to all state and local, tax
returns and reports filed by the Borrower or in which
the Borrower was included on a consolidated or combined
basis (excluding sales, use and like taxes); and
(xi) such other information respecting the
condition (financial or otherwise), business,
operations, properties or prospects of the Borrower as
any Lender through the Agent may from time to time
reasonably request.
SECTION 5.02. Negative Covenants. Until the later of the
Facility Termination Date and the date on which no Advances shall
be outstanding and all obligations of the Borrower hereunder
shall be paid in full, the Borrower will not (and will not permit
its Subsidiaries to), directly or indirectly, without the written
consent of the Majority Lenders:
(a) Liens, Etc. Create or suffer to exist any Lien
upon or with respect to any of its assets or properties,
whether now owned or hereafter acquired, or assign any right
to receive income, in each case to secure or provide for the
payment of any Indebtedness of any Person, other than
Permitted Liens.
(b) Indebtedness. Create or suffer to exist any
Indebtedness, except (i) the Advances and the other obliga-
tions of the Borrower pursuant to the Loan Documents; (ii)
Indebtedness in existence on the date hereof; (iii)
Indebtedness incurred by Subsidiaries in Canada, France,
Germany and the United Kingdom; (iv) Indebtedness of the
Borrower and Subsidiaries other than Subsidiaries in Canada,
France, Germany and the United Kingdom in an aggregate not
in excess of $10,000,000 at any one time outstanding; and
(v) Indebtedness in connection with contingent lease
obligations in accordance with U.S. GAAP arising from
recourse lease transactions in an aggregate amount not in
excess of $10,000,000.
(c) Dividends, Etc. Declare or make any dividend
payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares
of any class of capital stock of the Borrower, or return any
capital to its shareholders as such, or purchase, retire,
defease, redeem or otherwise acquire for value or make any
payment in respect of any shares of any class of capital
stock of the Borrower or any warrants, rights or options to
acquire any such shares, now or hereafter outstanding;
provided that the Borrower's Subsidiaries may make any such
payments to the Borrower;
(d) Mergers, Etc. Merge or consolidate with or into
any Person, except that Subsidiaries of the Borrower may
merge or consolidate with or into each other or with or into
the Borrower.
(e) Investments in Other Persons. Except for Eligible
Investments, make, own or hold any loan or advance to any
Person; or make, own or hold any capital contribution to, or
otherwise invest in, any Person requiring cash consideration
in excess of $75,000,000 in the aggregate in any 364 day
period.
(f) Accounting Changes. Make any change (i) in
accounting treatment and reporting practices except as
permitted or required by U.S. GAAP, or (ii) in tax reporting
treatment except as permitted or required by law and, in any
case, as disclosed to the Agent in the notes to the
financial statements delivered to the Agent pursuant to
Section 5.01(g)(i), or otherwise.
(g) Corporate Organization. Amend its certificate of
incorporation or by-laws.
(h) Speculative Transactions. Engage in any transac-
tions involving commodity options or futures contracts or
engage in any transaction involving risks that are excessive
or unusual in light of the circumstances.
(i) Consolidated Tangible Net Worth. At any time
fail to maintain a Consolidated Tangible Net Worth of
$400,000,000, determined in accordance with U.S. GAAP.
(j) Net Worth. Permit the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth to be greater
than 1.25 to 1 at the end of any fiscal quarter.
(k) Interest Expense Ratio. Permit the ratio of the
Borrower's "net cash provided from operating activities"
reported on the Borrower's consolidated statement of cash
flow prepared at the end of each fiscal quarter in
accordance with U.S. GAAP to Consolidated Net Interest
Expense to be less than 5 to 1 at the end of any four
quarter period beginning on September 30, 1990.
(l) Sales, Etc. of Assets. Other than as set forth on
Schedule 5.02(1) sell, assign, lease or otherwise dispose
of, or permit any Subsidiary to sell, assign, lease or
otherwise dispose of, all or a substantial part of its
assets except (i) sales of inventory in the ordinary
course, (ii) for real property the proposed sale of which by
the Borrower was disclosed in the Borrower's Annual Report
for the year ended September 28, 1991 and (iii) sales,
assignments, leases and other dispositions of assets having
a fair market value less than $5,000,000 in any 364 day
period.
(m) Cash/Short Term Investment Availability. Permit
the sum of cash maintained in the Borrower's operating
account(s) plus Eligible Investments to be less than
$30,000,000 at any time.
(n) Cash/Short Term Investment/Marketable Security
Availability. Permit the amount by which (x) the sum of
cash maintained in the Borrower's operating account(s),
Eligible Investments and other securities held by the
Borrower which in the opinion of the Agent are readily
marketable exceeds (y) the aggregate outstanding Principal
amount of Advances plus Interest accrued thereon, to be less
than $100,000,000 at any time.
(o) Transactions with Affiliates. Sell or transfer
any property or assets to, or otherwise engage in any other
transactions with, any of its Affiliates (other than the
Borrower and its Subsidiaries), except that the Borrower may
engage in any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not
less favorable to the Borrower than could be obtained on an
arm's-length basis from unrelated third parties.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to make any payment to be
made by it hereunder in respect of Principal when the same
becomes due and payable, or shall fail to make any payment
to be made by it hereunder in respect of Interest or fees or
any other amounts payable hereunder or under any other Loan
Document within three Business Days after the same becomes
due and payable; or
(b) The Borrower shall fail to perform or observe any
term, covenant or agreement contained in Sections 5.01(b),
(e) or (f) or 5.02, provided that in the case of Sections
5.01(e) and (f) such failure continues unremedied for 3
days; or
(c) An Event of Default shall have occurred under the
Letter of Credit Agreement (as defined therein); or
(d) A fundamental change shall have occurred under
that certain indenture pursuant to which the Borrower has
issued 7 3/4% subordinated debentures due 2001 (as such
terms are defined therein); or
(e) Any representation or warranty or statement made
by the Borrower (or any of its officers) under or in
connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(f) The Borrower shall fail to perform or observe any
other term, covenant or agreement contained in any Loan
Document on its part to be performed or observed and any
such failure shall remain unremedied for 10 days after the
Borrower obtains knowledge of such failure; or
(g) The Borrower or any of its Subsidiaries shall fail
to pay any principal of or premium or interest on any
Indebtedness when the same becomes due and payable (whether
by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after
the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness or any
other event shall occur or condition shall exist under any
agreement or instrument relating to any such Indebtedness
and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the
effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness;
or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), redeemed, purchased or
defeased, or an offer to repay, redeem, purchase or defease
such Indebtedness shall be required to be made, in each
case prior to the stated maturity thereof; or
(h) The Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted
by or against the Borrower or any of its Subsidiaries
seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for
any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions
sought in such proceeding (including, without limitation,
the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall
occur; or the Borrower or any of its Subsidiaries shall take
any corporate action to authorize any of the actions set
forth above in this subsection (f); or
(i) Any judgment or order for the payment of money in
excess of $7,500,000 (after deducting the portion of any
such judgment or order which is fully covered by insurance
issued by a reputable insurer) shall be rendered against the
Borrower or any of its Subsidiaries and either (i)
enforcement proceedings shall have been commenced and shall
be continuing by any Person upon such judgment or order or
(ii) there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in
effect; or
(j) Any non-monetary judgment or order shall be
rendered against the Borrower or any of its Subsidiaries
which does or could reasonably be expected to (i) cause a
material adverse change in the condition (financial or
otherwise), business, operations, properties or prospects of
the Borrower, (ii) have a material adverse effect on the
ability of the Borrower to perform its obligations under any
Loan Document, or (iii) have a material adverse effect on
the rights and remedies of the Agent or any Lender under any
Loan Document and either (A) enforcement proceedings shall
have been commenced by any Person upon such judgment or order
or (B) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not
be in effect; or
(k) Any provision of any Loan Document after delivery
thereof pursuant to Section 3.02 shall for any reason cease
to be valid and binding on or enforceable against the
Borrower, or the Borrower shall so state in writing, if such
invalidity or unenforceability could have a material adverse
effect on the rights and remedies of the Agent or the
Lenders under such Loan Document; or
(l) Any ERISA Termination Event with respect to a Plan
shall have occurred and, 30 days after notice thereof shall
have been given to the Borrower by the Agent, (i) such ERISA
Termination Event shall still exist and (ii) the sum of the
ERISA Title IV liability incurred with respect to the
Insufficiency of any and all Plans with respect to which an
ERISA Termination Event shall have occurred and then exist
(or in the case of a Plan with respect to which an ERISA
Termination Event described in clause (ii) of the definition
of ERISA Termination Event shall have occurred and then
exist, the liability related thereto) is likely to have a
material adverse effect on the Borrower and the ERISA
Affiliates taken as a whole; or
(m) (i) the Borrower or any ERISA Affiliate thereof
shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan, (ii) the Borrower or such ERISA
Affiliate does not have reasonable grounds to contest such
Withdrawal Liability and is not in fact contesting such
Withdrawal Liability in a timely and appropriate manner, and
(iii) the amount of such Withdrawal Liability specified in
such notice, when aggregated with all other amounts required
to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities (determined as of the date of such
notification), is likely to have a material adverse effect
on the Borrower and the ERISA Affiliates taken as a whole;
or
(n) The Borrower or any ERISA Affiliate thereof shall
have been notified by the sponsor of a Multiemployer Plan
that such Multiemployer Plan is in reorganization or is
being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the
aggregate annual contributions of the Borrower and its ERISA
Affiliates to all Multiemployer Plans that are then in
reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer
Plans for the plan years that include the date hereof by an
amount that is likely to have a material adverse effect on
the Borrower and the ERISA Affiliates taken as a whole; or
(o) The Borrower or any ERISA Affiliate shall have
committed a failure described in Section 302(f)(1) of ERISA
and the amount determined under Section 302(f)(3) of ERISA
is likely to have a material adverse effect on the Borrower
and the ERISA Affiliates taken as a whole; or
(p) Any Person or group (as defined in the Securities
Exchange Act of 1934, as amended) shall acquire the
ownership of (constructive or otherwise), or power to vote
more than, 25% of the Borrower's outstanding capital stock;
then, and in any such event, the Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the
Borrower (i) declare the Commitments and the obligation of each
Lender to make Advances terminated, whereupon the same shall
forthwith terminate, and/or (ii) declare the Notes, all Interest
thereon and all other amounts payable under this Agreement, the
Notes and the other Loan Documents to be forthwith due and
payable, whereupon the Notes, all such Interest and all such
amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower, provided,
however, that in the event of an actual or deemed entry of an
order for relief with respect to the Borrower under the Federal
Bankruptcy Code as described in subsection (f), the Note, all
such Interest and all such amounts shall automatically become and
be due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly
waived by the Borrower. Upon any such termination of the
Commitments, the Agent and the Lenders shall have, in addition to
all other rights and remedies under this Agreement or otherwise,
all other rights and remedies provided under the laws of the
applicable jurisdiction and other applicable laws, which rights
shall be cumulative.
ARTICLE VII
THE AGENT
SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and
the other Loan Documents as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for
by the Loan Documents (including, without limitation, enforcement
or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the
Majority Lenders, and such instructions shall be binding upon all
Lenders and all holders of the Notes; provided, however, that the
Agent shall not be required to take any action which exposes the
Agent to personal liability or which is contrary to the Loan
Documents or to applicable law. The Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.
SECTION 7.02. Agent's Reliance, Etc. Neither the Agent
or any Affiliate of the Agent, nor any of their respective
directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Agent or on
behalf of the Agent under or in connection with the Loan
Documents, except for its or their own gross negligence or
willful misconduct. Without limiting the generality of the
foregoing, the Agent: (i) may consult with legal counsel
(including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants
or experts; (ii) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (iii)
shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or
conditions of the Loan Documents on the part of the Borrower or
to inspect the property (including the books and records) of the
Borrower; (iv) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the Notes or any other
Loan Document or any other instrument or document furnished
pursuant hereto; (v) shall incur no liability under or in respect
of the Loan Documents by acting upon any notice (including notice
by telephone), consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper
party or parties; and (vi) may treat the payee of any Note as the
holder thereof until the Agent receives written notice of the
assignment or transfer thereof signed by such payee and including
the agreement of the assignee or transferee to be bound hereby as
it would have been if it had been an original Lender party
hereto, in form satisfactory to the Agent.
SECTION 7.03. NWB and Affiliates. NWB and its Affiliates
may generally engage in any kind of business with the Borrower
any of its respective Affiliates and any Person who may do
business with or own securities of the Borrower or any of its
respective Affiliates, all as if NWB were not the Agent and
without any duty to account therefor to the Lenders.
SECTION 7.04. Lender's Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
the Agent or any of its Affiliates and based on the financial
statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and to make
Advances hereunder. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any of its
Affiliates and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement.
SECTION 7.05. Indemnification. The Lenders agree to
indemnify the Agent (to the extent not reimbursed by the
Borrower), ratably according to the respective principal amounts
of the Advances then owing to each of them (or if no Advances are
at the time outstanding, ratably according to the respective
amounts of their Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out
of the Loan Documents or any action taken or omitted by the Agent
under the Loan Documents, provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel
fees) 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, the Loan Documents, to the extent that
the Agent is not reimbursed for such expenses by the Borrower.
SECTION 7.06. Successor Agent. The Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Majority Lenders shall have the
right to appoint any Lender a successor Agent. If no successor
Agent shall have been so appointed by the Majority Lenders, and
shall have accepted such appointment, within 30 days after the
retiring Agent's giving notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United
States of America or any State thereof or licensed under the laws
of the United States or any State thereof to maintain a branch or
agency in the United States and having a combined capital and
surplus of at least $1,000,000,000 (or the equivalent thereof in
another currency). Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article
VII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Borrower. Without
limiting any other rights which the Agent, the Lenders or any
Affiliate of either (each, an "Indemnified Party") may have
hereunder or under applicable law, the Borrower hereby agrees to
indemnify each Indemnified Party from and against any and all
claims, losses and liabilities (including reasonable attorneys'
fees) (all of the foregoing being collectively referred to as
"Indemnified Amounts") growing out of or resulting from this
Agreement or the use of proceeds of Advances, excluding, however,
Indemnified Amounts to the extent resulting from gross negligence
or willful misconduct on the part of such Indemnified Party or
any Affiliate of such Indemnified Party which directly or
indirectly controls, is controlled by or is under common control
with such Indemnified Party or is a director or officer of such
Indemnified Party or of such an Affiliate of such Indemnified
Party. Without limiting or being limited by the foregoing, the
Borrower shall pay on demand to each Indemnified Party any and
all amounts necessary to indemnify such Indemnified Party from
and against any and all Indemnified Amounts relating to or
resulting from:
( i) reliance on any representation or warranty or
statement made or deemed made by the Borrower (or any of its
officers ) under or in connection with any Loan Document
which shall have been incorrect in any material respect when
made; or
(ii) any investigation, litigation or proceeding
relating to this Agreement or the use of proceeds of
Advances; or
(iii) any failure by the Borrower to effect a
Borrowing after having given notice thereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of
any provision of any Loan Document, and no consent to any
departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Majority Lenders, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and signed
by all the Lenders, do any of the following: (a) waive any of
the conditions specified in Section 3.01, (b) increase the
Commitments of the Lenders or subject the Lenders to any
additional obligations, (c) reduce the Principal of, or Interest
on, the Advances or any fees or other amounts payable hereunder,
(d) postpone any date fixed for any payment of Principal of, or
Interest on, the Advances or any fees or other amounts payable
hereunder, (e) change the percentage of the Commitments or of the
aggregate unpaid Principal amount of the Advances, or the number
of Lenders which shall be required for the Lenders or any of them
to take any action hereunder or thereunder, or (f) amend this
Section 9.01; and provided, further, that no amendment, waiver or
consent shall, unless in writing and signed by the Agent in
addition to the Lenders required above to take such action,
affect the rights or duties of the Agent under this Agreement or
any other Loan Document.
SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise
stated herein, be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled or delivered, if to the Borrower, at
its address set forth under its name on the signature pages
hereof, if to the Agent, at 175 Water Street, New York, New York
10038 or as to each other party hereto, at its address set forth
under its name on the signature pages hereof or at such other
address as shall be designated by any party hereto in a written
notice to the other parties hereto. All such notices and
communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by
telex answerback or delivered to the cable company, respectively,
except that notices and communications to the Agent pursuant to
Article II shall not be effective until received by the Agent.
SECTION 9.03. No Waiver; Remedies. No failure on the part
of any Lender or the Agent to exercise, and no delay in exercis-
ing, any right under any Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such
right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 9.04. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Agent
and the Lenders and their respective successors and assigns,
except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written
consent of the Agent.
SECTION 9.05. Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws
of the State of New York applicable to contracts made and to be
performed wholly within such State and Letters of Credit issued
hereunder shall provide that they are governed by the Uniform
Customs and Practice for Documentary Credits.
SECTION 9.06. Costs and Expenses. In addition to the
rights of indemnification granted to the Indemnified Parties
under Article VIII and Section 2.12 hereof, the Borrower agrees
to pay on demand all costs and expenses in connection with the
preparation, execution, delivery, administration (including
periodic auditing), modification and amendment of the Loan
Documents and the other documents to be delivered thereunder,
including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent, and of local
counsel who may be retained by the Agent, with respect thereto
and with respect to advising the Agent as to its rights and
remedies under the Loan Documents. The Borrower further agrees
to pay on demand all costs and expenses, if any (including,
without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations,
legal proceedings, or otherwise) of the Loan Documents and the
other documents to be delivered thereunder, including, without
limitation, reasonable counsel fees and expenses in connection
with the enforcement of rights under this Section 9.06.
SECTION 9.07. Assignments and Participations. (a) With
the prior written consent of the Agent and the Borrower, which
shall not be unreasonably withheld (provided that such written
consent of the Agent and the Borrower shall not be required in
the case of an assignment by a Lender to any Subsidiary or
Affiliate of such Lender if the effect of such assignment would
not be to increase the amounts payable by the Borrower pursuant
to Sections 2.11, 2.12 or 2.13 based upon applicable laws or
regulations in effect on the date of such assignment), each
Lender may assign to one or more commercial banks (each, an
"Assignee") all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion
of its Commitment and the Advances owing to it); provided,
however, that (i) each such assignment shall be of a constant,
and not a varying, percentage of all rights and obligations under
this Agreement, (ii) the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than
$5,000,000, and (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and
recording in the Register (as defined below), an Assignment and
Acceptance, together with a processing and recordation fee of
$3,000 unless the relevant Assignee is a Subsidiary or Affiliate
of the assigning Lender. Upon such execution, delivery,
acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) 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, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall
cease to be a party hereto).
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the Assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such Assignee confirms
that it has received a copy of this Agreement, together with
copies of such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under this Agreement; (v) such Assignee appoints and authorizes
the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such Assignee agrees that
it will perform in accordance with their terms all of the obliga-
tions which by the terms of this Agreement are required to be
performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in
Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the
names and addresses of the Lenders and the Commitment of, and
principal amount of the Advances owing to, each Lender from time
to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender thereunder for
all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and consented to
by the Borrower pursuant to Section 9.07(a)), the Agent shall, if
such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit D hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to
the Borrower. Within five Business Days after its receipt of
such notice, the Borrower shall execute and deliver to the Agent
in exchange for the surrendered Note or Notes a new Note to the
order of such Assignee in an amount equal to the amount of the
Advance outstanding purchased by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained any
amount of such Advance outstanding hereunder, a new Note to the
order of the assigning Lender in an amount equal to the amount of
such Advance outstanding retained by it hereunder. Such Note or
Notes shall be in an aggregate principal amount equal to the
aggregate principal amount outstanding under such surrendered
Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially
the form of the Note or Notes subject to such assignments.
(e) Each Lender with the prior written consent of the
Borrower and the Agent (which shall not be unreasonably withheld)
may sell participations to one or more Persons in all or a
portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its
Commitment and the Advances owing to it), in which event, without
limiting the foregoing, the provisions of Section 2.11, 2.12 and
2.13 shall inure to the benefit of such participant; provided,
however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower
hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the
performance of such obligations, and (iii) the Borrower, the
Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights
and obligations under this Agreement.
(f) Notwithstanding anything to the contrary contained
herein, no assignment or participation may be effected by any
Lender unless at the time thereof such Lender effects the
assignment or participation, as the case may be, of the same
percentage of its interest under the Letter of Credit Agreement
to the assignee or participant, as the case may be.
SECTION 9.08. Confidentiality. Unless otherwise agreed to
in writing by the Borrower, the Agent and each Lender hereby
agrees to keep all Proprietary Information (as defined below)
confidential and not to disclose or reveal any Proprietary
Information to any Person other than the Agent's or such Lender's
directors, officers, employees, Affiliates and agents to actual
or potential Assignees and participants, and then only on a
confidential basis; provided, however, that the Agent and each
Lender may disclose Proprietary Information (a) as required by
law, rule, regulation or judicial process, (b) to its attorneys
and accountants or (c) as requested or required by any State,
Federal or foreign authority or examiner regulating banks or
banking. For purposes of this Agreement, the term "Proprietary
Information" shall include all non-public information regarding
the Borrower and its Affiliates, whether furnished before or
after the date hereof, and (in the case of written materials)
designated as "Proprietary Information"; provided, however, that
Proprietary Information does not include information which (x) is
or becomes generally available to the public other than as a
result of a disclosure by the Agent or a Lender not permitted by
this Agreement, (y) was available to the Agent or the Lender on a
nonconfidential basis prior to its disclosure to the Agent or
such Lender by the Borrower or any of its Affiliates or (z)
becomes available to the Agent or a Lender on a nonconfidential
basis from a Person other than the Borrower or its Affiliates
who, to the best knowledge of the Agent or such Lender, as the
case may be, is not otherwise bound by a confidentiality
agreement with the Borrower or any of its Affiliates, or is not
otherwise prohibited from transmitting the information to the
Agent or such Lender.
SECTION 9.09. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement.
SECTION 9.10. Waiver of Jury Trial. Each of the Borrower,
the Agent and each Lender hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim arising
out of or relating to any of the Loan Documents or the
transactions contemplated thereby.
SECTION 9.11. Right of Setoff. Upon the occurrence and
during the continuance of any Event of Default the Agent and each
Lender is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to setoff and apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower
now or hereafter existing under the Loan Documents irrespective
of whether or not such Lender shall make any demand under any
Loan Document or such obligations may be matured. The rights of
each Lender under this Section 9.11 are in addition to any other
rights and remedies which such Lender may have upon the
occurrence and during the continuance of any Event of Default.
SECTION 9.12. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be unenforceable to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 9.13. Headings. Section headings used herein are
for convenience only and are not to effect the construction of or
be taken into consideration in interpreting this Agreement.
SECTION 9.14. Prior Agreements. This Agreement and the
other Loan Documents represent the entire agreement of the
parties with regard to the subject matter hereof and the terms of
any letters and other documents entered into by the Borrower and
any Lender or the Agent prior to the execution of this Agreement
which relate to Advances to be made hereunder shall be replaced
by the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
DATA GENERAL CORPORATION
By:
Title:
4400 Computer Drive
Westboro, MA 01580
Attn.: Treasurer
(Telecopier: 508-366-8016)
COMMITMENT NATIONAL WESTMINSTER BANK PLC,
$8,571,429 as Lender and as Agent
By:
Vice President
Prime Rate Advance Lending
Office
National Westminster Bank PLC
New York Branch
175 Water Street
New York, NY 10038
Attn: Manager's Department
- Level 21
Telephone: (212) 602-4193
Telecopy: (212) 602 4118
with a copy to:
NATIONAL WESTMINSTER BANK PLC
New York Branch
175 Water Street
New York, NY 10038
Attn: New York Marketing
Office
- Level 29
Telephone: (212) 602-4395
Telecopy: (212) 602-4256
NATIONAL WESTMINSTER BANK,
PLC, through its LIBOR Rate
Advance Lending Office
By:
Vice President
National Westminster Bank PLC
Nassau Branch
175 Water Street
New York, NY 10038
Attn: Manager's Department
-Level 21
Telephone: (212) 602-4193
Telecopy: (212) 602-4118
$8,571,429 THE BANK OF NOVA SCOTIA
101 Federal Street
Boston, MA 02208
Telephone: (617) 737-6310
Telecopy: (617) 951-2177
By:
Title:
$8,571,429 FLEET BANK OF MASSACHUSETTS,
NATIONAL ASSOCIATION
75 State Street
Boston, Massachusetts 02109
Telephone: (617) 573-6524
Telecopy: (617) 573-5045
By:______________________
Title:
$5,714,286 NATIONSBANK
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 644-4449
Telecopy: (212) 593-1083
By:______________________
Vice President
$8,571,429 CANADIAN IMPERIAL BANK OF
COMMERCE
275 Battery Street-Suite 1840
San Francisco, California
94111
Telephone: (415) 399-5749
Telecopy: (415) 399-5761
By:______________________
Title:
LETTER OF CREDIT AGREEMENT
LETTER OF CREDIT AGREEMENT, dated as of December 30, 1993
(the "Agreement") by and among DATA GENERAL CORPORATION, a
Delaware corporation (the "Borrower"), NATIONAL WESTMINSTER BANK
PLC ("NWB"), THE BANK OF NOVA SCOTIA ("BNS"), FLEET BANK OF
MASSACHUSETTS, NATIONAL ASSOCIATION ("Fleet"), NATIONSBANK,
CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC" and, together with
NWB, BNS, Fleet and NationsBank, the "Lenders") and NWB, as agent
for the Lenders (the "Agent").
PRELIMINARY STATEMENTS
WHEREAS, pursuant to the Existing Credit Agreement (as
hereinafter defined), the Lenders have provided the Borrower with
the Existing Letters of Credit (as hereinafter defined) for bid,
performance and insurance obligations or in support of short term
facilities extended to certain foreign Subsidiaries (as
hereinafter defined); and
WHEREAS, the Borrower, the Agent and the Lenders have
agreed to amend and restate the Existing Credit Agreement in its
entirety on the terms and conditions contained in the Revolving
Credit Agreement (as hereinafter defined) and to enter into this
Letter of Credit Agreement to provide the Letters of Credit (as
hereinafter defined) described herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITION AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Advance" has the meaning set forth in Section 2.01 of
the Revolving Credit Agreement.
"Affiliate" means, as to any Person, any other
Person that, directly or indirectly, is in control of, is
controlled by or is under common control with such Person or
is a director or officer of such Person or of an Affiliate
of such Person.
"Agent's Account" means the account of the Agent main-
tained at the office of National Westminster Bank PLC at 175
Water Street, New York, New York 10038.
"Assignment and Acceptance" means an assignment and
acceptance substantially in the form of Exhibit D annexed to
the Revolving Credit Agreement entered into by a Lender and
an Assignee (as hereinafter defined in Section 9.07(a)), and
accepted by the Agent.
"Business Day" means (i) any day excluding (x)
Saturday, (y) Sunday and (z) any day on which banks in New
York City and Boston are authorized by law to close and (ii)
with respect to all notices and determinations in connection
with, and all payments of principal and interest on,
Eurodollar Loans, any day which is a Business Day described
in clause (i) above and which is also a day for trading by
and between banks in United States dollar deposits in the
London Interbank Eurodollar market.
"Charges" has the meaning specified in Section 2.07(a).
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commitment" means, as to each Lender, the amount of
such Lender's share of the Total Commitment as set forth
opposite such Lender's name on the signature pages hereof,
as such amount may be reduced pursuant to Section 2.04
hereof; provided that at all times on and after the Letter
of Credit Termination Date, the Commitment of each Lender
shall be zero.
"Commitment Percentage" shall mean at any time, with
respect to each Lender, the percentage obtained by dividing
its Commitment at such time by the Total Commitment at such
time.
"Consolidated Net Interest Expense" means, with respect
to any fiscal period of the Borrower, the aggregate amount
of interest accrued and payable on all Indebtedness of the
Borrower and its consolidated Subsidiaries less the
aggregate amount of interest earned during such fiscal
period on all investments of the Borrower and its
consolidated Subsidiaries.
"Consolidated Tangible Net Worth" means, at any date as
of which the amount thereof shall be determined, consoli-
dated total assets of the Borrower and its consolidated
Subsidiaries (excluding the effect of any amount in the
cumulative translation adjustment account) minus the sum of
(i) any amounts attributable to (x) goodwill, and (y) other
intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names,
copyrights and research and development expenses except
prepaid expenses and software research and development
required to be capitalized under U.S. GAAP (as hereinafter
defined) and (ii) Consolidated Total Liabilities of the
Borrower and its consolidated Subsidiaries.
"Consolidated Total Liabilities" means, at any date as
of which the amount thereof shall be determined, all
obligations of the Borrower and its consolidated
Subsidiaries that should, in accordance with U.S. GAAP, be
classified as current and long term liabilities on the
consolidated balance sheet of the Borrower and its
consolidated Subsidiaries, including, in any event, all
Indebtedness of the Borrower and its consolidated
Subsidiaries, excluding deferred items.
"Default" means any event that would constitute an
Event of Default but for the requirement that notice be
given or time elapse or both.
"Effective Date" means the date on which the conditions
set forth in Section 3.01 hereof are satisfied.
"Eligible Investments" means (a) direct obligations of,
or obligations the principal of and interest on which are
unconditionally guaranteed by the full faith and credit of,
the United States of America (including obligations issued
or held in book-entry form on the books of the Department of
the Treasury of the United States of America); (b)
commercial or finance paper or other similar obligations
having a rating in the highest rating category from either
S&P or Moody's; and (c) negotiable or non-negotiable
certificates of deposit, time deposits or other similar
banking arrangements issued by any bank (including the
Agent) or trust company, having a commercial paper rating in
the highest rating category from either S&P or Moody's, or
fully insured by the Federal Deposit Insurance Corporation;
and which in each case mature no more than 2 years from the
date of acquisition thereof in the case of direct
obligations of the United States of America, one year from
the date of acquisition thereof in the case of obligations
unconditionally guaranteed by the United States of America
and six months from the date of acquisition thereof in the
case of other Eligible Investments.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) which is a member of a group of which
the Borrower is a member and which is under common control
with the Borrower within the meaning of Section 414(b) or
(c) of the Code and the regulations promulgated and rulings
issued thereunder.
"ERISA Termination Event" means (i) a Reportable Event,
or (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Multiple Employer Plan during a plan year
in which it was a "substantial employer," as such term is
defined in Section 4001(a)(2) of ERISA, or the incurrence of
liability by the Borrower or any ERISA Affiliate under
Section 4064 of ERISA upon the termination of a Multiple
Employer Plan, or (iii) providing notice of intent to termi-
nate a Plan pursuant to Section 4041(a)(2) of ERISA or the
treatment of a Plan amendment as a termination under Section
4041 of ERISA, or (iv) the institution of proceedings to
terminate a Plan by the PBGC under Section 4042 of ERISA, or
(v) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Plan, or
the imposition of any liability under Title IV of ERISA
(other than for the payment of premiums to the PBGC).
"Event of Default" has the meaning specified in Section
6.01.
"Existing Credit Agreement" shall mean that certain
Revolving Credit Agreement dated as of November 22, 1991 (as
amended pursuant to the First Amendment dated as of December
30, 1991, the Second Amendment dated as of March 31, 1992,
the Third Amendment dated as of July 16, 1992, the Fourth
Amendment dated as of April 19, 1993 and the Fifth Amendment
dated as of September 23, 1993) by and among Data General
Corporation, National Westminster Bank PLC, The Bank of Nova
Scotia, Fleet Bank of Massachusetts, National Association,
NationsBank and Canadian Imperial Bank of Commerce.
"Existing Letters of Credit" shall mean those letters
of credit issued pursuant to the Existing Credit Agreement.
"Facility Termination Date" shall have the meaning set
forth in Section 1.01 of the Revolving Credit Agreement.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not published
for any day which is a Business Day, the average of the
quotations for such day for such transactions received by
NWB from three Federal funds brokers of recognized standing
selected by it.
"Fronting Bank" means any Lender as may agree to act in
such capacity.
"Indebtedness" of any Person means any obligation
(whether present or future, actual or contingent, secured or
unsecured, as principal or guarantor or otherwise) for the
payment or repayment of money which would be regarded as
indebtedness in accordance with U.S. GAAP (but excluding
obligations in respect of forward foreign exchange contracts
in an aggregate amount not in excess of $150,000,000).
"Indemnified Party" has the meaning specified in
Section 8.01.
"Insufficiency" means, with respect to any Plan, the
amount, if any, of its unfunded benefit liabilities within
the meaning of Section 4001(a)(18) of ERISA.
"Letter of Credit Facility" means the agreement of the
Lenders to issue Letters of Credit for the account of the
Borrower from time to time.
"Letter of Credit Fees" shall mean the fees payable in
respect of Letters of Credit pursuant to Section 2.05.
"Letter of Credit Outstandings" shall mean, at any
time, the sum of (i) the aggregate stated amount of all
outstanding Letters of Credit issued hereunder and Existing
Letters of Credit then outstanding plus (ii) all amounts
theretofore drawn under Letters of Credit issued hereunder
and Existing Letters of Credit and not then reimbursed.
"Letter of Credit Termination Date" means the 364th day
after the Effective Date provided, however, that if such day
is not a Business Day, the Letter of Credit Termination Date
shall be the next preceding Business Day and provided,
further, however, that the Letter of Credit Termination Date
will be automatically extended every day following the
Effective Date for a period of one additional day unless any
Lender has given written notice to the Borrower and the
Agent of the termination of the Commitments at least 363
days prior to the then scheduled Letter of Credit
Termination Date.
"Lien" has the meaning specified in Section 4.01(b).
"Loan Documents" means this Agreement, the Revolving
Credit Agreement, the promissory notes in the form attached
as Exhibit A to the Revolving Credit Agreement, and each
other instrument or agreement executed and delivered by the
Borrower in connection herewith.
"L/C Limit" shall have the meaning set forth in Section
2.01.
"Majority Lenders" means at any time Lenders holding at
least 66% of the Commitments (or, after the Letter of Credit
Termination Date, 66% of all amounts theretofore drawn under
Letters of Credit issued hereunder and existing Letters of
Credit and not then reimbursed) if at such time there are
four or more Lenders hereunder (or all of the Lenders, if
at such time there are less than four Lenders hereunder).
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA to which the Borrower
or any ERISA Affiliate is making or accruing an obligation
to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a Single Employer Plan,
which (i) is maintained for employees of the Borrower or an
ERISA Affiliate and at least one Person other than the
Borrower and its ERISA Affiliates or (ii) was so maintained
and in respect of which the Borrower or an ERISA Affiliate
could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"Overdue Rate" in respect of the rate of interest on
any unreimbursed Letter of Credit draw, means a rate of
interest equal to the Prime Rate plus 2% per annum.
"PBGC" means the Pension Benefit Guaranty Corporation,
or any successor agency or entity performing substantially
the same functions.
"Permitted Liens" means (i) Liens incurred and pledges
and deposits made in the ordinary course of business in
connection with workers' compensation, unemployment
insurance, old-age pensions and other social security
benefits other than in respect of employee benefit plans
subject to ERISA; (ii) Liens imposed by law, such as
carriers', warehousemen's, mechanics', materialmen's and
vendors' Liens, incurred in the ordinary course of business
and securing obligations which are not yet due or which are
being contested in good faith by appropriate proceedings;
(iii) Liens securing the payment of taxes, assessments and
governmental charges or levies, either (a) not delinquent or
(b) being contested in good faith by appropriate legal or
administrative proceedings and as to which adequate reserves
shall have been established, but only so long as such
proceedings could not subject the Agent or the Lenders to
any civil or criminal penalty or liability; (iv) purchase
money Liens securing Indebtedness incurred to finance the
purchase price of property acquired in the ordinary course
of business in an aggregate amount not in excess of
$5,000,000 at any one time outstanding; and (v) extensions,
renewals and replacements of Liens referred to in clauses
(i) through (iv) above, provided that any such extension,
renewal or replacement Lien is limited to the property or
assets covered by the Lien extended, renewed or replaced and
does not secure any Indebtedness in addition to that secured
immediately prior to such extension, renewal or replacement.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency
thereof.
"Plan" means a Single Employer Plan or a Multiemployer
Plan.
"Prime Rate" means, with respect to any day, the higher
of (i) 0.50% per annum above the rate of interest announced
by the Agent in New York City as its prime rate for U.S.
Dollar loans as in effect on such day and (ii) 0.50% per
annum above the rate determined by the Agent to be the
average rate at which overnight Federal funds are offered to
it on such day.
"Proprietary Information" has the meaning specified in
Section 9.08.
"Reportable Event" means a "reportable event", as such
term is described in Section 4043 of ERISA and the
regulations issued thereunder (other than a "reportable
event" not subject to the provision for 30-day notice to the
PBGC under such regulations) or an event described in
Section 4068(f) of ERISA.
"Revolving Credit Agreement" means that certain Amended
and Restated Revolving Credit Agreement of even date
herewith by and among the Borrower, the Agent and the
Lenders pursuant to which the Lenders have agreed to make
Advances to the Borrower subject to the terms thereof.
"Significant Subsidiaries" means Data General GmbH,
Data General (Canada), Inc., Data General France SARL, and
Data General Limited.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that is subject to
Title IV of ERISA and (i) is maintained for employees of the
Borrower or an ERISA Affiliate or (ii) was so maintained and
in respect of which the Borrower could have liability under
Section 4069 of ERISA in the event such plan has been or
were to be terminated.
"Subsidiary" of any Person means any corporation of
which more than 50% of the issued and outstanding capital
stock or the outstanding capital stock having ordinary
voting power to elect a majority of the Board of Directors
of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporat
ion shall or might have voting power upon the occurrence of
any contingency) is at the time directly or indirectly
owned or controlled by such Person, by such Person and
one or more of its other Subsidiaries or by one or more
of such Person's other Subsidiaries.
"Total Commitment" shall mean, at any time, the sum of
the Commitments of each Lender hereunder at such time, which
in the aggregate is equal to $30,000,000, subject to
reduction pursuant to Section 2.04 hereof.
"Unused Total Commitment" shall mean, at any time, (i)
the Total Commitment less (ii) the aggregate Letter of
Credit Outstandings.
"U.S. GAAP" has the meaning specified in Section 1.03.
"Withdrawal Liability" has the meaning given such term
under Part 1 of Subtitle E of Part IV of ERISA.
SECTION 1.02. Computation of Time Periods. Unless
otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding."
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles in the United States
("U.S. GAAP") consistently applied.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.0 1. Letters of Credit. (a) Upon the terms
and subject to the conditions herein set forth, the Borrower may
request a Fronting Bank, at any time and from time to time after
the Effective Date and prior to the Letter of Credit Termination
Date, to issue, and subject to the terms and conditions contained
herein, such Fronting Bank shall issue, for the account of the
Borrower, one or more Letters of Credit, provided that no Letter
of Credit shall be issued if after giving effect to such issuance
the aggregate Letter of Credit Outstandings would exceed
$30,000,000 (the "L/C Limit"). Letters of Credit may be issued
either (x) in respect of bid, performance, insurance obligations
or general corporate purposes or (y) in favor of one or more
Lenders in support of short term loan facilities made available
to Subsidiaries in Canada, France, Germany or the United Kingdom
or (z) in favor of one or more Lenders in support of short term
loan facilities made available to the Borrower or Subsidiaries
other than Subsidiaries in Canada, France, Germany or the United
Kingdom up to a maximum of $10,000,000 in the aggregate. The
Fronting Bank shall give prompt written notice of the issuance of
each Letter of Credit to the Lenders.
(b) On the Effective Date, and simultaneously with
the occurrence thereof, each Letter of Credit issued under the
Existing Agreement that is outstanding on the Effective Date
shall be deemed to be a Letter of Credit outstanding hereunder.
(c) No Letter of Credit shall expire later than the
Letter of Credit Termination Date in effect at the time of the
issuance thereof.
(d) The Borrower shall pay to each Fronting Bank, in
addition to such other fees and charges as are specifically
provided for in Section 2.06 hereof, such fees and charges in
connection with the issuance and processing of the Letters of
Credit issued by such Fronting Bank as are customarily imposed by
such Fronting Bank from time to time in connection with letter of
credit transactions.
(e) Drafts drawn under each Letter of Credit shall be
reimbursed by the Borrower not later than the first Business Day
following the date of draw. The Borrower shall effect such
reimbursement (x) if such draw occurs prior to the Facility
Termination Date (or the earlier date of termination of the
Revolving Credit Commitment), through a Borrowing without the
satisfaction of the conditions precedent set forth in Section
3.02 or (y) if such draw occurs on or after the Facility
Termination Date then in effect (or the earlier date of
termination of the Commitment), in cash.
(f) Drafts drawn under each Letter of Credit shall
bear interest from the date of draw at a rate per annum equal to
the Prime Rate for the first Business Day following the date of
such draw and at the Overdue Rate thereafter.
(g) Immediately upon the issuance of any Letter of
Credit by any Fronting Bank, such Fronting Bank shall be deemed
to have sold to each Lender other than such Fronting Bank and
each such other Lender shall be deemed unconditionally and
irrevocably to have purchased from such Fronting Bank, without
recourse or warranty, an undivided interest and participation, to
the extent of such Lender's Commitment Percentage, in such Letter
of Credit, each drawing thereunder and the obligations of the
Borrower under this Agreement with respect thereto. Upon any
change in the Commitments pursuant to Section 9.07, it is hereby
agreed that with respect to all Letter of Credit Outstandings,
there shall be an automatic adjustment to the participation
hereby created to reflect the new Commitment Percentages of the
assigning and assignee Lenders. Any action taken or omitted by a
Fronting Bank under or in connection with a Letter of Credit, if
taken or omitted in the absence of gross negligence or wilful
misconduct, shall not create for such Fronting Bank any resulting
liability to any other Lender.
(h) In the event that a Fronting Bank makes any
payment under any Letter of Credit and the Borrower shall not
have reimbursed such amount in full to such Fronting Bank
pursuant to this Section, the Fronting Bank shall promptly notify
the Agent, which shall promptly notify each Lender of such
failure, and each Lender shall promptly and unconditionally pay
to the Agent for the account of the Fronting Bank the amount of
such Lender's Commitment Percentage of such unreimbursed payment
in Dollars and in same day funds. If the Fronting Bank so
notifies the Agent, and the Agent so notifies the Lenders prior
to 11:00 A.M. (New York time) on any Business Day, such Lenders
shall make available to the Fronting Bank such Lender's
Commitment Percentage of the amount of such payment on such
Business Day in same day funds. If and to the extent such Lender
shall not have so made its Commitment Percentage of the amount of
such payment available to the Fronting Bank, such Lender agrees
to pay to such Fronting Bank, forthwith on demand, such amount,
together with interest thereon, for each day from such date until
the date such amount is paid to the Agent for the account of such
Fronting Bank at the Federal Funds Rate. The failure of any
Lender to make available to the Fronting Bank its Commitment
Percentage of any payment under any Letter of Credit shall not
relieve any other Lender of its obligation hereunder to make
available to the Fronting Bank its Commitment Percentage of any
payment under any Letter of Credit on the date required, as
specified above, but no Lender shall be responsible for the
failure of any other Lender to make available to such Fronting
Bank such other Lender's Commitment Percentage of any such
payment. Whenever a Fronting Bank receives a payment of a
reimbursement obligation as to which it has received any payments
from the Lenders pursuant to this paragraph, such Fronting Bank
shall pay to each Lender which has paid its Commitment Percentage
thereof, in Dollars and in same day funds, an amount equal to
such Lender's Commitment Percentage thereof.
SECTION 2.0 2. Issuance. Whenever the Borrower desires
the Fronting Bank to issue a Letter of Credit, it shall give to
the Fronting Bank and the Agent at least three Business Days'
prior written (including telegraphic, telex, facsimile or cable
communication) notice (or such shorter period as may be agreed
upon in writing by the Agent and the Borrower) specifying the
date on which the proposed Letter of Credit is to be issued
(which shall be a Business Day), the stated amount of the Letter
of Credit so requested, the expiration date of such Letter of
Credit and the name and address of the beneficiary thereof.
SECTION 2.0 3. Nature of Letter of Credit Obligations
Absolute. The obligations of the Borrower to reimburse the
Lenders for drawings made under any Letter of Credit shall be
unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all
circumstances, including, without limitation (it being understood
that any such payment by the Borrower shall be without prejudice
to, and shall not constitute a waiver of, any rights the Borrower
might have or might acquire as a result of the payment by the
Fronting Bank of any draft or the reimbursement by the Borrower
thereof): (i) any lack of validity or enforceability of any
Letter of Credit; (ii) the existence of any claim, setoff,
defense or other right which the Borrower may have at any time
against a beneficiary of any Letter of Credit or against any of
the Lenders, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (iv) payment by the
Fronting Bank of any Letter of Credit against presentation of a
demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit; (v) any other
circumstance or happening whatsoever, which is similar to any of
the foregoing; or (vi) the fact that any Event of Default shall
have occurred and be continuing.
SECTION 2.0 4. Termination or Reduction of the Commitments.
The Borrower may, upon at least five Business Days' notice to
the Agent, terminate in whole or reduce ratably in part the
unused portion of the respective Commitments of the Lenders;
provided, however, that each partial reduction shall be in a
minimum amount equal to $5,000,000 and in an integral multiple of
$1,000,000 in each case in the aggregate.
SECTION 2.0 5. Payments and Computations, Etc. All
amounts to be paid or deposited by the Borrower hereunder shall
be paid or deposited in accordance with the terms hereof no later
than 1:00 P.M. (New York City time) on the day when due in lawful
money of the United States of America in same day funds to the
Agent's Account. Amounts received by the Agent after 1:00 P.M.
(New York City time) on any Business Day shall be deemed to have
been received on the next Business Day. The Agent will promptly
thereafter cause to be distributed like funds relating to the
payment of interest or Letter of Credit Fees ratably (other than
amounts payable pursuant to Sections 2.07 or 2.08) to the
Lenders, and like funds relating to the payment of any other
amount payable to any Lender to such Lender, in each case to be
applied in accordance with the terms of this Agreement.
(a) All computations of interest and fees hereunder shall
be made on the basis of a year of 365 days for the actual number
of days (including the first but excluding the last day)
elapsed. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(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 payment
of interest or fees.
(c) Unless the Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the
Lenders hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent may, in
reliance on such assumption, cause to be distributed to each
Lender on such due date an amount equal to the amount then due
such Lender. If and to the extent the Borrower shall not have so
made such payment in full to the Agent, each Lender shall repay
to the Agent forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the day
such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds
Rate.
SECTION 2.0 6. Fees. (a) From and after the date hereof
until the later of the Letter of Credit Termination Date and the
date on which all obligations of the Borrower hereunder shall be
paid in full, the Borrower shall pay:
(i) to the Agent, for the account of each Lender, a
commitment fee (the "Commitment Fee") equal to the product
of (x) the average daily unused portion of such Lender's
Commitment and (y) the per annum rate of .375 of 1%;
(ii) to the Agent for the account of each Lender a fee
per each Lender's Commitment (the "Facility Fee") equal to
the product of (x) the total L/C Limit (whether used or
unused) and (y) the per annum rate of .375 of 1%; and
(iii) with respect to each Letter of Credit (x) to the
Agent on behalf of the Banks, a fee calculated (on the basis
of the actual number of days elapsed over a year of 360
days) at the rate of one and one-half (1-1/2%) per cent per
annum on the stated amount of each Letter of Credit (the
"Letter of Credit Fee") and (y) to the Fronting Bank such
Fronting Bank's customary fees for issuance and processing
referred to in Section 2.02. Accrued fees described in
clause (y) of the first sentence of this paragraph in
respect of each Letter of Credit shall be payable at times
to be determined by the Fronting Bank, the Borrower and the
Agent.
(b) The Commitment Fee, the Facility Fee and the Letter of
Credit Fee shall be payable in arrears quarterly on the last
Business Day of each November, February, May and August during
the term of this Agreement and on the later of the Letter of
Credit Termination Date and the date on which no amounts under
Letters of Credit shall be outstanding and all obligations of the
Borrower hereunder shall be paid in full.
SECTION 2.0 7. Taxes. (a) All payments made by the
Borrower under this Agreement shall be made free and clear of,
and without reduction for or on account of, any present or future
stamp or other taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, restrictions or conditions of any
nature whatsoever now or hereafter imposed, levied, collected,
withheld or assessed by any country (or by any political
subdivision or taxing authority thereof or therein), excluding
any income, franchise and withholding taxes now or hereafter
imposed on any Lender (such nonexcluded taxes being called
"Charges"). If any Charges are required to be withheld from any
amounts payable to any Lender hereunder, the amounts so payable
to such Lender shall be increased to the extent necessary to
yield to such Lender (after payment of all Charges) interest or
any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement. Whenever any Charges are
payable by the Borrower, as promptly as possible thereafter, the
Borrower shall send to such Lender an original official receipt
showing payment thereof.
(b) The parties acknowledge that the Borrower will be
obligated to comply with applicable United States withholding tax
requirements, and in that regard each Lender that is not a United
States Person (as such term is defined in 7701(a)(30) of the
Code) shall complete and deliver to the Borrower, prior to the
date on which the first payment to such Lender is due hereunder,
an Internal Revenue Service Form 1001, certifying that it is
entitled to complete exemption from United States withholding tax
under an income tax treaty to which the United States is a party,
or an Internal Revenue Service Form 4224 in duplicate, certifying
that the payments to be received under this Agreement are
effectively connected with the conduct of a trade or business of
such Lender in the United States, as appropriate. Each Lender
further agrees to complete and deliver to the Borrower from time
to time any successor or additional form or certificate required
by the Internal Revenue Service in order to secure complete
exemption from United States withholding taxes. If for any
reason during the term of this Agreement a Lender becomes unable
to submit the forms or certificate referred to above or the
information or representations contained therein is no longer
accurate in any material respect, such Lender shall promptly upon
discovery thereof immediately notify the Borrower in writing to
that effect so that the Borrower is not in violation of
applicable United States withholding tax requirements.
(c) Each Lender agrees to use reasonable efforts to avoid
the imposition of any Charges on payments hereunder or under the
other Loan Documents or to minimize any amounts which might
otherwise be payable pursuant to this Section 2.07; provided,
however, that such efforts shall not cause the imposition on such
Lender of any additional costs or legal expenses not reimbursable
hereunder or regulatory burden deemed by the Lender to be
material.
(d) If the Borrower makes any additional payment to any
Lender pursuant to this Section 2.07 in respect of any Charges,
and such Lender determines that it has received (i) a refund of
such Charges, or (ii) a credit against, relief or remission for,
or a reduction in the amount of, any tax or other governmental
charge solely as a result of any deduction or credit for any
Charges with respect to which it has received payments under this
Section 2.07, such Lender shall, to the extent that it can do so
without prejudice to the retention of such refund, credit,
relief, remission or reduction, pay to the Borrower such amount
as shall be reasonably determined by such Lender to be solely
attributable to the deduction or withholding of such Charges. If
such Lender later determines that it was not entitled to such
refund, credit, relief, remission or reduction to the full extent
of any payment made pursuant to the first sentence of this
Section 2.07(d), the Borrower shall upon demand of such Lender
promptly repay the amount of such overpayment. Nothing in this
Section 2.07(d) shall be construed as requiring such Lender to
conduct its business or to arrange or alter in any respect its
tax or financial affairs so that it is entitled to receive such a
refund, credit or reduction or as allowing any Person to inspect
any records, including tax returns, of such Lender.
SECTION 2.0 8. Capital Adequacy. If any Lender shall have
determined that on or after the date hereof, the adoption of any
applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any
request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Lender as a consequence of
its obligations hereunder to a level below that which such Lender
could have achieved but for such adoption, change or compliance
(taking into consideration the policies of such Lender with
respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, within 15 days after
demand by such Lender which demand shall set forth the basis
therefor in reasonable detail, provided, however, that no Lender
will be obligated to provide such detail to the extent same would
compromise the confidentiality of such Lender's calculations
concerning its cost of capital or its method of calculating same,
the Borrower shall be obligated to pay or cause to be paid to
such Lender such additional amount or amounts as will compensate
for such reduction.
SECTION 2.0 9. Use of Letters of Credit. The Letters of
Credit shall be used for the purposes set forth in Section 2.01.
SECTION 2. 10. Reduction of Letter of Credit Fee. The
Lenders and the Agent hereby agree that if the Borrower's long
term senior debt rating is upgraded to BBB by Standard & Poors
and to Baa2 by Moody's Investor Services, Letter of Credit Fees
shall be calculated at 1-1/4% per annum rather than 1-1/2% per
annum.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.0 1. Conditions Precedent to the Occurrence of the
Effective Date. The occurrence of the Effective Date shall be
subject to the following conditions precedent:
(a) There shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in any court or
before any arbitrator or governmental instrumentality that would
be reasonably likely to have a material adverse effect on (i) the
condition (financial or otherwise), business, operations, proper-
ties or prospects of the Borrower or (ii) the transactions
contemplated by the Loan Documents.
(b) All accrued fees and expenses (including the fees and
expenses of counsel to the Agent) under and with respect to the
transactions contemplated by the Loan Documents shall have been
paid.
(c) Each of the documents and instruments delivered
pursuant to this Section 3.01 hereto shall be in full force and
effect, and no default shall exist thereunder.
(d) All governmental and third party consents and approvals
necessary in connection with the transactions contemplated by the
Loan Documents shall have been obtained and remain in effect.
(e) The Borrower shall have delivered to the Agent a
certificate of the Borrower stating that each of the conditions
precedent set forth in this Section 3.01 has been satisfied.
(f) The Agent shall have received the following, each dated
the Effective Date, and in form and substance satisfactory to the
Agent in sufficient copies for each Lender:
(i) A certified copy of the certificate of
incorporation of the Borrower as amended, certified as of a
recent date by the Secretary of State of the State of
Delaware.
(ii) An executed and effective Revolving Credit
Agreement.
(iii) A certificate of such Secretary of State, dated
as of a recent date, as to the good standing of and payment
of taxes by, the Borrower and as to the charter documents on
file in the office of such Secretary of State.
(iv) A certified copy of the resolutions of the
Board of Directors of the Borrower approving (A) this
Agreement, the Loan Documents and the transactions
contemplated thereby, and (B) all documents evidencing other
corporate action with respect thereto.
(v) A Certificate of the Secretary or Assistant
Secretary of the Borrower certifying as to the by-laws and
the names and true signatures of the officers of the
Borrower authorized to sign the Loan Documents and the other
documents to be delivered hereunder to which such Borrower
is a party.
(vi) A favorable opinion of Fulbright & Jaworski,
counsel to the Borrower, in substantially the form of
Exhibit C to the Revolving Credit Agreement.
(vii) Other such approvals, opinions or documents as
the Agent may reasonably request.
SECTION 3.0 2. Conditions Precedent to Each Letter of
Credit. The obligation of the Fronting Bank to issue each Letter
of Credit (including the initial Letter of Credit) shall be
subject to the conditions precedent that on the date of such
issuance the Effective Date shall have occurred and the following
statements shall be true (and the request for such issuance shall
constitute a representation and warranty by the Borrower that on
the date of such issuance such statements are true):
(i) The representations and warranties of the Borrower
contained in Section 4.01 hereof and in the other Loan
Documents are correct on and as of the date of issuance,
before and after giving effect to such issuance and to the
application of the proceeds therefrom, as though made on and
as of such date, except to the extent such representations
and warranties relate solely to an earlier date (in which
case such representations and warranties shall be true and
correct on and as of such earlier date); and
(ii) No event has occurred and is continuing, or
would result from such Borrowing or from the application of
the proceeds therefrom or such issuance, which constitutes
an Event of Default or Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.0 1. Representations and Warranties of the
Borrower. The Borrower represents and warrants as follows:
(a) The Borrower (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in
which the failure to so qualify would have a material
adverse effect on the condition (financial or otherwise),
business, operations, properties or prospects of the
Borrower; (ii) has the requisite corporate power and
authority to effect the transactions contemplated hereby, by
the other Loan Documents to which it is a party; and (iii)
has all requisite corporate power and authority and the
legal right to own, pledge, mortgage and operate its
properties, and to conduct its business as now or currently
proposed to be conducted.
(b) The execution, delivery and performance by the
Borrower of each of this Agreement and any other Loan
Documents, (i) are within the corporate powers of the
Borrower, have been duly authorized by all necessary
corporate action, including the consent of shareholders
where required, and do not (A) contravene the certificate of
incorporation or by-laws of the Borrower, (B) violate any
law (including, without limitation, the Securities Exchange
Act of 1934) or regulation, or any order or decree of any
court or governmental instrumentality, (C) conflict with or
result in the breach of, or constitute a default under, any
indenture, mortgage or deed of trust or any material lease,
agreement or other instrument binding on or affecting the
Borrower, or any of its properties, or (D) result in or
require the creation or imposition of any lien, charge,
security interest, encumbrance or any other type of
preferential arrangement (any of the foregoing being
referred to herein as a "Lien") upon any of the property of
the Borrower; and (ii) do not require the consent,
authorization by or approval of or notice to or filing or
registration with any governmental body, agency, authority,
regulatory body or any other Person other than those which
have been obtained and copies of which have been delivered
pursuant to Section 3.01 to the Agent, each of which is in
full force and effect. This Agreement has been duly
executed and delivered by the Borrower. This Agreement is,
and each of the other Loan Documents to which the Borrower
is a party when delivered hereunder or pursuant hereto, will
be, legal, valid and binding obligations of the Borrower,
enforceable against the Borrower, in accordance with their
respective terms, except as such enforceability may be
limited by bankruptcy, insolvency and other similar laws
applicable to creditors' rights generally.
(c) No written statement prepared or furnished by the
Borrower to the Agent or to any governmental authority in
connection with any Loan Document or any financial statement
delivered pursuant hereto or thereto (other than to the
extent any such statements constitute projections) contains
any untrue statement of a material fac
t or omits to state a material fact necessary to make the
statements contained herein or therein
not misleading; and, to the extent that
any such written statements constitute
projections, such projections were
prepared in good faith on the basis of
assumptions, methods, data, tests and
information believed by the Borrower to
be valid and accurate at the time such
projections were furnished to the Agent
or such governmental authority, as the
case may be.
(d) Each exhibit, financial statement, book, record,
report or other document and any other information furnished
at any time by the Borrower to the Lenders in connection
with this Agreement will be accurate in all material
respects as to its date and as of the date so furnished, and
no such document or information will contain any material
misstatement of fact or omit to state a material fact or any
fact necessary to make the statements contained therein not
misleading and since September 28, 1991, there has been no
material adverse change in the condition (financial or
otherwise), prospects, property or business of the Borrower.
(e) The operations of the Borrower comply in all
material respects with all applicable environmental, health
and safety statutes and regulations, including, without
limitation, regulations promulgated under the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.),
none of the operations of the Borrower is the subject of any
Federal or state investigation evaluating whether any
remedial action involving a material expenditure is needed
to respond to a release of any Hazardous Waste or Hazardous
Substance (as such terms are defined in any applicable state
or Federal environmental law or regulations) into the
environment, and the Borrower does not have any material
contingent liability in connection with any release of any
Hazardous Waste or Hazardous Substance into the environment.
(f) There is no pending or, to the Borrower's
knowledge after due inquiry, threatened action or proceeding
against the Borrower before any court, governmental agency
or arbitrator, that may reasonably be expected to materially
and adversely affect the condition (financial or otherwise),
business, operations, properties or prospects of the
Borrower or that purports to affect the legality, validity
or enforceability of any Loan Document and none of the
transactions contemplated by any of the foregoing is or to
the Borrower's knowledge is threatened to be restrained or
enjoined (temporarily, preliminarily or permanently).
(g) The Borrower is not a party to any contract,
agreement, lease or instrument the performance of which,
either unconditionally or upon the happening of any event,
will result in or require the creation of a Lien on the
property or assets of the Borrower or other wise result
in a violation of this Agreement.
(h) (i) The Borrower is not a party to any indenture,
loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate
restriction that could reasonably be expected to have, and
no provision of applicable law or governmental regulation
could reasonably be expected to have, a material adverse
effect on the condition (financial or otherwise), business,
operations, properties or prospects of the Borrower, or may
reasonably be expected to have such an effect on the ability
of the Borrower to carry out its obligations under this
Agreement, Notes or any other Loan Documents, and (ii) the
Borrower is not in default under or with respect to any
contract, agreement, lease or other instrument to which the
Borrower is a party and which is material to the Borrower's
condition (financial or otherwise), business, operations,
properties or prospects, and the Borrower has not delivered
or received any notice of default thereunder.
(i) The Borrower is not an "investment company," or an
"affiliated person" of, or "promoter" or "principal under-
writer" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
The transactions contemplated by this Agreement and the
other Loan Documents will not violate any provision of such
Act or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
(j) No event requiring notice to the PBGC under
Section 302(f)(4)(A) of ERISA has occurred or is reasonably
expected to occur with respect to any Plan.
(k) No amendment with respect to which security is
required under Section 307 of ERISA has been made or is
reasonably expected to be made to any Plan.
(l) Neither the Borrower nor any ERISA Affiliate has
incurred or is reasonably expected to incur any material
Withdrawal Liability to any Multiemployer Plan.
(m) Neither the Borrower nor any ERISA Affiliate has
been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA, if the
effect of such reorganization or termination would be
material to the Borrower and its ERISA Affiliates taken as a
whole, and, to the best of the Borrower's knowledge, no
Multiemployer Plan is reasonably expected to be in reorgani-
zation or to be terminated, within the meaning of Title IV
of ERISA, if the effect of such reorganization or
termination would be material to the Borrower and its ERISA
Affiliates taken as a whole.
(n) (i) No ERISA Termination Event has occurred or is
reasonably expected to occur with respect to any Plan the
effect of which would be material to the Borrower and its
ERISA Affiliates taken as a whole. If any Plan were to be
terminated as of the date hereof, no liability would be
incurred under Title IV of ERISA which would be material to
the Borrower and its ERISA Affiliates taken as a whole.
(ii) There are no pending claims or
lawsuits asserted or instituted against the assets of
any Plan trust or against any fiduciary of a Plan with
respect to the operation of such Plan which are likely
to have a material adverse effect on the condition
(financial or otherwise), business, operations,
properties or prospects of the Borrower or its ERISA
Affiliates taken as a whole.
(iii) There are no strikes or other labor
disputes or grievances pending against the Borrower
which are likely to have a material adverse effect on
the condition (financial or otherwise), business,
operations, properties or prospects of the Borrower.
All payments due from the Borrower pursuant to the
provisions of any collective bargaining agreement have
been paid or accrued as a liability on the books of the
Borrower, to the extent required by U.S. GAAP.
(o) The Borrower has filed, or caused to be filed or
be included in, all tax returns and reports (Federal, state,
local and foreign) required to be filed and paid all amounts
of taxes, including interest and penalties required to be
paid, except for such taxes (i) as are being contested in
good faith and by proper proceedings and (ii) against which
appropriate reserves are being maintained, but only so long
as the proceedings referred to in clause (i) above could not
subject the Agent or the Lenders to any civil or criminal
penalty or liability.
(p) All of the Subsidiaries of the Borrower are listed
on Schedule I annexed hereto.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.0 1. Affirmative Covenants. Until the later to
occur of the Letter of Credit Termination Date, the date on which
no Letter of Credit shall remain outstanding and all obligations
of the Borrower hereunder shall be paid in full, the Borrower
will, unless the Majority Lenders shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply and cause all
of its Significant Subsidiaries to comply in all material
respects with all applicable laws, rules, regulations and
orders with respect to it, its business and properties,
such compliance to include, without limitation, compliance
with (i) ERISA and all applicable rules, regulations and
orders thereunder and (ii) all applicable environmental
laws, rules, regulations and orders.
(b) Preservation of Corporate Existence. Preserve and
maintain in all material respects its corporate existence,
corporate rights (charter and statutory), and corporate
franchises.
(c) Visitation Rights. At any reasonable time during
normal business hours and from time to time, permit the
Agent or any Lender or any agents or representatives thereof
to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the
Borrower and to discuss the affairs, finances and accounts
of the Borrower with any of its officers or directors and
with its independent certified public accountants and advise
such accountants that the Agent and the Lenders have been
authorized to review and discuss with such accountants any
and all financial statements and other information of any
kind that they may have with respect to the Borrower and
direct such accountants to comply with any reasonable
request of the Agent or the Lenders for such information.
(d) Keeping of Books. Keep proper books of record and
account, which shall be maintained or caused to be
maintained by the Borrower and shall be separate and apart
from those of any Affiliate of the Borrower, in which full
and correct entries shall be made of all financial
transactions and the assets and business of the Borrower in
accordance with U.S. GAAP.
(e) Payment of Taxes, Etc. Pay and discharge and
cause all of its Significant Subsidiaries to pay and
discharge before the same shall become delinquent, (A) all
material taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (B) all
lawful claims that, if unpaid, might by law become a Lien
upon its property, provided, however, that the Borrower
shall not be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good
faith and by proper proceedings; and maintain appropriate
reserves in respect of taxes, assessments, governmental
charges and levies.
(f) Maintenance of Properties, Etc. Maintain and
preserve and cause all of its Significant Subsidiaries to
maintain and preserve in good working order and condition,
ordinary wear and tear excepted, all of its properties that
are used or useful in the conduct of its business (and
maintain all necessary insurance) with respect to which
failure to so maintain and preserve would have a material
adverse effect on the condition (financial or otherwise),
business, operations, properties or prospects of the
Borrower.
(g) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within
45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, an
unaudited consolidated balance sheet of the Borrower as
of the end of such quarter and consolidated unaudited
statements of earnings and retained earnings and of
source and application of funds of the Borrower for the
period commencing at the end of the previous fiscal
year and ending with the end of such quarter, all in
reasonable detail and duly certified by the chief
financial officer of the Borrower (subject to year-end
audit adjustments) as having been prepared in
accordance with U.S. GAAP consistent (except as
expressly noted therein) with those applied in the
preparation of the financial statements, if any,
previously delivered pursuant to this Section 5.01(g),
together with a certificate of said officer stating
that no Event of Default or Default has occurred and is
continuing or, if such an Event of Default or Default
has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower
proposes to take with respect thereto;
(ii) as soon as available and in any event within
90 days after the end of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower
as of the end of such year and statements of income and
retained earnings and of source and application of
funds of the Borrower for the period commencing at the
end of the previous fiscal year and ending with the end
of such year, certified in a manner satisfactory to the
Majority Lenders by Price Waterhouse or other
nationally recognized independent public accountants
reasonably acceptable to the Majority Lenders, together
with (a) a certificate of such accounting firm stating
that in the course of the regular audit of the business
of the Borrower, which audit was conducted in
accordance with generally accepted auditing standards
in the United States, such accounting firm has obtained
no knowledge that an Event of Default or Default has
occurred and is continuing, or if, in the opinion of
such accounting firm, such an Event of Default or
Default has occurred and is continuing, a statement as
to the nature thereof and (b) a certificate of the
chief financial officer of the Company stating that no
Event of Default or Default has occurred and is
continuing or, if such an Event of Default or Default
has occurred and is continuing, a statement as to the
nature thereof and the action which the Borrower
proposes to take with respect thereto;
(iii) as soon as available and in any event (A)
within 30 days after the Borrower or any of its ERISA
Affiliates knows or has reason to know that any ERISA
Termination Event described in clause (i) of the defin-
ition of ERISA Termination Event with respect to any
Plan of the Borrower or such ERISA Affiliate has
occurred and (B) within 10 days after the Borrower or
any of its ERISA Affiliates knows or has reason to know
that any other ERISA Termination Event with respect to
any such Plan has occurred, a statement of the chief
financial officer of the Borrower describing such ERISA
Termination Event and the action, if any, which the
Borrower or such ERISA Affiliate proposes to take with
respect thereto;
(iv) promptly and in any event within 10 days
after receipt thereof by the Borrower or any of its
ERISA Affiliates from the PBGC copies of each notice
received by the Borrower or any such ERISA Affiliate of
the PBGC's intention to terminate any Plan of the
Borrower or such ERISA Affiliate or to have a trustee
appointed to administer any Plan;
(v) promptly and in any event within 30 days
after the filing thereof with the Internal Revenue
Service, copies of each Schedule B (Actuarial Informa-
tion) to the annual report (Form 5500 Series) with
respect to each Plan of the Borrower or any of its
ERISA Affiliates;
(vi) within 10 days after notice is given or
required to be given to the PBGC under Section
302(f)(4)(A) of ERISA of the failure to make timely
payments to a Plan, a copy of any such notice filed and
a statement of the chief financial officer of the
Borrower setting forth (A) sufficient information
necessary to determine the amount of the lien under
Section 302(f)(3), (B) the reason for the failure to
make the required payments and (C) the action, if any,
which the Borrower or any of its ERISA Affiliates
proposes to take with respect thereto;
(vii) promptly and in any event within 10 days
after receipt thereof by the Borrower or any ERISA
Affiliate from a Multiemployer Plan sponsor, a copy of
each notice received by the Borrower or any ERISA
Affiliate concerning (A) the imposition of Withdrawal
Liability by a Multiemployer Plan, (B) the
determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the meaning of
Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of
ERISA, or (D) the amount of liability incurred, or
which may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in
clause (A), (B) or (C) above;
(viii) promptly after the commencement thereof,
notice of all actions, suits and proceedings before any
court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower, of the type described in
Section 4.01(f);
(ix) promptly and in any event within three
Business Days after the Borrower becomes aware of the
existence thereof, telephonic, telex or telecopied
notice (confirmed in writing) specifying the nature of
any Event of Default or Default, any breach or
non-performance of any other Loan Document, or any
development or other information which is reasonably
likely to materially and adversely affect the condition
(financial or otherwise), business, operations, proper-
ties or prospects of the Borrower or the ability of the
Borrower to perform its obligations under this
Agreement, the Notes, or any other Loan Document, and
stating the action which the Borrower proposes to take
with respect thereto;
(x) within 10 days upon its request, copies of
all federal, and access to all state and local, tax
returns and reports filed by the Borrower or in which
the Borrower was included on a consolidated or combined
basis (excluding sales, use and like taxes); and
(xi) such other information respecting the
condition (financial or otherwise), business,
operations, properties or prospects of the Borrower as
any Lender through the Agent may from time to time
reasonably request.
SECTION 5.0 2. Negative Covenants. Until the later to occur
of the Letter of Credit Termination Date, the date on which no
Letter of Credit shall remain outstanding and all obligations of
the Borrower hereunder shall be paid in full, the Borrower will
not (and will not permit its Subsidiaries to), directly or
indirectly, without the written consent of the Majority Lenders:
(a) Liens, Etc. Create or suffer to exist any Lien
upon or with respect to any of its assets or properties,
whether now owned or hereafter acquired, or assign any right
to receive income, in each case to secure or provide for the
payment of any Indebtedness of any Person, other than
Permitted Liens.
(b) Indebtedness. Create or suffer to exist any
Indebtedness, except (i) the Advances and the other obliga-
tions of the Borrower pursuant to the Loan Documents; (ii)
Indebtedness in existence on the date hereof;
(iii) Indebtedness incurred by Subsidiaries in Canada, France,
Germany and the United Kingdom; (iv) Indebtedness of the
Borrower and Subsidiaries other than Subsidiaries in
Canada, France, Germany and the United Kingdom in an aggregate
not in excess of $10,000,000 at any one time outstanding;
and (v) Indebtedness in connection with contingent lease
obligations in accordance with U.S. GAAP arising from
recourse lease transactions in an aggregate amount not
in excess of $10,000,000.
(c) Dividends, Etc. Declare or make any dividend
payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares
of any class of capital stock of the Borrower, or return any
capital to its shareholders as such, or purchase, retire,
defease, redeem or otherwise acquire for value or make any
payment in respect of any shares of any class of capital
stock of the Borrower or any warrants, rights or options to
acquire any such shares, now or hereafter outstanding;
provided that the Borrower's Subsidiaries may make any such
payments to the Borrower;
(d) Mergers, Etc. Merge or consolidate with or into
any Person, except that Subsidiaries of the Borrower may
merge or consolidate with or into each other or with or into
the Borrower.
(e) Investments in Other Persons. Except for Eligible
Investments, make, own or hold any loan or advance to any
Person; or make, own or hold any capital contribution to, or
otherwise invest in, any Person requiring cash consideration
in excess of $75,000,000 in the aggregate in any 364 day
period.
(f) Accounting Changes. Make any change (i) in
accounting treatment and reporting practices except as
permitted or required by U.S. GAAP, or (ii) in tax reporting
treatment except as permitted or required by law and, in any
case, as disclosed to the Agent in the notes to the
financial statements delivered to the Agent pursuant to
Section 5.01(h)(ii), or otherwise.
(g) Corporate Organization. Amend its certificate of
incorporation or by-laws.
(h) Speculative Transactions. Engage in any transac-
tions involving commodity options or futures contracts or
engage in any transaction involving risks that are excessive
or unusual in light of the circumstances.
(i) Consolidated Tangible Net Worth. At any time
fail to maintain a Consolidated Tangible Net Worth of
$400,000,000, determined in accordance with U.S. GAAP.
(j) Net Worth. Permit the ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth to be greater
than 1.25 to 1 at the end of any fiscal quarter.
(k) Interest Expense Ratio. Permit the ratio of the
Borrower's "net cash provided from operating activities"
reported on the Borrower's consolidated statement of cash
flow prepared at the end of each fiscal quarter in
accordance with U.S. GAAP to Consolidated Net Interest
Expense to be less than 5 to 1 at the end of any four
quarter period beginning on September 30, 1990.
(l) Sales, Etc. of Assets. Other than as set forth on
Schedule 5.02(1), sell, assign, lease or otherwise dispose
of, or permit any Subsidiary to sell, assign, lease or
otherwise dispose of, all or a substantial part of its
assets except (i) sales of inventory in the ordinary
course, (ii) for real property the proposed sale of which by
the Borrower was disclosed in the Borrower's Annual Report
for the year ended September 28, 1991 and (iii) sales,
assignments, leases and other dispositions of assets having
a fair market value less than $5,000,000 in any 364 day
period.
(m) Cash/Short Term Investment Availability. Permit
the sum of cash maintained in the Borrower's operating
account(s) plus Eligible Investments to be less than
$30,000,000 at any time.
(n) Cash/Short Term Investment/Marketable Security
Availability. Permit the amount by which (x) the sum of
cash maintained in the Borrower's operating account(s),
Eligible Investments and other securities held by the
Borrower which in the opinion of the Agent are readily
marketable exceeds (y) the aggregate outstanding Principal
amount of Advances plus Interest (as defined in the
Revolving Credit Agreement) accrued thereon, to be less than
$100,000,000 at any time.
(o) Transactions with Affiliates. Sell or transfer
any property or assets to, or otherwise engage in any other
transactions with, any of its Affiliates (other than the
Borrower and its Subsidiaries), except that the Borrower may
engage in any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not
less favorable to the Borrower than could be obtained on an
arm's-length basis from unrelated third parties.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.0 1. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to make any payment to be
made by it hereunder in respect of principal or interest
when the same becomes due and payable, or shall fail to make
any payment to be made by it hereunder in respect of fees or
any other amounts payable hereunder or under any other Loan
Document within three Business Days after the same becomes
due and payable; or
(b) The Borrower shall fail to perform or observe any
term, covenant or agreement contained in Sections 5.01(b),
(e) or (f) or 5.02, provided that in the case of Sections
5.01(e) and (f) such failure continues unremedied for 3
days; or
(c) An Event of Default shall have occurred and be
continuing under the Revolving Credit Agreement (as defined
therein); or
(d) A fundamental change shall have occurred under
that certain indenture pursuant to which the Borrower has
issued 7 3/4% subordinated debentures due 2001 (as such
terms are defined therein); or
(e) Any representation or warranty or statement made
by the Borrower (or any of its officers) under or in
connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(f) The Borrower shall fail to perform or observe any
other term, covenant or agreement contained in any Loan
Document on its part to be performed or observed and any
such failure shall remain unremedied for 10 days after the
Borrower obtains knowledge of such failure; or
(g) The Borrower or any of its Subsidiaries shall fail
to pay any principal of or premium or interest on any
Indebtedness when the same becomes due and payable (whether
by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after
the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness or any
other event shall occur or condition shall exist under any
agreement or instrument relating to any such Indebtedness
and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the
effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such
Indebtedness; or any such Indebtedness shall be declared to
be due and payable, or required to be prepaid (other than by
a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to repay, redeem,
purchase or defease such Indebtedness shall be required to
be made, in each case prior to the stated maturity thereof;
or
(h) The Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted
by or against the Borrower or any of its Subsidiaries
seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for
any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions
sought in such proceeding (including, without limitation,
the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall
occur; or the Borrower or any of its Subsidiaries shall take
any corporate action to authorize any of the actions set
forth above in this subsection (f); or
(i) Any judgment or order for the payment of money in
excess of $7,500,000 (after deducting the portion of any
such judgment or order which is fully covered by insurance
issued by a reputable insurer) shall be rendered against the
Borrower or any of its Subsidiaries and either (i)
enforcement proceedings shall have been commenced and shall
be continuing by any Person upon such judgment or order or
(ii) there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in
effect; or
(j) Any non-monetary judgment or order shall be
rendered against the Borrower or any of its Subsidiaries
which does or could reasonably be expected to (i) cause a
material adverse change in the condition (financial or
otherwise), business, operations, properties or prospects of
the Borrower, (ii) have a material adverse effect on the
ability of the Borrower to perform its obligations under any
Loan Document, or (iii) have a material adverse effect on
the rights and remedies of the Agent or any Lender under any
Loan Document and either (A) enforcement proceedings shall
have been commenced by any Person upon such judgment or
order or (B) there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not
be in effect; or
(k) Any provision of any Loan Document after delivery
thereof pursuant to Section 3.01 shall for any reason cease
to be valid and binding on or enforceable against the
Borrower, or the Borrower shall so state in writing, if such
invalidity or unenforceability could have a material
adverse effect on the rights and remedies of the Agent or
the Lenders under such Loan Document; or
(l) Any ERISA Termination Event with respect to a Plan
shall have occurred and, 30 days after notice thereof shall
have been given to the Borrower by the Agent, (i) such ERISA
Termination Event shall still exist and (ii) the sum of the
ERISA Title IV liability incurred with respect to the
Insufficiency of any and all Plans with respect to which an
ERISA Termination Event shall have occurred and then exist
(or in the case of a Plan with respect to which an ERISA
Termination Event described in clause (ii) of the definition
of ERISA Termination Event shall have occurred and then
exist, the liability related thereto) is likely to have a
material adverse effect on the Borrower and the ERISA
Affiliates taken as a whole; or
(m) (i) the Borrower or any ERISA Affiliate thereof
shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan, (ii) the Borrower or such ERISA
Affiliate does not have reasonable grounds to contest such
Withdrawal Liability and is not in fact contesting such
Withdrawal Liability in a timely and appropriate manner, and
(iii) the amount of such Withdrawal Liability specified in
such notice, when aggregated with all other amounts required
to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities (determined as of the date of such
notification), is likely to have a material adverse effect
on the Borrower and the ERISA Affiliates taken as a whole;
or
(n) The Borrower or any ERISA Affiliate thereof shall
have been notified by the sponsor of a Multiemployer Plan
that such Multiemployer Plan is in reorganization or is
being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the
aggregate annual contributions of the Borrower and its ERISA
Affiliates to all Multiemployer Plans that are then in
reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer
Plans for the plan years that include the date hereof by an
amount that is likely to have a material adverse effect on
the Borrower and the ERISA Affiliates taken as a whole; or
(o) The Borrower or any ERISA Affiliate shall have
committed a failure described in Section 302(f)(1) of ERISA
and the amount determined under Section 302(f)(3) of ERISA
is likely to have a material adverse effect on the Borrower
and the ERISA Affiliates taken as a whole; or
(p) Any Person or group (as defined in the Securities
Exchange Act of 1934, as amended) shall acquire the
ownership of (constructive or otherwise), or power to vote
more than, 25% of the Borrower's outstanding capital stock;
then, and in any such event, the Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the
Borrower (i) declare the Commitments and the obligation of the
Lenders to issue Letters of Credit terminated, whereupon the same
shall forthwith terminate and/or (ii) require the deposit by the
Borrower with the Agent of cash collateral in an amount equal to
105% of the Letter of Credit Outstandings; provided, however,
that in the event of an actual or deemed entry of an order for
relief with respect to the Borrower under the Federal Bankruptcy
Code as described in subsection (f), all such amounts due
hereunder shall automatically become and be due and payable
without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower.
Upon any such termination of the Commitments, the Agent and the
Lenders shall have, in addition to all other rights and remedies
under this Agreement or otherwise, all other rights and remedies
provided under the laws of the applicable jurisdiction and other
applicable laws, which rights shall be cumulative.
ARTICLE VII
THE AGENT
SECTION 7.0 1. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and
the other Loan Documents as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for
by the Loan Documents, the Agent shall not be required to
exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of the
Majority Lenders, and such instructions shall be binding upon all
Lenders; provided, however, that the Agent shall not be required
to take any action which exposes the Agent to personal liability
or which is contrary to the Loan Documents or to applicable law.
The Agent agrees to give to each Lender prompt notice of each
notice given to it by the Borrower pursuant to the terms of this
Agreement.
SECTION 7.0 2. Agent's Reliance, Etc. Neither the Agent
or any Affiliate of the Agent, nor any of their respective
directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Agent or on
behalf of the Agent under or in connection with the Loan
Documents, except for its or their own gross negligence or
willful misconduct. Without limiting the generality of the
foregoing, the Agent: (i) may consult with legal counsel
(including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants
or experts; (ii) makes no warranty or representation to any
Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (iii)
shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or
conditions of the Loan Documents on the part of the Borrower or
to inspect the property (including the books and records) of the
Borrower; (iv) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document
or any other instrument or document furnished pursuant hereto;
(v) shall incur no liability under or in respect of the Loan
Documents by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing
(which may be by telecopier, telegram, cable or telex) believed
by it to be genuine and signed or sent by the proper party or
parties; and (vi) may treat the payee of any Note (as defined in
the Revolving Credit Agreement) as the holder thereof until the
Agent receives written notice of the assignment or transfer
thereof signed by such payee and including the agreement of the
assignee or transferee to be bound hereby as it would have been
if it had been an original Lender party hereto, in form
satisfactory to the Agent.
SECTION 7.0 3. NWB and Affiliates. NWB and its Affiliates
may generally engage in any kind of business with the Borrower
any of its respective Affiliates and any Person who may do
business with or own securities of the Borrower or any of its
respective Affiliates, all as if NWB were not the Agent and
without any duty to account therefor to the Lenders.
SECTION 7.0 4. Lender's Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
the Agent or any of its Affiliates and based on the financial
statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and to make
Advances hereunder. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any of its
Affiliates and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement.
SECTION 7.0 5. Indemnification. The Lenders agree to
indemnify the Agent (to the extent not reimbursed by the
Borrower), ratably according to the respective amounts of their
Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by the Agent under
the Loan Documents, provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each
Lender agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel
fees) 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, the Loan Documents, to the extent that
the Agent is not reimbursed for such expenses by the Borrower.
SECTION 7.0 6. Successor Agent. The Agent may resign at any
time by giving notice thereof to the Lenders and the Borrower.
Upon any such resignation, the Majority Lenders shall have the
right to appoint any Lender a successor Agent. If no successor
Agent shall have been so appointed by the Majority Lenders, and
shall have accepted such appointment, within 30 days after the
retiring Agent's giving notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United
States of America or any State thereof or licensed under the laws
of the United States or any State thereof to maintain a branch or
agency in the United States and having a combined capital and
surplus of at least $1,000,000,000 (or the equivalent thereof in
another currency). Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article
VII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.0 1. Indemnities by the Borrower. Without
limiting any other rights which the Agent, the Lenders or any
Affiliate of either (each, an "Indemnified Party") may have
hereunder or under applicable law, the Borrower hereby agrees to
indemnify each Indemnified Party from and against any and all
claims, losses and liabilities (including reasonable attorneys'
fees) (all of the foregoing being collectively referred to as
"Indemnified Amounts") growing out of or resulting from this
Agreement excluding, however, Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part
of such Indemnified Party or any Affiliate of such Indemnified
Party which directly or indirectly controls, is controlled by or
is under common control with such Indemnified Party or is a
director or officer of such Indemnified Party or of such an
Affiliate of such Indemnified Party. Without limiting or being
limited by the foregoing, the Borrower shall pay on demand to
each Indemnified Party any and all amounts necessary to indemnify
such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from:
(i) reliance on any representation or warranty or
statement made or deemed made by the Borrower (or any of its
officers ) under or in connection with any Loan Document
which shall have been incorrect in any material respect when
made; or
(ii) any investigation, litigation or proceeding
relating to this Agreement or the use of proceeds of
Advances; or
(iii) any failure by the Borrower to effect a
Borrowing after having given notice thereof.
ARTICLE IX
MISCELLANEOUS
SECTION 9.0 1. Amendments, Etc. No amendment or waiver of
any provision of any Loan Document, and no consent to any
departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Majority Lenders, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and signed
by all the Lenders, do any of the following: (1) waive any of
the conditions specified in Section 3.01, (2) increase the
Commitments of the Lenders or subject the Lenders to any
additional obligations, (3) reduce the amount of principal of,
or interest on, or fees or other amounts payable hereunder, (4)
postpone any date fixed for any payment of interest or any fees
or other amounts payable hereunder, (5) change the percentage of
the Commitments or the number of Lenders which shall be required
for the Lenders or any of them to take any action hereunder or
thereunder, or (6) amend this Section 9.01; and provided,
further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders
required above to take such action, affect the rights or duties
of the Agent under this Agreement or any other Loan Document.
Notwithstanding the foregoing, in the event that any Lender
refuses to fund its portion of any unreimbursed payment as
required by Section 2.01(h) hereof (such event a "Lender Default"
and, such Lender, a "Defaulting Lender") and so long as any
Lender Default remains in effect, each such Defaulting Lender
shall not be entitled to give instructions to the Agent, approve,
disapprove, consent to or vote on any matters relating to this
Letter of Credit Agreement and all amendments, waivers or
modifications of this Letter of Credit Agreement may be made
without regard to any such Defaulting Lender and for purposes of
this definition of "Majority Lenders", any such Defaulting Lender
shall be deemed not to be a "Lender" and not to have a
Commitment.
SECTION 9.0 2. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise
stated herein, be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled or delivered, if to the Borrower, at
its address set forth under its name on the signature pages
hereof, if to the Agent, at 175 Water Street, New York, New York
10038 or as to each other party hereto, at its address set forth
under its name on the signature pages hereof or at such other
address as shall be designated by any party hereto in a written
notice to the other parties hereto. All such notices and
communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by
telex answerback or delivered to the cable company, respectively,
except that notices and communications to the Agent pursuant to
Article II shall not be effective until received by the Agent.
SECTION 9.0 3. No Waiver; Remedies. No failure on the part
of any Lender or the Agent to exercise, and no delay in exercis-
ing, any right under any Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such
right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 9.0 4. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Agent
and the Lenders and their respective successors and assigns,
except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written
consent of the Agent.
SECTION 9.0 5. Governing Law. This Agreement and all of
the Loan Documents shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to
contracts made and to be performed wholly within such State and
Letters of Credit issued hereunder shall provide that they are
governed by the Uniform Customs and Practice for Documentary
Credits.
SECTION 9.0 6. Costs and Expenses. In addition to the
rights of indemnification granted to the Indemnified Parties
under Article VIII and Section 2.07 hereof, the Borrower agrees
to pay on demand all costs and expenses in connection with the
preparation, execution, delivery, administration (including
periodic auditing), modification and amendment of the Loan
Documents and the other documents to be delivered thereunder,
including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Agent, and of local
counsel who may be retained by the Agent, with respect thereto
and with respect to advising the Agent as to its rights and
remedies under the Loan Documents. The Borrower further agrees
to pay on demand all costs and expenses, if any (including,
without limitation, reasonable counsel fees and expenses), in
connection with the enforcement (whether through negotiations,
legal proceedings, or otherwise) of the Loan Documents and the
other documents to be delivered thereunder, including, without
limitation, reasonable counsel fees and expenses in connection
with the enforcement of rights under this Section 9.06.
SECTION 9.0 7. Assignments and Participations. (a) With
the prior written consent of the Agent and the Borrower, which
shall not be unreasonably withheld (provided that such written
consent of the Agent and the Borrower shall not be required in
the case of an assignment by a Lender to any Subsidiary or
Affiliate of such Lender if the effect of such assignment would
not be to increase the amounts payable by the Borrower pursuant
to Sections 2.07 or 2.08 based upon applicable laws or
regulations in effect on the date of such assignment), each
Lender may assign to one or more commercial banks (each, an
"Assignee") all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion
of its Commitment and the Advances owing to it); provided,
however, that (i) each such assignment shall be of a constant,
and not a varying, percentage of all rights and obligations under
this Agreement, (ii) the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than
$5,000,000, and (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and
recording in the Register (as defined below), an Assignment and
Acceptance, together with a processing and recordation fee of
$3,000 unless the relevant Assignee is a Subsidiary or Affiliate
of the assigning Lender. Upon such execution, delivery,
acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, (x) 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, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall
cease to be a party hereto).
(b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the Assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such Assignee confirms
that it has received a copy of this Agreement, together with
copies of such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning
Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under this Agreement; (v) such Assignee appoints and authorizes
the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such Assignee agrees that
it will perform in accordance with their terms all of the obliga-
tions which by the terms of this Agreement are required to be
performed by it as a Lender.
(c) The Agent shall maintain at its address referred to in
Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the
names and addresses of the Lenders and the Commitment of, and
principal amount of the Advances owing to, each Lender from time
to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender thereunder for
all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Assignee (and consented to
by the Borrower pursuant to Section 9.07(a)), the Agent shall, if
such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit D to the Revolving Credit
Agreement, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give
prompt notice thereof to the Borrower.
(e) Each Lender with the prior written consent of the
Borrower and the Agent (which shall not be unreasonably withheld)
may sell participations to one or more Persons in all or a
portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its
Commitment), in which event, without limiting the foregoing, the
provisions of Section 2.07 and 2.08 shall inure to the benefit of
such participant; provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation,
its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, and (iii)
the Borrower, the Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement.
(f) Notwithstanding anything to the contrary contained
herein, no assignment or participation may be effected by any
Lender unless at the time thereof such Lender effects the
assignment or participation, as the case may be, of the same
percentage of its interest under the Revolving Credit Agreement
to the same assignee or participant, as the case may be.
SECTION 9.0 8. Confidentiality. Unless otherwise agreed to
in writing by the Borrower, the Agent and each Lender hereby
agrees to keep all Proprietary Information (as defined below)
confidential and not to disclose or reveal any Proprietary
Information to any Person other than the Agent's or such Lender's
directors, officers, employees, Affiliates and agents to actual
or potential Assignees and participants, and then only on a
confidential basis; provided, however, that the Agent and each
Lender may disclose Proprietary Information (a) as required by
law, rule, regulation or judicial process, (b) to its attorneys
and accountants or (c) as requested or required by any State,
Federal or foreign authority or examiner regulating banks or
banking. For purposes of this Agreement, the term "Proprietary
Information" shall include all non-public information regarding
the Borrower and its Affiliates, whether furnished before or
after the date hereof, and (in the case of written materials)
designated as "Proprietary Information"; provided, however, that
Proprietary Information does not include information which (x) is
or becomes generally available to the public other than as a
result of a disclosure by the Agent or a Lender not permitted by
this Agreement, (y) was available to the Agent or the Lender on a
nonconfidential basis prior to its disclosure to the Agent or
such Lender by the Borrower or any of its Affiliates or (z)
becomes available to the Agent or a Lender on a nonconfidential
basis from a Person other than the Borrower or its Affiliates
who, to the best knowledge of the Agent or such Lender, as the
case may be, is not otherwise bound by a confidentiality
agreement with the Borrower or any of its Affiliates, or is not
otherwise prohibited from transmitting the information to the
Agent or such Lender.
SECTION 9.0 9. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement.
SECTION 9. 10. Waiver of Jury Trial. Each of the Borrower,
the Agent and each Lender hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim arising
out of or relating to any of the Loan Documents or the
transactions contemplated thereby.
SECTION 9. 11. Right of Setoff. Upon the occurrence and
during the continuance of any Event of Default the Agent and each
Lender is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to setoff and apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower
now or hereafter existing under the Loan Documents irrespective
of whether or not such Lender shall make any demand under any
Loan Document or such obligations may be matured. The rights of
each Lender under this Section 9.11 are in addition to any other
rights and remedies which such Lender may have upon the
occurrence and during the continuance of any Event of Default.
SECTION 9. 12. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be unenforceable to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 9. 13. Headings. Section headings used herein are
for convenience only and are not to effect the construction of or
be taken into consideration in interpreting this Agreement.
SECTION 9. 14. Prior Agreements. This Agreement and the
other Loan Documents represent the entire agreement of the
parties with regard to the subject matter hereof and the terms of
any letters and other documents entered into by the Borrower and
any Lender or the Agent prior to the execution of this Agreement
which relate to Advances to be made hereunder shall be replaced
by the terms of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
DATA GENERAL CORPORATION
By:
Title:
4400 Computer Drive
Westboro, MA 01580
Attn.: Treasurer
(Telecopier: 508-366-8016)
COMMITMENT NATIONAL WESTMINSTER BANK PLC,
$6,428,571 as Lender and as Agent
By:
Vice President
Prime Rate Advance Lending
Office
National Westminster Bank PLC
New York Branch
175 Water Street
New York, NY 10038
Attn: Manager's Department
- Level 21
Telephone: (212) 602-4193
Telecopy: (212) 602 4118
with a copy to:
NATIONAL WESTMINSTER BANK PLC
New York Branch
175 Water Street
New York, NY 10038
Attn: New York Marketing
Office
- Level 29
Telephone: (212) 602-4395
Telecopy: (212) 602-4256
NATIONAL WESTMINSTER BANK,
PLC, through its LIBOR Rate
Advance Lending Office
By:
Vice President
National Westminster Bank PLC
Nassau Branch
175 Water Street
New York, NY 10038
Attn: Manager's Department
-Level 21
Telephone: (212) 602-4193
Telecopy: (212) 602-4118
$6,428,571 THE BANK OF NOVA SCOTIA
101 Federal Street
Boston, MA 02208
Telephone: (617) 737-6310
Telecopy: (617) 951-2177
By:
Title:
$6,428,571 FLEET BANK OF MASSACHUSETTS,
NATIONAL ASSOCIATION
75 State Street
Boston, Massachusetts 02109
Telephone: (617) 573-6524
Telecopy: (617) 573-5045
By:______________________
Title:
$4,285,714 NATIONSBANK
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 644-4449
Telecopy: (212) 593-1083
By:______________________
Vice President
$6,428,571 CANADIAN IMPERIAL BANK OF
COMMERCE
275 Battery Street-Suite 1840
San Francisco, California
94111
Telephone: (415) 399-5749
Telecopy: (415) 399-5761
By:______________________
Title:
EXHIBIT 11
DATA GENERAL CORPORATION
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
(Unaudited)
(In thousands, except per share amounts)
Quarter Ended
Dec. 25, Dec. 26,
1993 1992
Primary earnings per share:
Net income (loss). . . . . . . . . . . . . . .$(21,091) $759
Weighted average shares outstanding. . . . . . 35,333 33,741
Incremental shares from use of treasury
stock method for stock options . . . . . . . -- 1,647
Common and common equivalent
shares, where applicable . . . . . . . . . . 35,333 35,388
Net income (loss) per share. . . . . . . . $(.60) $.02
Earnings per share assuming full
dilution:(a)
Net income (loss). . . . . . . . . . . . . . .$(21,091) $759
Weighted average shares outstanding. . . . . . 35,333 33,741
Incremental shares from use of treasury
stock method for stock options . . . . . . . -- 1,647
Common and common equivalent
shares assuming full dilution. . . . . . . . 35,333 35,388
Net income (loss) per share. . . . . . . . $(.60) $.02
(a) For the quarters ending December 25, 1993 and December 26, 1992, the
assumed conversion of convertible debentures, giving effect to the
incremental shares and the adjustment to reduce interest expense,
results in anti-dilution and has therefore been excluded from the
computation.
Data General Corporation
First Quarter 1994 Interim Report
Period ending December 25, 1993
TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES:
Data General reported a net loss of $21.1 million, or $.60 per share, for
its first quarter of fiscal 1994, which ended December 25, 1993. For its first
quarter last year the company reported net income of $800,000, or $.02 per
share.
Revenues for the first quarter were $261.2 million, compared with revenues
of $279.6 million for the first quarter last year.
We were very disappointed with our financial results. Revenues from our
traditional computer line, the ECLIPSE(R) family, were down about 50 percent
compared with both the prior quarter and year over year. Performance in Europe
was also very disappointing with product revenues 30 percent lower than both
the prior quarter and last year's first quarter. The lower volume and the shift
in product mix resulted in particularly low margins on equipment sales during
the quarter.
However, while the revenue decline in Europe impacted both our ECLIPSE and
AViiON(R) product lines, total AViiON revenues again grew compared to both the
prior quarter and last year's comparable quarter. We continue to be encouraged
by our AViiON growth, particularly at the high end where our new AV 9500
systems are being very well received by the marketplace.
The success of the AV 9500 reinforces our belief in the strategy of
focusing on the high-end of the commercial marketplace as the means to future
revenue growth. To be successful, it is imperative that we continue to focus on
the changing needs of these customers. That means an increased emphasis on
providing high-value systems, storage and services to large enterprises.
Increasingly, users are looking for information technology suppliers whose
platforms can support large databases and the leading enterprise-wide software
applications. They are no longer simply looking for the best technology.
During the quarter, the company strengthened its position in the high-end
marketplace with the announcement that more than 20 leading enterprise software
vendors have ported or have agreed to port their software to the AViiON
platform. More than 3,000 applications now run on AViiON.
Included in the announcement were such companies as Computer Associates
(Unicenter(R)), Oracle (Oracle Parallel Server(TM)), Hewlett-Packard
(OpenView(TM)), Datalogix International(GEMMS), Integris(UniKix(TM)), Platinum
Software (SeQuel) and Tivoli Systems (Tivoli Management Environment).
Given the tightly focused marketplace that we serve, we must be able to
offer integrated solutions that address the enterprise customer's needs, from
development and application rehosting tools to enterprise-wide management
software.
A customer base of more than 23,000 AViiON installations, with a total
value of more than $1 billion, has been established since the AViiON line began
shipping just over four years ago.
In January, we announced that our multi- processor AV 9500 central server
and AV 5500 distributed server models had produced industry-leading Transaction
Processing Benchmark-A (TPC-A) price/performance results. Developed by the
Transaction Processing Performance Council, the TPC-A benchmark is a recognized
standard of transaction processing performance.
During the first quarter, we further strengthened our marketplace position
with the formation of a Systems Integration Business Unit under the direction
of Vice President Donald Zereski, a 30-year industry veteran who joined the
company in October. The unit provides a variety of services, ranging from
customization of technology, including both hardware and software, to total
program management of complex enterprise-wide installations based on Data
General technology.
In addition, the company's CLARiiON(TM) Business Unit expanded its Series
2000 disk array product line with a new high performance model and introduced
an economical entry-level Series 1000 disk array family. The new models,
announced in January, feature a high speed "mirrored-cache" capability,
previously available only in mainframe computer environments.
Although CLARiiON open storage revenues still represent a small percentage
of our total revenues, they are growing at a significant pace, with first
quarter revenues more than double those of the prior quarter.
Despite the disappointing financial results, Data General's financial
position remains strong with cash and marketable securities of $168 million at
the end of the quarter. In light of first quarter results we are accelerating
adjustments to our cost structure to bring it more in line with revenues and
margins.
With the combination of our AViiON servers, our CLARiiON open storage
devices, the commercial strengths of our DG/UXTM operating system, our services
capability and software partnerships, we believe that Data General today can
provide the industry's most complete open enterprise computing solution.
Respectfully submitted,
(signature)
Ronald L. Skates
President and Chief Executive Officer
February 4, 1994
ANNUAL MEETING HIGHLIGHTS
The Annual Meeting of Stockholders of Data General Corporation was held in
Boston on Wednesday, January 26, 1994. Stockholders voted on three proposals
- -- the election of company directors, an amendment to Data General's Employee
Qualified Stock Purchase Plan, and the adoption of the 1994 Non-Employee
Director Stock Option Plan.
The following were elected as directors:
Frederick R. Adler -- Retiring Senior Partner, Fulbright & Jaworski L.L.P.,
Attorneys at Law.
Ferdinand Colloredo-Mansfeld -- Chairman and Chief Executive Officer, Cabot
Partners Limited Partnership.
John G. McElwee -- Retired Chairman and Chief Executive Officer, John
Hancock Mutual Life Insurance Company.
Ronald L. Skates -- President and Chief Executive Officer, Data General
Corporation.
Donald H. Trautlein -- Retired Chairman and Chief Executive Officer,
Bethlehem Steel Corporation.
During the meeting, stockholders voted to increase the number of shares of
common stock that may be issued through the Employee Qualified Stock Purchase
Plan to 8,600,000 shares from 6,600,000 shares.
Stockholders also approved the adoption of the 1994 Non-Employee Director
Stock Option Plan, which provides for the issuance of an annual option to
purchase 4,000 shares of the Company's Common Stock to each non-employee
director who is elected to the Board of Directors at the Annual Meeting of
Stockholders. An aggregate of 150,000 shares of Common Stock may be issued
under this plan.
The Report of the Annual Meeting, including the text of remarks made by Mr.
Skates, is being sent to all current stockholders. Additional copies may be
obtained by writing to: Data General Corporation, Corporate Communications
Department, MS-A235, 4400 Computer Drive, Westboro, Mass. 01580.
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended
Dec. 25, Dec. 26,
in thousands, except net income (loss) per share 1993 1992
Revenues:
Product . . . . . . . . . . . . . . . . . . . . . . . .$163,697 $175,649
Service . . . . . . . . . . . . . . . . . . . . . . . . 97,530 103,991
Total revenues . . . . . . . . . . . . . . . . . . 261,227 279,640
Costs and expenses:
Cost of product revenues. . . . . . . . . . . . . . . . 111,603 103,741
Cost of service revenues. . . . . . . . . . . . . . . . 57,556 59,608
Research and development. . . . . . . . . . . . . . . . 23,517 25,912
Selling, general, and administrative. . . . . . . . . . 87,022 86,226
Total costs and expenses . . . . . . . . . . . . . 279,698 275,487
Income (loss) from operations . . . . . . . . . . . . . . . (18,471) 4,153
Interest income . . . . . . . . . . . . . . . . . . . . . . 1,454 2,172
Interest expense. . . . . . . . . . . . . . . . . . . . . . 3,474 3,766
Income (loss) before income taxes . . . . . . . . . . . . . (20,491) 2,559
Income tax provision. . . . . . . . . . . . . . . . . . . . 600 1,800
Net income (loss) . . . . . . . . . . . . . . . . . . . . .$(21,091) $ 759
Net income (loss) per share . . . . . . . . . . . . . . . . $(.60) $.02
Weighted average shares outstanding
including common stock equivalents where applicable . . . 35,333 35,388
No cash dividends have been declared or paid since inception.
The accompanying Notes to Condensed Consolidated Financial Statements are
an integral part of these financial statements.
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Dec. 25, Sept. 25,
dollars in thousands 1993 1993
Assets
Current assets:
Cash and temporary cash investments . . . . . . . . $100,287 $119,560
Marketable securities . . . . . . . . . . . . . . . 67,673 72,395
Receivables, net. . . . . . . . . . . . . . . . . . 274,154 285,481
Inventories . . . . . . . . . . . . . . . . . . . . 111,851 101,827
Other current assets. . . . . . . . . . . . . . . . 33,097 32,397
Total current assets. . . . . . . . . . . . . . . 587,062 611,660
Property, plant, and equipment, net . . . . . . . . . 176,042 177,551
Other assets. . . . . . . . . . . . . . . . . . . . . 77,784 77,118
$840,888 $866,329
Liabilities and stockholders' equity
Current liabilities:
Notes payable . . . . . . . . . . . . . . . . . . $ 2,242 $ 2,267
Accounts payable. . . . . . . . . . . . . . . . . . 96,172 85,571
Other current liabilities . . . . . . . . . . . . . 199,005 215,070
Total current liabilities . . . . . . . . . . . . 297,419 302,908
Long-term debt. . . . . . . . . . . . . . . . . . . . 158,354 158,352
Other liabilities . . . . . . . . . . . . . . . . . . 29,960 27,992
Stockholders' equity:
Common stock:
Outstanding -- 35,413,000 shares at Dec. 25, 1993
and 35,267,000 shares at Sept. 25, 1993 (net of
deferred compensation of $11,907 at Dec. 25, 1993
and $11,619 at Sept. 25, 1993). . . . . . . . . . 424,540 422,589
Accumulated deficit . . . . . . . . . . . . . . . . (50,321) (29,230)
Cumulative translation adjustment . . . . . . . . . (19,064) (16,282)
Total stockholders' equity. . . . . . . . . . . . 355,155 377,077
$840,888 $866,329
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these financial statements.
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Quarter Ended
Dec. 25, Dec. 26,
in thousands 1993 1992
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . .$(21,091) $ 759
Adjustments to reconcile net income (loss) to
net cash provided from (used by) operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . 19,356 22,576
Amortization of capitalized software development costs. . . 4,336 3,829
Other non-cash items, net . . . . . . . . . . . . . . . . . 7,267 5,809
Change in operating assets and liabilities . . . . . . . . (6,435) (11,498)
Net cash provided from operating activities . . . . . . . . 3,433 21,475
Cash flows from investing activities:
Expenditures for property, plant, and equipment . . . . . . . (20,886) (27,672)
Net proceeds from (purchases of) marketable securities. . . . 4,722 (601)
Capitalized software development costs. . . . . . . . . . . . (4,373) (5,388)
Investment in equity security . . . . . . . . . . . . . . . . (2,000) --
Net cash used by investing activities . . . . . . . . . . . (22,537) (33,661)
Cash flows from financing activities:
Cash provided from stock plans. . . . . . . . . . . . . . . 621 1,685
Effect of foreign currency rate fluctuations
on cash and temporary cash investments. . . . . . . . . . . . (790) (4,367)
Decrease in cash and temporary
cash investments. . . . . . . . . . . . . . . . . . . . . . . (19,273) (14,868)
Cash and temporary cash investments - beginning of period . . . 119,560 139,445
Cash and temporary cash investments - end of period . . . . . .$100,287 $124,577
Supplemental disclosure of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . .$ 4,998 $ 4,940
Income taxes paid . . . . . . . . . . . . . . . . . . . . . .$ 610 $ 1,269
Certain prior year amounts have been reclassified to conform to current year presentation.
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these financial statements.
</TABLE>
DATA GENERAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Consolidated Balance Sheet Details
Dec. 25, Sept. 25,
in thousands 1993 1993
Inventories:
Raw materials . . . . . . . . . . . . . . . . . . . . $ 9,648 $ 6,665
Work in process . . . . . . . . . . . . . . . . . . . 28,066 27,778
Finished systems. . . . . . . . . . . . . . . . . . . 36,385 31,566
Field engineering parts and components.. . . . . . . . 37,752 35,818
$111,851 $101,827
Property, plant, and equipment:
Property, plant, and equipment. .. . . . . . . . . . . $663,152 $659,439
Accumulated depreciation. . . . .. . . . . . . . . . . (487,110) (481,888)
$176,042 $177,551
Note 2. Income Taxes
In the current quarter, the company adopted Statement of Financial
Accounting Standards ("SFAS") 109, "Accounting for Income Taxes". SFAS 109 is
an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the company's financial statements or tax returns. In
estimating future tax consequences, SFAS 109 generally considers all expected
future events other than enactments of changes in the tax law or rates.
Previously, the company used the SFAS 96 asset and liability approach that
gave no recognition to future events other than the recovery of assets and
settlement of liabilities at their carrying amounts. The implementation of
SFAS 109 did not have a material effect on either the company's consolidated
financial position or results of operations.
Note 3. Litigation
In a previously reported action, in the U.S. District Court for the District
of Massachusetts, a jury, on January 28, 1993, awarded the company $52.3
million in damages and related interest from Grumman Systems Support
Corporation ("Grumman") for infringing the company's copyrights and
misappropriating trade secrets relating to the company's proprietary MV/ADEX
diagnostic software. The award includes approximately $15.9 million in
pre-judgment interest. On May 13, 1993, Grumman's motion for judgment
notwithstanding the verdict and/or for a new trial was rejected. Grumman has
appealed to the United States First Circuit Court of Appeals. The company
will not recognize the award in its financial statements until it is received
or assured. The company has deferred legal costs incurred subsequent to the
jury verdict in order to match these costs with the award when recognized.
Note 4. Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consol-
idated financial statements reflect all adjustments, consisting of normal re-
curring accruals, considered necessary for a fair presentation. The company's
accounting policies are described in the Notes to Consolidated Financial
Statements in the company's 1993 Annual Report. The results of operations for
the quarter ended December 25, 1993 are not necessarily indicative of the
results for the entire fiscal year.
