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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 24, 1994
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 20, 1995:
Common Stock, par value $.01 36,710,303
(Title of each class) (Number of shares)
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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 24, 1994 and December 25, 1993, condensed consolidated
balance sheets as of December 24, 1994 and September 24, 1994,
condensed consolidated statements of cash flows for the quarters
ended December 24, 1994 and December 25, 1993, and related notes
to condensed consolidated financial statements, are incorporated
herein by reference to pages 3 through 6 of the company's First
Quarter 1995 Interim Report. The First Quarter 1995 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 B-221, 4400 Computer Drive,
Westboro, MA 01580.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Financial Condition
Cash and temporary cash investments as of December 24, 1994
were $119.2 million, a decrease of $23.3 million from the end of
fiscal 1994. In addition, the company holds $91.5 million in
marketable securities, a net increase of $43.6 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. The increase in
marketable securities is primarily due to funds received from a
software copyright infringement settlement received in the current
quarter. Net cash provided from operations for the quarter ended
December 24, 1994 totaled $53.0 million, expenditures for
property, plant, and equipment were $23.7 million, capitalized
software development costs totaled $5.4 million, and cash provided
from stock plans totaled $.8 million. The company repaid $2.7
million of long-term debt and made a $.6 million investment in an
unaffiliated entity in the current three-month period. The effect
of foreign currency rate fluctuations on cash and temporary cash
investments was a decrease of $1.1 million.
Net receivables increased $1.3 million from fiscal year-end
1994. Both revenues and collections were lower than that of the
quarter ended September 24, 1994, resulting in an increase in days
sales outstanding from 80 days to 84 days. The decrease in cash
collections was primarily attributable to the end of quarter
holidays and timing of fourth quarter fiscal 1994 revenues. Total
inventories at December 24, 1994 decreased $5.3 million from
fiscal year-end 1994 levels. The decrease was primarily due to a
worldwide decrease in raw materials and finished goods inventory.
Fixed asset dispositions for the current three-month period
totaled $.9 million, primarily as a result of sales of
demonstration equipment to end-users. Management expects that
sales of demonstration equipment will continue in the future.
Approximately 20% of the company's net fixed assets relate to the
company's proprietary ECLIPSE MV ("MV") family of products and are
primarily comprised of spare parts required to support the MV
service base of over 19,000 installed units worldwide as well as
those MVs which are serviced by third parties.
Accounts payable remained relatively unchanged from fiscal
year-end 1994 levels. Other current liabilities decreased $6.2
million from fiscal year-end 1994, primarily as a result of
reduced employee related accruals and the settlement of certain
obligations accrued as part of restructuring charges recorded in
previous years. These items were partially offset by an increase
in income taxes payable as a result of the $7 million income tax
provision recorded for the quarter ended December 24, 1994.
Long-term debt including the current portion of long-term debt
decreased a total of $2.7 million during the current quarter as a
result of the company reacquiring a portion of the 8 3/8% Sinking
Fund Debentures due in 2002. Of this amount, $.6 million is
required to satisfy the current year sinking fund payment and $2.1
million will be available to satisfy future sinking fund
requirements.
Effective December 21, 1994, the company entered into a $30
million unsecured letter of credit facility with a group of
banks. This agreement, which is available to secure issuance of
letters of credit has a duration of 364 days. The facility
contains certain covenants, including restrictions on the sale or
pledge of certain assets, the declaration of dividends, and the
incurrence of other debt. At December 24, 1994 there were $5.4
million letters of credit secured by this facility. The new
agreement replaced the company's unsecured $40 million revolving
credit facility and $30 million letter of credit facility. At
December 24, 1994 there were $5.5 million of letters of credit
secured by the expiring facility. This facility was cancelled on
January 18, 1995 upon liquidation of the outstanding
obligations. The revolving credit facility was cancelled prior to
the end of the current fiscal quarter.
During fiscal years 1994 and 1993, the company recorded
restructuring charges of $35 million and $25 million,
respectively. No additional charges or material changes in
estimates to prior provisions were recorded during the first
quarter fiscal 1995. The following table sets forth the company's
restructuring charges for the period ended December 24, 1994. All
charges, excluding asset writedowns and certain other charges, are
cash in nature and are funded from operations.
QUARTER ENDED
BALANCE DEC. 24, 1994 BALANCE
IN MILLIONS SEP. 24, 1994 CHARGES DEC. 24, 1994
Provision related to terminated employees:
Termination payments $15.2 $6.0 $9.2
Pension and OPEB costs
(curtailment loss) 1.5 -- 1.5
Other costs 1.1 -- 1.1
Provisions related to employees
not terminated 1.9 -- 1.9
Provisions for leases 14.0 2.4 11.6
Writedown of assets to be
sold and discarded .7 -- .7
Other 2.3 .3 2.0
$36.7 $8.7 $28.0
During the current quarter approximately 160 terminations
relating to fiscal 1994 had occurred and the remaining provision at
December 24, 1994 is for the future terminations of approximately 210
employees, as part of the continuing realignment of the company's
worldwide sales, service, and other operations. The charges and
remaining provision for leases are for the closure of various domestic
branch sales offices and excess vacant rental properties, primarily
located in the United Kingdom.
Results of Operations
Total revenues for the quarter ended December 24, 1994 increased
8% from the same quarter of the previous year. Domestic revenues,
excluding U.S. direct export sales, were $148.8 million for the
current quarter, relatively unchanged from the comparable period of
fiscal 1994. Domestic revenues were 53% of total revenues for the
current quarter and 57% of total revenues for the first quarter of
fiscal 1994. European revenues, including U.S. direct export sales
into the European marketplace, were $82.3 million compared with $70.6
million for the comparable period in fiscal 1994. European revenues
represented 29% and 27% of total revenues in the current and
prior-year periods, respectively. Other international revenues,
including U.S. direct export sales, were $51.1 million for the current
quarter, a 20% increase from $42.7 million for the comparable period
in fiscal 1994. Other international revenues represented 18% of total
revenues in the current quarter and 16% of total revenues in the
comparable prior-year period. The increase in European and other
international revenues is primarily a result of the weakening of the
U.S. dollar in relation to foreign currencies, particularly in Europe,
and the growing acceptance of CLARiiON, the company's mass-storage
systems, in these marketplaces.
Product revenues for the current quarter increased 11% from the
comparable prior-year period. Revenues from the company's Open
CLARiiON systems produced significant revenue growth from the
comparable quarter in fiscal year 1994 and accounted for 12% of total
product revenues in the current quarter. Revenues from the company's
AViiON family of open systems products increased approximately 10%
during the current quarter compared with the same period of the prior
year. Proprietary MV system revenues declined $11 million from the
same period in the prior year and currently represent less than 9% of
total product revenues. Revenues from personal computers and other
low margin equipment increased 16% over the same quarter of the prior
year.
Domestic product revenues, which were $92.3 million for the
current quarter, were relatively unchanged from $91.7 million for the
comparable period in fiscal 1994. Domestic product revenues were 51%
of total product revenues in the current quarter and 56% of total
product revenues in the comparable prior-year period. European
product revenues were $49.7 million for the current quarter, a 22%
increase from $40.6 million in the comparable prior year quarter.
European product revenues represented 27% and 25% of total product
revenues for the current and comparable prior-year period,
respectively. Other international product revenues were $39.2 million
for the current quarter, a 25% increase from $31.4 million for the
comparable period in fiscal 1994. Other international product
revenues represented 22% of total product revenues in the current
quarter and 19% of total product revenues in the comparable prior-year
period. The increase in European product revenues was due to
increased demand and acceptance of the company's open systems products
and from the weakening of the U.S. dollar in relation to European
currencies. The increase in other international revenues was
primarily from increases in CLARiiON in the Asian marketplace, a
direct result of the establishment of relationships with various
distributors in this region.
Service revenues for the current quarter increased 4% from the
comparable period of fiscal 1994. Domestic service revenues for the
current quarter were $56.5 million, relatively unchanged from the
comparable prior-year period. European service revenues were $32.6
million, a 9% increase from $30.0 million for the comparable prior
year period. Other international service revenues for the current
quarter were $11.9 million, compared to $11.3 million for the
comparable prior-year period. The increase in European and other
international service revenues was primarily a result of an increase
in systems integration revenue and the weakening of the U.S. dollar in
relation to foreign currencies in the current quarter as compared to
the same prior-year period.
Cost of product revenues for the current quarter was 66% of
product revenues, compared with 68% of product revenues in the first
quarter of fiscal 1994. Cost of product revenues in the current
quarter benefited from the company's continuing cost reduction and
restructuring programs when compared to the same quarter in the prior
year. Cost of service revenues for the current quarter represented
64% of service revenues, compared with 59% of service revenues for the
first quarter of fiscal 1994. The company continues to see a shift in
service revenues towards increased systems integration activities,
which yield a lower margin than traditional service revenues.
Research and development expenses for the current quarter de-
creased 8% to $21.7 million from the first quarter of fiscal 1994, and
represented 8% of total revenues for the current quarter and 9% of
total revenues for the comparable prior-year period. The company
continues 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, which has reduced the requirement for
research and development in hardware.
Selling, general, and administrative expenses for the current
quarter decreased 1% from the comparable period of fiscal 1994 and
represented 31% of total revenues in the current quarter and 33% in
the comparable prior-year period. The company has responded to
increasingly competitive industry conditions through ongoing cost
reduction and containment programs. At December 24, 1994 the number
of employees totaled 5,660, a reduction of 695 employees from December
25, 1993.
Interest income for the current quarter increased 51% to $2.2
million from the comparable period of fiscal 1994, due to higher
levels of invested cash and increasing market interest rates.
Interest expense remained relatively unchanged from the same period of
fiscal 1994.
In the current quarter, the company settled with Northrop Grumman
Corporation its six-year software copyright infringement and trade
secrets litigation against Grumman System Support Corporation
("Grumman"). Under the terms of the settlement, Grumman paid the
company $53 million and the parties have dismissed all pending
litigation. The company recognized a pre-tax gain, net of related
legal fees and other expenses, of $44.5 million resulting from the
settlement, which is included in other income, net, in the current
quarter consolidated statement of operations. This amount has been
partially offset by certain other non-operating expenses.
The income tax provision for the current quarter was $7 million
compared with $.6 million for the prior-year quarter. The provision
in the current quarter resulted primarily from the settlement of the
Grumman lawsuit, deferred taxes on undistributed earnings for certain
foreign subsidiaries, and foreign and state taxes.
In the current quarter, the company adopted Statement of
Financial Accounting Standards ("SFAS") 112, "Employers' Accounting
for Post-Employment Benefits" and SFAS 115, "Accounting for Certain
Investments in Debt and Equity Securities". SFAS 112 requires the
accrual of liabilities for the estimated cost of benefits provided by
the employer to former or inactive employees. SFAS 115 addresses
accounting and reporting for investments in certain debt and equity
securities that will not be held until maturity. All of the company's
marketable securities at September 24, 1994 and December 24, 1994 have
original maturities of less than one year, and have been classified as
being 'held-to-maturity'. The implementation of SFAS 112 and SFAS 115
did not have a material effect on the company's consolidated financial
position or results of operations.
In May 1993, the Financial Accounting Standards Board ("FASB")
issued SFAS 114, "Accounting by Creditors for Impairment of a Loan".
In October 1994, the FASB issued SFAS 119, "Disclosure about
Derivative Financial Instruments and Fair Value of Financial
Instruments". SFAS 114 is effective for fiscal years commencing after
December 15, 1994 and SFAS 119 is effective for fiscal years ending
after December 15, 1994. The company will implement these statements
as required. The future adoption of SFAS 114 and SFAS 119 are not
expected to have a material effect on the company's consolidated
financial position or results of operations.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
In the current quarter, the company settled with Northrop Grumman
Corporation its six-year copyright infringement and trade secrets
litigation against Grumman Systems Support Corporation ("Grumman").
Under the terms of this settlement, Grumman paid the company $53
million and the parties have dismissed all pending litigation. The
settlement resulted in a pre-tax gain, net of related legal fees and
other expenses, of $44.5 million.
In November, 1994, the company commenced an action against IBM
Corporation in the Federal District Court in Boston, Massachusetts
claiming several IBM products including the AS/400 mid-range systems
and System/390 mainframe line infringed up to seven company patents.
The suit seeks, among other relief, compensatory damages. In January,
1995, IBM answered the complaint, denied the company's infringement
claims and counterclaimed against the company, alleging that the
company's AViiON and CLARiiON products infringed seven IBM patents.
Although the company believes its claims are valid, it cannot
predict the outcome of the litigation. In the opinion of management,
based on preliminary evaluation of the IBM patents covered in the
counterclaim, and subject to the risks of litigation, the
counterclaims are without merit, the company will prevail thereon and
the counterclaims will not have a material adverse impact on the
business or financial condition of the company.
Item 4. Submission of Matters to a Vote of Security-Holders
(a) The Annual Meeting of Stockholders of Data General
Corporation was held January 25, 1995.
(b) During the meeting, stockholders elected the following as
directors of Data General:
Frederick R. Adler
Ferdinand Colloredo-Mansfeld
John G. McElwee
Ronald L. Skates
W. Nicholas Thorndike
Donald H. Trautlein
Richard L. Tucker
The directors were elected by the following voting breakdowns:
Director Votes For Votes Withheld
Adler 29,065,043 724,428
Colloredo-Mansfeld 29,151,020 638,451
McElwee 29,145,390 644,081
Skates 29,062,819 726,652
Thorndike 28,941,719 847,752
Trautlein 29,148,612 640,859
Tucker 29,150,746 638,725
(c) By 13,627,533 affirmative votes (10,078,829 against, 256,345
abstained and 5,826,764 broker non-votes), the stockholders
approved amendments to increase the number of shares of
common stock that may be issued through the Employee Stock
Option Plan to 7,000,000 shares from 4,000,000 shares, to
extend the termination date of this plan from October 6,
1996 to November 2, 2004, and to give the Employee Option
Plan Committee discretion to designate options as
transferable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10. Letter of Credit and Reimbursement Agreement, dated December
21, 1994.
11. Computation of primary and fully diluted earnings per share.
19. First Quarter 1995 Interim Report of Data General
Corporation.
(b) No reports on Form 8-K were filed during the current quarter
ended December 24, 1994.
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 2, 1995
EXHIBITS
Index to Exhibits.
10. Letter of Credit and Reimbursement Agreement, dated
December 21, 1994.
11. Computation of primary and fully diluted earnings per
share.
19. First Quarter 1995 Interim Report of Data General
Corporation.
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
by and among
DATA GENERAL CORPORATION,
as Borrower,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
and
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION,
as Agent
December 21, 1994
TABLE OF CONTENTS
ARTICLE I
Definitions and Terms
1.01 Definitions 1
1.02 Accounting Terms 14
1.03 Terms Consistent 14
ARTICLE II
Letters of Credit
2.01 Letters of Credit 14
2.02 Reimbursement 15
2.03 Letter of Credit and Commitment Fees 18
2.04 Other Fees 19
2.05 Reductions; Cancellation 19
ARTICLE III
Yield Protection
3.01 Additional Costs 19
3.02 Taxes 21
ARTICLE IV
Conditions to Issuing
Letters of Credit
4.01 Conditions of Initial Issuance of
Letters of Credit 22
4.02 Conditions of Letters of Credit 24
ARTICLE V
Representations and Warranties
5.01 Representations and Warranties 25
ARTICLE VI
Affirmative Covenants
6.01 Financial Reports, Etc. 32
6.02 Maintain Properties 33
6.03 Existence, Qualification, Etc. 33
6.04 Regulations and Taxes 33
6.05 Insurance 34
6.06 True Books; Right of Inspection 34
6.07 Pay Indebtedness to Lenders and Perform Other Covenants 34
6.08 Observe all Laws 34
6.09 Covenants Extending to Subsidiaries 34
6.10 Officer's Knowledge of Default 34
6.11 Notice of Suits or Other Proceedings 35
6.12 Notice of Discharge of Hazardous Material or
Environmental Complaint 35
6.13 Environmental Compliance 35
6.14 Indemnification 35
6.15 Further Assurances 35
6.16 Benefit Plans 36
6.17 Intellectual Property 36
6.18 Continued Operations 36
6.19 Use of Letters of Credit 36
ARTICLE VII
Negative Covenants
7.01 Consolidated Total Debt Ratio 37
7.02 Consolidated Interest Coverage Ratio 37
7.03 Consolidated Tangible Net Worth 37
7.04 Consolidated Cash and Marketable Securities 37
7.05 Indebtedness 37
7.06 Liens 38
7.07 Investments; Acquisitions 39
7.08 Merger or Consolidation 40
7.09 Transactions with Affiliates 40
7.10 Benefit Plans 40
7.11 Fiscal Year 41
7.12 Dividends, Redemptions and Other Payments 41
7.13 Rental Obligations 41
7.14 Sale and Lease-Backs 41
7.15 Speculative Transactions 41
ARTICLE VIII
Events of Default and Acceleration
8.01 Events of Default 42
8.02 Agent to Act 46
8.03 Cumulative Rights 46
8.04 No Waiver 46
8.05 Allocation of Proceeds 46
ARTICLE IX
The Agent
9.01 Appointment 47
9.02 Attorneys-in-fact 47
9.03 Limitation on Liability 48
9.04 Notice to Lenders. 48
9.05 Reliance 48
9.06 Notice of Default 49
9.07 No Representations 49
9.08 Indemnification 49
9.09 Lender 50
9.10 Resignation 50
9.11 Sharing of Payments, etc. 51
ARTICLE X
Miscellaneous
10.01 Assignments and Participations 51
10.02 Notices 54
10.03 Setoff 55
10.04 Survival 55
10.05 Expenses 55
10.06 Amendments; Waivers 56
10.07 Confidentiality 57
10.08 Counterparts 57
10.09 Termination 58
10.10 Indemnification 58
10.11 Headings and References 59
10.12 Severability 59
10.13 Entire Agreement 59
10.14 Agreement Controls 59
10.15 Governing Law 59
10.16 Waivers 60
EXHIBIT A Letter of Credit Commitments A1
EXHIBIT B Form of Assignment and Acceptance B1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative C1
EXHIBIT D Form of Opinion of Counsel to Borrower D1
EXHIBIT E Form of Compliance Certificate E1
Schedule 1 Outstanding Letters of Credit SCH1
Schedule 5.01(d) Subsidiaries SCH2
Schedule 5.01(f) Liens SCH3
Schedule 5.01(p) Hazardous Materials SCH4
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of December
21, 1994 (the "Agreement"), is made by and among:
DATA GENERAL CORPORATION, a Delaware corporation having its principal
place of business in Westboro, Massachusetts (the "Borrower");
Each lender executing and delivering a signature page hereto and each
other lender which may hereafter execute and deliver an instrument of assignment
with respect to this Agreement pursuant to Section 10.01 hereof (hereinafter
such lenders may be referred to individually as a "Lender" or collectively as
the "Lenders"); and
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America ("NationsBank"), in its capacity as agent for the Lenders (in such
capacity, and any successor appointed in accordance with the terms of Section
9.09 hereof, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to it
a letter of credit facility of up to $30,000,000, for general corporate
purposes; and
WHEREAS, the Lenders are willing to make such facility available to the
Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
1.01 For the purposes of this Agreement, in addition to the definitions
set forth above, the following terms shall have the respective meanings set
forth below:
"Affiliate" means a Person (i) which directly or indirectly through one
or more intermediaries controls, or is controlled by, or is under common control
with, the Borrower; (ii) which beneficially owns or holds 20% or more of any
class of the outstanding voting stock (or in the case of a Person which is not a
corporation, 20% or more of the equity interest) of the Borrower; or (iii) 20%
or more of any class of the outstanding voting stock (or in the case of a Person
which is not a corporation, 20% or more of the equityinterest) of which is
beneficially owned or held by the Borrower. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting stock, by contract or otherwise;
"Applicable Commitment Percentage" means, at any time for each Lender
with respect to the Letter of Credit Facility (including its Participations and
its obligations hereunder to NationsBank to acquire Participations), a fraction
(expressed as a percentage), (A) the numerator of which shall be the amount of
such Lender's Letter of Credit Commitment at such date of determination (which
Letter of Credit Commitment for each Lender as of the Closing Date is set forth
in Exhibit A attached hereto and incorporated herein by reference), and (B) the
denominator of which shall be the Total Letter of Credit Commitment at such date
of determination; provided that each Applicable Commitment Percentage of each
Lender shall be increased or decreased to reflect any assignments to or by such
Lender effected in accordance with Section 10.01 hereof;
"Applications for Letters of Credit" means, collectively, the
applications and agreements for Letters of Credit executed by the Borrower from
time to time and delivered to NationsBank to request and support the issuance of
Letters of Credit;
"Assignment and Acceptance" means an Assignment and Acceptance
substantially in the form of Exhibit B attached hereto and incorporated herein
by reference (with blanks appropriately filled in) delivered to the Agent in
connection with an assignment of a Lender's interest under this Agreement
pursuant to Section 10.01 hereof;
"Authorized Representative" means any of the Chief Executive Officer,
Chief Financial Officer, Treasurer and Controller of the Borrower or any other
person expressly designated by the Chief Financial Officer or the Treasurer of
the Borrower as an Authorized Representative of the Borrower, as set forth from
time to time in a certificate in the form attached hereto as Exhibit C and
incorporated herein by reference;
"Base Rate" means the greater of (i) the Prime Rate or (ii) the Federal
Funds Effective Rate plus one-half of one percent (.5%), each change in such
Base Rate to be effective as of the effective date of any change in the Prime
Rate or the Federal Funds Effective Rate giving rise thereto;
"Board" means the Board of Governors of the Federal Reserve System (or
any successor body);
"Business Day" means any day which is not a Saturday, Sunday or a day on
which banks in the State of New York or State of North Carolina are authorized
or obligated by law, executive order or governmental decree to be closed;
"Capital Leases" means all leases which have been or should be
capitalized in accordance with Generally Accepted Accounting Principles,
including Statement No. 13 of the Financial Accounting Standards Board and any
successor thereof, applied on a Consistent Basis;
"Closing Date" means the date as of which this Agreement is executed by
the Borrower, the Lenders and the Agent and on which the conditions set forth in
Section 4.01 hereof have been satisfied;
"Code" means the Internal Revenue Code of 1986, as amended, any successor
provision or provisions and any regulations promulgated thereunder;
"Commercial Letter of Credit" means an irrevocable documentary letter of
credit issued hereunder for the account of the Borrower;
"Commitment Termination Date" means the earliest to occur of (i) December
20, 1995 (364 days after the Closing Date), or (ii) the date of termination of
Lenders' obligations pursuant to Section 8.01 hereof upon the occurrence of an
Event of Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Letter of Credit Facility by causing all Obligations
of the Borrower to NationsBank and the Lenders to be Fully Satisfied and
terminating all obligations of NationsBank and the Lenders with respect to
Letters of Credit and Participations;
"Consistent Basis" in reference to the application of Generally Accepted
Accounting Principles means the accounting principles observed in the period
referred to are comparable in all material respects to those applied in the
preparation of the audited financial statements of the Borrower referred to in
Section 5.01(e)(i) hereof;
"Consolidated Interest Coverage Ratio" means, with respect to the
Borrower and its Subsidiaries for the Four-Quarter Period ending immediately
prior to the date of computation thereof, the ratio of Consolidated Operating
Cash Flow during such Four-Quarter Period to Consolidated Interest Expense
during such Four-Quarter Period;
"Consolidated Interest Expense" means, for any period of computation
thereof, the gross interest expense of the Borrower and its Subsidiaries,
including without limitation (i) the amortization of debt discounts, (ii) the
amortization of all fees (including, without limitation, fees payable in respect
of Rate Hedging Obligations) payable in connectionwith the incurrence of
Indebtedness to the extent included in interest expense and (iii) the portion of
any payments made in connection with Capital Leases allocable to interest
expense, all determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis;
"Consolidated Net Income" means, for any period of computation thereof,
the gross revenues from operations of the Borrower and its Subsidiaries
(including interest income from investments), less all operating and
non-operating expenses of the Borrower and its Subsidiaries including taxes on
income, all determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles applied on a Consistent Basis, but excluding as
income (i) net gains on the sale, conversion or other disposition of capital
assets, net gains on the acquisition, retirement, sale or other disposition of
capital stock and other securities of the Borrower or its Subsidiaries, and net
gains on the collection of proceeds of life insurance policies, (ii) any
write-up of any asset, and (iii) any other net gain or credit of an
extraordinary nature, all determined in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis;
"Consolidated Operating Cash Flow" means, with respect to the Borrower
and its Subsidiaries for any period of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income excluding any extraordinary gains or
losses, plus (ii) Consolidated Interest Expense, plus (iii) taxes on income,
plus (iv) amortization and depreciation, all determined on a consolidated basis
in accordance with Generally Accepted Accounting Principles applied on a
Consistent Basis;
"Consolidated Shareholders' Equity" means, at any time as of which the
amount thereof is to be determined, shareholders' equity of the Borrower and its
Subsidiaries as determined in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis;
"Consolidated Subsidiary" means any Subsidiary of the Borrower whose
financial information and operations are required to be consolidated in the
financial statements of the Borrower pursuant to Generally Accepted Accounting
Principles;
"Consolidated Tangible Net Worth" means, at any time as of which the
amount thereof is to be determined, Consolidated Shareholders' Equity less
(without duplication of deductions in respect of items already deducted in
arriving at surplus and retained earnings) the net book value of all assets
which would be treated as intangible assets (including, without limitation,
intangible assets constituting offsetting journalentries for the pension
liabilities described in clause (iii) below), plus (i) software research and
development costs required to be capitalized under Statement No. 86 of the
Financial Accounting Standards Board, (ii) the effect of any amount in the
foreign exchange cumulative translation adjustment account as disclosed on the
consolidated financial statements of the Borrower and its Subsidiaries referred
to in Section 5.01(e)(i) hereof and to be delivered under Section 6.01 hereof,
(iii) all pension liabilities of the Borrower and its Subsidiaries required to
be recognized under Statement No. 87 of the Financial Accounting Standards Board
and (iv) all deferred revenues of the Borrower and its Subsidiaries under
service contracts that are currently accounted for as a liability and all
deferred gain on the sale of certain real property of the Borrower located in
Manhattan Beach, California, each as disclosed from time to time on the
consolidated balance sheets of the Borrower and its Subsidiaries referred to in
Section 5.01(e)(i) hereof and to be delivered under Section 6.01 hereof, all as
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis;
"Consolidated Total Capitalization" means, at any time as of which the
amount thereof is to be determined, the sum of Consolidated Shareholder's Equity
plus all Consolidated Total Debt that matures more than one year from the date
of its creation or matures within one year of the date of its creation but is
renewable or extendable, at the option of the Borrower or any Subsidiary, to a
date more than one year from the date of its creation, including all payments in
respect thereof that are required to be made within one year from the date of
any determination of Consolidated Total Debt whether or not included in
consolidated current liabilities of the Borrower and its Subsidiaries;
"Consolidated Total Debt" means, as at the date of determination thereof,
all Indebtedness for Money Borrowed of the Borrower and any Subsidiary, all
Obligations hereunder and all other contingent reimbursement obligations with
respect to letters of credit of the Borrower and any Subsidiary issued in an
aggregate stated amount in excess of $5,000,000;
"Consolidated Total Debt Ratio" means, with respect to the Borrower and
its Subsidiaries as of any date of determination, the ratio of Consolidated
Total Debt as at such date to Consolidated Total Capitalization as at such date;
"Contingent Obligation" of any Person means all contingent liabilities
required (or which, upon the creation or incurring thereof, would be required)
to be included in the consolidated financial statements (including footnotes) of
such Person in accordance with Generally Accepted Accounting Principles applied
on a Consistent Basis, including Statement No. 5 of the Financial Accounting
Standards Board, and any obligation of such Person guaranteeing any
Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including obligations
of such Person however incurred:
(i) to purchase such Indebtedness or other obligation or any property
or assets constituting security therefor;
(ii) to advance or supply funds in any manner (A) for the purchase or
payment of such Indebtedness or other obligation, or (B) to maintain a minimum
working capital, net worth or other balance sheet condition or any income
statement condition of the primary obligor;
(iii) to grant or convey any lien, security interest, pledge, charge or
other encumbrance on any property or assets of such Person to secure payment of
such Indebtedness or other obligation;
(iv) to lease property or to purchase securities or other property or
services primarily for the purpose of assuring the owner or holder of such
Indebtedness or obligation of the ability of the primary obligor to make payment
of such Indebtedness or other obligation; or
(v) otherwise to assure the owner of such Indebtedness or such
obligation of the primary obligor against loss in respect thereof;
"Default" means any event or condition which, with the giving or receipt
of notice or lapse of time or both, would constitute an Event of Default;
"Determination Date" means the last day of each Fiscal Quarter of the
Borrower;
"Dollars" and the symbol "$" means dollars constituting legal tender for
the payment of public and private debts in the United States;
"Eligible Securities" 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 Standard
& Poors Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's");
(c) negotiable or nonnegotiable certificates of deposit, time deposits or other
similar banking arrangementsissued by any bank (including any Lender) or trust
company, having a commercial paper rating in the highest rating category from
either S&P or Moody's and (d) negotiable and non-negotiable certificates of
deposit, time deposits or other similar commercial arrangements issued by any
bank or trust company issued to or purchased by any Subsidiary in an individual
amount of up to $100,000 and in the aggregate amount at any time not exceeding
$20,000,000; 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 all other Eligible
Securities.
"Environmental Laws" means, collectively, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Toxic Substances Control Act, as amended, the Clean Air Act,
as amended, the Clean Water Act, as amended, any other "Superfund" or
"Superlien" law or any other applicable statute, law, ordinance, code, rule,
regulation, order or decree, of the United States or any foreign nation or any
province, territory, state, protectorate or other political subdivision thereof,
regulating, relating to, or imposing liability or standards of conduct
concerning, any hazardous, toxic or dangerous waste, substance or material;
"ERISA" means, at any date, the Employee Retirement Income Security Act
of 1974, as amended, and the regulations thereunder, all as the same shall be in
effect at such date;
"ERISA Affiliate" means any entity which would be aggregated at any
relevant time with the Borrower pursuant to Section 414(b), (c), (m) or (o) of
the Code or Section 4001(b)(1) of ERISA.
"Event of Default" means any of the occurrences set forth as such in
Section 8.01 hereof;
"Existing Credit Agreement" means that certain Amended and Restated
Credit Agreement, as amended, dated as of December 30, 1993 among the Borrower,
National Westminster Bank PLC, The Bank of Nova Scotia, Fleet Bank of
Massachusetts, National Association, NationsBank and Canadian Imperial Bank of
Commerce;
"Existing Letter of Credit Agreement" means that certain Letter of Credit
Agreement dated as of December 30, 1993, as amended, among the Borrower,
National Westminster Bank PLC, The Bank of Nova Scotia, Fleet Bank of
Massachusetts, NationalAssociation, NationsBank and Canadian Imperial Bank of
Commerce;
"Facility Termination Date" means the date on which there shall have
occurred both (i) the Letter of Credit Termination Date and (ii) the Commitment
Termination Date;
"Federal Funds Effective Rate" for any day, as used herein, means the
rate per annum (rounded upward to the nearest 1/100 of 1%) announced by the
Federal Reserve Bank of New York (or any successor) on such day as being the
weighted average of the rates on overnight Federal funds transactions arranged
by Federal funds brokers on the previous trading day, as computed and announced
by such Federal Reserve Bank (or any successor) in substantially the same manner
as such Federal Reserve Bank computes and announces the weighted average it
refers to as the "Federal Funds Effective Rate" as of the date of this
Agreement; provided, if such Federal Reserve Bank (or its successor) does not
announce such rate on any day, the "Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective Rate for the last day on which such rate
was announced;
"Fee Letter" means that certain fee letter dated as of the date hereof
between the Borrower and the Agent;
"Fiscal Quarter" means the quarterly period of the Borrower ending on the
last Saturday of December, March, June and September of any Fiscal Year;
provided, however, that the first Fiscal Quarter of fiscal 1995 shall end on
December 24, 1994;
"Fiscal Year" means the annual period of the Borrower ending on the last
Saturday in each September;
"Foreign Benefit Law" means any applicable statute, law, ordinance, code,
rule, regulation, order or decree of any foreign nation or any province, state,
territory, protectorate or other political subdivision thereof regulating,
relating to, or imposing liability or standards of conduct concerning, any
pension, retirement, healthcare, death, disability or other employee benefit
plan;
"Four-Quarter Period" means a period of four full consecutive Fiscal
Quarters, taken together as one accounting period;
"Fully Satisfied" means, with respect to the Obligations as of any date,
that on or before such date, (i) any outstanding Obligations shall have been
paid in full in cash, (ii) the aggregate then undrawn and unexpired amount of
any then outstanding Letters of Credit shall have been fully cash
collateralized, (iii) all Rate Hedging Obligations to anyLender shall have been
terminated or all Obligations thereunder of the Borrower (other than for fees
and expenses not yet due and payable and indemnities) shall have been cash
collateralized, (iv) all fees, expenses and other amounts then due and payable
which constitute Obligations shall have been paid in full in cash, and (v) the
Total Letter of Credit Commitment shall have expired or been terminated;
"Generally Accepted Accounting Principles" means those principles of
accounting set forth in pronouncements of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants or which have
other substantial authoritative support and are applicable in the circumstances
as of the date of a report subject to compliance at all times with Section 1.02
hereof;
"Governmental Authority" means any Federal, state, municipal, national or
other governmental department, commission, board, bureau, agency or
instrumentality or political subdivision thereof or any entity or officer
exercising executive, legislative or judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case whether
a state of the United States, the United States or a foreign nation, state,
province or other governmental instrumentality;
"Hazardous Material" means and includes any hazardous, toxic or dangerous
waste, substance or material, the generation, handling, storage, disposal,
treatment or emission of which is subject to any Environmental Law;
"Indebtedness" of a Person means, without duplication, (i) all
Indebtedness for Money Borrowed, (ii) all obligations of such Person arising
under acceptance facilities, (iii) the undrawn face amount of, and unpaid
reimbursement obligations in respect of, all letters of credit issued for the
account of such Person, (iv) all obligations of such Person upon which interest
charges are actually paid, (v) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (vi) all executory obligations of such Person in respect of Rate
Hedging Obligations and (vii) all Contingent Obligations in respect of
Indebtedness set forth in clauses (i) through (vi) above of Persons other than
the Borrower or any Subsidiary; "Indebtedness" shall not include, however, (x)
any intercompany indebtedness of the Borrower and its Subsidiaries and (y)
obligations in respect of forward foreign exchange contracts with any Lender or
any Senior Lender in an aggregate notional amount not in excess of $150,000,000;
"Indebtedness for Money Borrowed" means for any Person all indebtedness
in respect of money borrowed, including without limitation, all Capital Leases
and the deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the payment
of money (including, but not limited to, conditional sales or similar title
retention agreements);
"Indenture" means that certain Indenture dated as of September 15, 1977
pursuant to which the Borrower has issued 8 3/8% sinking fund debentures due
2002;
"Lending Office" means, as to each Lender, the Lending Office of such
Lender designated on the signature pages hereof or in an Assignment and
Acceptance or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time specify in writing to an Authorized
Representative and the Agent as the office by which its Loans are to be made and
maintained;
"Letter of Credit" means any Standby Letter of Credit or Commercial
Letter of Credit issued by NationsBank for the account of the Borrower in favor
of a Person as described in Article II hereof;
"Letter of Credit Termination Date" means the latest expiry date of any
Letter of Credit outstanding on the Commitment Termination Date, as any such
expiry date may be automatically extended pursuant to the terms of such Letter
of Credit and Section 2.01(b) hereof;
"Letter of Credit Commitment" means with respect to each Lender, the
obligation of such Lender to acquire Participations up to an aggregate stated
amount at any one time outstanding equal to such Lender's Applicable Commitment
Percentage of the Total Letter of Credit Commitment as the same may be increased
or decreased from time to time pursuant to this Agreement;
"Letter of Credit Documents" means this Agreement, all Letters of Credit,
all Applications for Letters of Credit, and all other instruments and documents
heretofore or hereafter executed or delivered to and in favor of any Lender or
the Agent in connection with the Letters of Credit made, issued or created under
this Agreement as the same may be amended, modified or supplemented from time to
time;
"Letter of Credit Facility" means the facility described in Article II
hereof providing for the issuance by NationsBank for the account of the Borrower
of Letters of Credit in an aggregate stated amount at any time outstanding not
exceeding the Total Letter of Credit Commitment;
"Letter of Credit Outstandings" means all undrawn amounts of Letters of
Credit plus Reimbursement Obligations;
"Lien" means any interest in property securing any obligation owed to, or
a claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. For the purposes of this Agreement, the
Borrower and its Subsidiaries shall be deemed to be the owners of any property
which any of them have acquired or hold subject to a conditional sale agreement,
financing lease, or other arrangement pursuant to which title to the property
has been retained by or vested in some other Person for security purposes;
"Material Adverse Effect" means a material adverse effect on the
business, properties, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole or, in matters relating to ERISA,
of the Borrower and its ERISA Affiliates taken as a whole;
"Multi-employer Plan" means an employee pension benefit plan covered by
Title IV of ERISA and in respect of which the Borrower or any Subsidiary is an
"employer" as described in Section 4001(b) of ERISA, which is also a
multi-employer plan as defined in Section 4001(a)(3) of ERISA;
"Obligations" means the obligations, liabilities and Indebtedness of the
Borrower with respect to the Reimbursement Obligations and the payment and
performance of all other obligations, liabilities and Indebtedness of the
Borrower to the Lenders or the Agent hereunder or under any one or more of the
other Letter of Credit Documents;
"Participation" means, with respect to any Lender (other than
NationsBank), the extension of credit represented by the participation of such
Lender hereunder in the liability of NationsBank in respect of a Letter of
Credit issued by NationsBank in accordance with the terms hereof;
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto;
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision thereof;
"Prime Rate" means the rate of interest per annum announced publicly by
NationsBank as its prime rate from timeto time. The Prime Rate is not
necessarily the best or the lowest rate of interest offered by NationsBank;
"Principal Office" means the office of the Agent at NationsBank of Texas,
National Association, Attention: Agency Services, or such other office and
address as the Agent may from time to time designate in writing to an Authorized
Representative;
"Rate Hedging Obligations" means any and all obligations of the Borrower,
whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (i) any and all agreements, devices
or arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, Dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts,
warrants and those commonly known as interest rate "swap" agreements; and (ii)
any and all cancellations, buybacks, reversals, terminations or assignments of
any of the foregoing;
"Regulation D" means Regulation D of the Board as the same may be amended
or supplemented from time to time;
"Regulatory Change" means any change in, or the adoption or making of
new, United States Federal or state laws or regulations (including Regulation D
and capital adequacy regulations) or foreign laws or regulations or the adoption
or making after the date hereof of any interpretations, directives or requests
applying to a class of banks, which includes any of the Lenders, under any
United States Federal or state or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof or compliance by any
Lender with any request or directive, whether or not having the force of law,
whether or not failure to comply therewith would be unlawful;
"Reimbursement Obligation" means at any time, the obligation of the
Borrower with respect to any Letter of Credit to reimburse NationsBank and the
Lenders to the extent of their respective Participations for amounts theretofore
paid by NationsBank pursuant to a drawing under such Letter of Credit;
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating at least 66% of the aggregate
Credit Exposures of all the Lenderson such date. For purposes of the preceding
sentence, the amount of the "Credit Exposure" of each Lender shall at all times
be equal to its Applicable Commitment Percentage; provided that, if any Lender
shall have failed to pay to NationsBank upon demand its Applicable Commitment
Percentage of any drawing under any Letter of Credit resulting in an outstanding
Reimbursement Obligation, such Lender's Credit Exposure attributable to such
Letter of Credit Outstandings shall be deemed to be held by NationsBank for
purposes of this definition;
"Senior Indebtedness" means (i) all of the Borrower's obligations with
respect to existing industrial revenue bonds, (ii) all of the Borrower's
obligations under the Indenture and the debentures issued thereunder, (iii) all
existing Capitalized Leases, (iv) the Obligations hereunder and (v) all other
Indebtedness of the Borrower not expressly subordinated in right of payment to
the Obligations hereunder;
"Senior Lender" means any holder of Senior Indebtedness;
"Short Term Loan Facilities" means (i) short term loan facilities made
available to Subsidiaries in Canada, France, Germany or the United Kingdom and
(ii) 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 stated amount of $10,000,000 in the aggregate;
"Single Employer Plan" means any employee pension benefit plan covered by
Title IV of ERISA and in respect of which the Borrower or any Subsidiary is an
"employer" as described in Section 4001(b) of ERISA, which is not a
Multi-employer Plan;
"Solvent" means, when used with respect to any Person, that at the time
of determination:
(i) the fair value of its assets (both at fair valuation and at
present fair saleable value on an orderly basis) is in excess of the total
amount of its liabilities, including, without limitation, Contingent
Obligations; and
(ii) it is then able and expects to be able to pay its debts as they
mature; and
(iii) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted;
"Standby Letter of Credit" means an irrevocable Standby Letter of Credit
issued hereunder for the account of the Borrower;
"Subsidiary" means (i) any corporation or other entity in which more than
50% of its outstanding stock having ordinary voting power is owned directly or
indirectly by the Borrower and/or by one or more of the Borrower's Subsidiaries
at or after the Closing Date or (ii) any joint venture, partnership or other
entity whose financial information and operations are required to be
consolidated in the financial statements of the Borrower in accordance with
Generally Accepted Accounting Principles applied on a Consistent Basis;
"Total Letter of Credit Commitment" means, at any time, the sum of each
Lender's Letter of Credit Commitment hereunder at such time, which in the
aggregate is equal to $30,000,000, subject to reduction pursuant to Section 2.05
hereof; provided, however, that $10,851,600 of the Total Letter of Credit
Commitment shall initially be utilized to issue replacement Letters of Credit
for the letters of credit listed on Schedule 1 hereto currently outstanding
under the Existing Letter of Credit Agreement; and provided further, that on and
after the Commitment Termination Date, the Total Letter of Credit Commitment
shall be zero;
"Unused Total Letter of Credit Commitment" means the Total Letter of
Credit Commitment less the aggregate Letter of Credit Outstandings.
1.02 All accounting terms not specifically defined herein shall have the
meanings assigned to such terms and shall be interpreted in accordance with
Generally Accepted Accounting Principles as in effect on the date of the audited
financial statements of the Borrower referred to in Section 5.01(e)(i) hereof
and applied on a Consistent Basis.
1.03 All of the terms defined in this Agreement shall have such defined
meanings when used in any of the Letter of Credit Documents unless the context
shall require otherwise. All references to the Borrower, the Agent and any
Lender shall be deemed to include any successor or permitted assign of any
thereof. All plural references and definitions shall have a corresponding
meaning in the singular, and all singular references and definitions shall have
a corresponding meaning in the plural.
2.01 (a) NationsBank agrees, subject to the terms and conditions of this
Agreement, upon request and for the account of Borrower, to issue from time to
time on or prior to the Commitment Termination Date Letters of Credit payable in
Dollars only upon delivery to NationsBank of an Application for Letter of Credit
in form and content reasonably acceptable to NationsBank; provided, that the
Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment. 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 Senior Lenders in support of Short Term Loan Facilities. Any
request for the issuance of a Letter of Credit shall be deemed a representation
and warranty by the Borrower to NationsBank and the Lenders that all the
representations and warranties set forth in Article V hereof and in the other
Letter of Credit Documents are true and correct on and as of the date thereof
except (i) to the extent that such representations and warranties expressly
relate to an earlier date, then as of such earlier date, (ii) that the
representations and warranties set forth in Section 5.01(d) hereof shall be
deemed to include and take into account any merger or consolidation permitted
under Section 7.08 hereof and (iii) that the financial statement referred to in
Section 5.01(e)(i) hereof shall be deemed to be those financial statements most
recently delivered pursuant to Section 6.01 hereof.
(b) No Letter of Credit shall have an initial expiry date later than
twelve (12) months subsequent to the date of issuance thereof; provided,
however, that each Letter of Credit may by its terms automatically extend its
then existing expiry date for an additional twelve (12) month period (an
"Extension Period") provided the Agent has not given notice to the Borrower and
the beneficiary of such Letter of Credit of its election not to renew such
Letter of Credit, such notice to be given at least sixty (60) days prior to the
then existing expiry date of such Letter of Credit. Each Letter of Credit may
have any number of consecutive Extension Periods provided no notice, as
described above, has been delivered by the Agent. Notwithstanding the forgoing,
no Lender shall be deemed to have a Participation in a Letter of Credit to the
extent such Letter of Credit automatically renews after the Commitment
Termination Date and such Lender has delivered to the Agent and each other
Lender written notice of its election not to renew its Participation in such
Letter of Credit, such notice to be given at least seventy-five (75) days prior
to the then existing expiry date of such Letter of Credit.
2.02 (a) The Borrower hereby unconditionally agrees to pay to
NationsBank on demand in Dollars in immediately available funds at the Principal
Office all amounts required to pay all drafts drawn or purporting to be drawn
under any Letter of Credit and all reasonable expenses incurred by NationsBank
in connection with any Letter of Credit, such payment to be made on the same
Business Day on which a drawing under any Letter of Credit occurs, and in any
event and without demand to place in possession of NationsBank sufficient funds
to pay all debts and liabilities arising under any Letter of Credit. The
Borrower's obligations to pay NationsBank under this Section 2.02, and
NationsBank's right to receive the same, shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever. NationsBank agrees to
give the Borrower prompt written notice of any request for a draw under a Letter
of Credit. The Borrower agrees to pay NationsBank interest on the amount of any
draw under a Letter of Credit on demand at the Base Rate from the date of such
draw through the completion of the first Business Day following a draw and
thereafter at the Base Rate plus two percent (2.0%) per annum, or the maximum
rate permitted by applicable law, whichever is lower, from the completion of the
first Business Day succeeding the date of payment of any drawing under a Letter
of Credit to the date such amount is paid in full. Such interest shall be
calculated on the basis of a 360 day year for the actual number of days
(including the first but excluding the last day) elapsed. NationsBank may
charge any account the Borrower may have with it for any and all amounts
NationsBank pays under a Letter of Credit, plus charges and reasonable expenses
as from time to time agreed to by NationsBank and the Borrower.
(b) NationsBank shall notify the Agent of the issuance and
type of any Letter of Credit (and shall promptly deliver to each Lender a copy
of such Letter of Credit) and of any drawing under any Letter of Credit as
promptly as practicable following the issuance of such Letter of Credit or
receipt by NationsBank of such drawing, as applicable, and the Agent shall
promptly provide written notice thereof to each Lender.
(c) Subject to the satisfaction of the terms and conditions
of Article IV hereof, each Lender (other than NationsBank) shall automatically
acquire, on the date of issuance thereof, a Participation in the liability of
NationsBank in respect of each Letter of Credit in an amount equal to such
Lender's Applicable Commitment Percentage of such liability, and to the extent
that the Borrower is obligated to pay NationsBank under Section 2.02(a) hereof,
each Lender (other than NationsBank) thereby shall, as hereinafter described,
absolutely, unconditionally and irrevocably assume, and shall be unconditionally
obligated to pay to NationsBank, its Applicable Commitment Percentage of the
liability of NationsBank under such Letter of Credit.
(i) Each Lender (other than NationsBank), upon receipt from the
Agent of notice of a drawing, shall promptly pay to the Agent for the account of
NationsBank, its Applicable Commitment Percentage of such drawing. If notice to
the Lenders of a drawing under any Letter of Credit is given by the Agent at or
before 1:00 P.M. Dallas, Texas time on any Business Day, each Lender shall,
pursuant to the conditions of this Agreement, pay such amount to the Agent for
the account of NationsBank at the Principal Office in Dollars and in immediately
available funds before 4:00 P.M. Dallas, Texas time on the same Business Day.
If such notice to the Lenders is given by the Agent after 1:00 P.M. Dallas,
Texas time on any Business Day, each Lender shall, pursuant to the terms and
subject to the conditions of this Agreement, pay such amount to the Agent for
the account of NationsBank at the Principal Office in Dollars and in immediately
available funds before 12:00 noon Dallas, Texas time on the next following
Business Day. Simultaneously with the making of each such payment by a Lender
to the Agent for the account of NationsBank, such Lender shall, automatically
and without any further action on the part of NationsBank or such Lender,
acquire a Participation in an amount equal to such payment (excluding the
portion thereof constituting interest) in the related Reimbursement Obligation
of the Borrower.
(ii) Each Lender's obligation to make payment to the Agent for
the account of NationsBank pursuant to this Section 2.02(c), and the right of
NationsBank to receive the same, shall be made without any offset, abatement,
withholding or reduction whatsoever. If any Lender is obligated to pay but does
not pay amounts to the Agent for the account of NationsBank in full as required
by this Section 2.02(c), such Lender shall, on demand, pay to the Agent for the
account of NationsBank interest on the unpaid amount for each day during the
period commencing on the date such payment obligation arises in accordance with
this Section 2.02(c) hereof until such Lender pays such amount to the Agent for
the account of NationsBank in full at the interest rate per annum equal to the
Federal Funds Effective Rate.
(iii) In the event the Lenders have purchased Participations as
set forth in clause (i) above, then at any time any payment is received by
NationsBank as issuer of the applicable Letter of Credit from the Borrower of
any Obligation, in whole or in part, NationsBank shall pay to the Agent and the
Agent shall pay to each Lender promptly, but in no event later than the next
Business Day, in immediately available funds an amount equal to its Applicable
Commitment Percentage of such payment from the Borrower.
(d) Promptly following the end of each calendar quarter,
NationsBank shall deliver to the Agent, and the Agent shall deliver to each
Lender, a notice describing the aggregate undrawn amount ofall Letters of Credit
at the end of such quarter. Upon the request of any Lender from time to time,
NationsBank shall deliver to the Agent, and the Agent shall deliver to such
Lender, any other information reasonably requested by such Lender with respect
to Letter of Credit Outstandings.
(e) The issuance by NationsBank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Sections 4.01 and
4.02 hereof, be subject to the conditions that such Letter of Credit be in such
form and contain such terms as shall be reasonably satisfactory to NationsBank
consistent with the then current practices and procedures of NationsBank with
respect to similar letters of credit, and the Borrower shall have executed and
delivered such other instruments and agreements relating to such Letter of
Credit as NationsBank shall have reasonably requested consistent with such
practices and procedures. All Letters of Credit shall be issued pursuant to and
subject to (i) the Uniform Customs and Practice for Documentary Credits, 1993
revision, International Chamber of Commerce Publication No. 500 and all
subsequent amendments and revisions thereto (the "UCP") and (ii) Article 5 of
the Uniform Commercial Code, as adopted in the State of New York (the "UCC");
provided, however, that if any conflict exists between the UCP and the UCC, the
UCP shall control.
(f) The Borrower agrees that NationsBank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents. NationsBank will use
reasonable care in accordance with its established procedures for its customers
generally to determine that a legal representative is authorized to sign a
Letter of Credit for a party.
(g) The obligation of the Borrower to immediately reimburse
NationsBank for drawings made under Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement and such Letters of Credit and the related
Applications for Letters of Credit, notwithstanding the existence of any of the
following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit Document, or the obligation supported by any Letter of Credit Document;
(ii) any amendment or waiver of or any consent to or departure
from all or any of the Letter of Credit Documents;
(iii) the existence of any claim, setoff, defense or other
rights which the Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such beneficiary
or any such transferee may be acting), Agent, Lenders or any other Person,
whether in connection with the Letter of Credit Documents or any unrelated
transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of Credit (or any
persons or entities for whom such beneficiary or any such transferee may be
acting), Agent, Lenders or any other Person;
(v) any draft, statement or any other document presented
under any Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever;
(vi) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by Agent, with or without
notice to or approval by the Borrower in respect of any of Borrower's
Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever similar to
any of the foregoing.
2.03 (a) For the period beginning on the Closing Date and ending on the
Facility Termination Date (provided, however, that after the Commitment
Termination Date, the fees described in clauses (i) and (ii) below shall be
zero), the Borrower agrees to pay the following fees:
(i) to the Agent on the Closing Date, for the pro rata benefit of the
Lenders based on their Applicable Commitment Percentages, a fee (the "Facility
Fee") equal to the product of the Total Letter of Credit Commitment multiplied
by 1/8 of 1% (.125%);
(ii) to the Agent, for the pro rata benefit of the Lenders based on their
Applicable Commitment Percentages, a commitment fee (the "Commitment Fee") equal
to the product of the 3/8 of 1% (.375%) multiplied by the average daily amount
of the Unused Total Letter of Credit Commitment; and
(iii) with respect to each Letter of Credit (x) to the Agent for the pro
rata benefit of the Lenders based on their Applicable Commitment Percentages, a
fee (the "Letter of Credit Fee") per annum equal to the product of 1 1/2%
(1.50%) multiplied by the stated amount of each Letter of Credit and (y) to
NationsBank, its customary fees and expenses for issuance and processing
referred to in Section 2.04 hereof. Accrued fees described in clause (y) above
in respect of each Letter of Credit shall be payable at times to be determined
by NationsBank, the Borrower and the Agent.
(b) Payments of the Commitment Fee and the Letter of Credit Fees provided
for in this Section 2.03 shall be due in arrears on the last Business Day of
each December, March, June and September beginning December 1994 to and on the
Facility Termination Date. Each fee shall be calculated on the basis of a year
of 360 days for the actual number of days elapsed. 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 fees.
2.04 The Borrower shall pay to NationsBank expenses incurred and such
administrative fees and other fees, if any, in connection with the issuance and
processing of the Letters of Credit in such amounts as are customarily imposed
by NationsBank from time to time in connection with letter of credit
transactions.
2.05 The Borrower shall have the right from time to time (but not more
frequently than once during each Fiscal Quarter) upon not less than ten (10)
Business Days written notice from an Authorized Representative to the Agent to
reduce the Total Letter of Credit Commitment. The Agent shall give each Lender,
within one (1) Business Day, telephonic notice (confirmed in writing) of such
reduction. Each such reduction shall be in the amount of $5,000,000 or such
greater amount which is in an integral multiple of $1,000,000, and shall
permanently reduce the Total Letter of Credit Commitment and the Letter of
Credit Commitment of each Lender pro rata. No such reduction shall be permitted
that results in the Letter of Credit Outstandings exceeding the Total Letter of
Credit Commitment after giving effect to such reduction. A reduction of the
Total Letter of Credit Commitment to zero and the Borrower causing all
Obligations hereunder (including the discharge of all Obligations of NationsBank
and the Lenders with respect to the Letters of Credit and Participations) to be
Fully Satisfied shall be deemed a cancellation and termination of this
Agreement.
3.01 (a) The Borrower shall promptly pay to the Agent for the account of
a Lender from time to time, without duplication, such amounts as such Lender may
determine to be necessary to compensate it for any costs incurred by such Lender
which it determines are attributable to the issuance or maintenance by
NationsBank of or any other Lender's Participation in any Letter of Credit
issued hereunder, or any reduction in any amountreceivable by such Lender under
or in respect of the Letters of Credit, including reductions in the rate of
return on a Lender's capital (such increases in costs and reductions in amounts
receivable and returns being herein called "Additional Costs"), in all cases
resulting solely from any Regulatory Change which: (i) changes the basis of
taxation of any amounts payable to such Lender under this Agreement in respect
of any of such Letters of Credit (other than taxes imposed on or measured by the
income, revenues or assets of any Lender unless such taxes arise solely by
virtue of the activities of the Lending Office of such Lender pursuant to or in
respect of this Agreement or any of the other Letter of Credit Documents); or
(ii) imposes or modifies any reserve, special deposit, or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, such Lender; or (iii) has or would have the effect of
reducing the rate of return on capital of any such Lender to a level below that
which the Lender could have achieved but for such Regulatory Change (taking into
consideration such Lender's policies, or policies of the parent corporation of
such Lender, with respect to capital adequacy); or (iv) imposes any other
condition having a financially adverse effect on the Agent, NationsBank or such
Lender under this Agreement or adversely affecting the issuance or maintenance
of, or any Lender's Participation in, the Letters of Credit (or any of such
extensions of credit or liabilities). Each Lender will notify an Authorized
Representative and the Agent of any event occurring after the Closing Date which
would entitle it to compensation pursuant to this Section 3.01(a) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation.
(b) Determinations by any Lender for purposes of this Section 3.01 of
the effect of any Regulatory Change on its Participations in Letters of Credit
or by NationsBank as issuer of any Letter of Credit of the effect of any
Regulatory Change on its costs in connection with the issuance or maintenance of
any Letter of Credit issued hereunder, or on amounts receivable by any Lender in
respect of Letters of Credit, and of the additional amounts required to
compensate such Lender in respect of any Additional Costs, shall be made taking
into account such Lender's policies, or the policies of the parent corporation
of such Lender, as to the allocation of capital, costs and other items and shall
be conclusive absent manifest error. The Lender requesting such compensation
shall furnish to an Authorized Representative and the Agent a written
explanation of the Regulatory Change and calculations, in reasonable detail,
setting forth such Lender's determination of any such Additional Costs.
(c) If any of the events requiring payments of additional amounts by
the Borrower under this Section 3.01 occurs, such Lender shall take such steps
as may be reasonable, in such Lender's sole discretion, to avoid the Borrower
being required to pay any additional amounts including, without limitation,
fulfilling such Lender's obligations through another branch or affiliate in
theUnited States; provided, however in no event shall such Lender be required or
obligated to take any such action that may result in additional expenses or
adverse consequences to such Lender.
3.02 (a) All payments by the Borrower of principal of, and interest on,
the Reimbursement Obligations and all other amounts payable hereunder shall be
made free and clear of and without deduction for any future excise, stamp or
other taxes, fees, duties, levies, imposts, charges, deductions, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding (i) franchise taxes, (ii) any taxes other than withholding taxes and
taxes that would be imposed as a result of a connection between a Lender or the
Agent and the jurisdiction imposing such taxes (other than a connection arising
solely by virtue of the activities of the Lending Office of such Lender or the
Agent pursuant to or in respect of this Agreement or any other Letter of Credit
Document) and (iii) any taxes imposed on or measured by any Lender's assets, net
income, receipts or branch profits (such non-excluded items being collectively
called "Taxes"). In the event that any withholding or deduction from any
payment to be made by the Borrower hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrower shall
(upon thirty (30) days' prior notice, such notice to include reasonable
documentation of any amounts due):
(A) pay directly to the relevant authority the full amount required
to be so withheld or deducted;
(B) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(C) pay to the Agent for the account of the Lenders such additional
amount or amounts as is necessary to ensure that the net amount actually
received by each Lender will equal the full amount such Lender would have
received had no such withholding or deduction been required.
(b) Prior to the date that any Lender or participant organized under
the laws of a jurisdiction outside the United States becomes a party hereto,
such Person shall deliver to the Borrower and the Agent such certificates,
documents or other evidence, as required by the Code, properly completed,
currently effective and duly executed by such Lender or participant establishing
that such payment is (i) not subject to United States Federal backup withholding
tax and (ii) not subject to United States Federal withholding tax under the Code
because such payment is either effectively connected with the conduct by such
Lender or participant of a trade or business in the United States or totally
exempt from United States Federal withholding tax by reason of the application
of the provisions of a treaty to which the United States is a party or such
Lender is otherwise exempt.
(c) If, after receiving reasonable prior notice, the Borrower fails to
pay any Taxes when due to the appropriate taxing authority or fails to remit to
the Agent, for the account of the respective Lender, the required receipts or
other required documentary evidence, the Borrower shall indemnify the Lenders
for any incremental Taxes, interest or penalties that may become payable by any
Lender as a result of any such failure. For purposes of this Section 3.02, a
distribution hereunder by the Agent or any Lender to or for the account of any
Lender shall be deemed a payment by the Borrower.
(d) If any of the events requiring payments of additional amounts by
the Borrower under this Section 3.02 occurs, such Lender shall take such steps
as may be reasonable, in such Lender's sole discretion, to avoid the Borrower
being required to pay any additional amounts; provided, however in no event
shall such Lender be required or obligated to take any such action that may
result in additional expenses or adverse consequences to such Lender.
(e) If the Borrower makes any additional payment to any Lender
pursuant to this Section 3.02 in respect of any Taxes, and such Lender
determines that it has received (i) a refund of such Taxes, 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
Taxes with respect to which it has received payments under this Section 3.02,
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 Taxes. 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 3.02(e), the Borrower shall upon demand of such
Lender promptly repay the amount of such overpayment. Nothing in this Section
3.02(e) 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.
(f) Notwithstanding any other provision of this Agreement to the
contrary, the provisions of this Section 3.02 shall survive until the first
December 31 following the Facility Termination Date.
4.01 The obligation of the Lenders to incur Participations in Letters of
Credit, and of NationsBank to issue the Letters of Credit, is subject to the
conditions precedent that the Agent and the Lenders shall have received on the
Closing Date, in form and substance reasonably satisfactory to the Agent and
Lenders, the following:
(a) executed originals of this Agreement and any Applications for
Letters of Credit, together with all schedules and exhibits thereto;
(b) favorable written opinions of special counsel to the Borrower
dated the Closing Date, addressed to the Agent and the Lenders and satisfactory
to Smith Helms Mulliss & Moore, L.L.P., special counsel to the Agent,
substantially in the form of Exhibit C, attached hereto and incorporated herein
by reference;
(c) resolutions of the boards of directors or other appropriate
governing body (or of the appropriate committee thereof) of the Borrower
certified by its secretary or assistant secretary or other appropriate officer
as of the Closing Date, appointing the initial Authorized Representative and
approving and adopting the Letter of Credit Documents to be executed by such
Person, and authorizing the execution, delivery and performance thereof;
(d) specimen signatures of officers of the Borrower executing the
Letter of Credit Documents on behalf of such Person, certified by the secretary
or assistant secretary or other appropriate official of the Borrower, as
applicable;
(e) the certificate of incorporation of the Borrower and all
amendments thereto certified as of a recent date by the Secretary of State or
other appropriate Governmental Authority of its jurisdiction of incorporation;
(f) the by laws of the Borrower certified as of the Closing Date as
true and correct by the secretary or assistant secretary of the Borrower;
(g) a certificate issued as of a recent date by the Secretary of
State or other appropriate Governmental Authority of its jurisdiction of
incorporation as to the due existence and good standing of the Borrower therein;
(h) certificates of qualification to do business, good standing and
authority to conduct business under assumed name, issued in respect of the
Borrower as of a recent date by the Secretary of State or other appropriate
Governmental Authority of each jurisdiction in which the Borrower conducts
business and where a failure to obtain such certificates could be reasonably
likely to have a Material Adverse Effect;
(i) notice of appointment of the initial Authorized Representative of
the Borrower in the form of Exhibit D hereto;
(j) certificate of an Authorized Representative dated the Closing
Date demonstrating compliance with the financial covenants contained in Sections
7.01 through 7.04 hereof as of the immediately preceding Determination Date for
which financial statements have been delivered by the Borrower in accordance
with Section 6.01, substantially in the form of Exhibit E attached hereto;
(k) evidence of insurance required by Section 6.05 hereof;
(l) all applicable fees payable by the Borrower on the Closing Date;
(m) evidence of the termination of the Existing Credit Agreement and
all obligations and commitments thereunder;
(n) consent from the Agent under the Existing Letter of Credit
Agreement regarding the transactions contemplated by this Agreement; and
(o) such other documents, instruments, certificates and opinions as the
Agent may reasonably request on or prior to the Closing Date in connection with
the consummation of the transactions contemplated hereby.
4.02 The obligations of the Lenders to incur Participations in Letters
of Credit, and NationsBank to issue Letters of Credit hereunder, on or
subsequent to the Closing Date are subject to the satisfaction of the following
conditions:
(a) the representations and warranties of the Borrower set forth in
Article V hereof and in each of the other Letter of Credit Documents shall be
true and correct on and as of the date of issuance of such Letters of Credit
with the same effect as though such representations and warranties had been made
on and as of such date, except (i) to the extent that such representations and
warranties expressly relate to an earlier date, then as of such earlier date,
(ii) that the representations and warranties set forth in Section 5.01(d) hereof
shall be deemed to include and take into account any merger or consolidation
permitted under Section 7.08 hereof, and (iii) that the financial statements
referred to in Section 5.01(e)(i) hereof shall be deemed to be those financial
statements most recently delivered to the Agent and the Lenders pursuant to
Section 6.01 hereof;
(b) Borrower shall have executed and delivered to NationsBank an
Application and Agreement for Letter of Credit in form and content reasonably
acceptable to NationsBank together with such other instruments and documents as
it shall reasonably request;
(c) at the time of issuance of each Letter of Credit, no Default or
Event of Default shall have occurred and be continuing;
(d) immediately after issuing any Letter of Credit, the aggregate
Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment; and
(e) immediately after giving effect to Letter of Credit, each
Lender's Applicable Commitment Percentage of Participations shall not exceed its
Letter of Credit Commitment.
5.01 The Borrower represents and warrants with respect to itself and to
its Subsidiaries (which representations and warranties shall survive the
delivery of the documents mentioned herein and the issuance of Letters of
Credit), that:
(a) Organization and Authority.
(i) the Borrower and each Subsidiary is a corporation duly organized
and validly existing under the laws of the jurisdiction of its incorporation or
creation;
(ii) the Borrower and each Subsidiary (A) has the requisite power and
authority to own its properties and assets and to carry on its business as now
being conducted and as contemplated in this Agreement, and (B) is qualified to
do business in every jurisdiction in which failure so to qualify could
reasonably be likely to have a Material Adverse Effect;
(iii) the Borrower has the power and authority to execute, deliver and
perform this Agreement, and to request issuance of Letters of Credit hereunder,
and to execute, deliver and perform each of the other Letter of Credit Documents
to which it is a party;
(iv) when executed and delivered, each of the Letter of Credit
Documents will be the legal, valid and bindingobligation or agreement, as the
case may be, of Borrower, enforceable against Borrower in accordance with its
terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of equity
which may limit the availability of equitable remedies (whether in a proceeding
at law or in equity);
(b) Letter of Credit Documents. The execution, delivery and performance
by the Borrower of each of the Letter of Credit Documents:
(i) have been duly authorized by all requisite corporate action
(including any required shareholder approval) of the Borrower signatory thereto
required for the lawful execution, delivery and performance thereof;
(ii) do not violate any provisions of (1) any applicable law, rule or
regulation in a manner that could reasonably be likely to have a Material
Adverse Effect, (2) any order of any court or other agency of government binding
on the Borrower, or its properties, or (3) the articles of incorporation or
bylaws of Borrower;
(iii) will not be in conflict with, result in a breach of or constitute
an event of default, or an event which, with notice or lapse of time, or both,
would constitute an event of default under, any indenture, agreement or other
instrument to which Borrower is a party, or by which the properties or assets of
Borrower are bound; and
(iv) will not result in the creation or imposition of any material
Lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of Borrower except any Liens in favor of the Agent and the Lenders
created by the Letter of Credit Documents;
(c) Solvency. Borrower is Solvent after giving effect to the
transactions contemplated by this Agreement and assuming Letter of Credit
Outstandings in an amount equal to the Total Letter of Credit Commitment;
(d) Material Subsidiaries and Stockholders. Borrower has no
Subsidiaries other than those Persons listed as Subsidiaries in Schedule 5.01(d)
hereto; the outstanding shares or other equity interests of each Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable;
and Borrower owns beneficially and of record all the issued and outstanding
shares of capital stock or equity interests of each Subsidiary, free and clear
of any Lien, except as set forth on Schedule 5.01(d) hereto;
(e) Financial Condition.
(i) The Borrower has heretofore furnished to each Lender audited
consolidated balance sheets of the Borrower and its Subsidiaries as at September
24, 1994 and the notes thereto and the related consolidated statements of
operations, cash flows, and stockholders' equity for the Fiscal Year then ended
as examined and certified by Price Waterhouse LLP. Except as set forth therein,
such financial statements (including the notes thereto) present fairly the
financial condition and results of operations of the Borrower and its
Subsidiaries as of the end of and for such Fiscal Year in conformity with
Generally Accepted Accounting Principles;
(ii) since the end of the most recently ended Fiscal Year, there have
not occurred any events having a Material Adverse Effect and the businesses,
properties and operations of the Borrower or any of its Subsidiaries have not
been materially adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workers, flood, embargo or
act of God;
(iii) except as set forth in the financial statements referred to in
Section 5.01(e)(i) hereof, or as permitted under Section 7.05 hereof, neither
Borrower nor any Subsidiary has incurred, other than in the ordinary course of
business, any Indebtedness or other Contingent Obligation which remains
outstanding or unsatisfied;
(f) Title to Properties. The Borrower and its Subsidiaries have
title to all their respective owned real and material personal properties,
subject to no transfer restrictions or Liens of any kind, except (i) for the
transfer restrictions and Liens described in Schedule 5.01(f) hereto, (ii) for
Liens permitted under Section 7.06 hereof and (iii) for taxes and assessments
being contested in good faith by appropriate proceedings diligently conducted
and against which adequate reserves have been established and are being
maintained in conformity with Generally Accepted Accounting Principles;
(g) Taxes. The Borrower and its Subsidiaries have filed or caused to
be filed or caused to be properly extended all Federal, state, local and foreign
tax returns which are required to be filed by them and except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which adequate reserves have been established and are
being maintained in conformity with Generally Accepted Accounting Principles,
have paid or caused to be paid all material taxes as shown on saidreturns or on
any assessment received by them, to the extent that such taxes have become and
remain due;
(h) Other Agreements. Neither the Borrower nor any Subsidiary is
(i) a party to any judgment, order, decree, agreement or instrument
or subject to restrictions which could reasonably be expected to have a Material
Adverse Effect or will result in or require the creation of a Lien on the
property or assets of the Borrower or otherwise;
(ii) in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument to which the Borrower or any Subsidiary is a party, which default
has, or if not remedied within any applicable grace period could reasonably be
expected to have, a Material Adverse Effect;
(iii) is 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 or could reasonably be likely to have an adverse effect on the ability of
the Borrower to carry out its obligations under this Agreement or any other
Letter of Credit Document.
(i) Litigation. There is no action, suit or proceeding at law or in
equity or by or before any governmental instrumentality or agency or arbitral
body pending, or, to the knowledge of the Borrower, threatened by or against the
Borrower or any Subsidiary or affecting the Borrower or any Subsidiary or any
properties or rights of the Borrower or any Subsidiary, which could reasonably
be expected to have a Material Adverse Effect or questioning the validity or
enforceability of, or the ability of Borrower to perform under, the Letter of
Credit Documents;
(j) Margin Stock. Neither the Borrower nor any Subsidiary owns any
"margin stock" as such term is defined in Regulation U, as amended (12 C.F.R.
Part 221), of the Board. None of the Letters of Credit will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute any of the Letters of Credit under this Agreement a "purpose credit"
within the meaning of said Regulation U orRegulation X (12 C.F.R. Part 224) of
the Board. Neither the Borrower nor any agent acting in its behalf has taken or
will take any action which might cause this Agreement or any of the documents or
instruments delivered pursuant hereto to violate any regulation of the Board or
to violate the Securities Exchange Act of 1934, as amended, or the Securities
Act of 1933, as amended, or any state securities laws, in each case as in effect
on the date hereof;
(k) Investment Company. Neither the Borrower nor any Subsidiary is
an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended (15 U.S.C. 80a1, et seq.).
The Letters of Credit and the performance by the Borrower of the transactions
contemplated by this Agreement will not violate any provision of said Act, or
any rule, regulation or order issued by the Securities and Exchange Commission
thereunder, in each case as in effect on the date hereof;
(l) No Untrue Statement. Neither this Agreement nor any other Letter
of Credit Document or certificate or document executed and delivered by or on
behalf of the Borrower in accordance with or pursuant to any Letter of Credit
Document knowingly contains any misrepresentation or untrue statement of
material fact or omits to state a material fact necessary, in light of the
circumstances under which such representation or statement was made, in order to
make any such representation or statement contained herein or therein not
misleading in any material respect; 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;
(m) No Consents, Etc. Neither the respective businesses or
properties of the Borrower or any of its Subsidiaries, nor any relationship
between the Borrower and any of its Subsidiaries and any other Person, nor any
circumstance in connection with the execution, delivery and performance of the
Letter of Credit Documents and the transactions contemplated hereby is such as
to require a consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or other authority or any other
Person on the part of the Borrower or any of its Subsidiaries as a condition to
the execution, delivery and performance of, or consummation of the transactions
contemplated by, this Agreement or the other Letter of Credit Documents or if
so, such consent, approval, authorization,filing, registration or qualification
has been obtained or effected, as the case may be;
(n) Benefit Plans.
(i) None of the employee benefit plans maintained at any time by the
Borrower or any ERISA Affiliate or the trusts created thereunder has engaged in
a prohibited transaction or violated any Foreign Benefit Law which could subject
any such employee benefit plan or trust to a material tax or penalty on
prohibited transactions imposed under Code Section 4975 or ERISA or under any
Foreign Benefit Law;
(ii) None of the employee benefit plans maintained at any time by the
Borrower or any ERISA Affiliate which are employee pension benefit plans and
which are subject to Title IV of ERISA or any Foreign Benefit Law or the trusts
created thereunder has been terminated so as to result in a material liability
of the Borrower under ERISA or under any Foreign Benefit Law nor has any such
employee benefit plan of the Borrower or any ERISA Affiliate incurred any
material liability to the PBGC established pursuant to ERISA or any other Person
exercising similar duties and functions under any Foreign Benefit Law, other
than for required insurance premiums which have been paid or are not yet due and
payable; except as set forth in the financial statements referred to in Section
5.01(e)(i) hereof, as of the Closing Date, the Borrower and its ERISA Affiliates
have made or provided for, within 90 days of the date required to be made, all
contributions to all such employee pension benefit plans which they maintain and
which are required as of the end of the most recent fiscal year under each such
plan; as of the Closing Date, neither the Borrower nor any Subsidiary has
incurred any accumulated funding deficiency with respect to any such plan,
whether or not waived; as of the Closing Date, there has not been any reportable
event, or other event or condition, which presents a material risk of
termination of any such employee benefit plan by such PBGC or any other Person
exercising similar duties and functions under any Foreign Benefit Law;
(iii) The issuance of the Letters of Credit provided for in Article II
will not involve any prohibited transaction under ERISA or any Foreign Benefit
Law which is not subject to a statutory or administrative exemption;
(iv) To the best of the Borrower's knowledge, each employee pension
benefit plan subject to Title IV of ERISA or any Foreign Benefit Law, maintained
by theBorrower or any ERISA Affiliate, has been administered in accordance with
its terms in all material respects and is in compliance in all material respects
with all applicable requirements of ERISA and other applicable laws, regulations
and rules and any applicable Foreign Benefit Law;
(v) There has been no withdrawal from and no withdrawal liability
incurred and unpaid with respect to any Multi-employer Plan to which the
Borrower or any ERISA Affiliate is or was a contributor which would reasonably
be likely to have a Material Adverse Effect;
(vi) As used in this Agreement, the terms "employee benefit plan,"
"employee pension benefit plan," "accumulated funding deficiency," "reportable
event," and "accrued benefits" shall have the respective meanings assigned to
them in ERISA, and the term "prohibited transaction" shall have the meaning
assigned to it in Code Section 4975 and ERISA; and
(vii) Neither the Borrower nor any ERISA Affiliate has any liability
not disclosed on any of the financial statements referred to in Section
5.01(e)(i) hereof or furnished to the Lenders pursuant to Section 6.01 hereof,
contingent or otherwise, under any plan or program or the equivalent for
unfunded post-retirement benefits, including pension, medical and death
benefits, which liability could reasonably be expected to have a Material
Adverse Effect;
(o) No Default. There does not exist any Default or Event of
Default;
(p) Hazardous Materials. Except as disclosed on Schedule 5.01(p)
hereto, the Borrower and each Subsidiary is in compliance in all material
respects with all applicable Environmental Laws and neither the Borrower nor any
Subsidiary has been notified of any action, suit, proceeding or investigation
which calls into question compliance by the Borrower or any Subsidiary with any
Environmental Laws or which seeks to suspend, revoke or terminate any license,
permit or approval necessary for the generation, handling, storage, treatment or
disposal of any Hazardous Material any of which could reasonably be likely to
have a Material Adverse Effect;
(q) Employment Matters. The Borrower and all Subsidiaries are in
compliance in all material respects with all applicable laws, rules and
regulations pertaining to labor or employment matters, including without
limitation those pertaining to wages, hours, occupational safety and taxation
the noncompliance with which could reasonably be expected tohave a Material
Adverse Effect and there is neither pending nor, to the knowledge of the
Borrower, threatened any litigation, administrative proceeding or investigation
in respect of such matters, an adverse ruling or determination in which could
reasonably be expected to have a Material Adverse Effect;
(r) Environmental Investigations and Liabilities. Except as disclosed
on Schedule 5.01(p) hereto, none of the operations of the Borrower or any
Subsidiary 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 Environmental Laws) into the environment, and the
Borrower and each Subsidiary does not have any material contingent liability in
connection with any release of any Hazardous Waste or Hazardous Substance into
the environment.
6.01 Until the Obligations have been Fully Satisfied and this
Agreement has been terminated in accordance with the terms hereof and the
occurrence of the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will:
(a) as soon as practical and in any event within 90 days after the end
of each Fiscal Year of the Borrower, deliver or cause to be delivered to the
Agent and each Lender (i) the consolidated balance sheets of the Borrower and
its Subsidiaries, in each case with the notes thereto, and the related
consolidated statements of operations, cash flow, and shareholders' equity and
the respective notes thereto for and as of the end of such Fiscal Year, setting
forth comparative financial statements for and as of the end of the preceding
Fiscal Year, all prepared in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis and containing opinions of Price
Waterhouse LLP, or other such independent certified public accountants of
similar stature, which are unqualified and without exception, except for such
qualifications and exceptions as are reasonably acceptable to the Required
Lenders; and (ii) a certificate of an Authorized Representative as to the
existence of any Default or Event of Default and demonstrating compliance with
Sections 7.01, 7.02, 7.03 and 7.04 hereof, which certificate shall be in the
form attached hereto as Exhibit E and incorporated herein by reference;
(b) as soon as practical and in any event within 45 days after the
end of each Fiscal Quarter deliver to the Agent and eachLender (i) the
consolidated balance sheets of the Borrower and its Subsidiaries, as of the end
of such Fiscal Quarter, the related consolidated statements of operations and
shareholders' equity for such Fiscal Quarter and statements of cash flow for the
period from the beginning of the current Fiscal Year through the end of such
Fiscal Quarter, accompanied by a certificate of an Authorized Representative to
the effect that such financial statements present fairly the financial condition
of the Borrower and its Subsidiaries as of the end of such reporting period and
the results of their operations and the changes in their financial condition for
such reporting period, in conformity with the standards set forth in Section
5.01(e)(i) hereof with respect to interim financials, and (ii) a certificate of
an Authorized Representative as to the existence of any Default or Event of
Default and containing computations for such quarter comparable to that required
pursuant to Section 6.01(a)(ii) hereof;
(c) promptly upon their becoming available to the Borrower, deliver
to the Agent a copy of (i) all regular or special reports or effective
registration statements which the Borrower or any Subsidiary shall file with the
Securities and Exchange Commission (or any successor thereto) or any securities
exchange and (ii) any proxy statement distributed by the Borrower, its
shareholders or bondholders or the financial community in general, all such
reports and statements to be delivered without exhibits unless otherwise
reasonably requested by the Agent or any Lender; and
(d) promptly, from time to time, deliver or cause to be delivered to
the Agent such other information regarding Borrower's and each Subsidiary's
operations, business affairs and financial condition as the Agent or any Lender
may reasonably request.
6.02 Maintain all properties necessary to its operations in good working
order and condition (ordinary wear and tear excepted) and make all needed
repairs, replacements and renewals as are necessary to conduct its business in
accordance with customary business practices.
6.03 Do or cause to be done all things necessary to preserve and keep in
full force and effect its existence and all material rights and franchises,
trade names, trademarks and permits, except to the extent conveyed in connection
with a transaction permitted under Section 7.08 hereof, and maintain its license
or qualification to do business as a foreign corporation and good standing in
each jurisdiction in which its ownership or lease of property or the nature of
its business makes such license or qualification necessary and where the failure
to be so licensed or qualified could be reasonably likely to have a Material
Adverse Effect.
6.04 Comply with all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
anyother obligation which, if unpaid, might become a Lien against any of its
properties except any of the foregoing being contested in good faith by
appropriate proceedings diligently conducted and against which adequate reserves
have been established and are being maintained in conformity with Generally
Accepted Accounting Principles.
6.05 (a) Keep all of its insurable properties adequately insured at all
times and maintain general public liability insurance at all times with
responsible insurance carriers against loss or damage by fire and other hazards
substantially in the amounts and coverages as such insurance is now maintained,
and (b) maintain insurance under all applicable workers' compensation laws (or
in the alternative, maintain required reserves if self-insured for workers'
compensation purposes). Each of the policies of insurance having material
coverages will provide that the insurer shall give the Agent not less than
thirty (30) days' prior written notice before any such policy shall terminate,
lapse, be cancelled or be materially amended.
6.06 (a) Keep true books of record and account in which full, true and
correct entries shall be made of all of its dealings and transactions in
accordance with customary business practices, and set up on its books such
reserves as may be required by Generally Accepted Accounting Principles with
respect to doubtful accounts and all taxes, assessments, charges, levies and
claims and with respect to its business in general, and include such reserves in
interim as well as year-end financial statements; and (b) permit any Person
designated by the Agent, at the Agent's expense, to visit and inspect any of the
properties, corporate books and financial reports of the Borrower or any of its
Subsidiaries, and to discuss its or their affairs, finances and accounts with
its or their principal officers and independent certified public accountants,
all at such reasonable times and as often as the Agent may reasonably request.
6.07 Make full and timely payment of all Obligations, whether now
existing or hereafter arising.
6.08 Conform to and duly observe in all material respects all laws,
rules and regulations and all other valid requirements of any Governmental
Authority with respect to the conduct of its business the non-compliance with
which could reasonably be expected to have a Material Adverse Effect.
6.09 Cause each of its Subsidiaries to do with respect to itself, its
business and its assets, each of the things required of the Borrower in Sections
6.02 through 6.08 hereof, inclusive.
6.10 Upon any Authorized Representative of the Borrower obtaining
knowledge of any Default or Event of Default, promptly deliver to the Agent
written notice thereof, the period of existence thereof, and what action the
Borrower proposes to take with respect thereto.
6.11 Upon any Authorized Representative obtaining knowledge of any
litigation or other proceedings being instituted against the Borrower or any
Subsidiary or otherwise questioning the validity or enforceability of, or the
ability of the Borrower to enter into or perform under, the Letter of Credit
Documents, or any attachment, levy, execution or other process being instituted
against any assets of the Borrower or any Subsidiary, in an aggregate stated
amount greater than $5,000,000 not otherwise covered by insurance, promptly
deliver to the Agent written notice thereof stating the nature and status of
such litigation, dispute, proceeding, levy, execution or other process.
6.12 Promptly provide to the Agent true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Subsidiary relating to any material (a)
violation or alleged violation by the Borrower or any Subsidiary of any
applicable Environmental Laws; (b) release or threatened release by the Borrower
or any Subsidiary of any Hazardous Material, except where occurring legally; or
(c) liability or alleged liability of the Borrower or any Subsidiary for the
costs of cleaning up, removing, remediating or responding to a release of
Hazardous Materials.
6.13 If the Borrower or any Subsidiary shall receive notice from any
Governmental Authority that the Borrower or any Subsidiary has violated any
applicable Environmental Laws which could reasonably be likely to have a
Material Adverse Effect, promptly deliver a copy of such notice to the Agent and
use its reasonable best efforts to remove or remedy, or cause the applicable
Subsidiary to remove or remedy, such violation within a reasonable time.
6.14 Defend, indemnify and hold harmless the Agent and the Lenders, and
their respective officers, directors, employees and agents, from and against any
and all claims, losses, liabilities, damages and expenses (including, without
limitation, cleanup costs and reasonable attorneys' fees) arising directly or
indirectly from, out of or by reason of the handling, storage, treatment,
emission or disposal of any Hazardous Material by or in respect of the Borrower
or any Subsidiary or property owned or leased or operated by the Borrower or any
Subsidiary. Notwithstanding any provision of this Agreement to the contrary,
the provisions of this Section 6.14 shall survive repayment of the Obligations,
occurrence of the FacilityTermination Date and expiration or termination of this
Agreement and each Letter of Credit.
6.15 At the Borrower's cost and expense, upon request of the Agent, duly
execute and deliver or cause to be duly executed and delivered, to the Agent
such further instruments, documents, certificates and agreements, and do and
cause to be done such further acts, that may be necessary or advisable in the
reasonable opinion of the Agent to carry out more effectively the provisions and
purposes of this Agreement and the other Letter of Credit Documents.
6.16 Comply in all material respects with all requirements of ERISA and
any Foreign Benefit Law applicable to it and furnish to the Agent as soon as
practicable and in any event (a) within thirty (30) days after the Borrower
knows that any reportable event or other event under any Foreign Benefit Law
with respect to any employee benefit plan maintained by the Borrower or any
ERISA Affiliate which could give rise to termination or the imposition of any
material tax or penalty has occurred, written statement of an Authorized
Representative describing in reasonable detail such reportable event or such
other event and any action which the Borrower or applicable ERISA Affiliate
proposes to take with respect thereto, together with a copy of any notice of
such reportable event given to the PBGC or to any other applicable Person
exercising similar duties and functions under any Foreign Benefit Law or a
statement that said notice, if required, will be filed with the annual report of
the United States Department of Labor with respect to such plan if such filing
has been authorized, (b) promptly after receipt thereof, a copy of any notice
that the Borrower or any ERISA Affiliate may receive from the PBGC or from any
other Person exercising similar duties and functions under any Foreign Benefit
Law relating to the intention of the PBGC or any such Person to terminate any
employee benefit plan or plans of the Borrower or any ERISA Affiliate or to
appoint a trustee to administer any such plan, and (c) within 10 days after a
filing with the PBGC pursuant to Section 412(n) of the Code or with any Person
pursuant to any Foreign Benefit Law of a notice of failure to make a required
installment or other payment with respect to a plan, a certificate of an
Authorized Representative setting forth details as to such failure and the
action that the Borrower or its affected ERISA Affiliate, as applicable,
proposes to take with respect thereto, together with a copy of such notice given
to the PBGC or to such Person.
6.17 Continue at all times to preserve, protect and maintain free from
Liens (other than Liens permitted under Section 7.05 hereof) its material
patents, copyrights, licenses, trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights, trade secrets and know-how
necessary or useful in the conduct of its operations.
6.18 Continue at all times to conduct its business and engage
principally in the same line or lines of business substantially as conducted on
the Closing Date.
6.19 Use the Letters of Credit and all proceeds thereof only for the
purposes set forth in Section 2.01 hereof.
Until the Obligations have been Fully Satisfied and this Agreement has
been terminated in accordance with the terms hereof and the occurrence of the
Facility Termination Date, unless the Required Lenders shall otherwise consent
in writing, the Borrower will not, nor with respect to covenants contained in
Sections 7.05 through 7.16, inclusive, will it permit any Subsidiary to:
7.01 Permit at any time the Consolidated Total Debt Ratio to be greater
than .45 to 1.00.
7.02 Permit at any time the Consolidated Interest Coverage Ratio to be
less than 3.50 to 1.00.
7.03 Permit at any Determination Date the Consolidated Tangible Net Worth
to be less than the sum of (a) $340,000,000 and (b) 50% of cumulative
Consolidated Net Income calculated from the date of the financial statements
referred to Section 5.01(e)(i) hereof to the most recently ended Determination
Date ("Minimum Consolidated Tangible Net Worth"); provided, however, in no event
shall such Minimum Consolidated Tangible Net Worth be decreased as a result of
any net loss of the Borrower and its Subsidiaries (i.e., negative Consolidated
Net Income) during any Fiscal Quarter.
7.04 Permit at any time the sum of cash and Eligible Securities of the
Borrower and its Subsidiaries on a consolidated basis to be less than the sum of
(i) Letter of Credit Outstandings, (ii) principal amount outstanding of all
other Senior Indebtedness and (iii) $50,000,000.
7.05 Incur, create, assume or permit to exist, or permit any Subsidiary
of the Borrower to incur, create, assume or permit to exist, any Indebtedness,
howsoever evidenced, except for
(i) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(ii) Indebtedness existing as of the Closing Date, including Senior
Indebtedness, and more particularly described in the financial statements and
notes thereto described in Section 5.01(e) and any refinancing thereof not
extending thematurity thereof and not increasing the outstanding aggregate
principal amount thereof;
(iii) Indebtedness consisting of Short Term Loan Facilities in an
aggregate amount not in excess of $25,000,000; and
(iv) Indebtedness in connection with contingent lease obligations in
accordance with Generally Accepted Accounting Principles applied on a Consistent
Basis arising from recourse lease transactions in an aggregate amount not in
excess of $25,000,000.
7.06 (a) Incur, create or permit to exist any pledge, Lien, charge or
other encumbrance of any nature whatsoever with respect to any real or material
personal property or assets now owned or hereafter acquired by the Borrower or
any of its Subsidiaries, including without limitation any capital stock of the
Borrower or any of its Subsidiaries, other than
(i) Liens existing as of the date hereof and as set forth in Schedule
5.01(f) hereto;
(ii) Liens imposed by law for taxes, assessments or charges of any
Governmental Authority for claims not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves have been established and are being maintained in
accordance with Generally Accepted Accounting Principles;
(iii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law or created in the ordinary
course of business and for amounts not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves have been established and are being maintained in
accordance with Generally Accepted Accounting Principles;
(iv) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts;
(v) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variationsand zoning and other restrictions,
charges or encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower or any
Subsidiary and which do not materially detract from the value of the property to
which they attach or materially impair the use thereof to the Borrower or any
Subsidiary; and
(vi) Liens securing Indebtedness of the Borrower and its Subsidiaries
incurred to finance the acquisition of fixed or capital assets, including any
items of equipment acquired after the date hereof, and refinancings thereof,
provided that (A) such Liens shall attach concurrently with or within 30 days of
the acquisition of such fixed or capital assets or items of equipment, (B) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness, (C) the amount of Indebtedness secured thereby does not at
any time exceed $15,000,000 and (D) the principal amount of Indebtedness secured
by any such Lien shall at no time exceed 100% of the original purchase price of
such property at the time it was acquired.
(b) Covenant or agree or otherwise be bound not to incur, create, or
permit to exist any pledge, Lien, charges or other encumbrance of any nature
whatsoever with respect to any property or assets now owned or hereafter
acquired by the Borrower or any of its Subsidiaries.
7.07 Purchase, own, invest in or otherwise acquire, directly or
indirectly, any stock or other securities or all or substantially all of the
assets of, or make or permit to exist any interest whatsoever in, any other
Person or permit to exist any loans or advances to any Person, except that
Borrower and its Subsidiaries may maintain investments or invest in
(i) Eligible Securities;
(ii) investments existing as of the date hereof and disclosed on the
financial statements of the Borrower and its Subsidiaries referred to in Section
5.01(e) hereof;
(iii) accounts receivable arising and trade credit granted in the
ordinary course of business;
(iv) loans and advances to its officers, directors and employees for
any business purpose and other investments in an aggregate principal amount at
any time outstanding not to exceed $15,000,000;
(v) key man life insurance with respect to its executive officers;
and
(vi) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the ordinary
course of business.
7.08 (a) Consolidate with or merge into any other Person, or (b) permit
any other Person to consolidate with or merge into it, or (c) liquidate, wind-up
or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets, or commence or suffer any proceedings seeking
such liquidation, dissolution, sale or disposition; provided, however, (i) any
Subsidiary of the Borrower may merge or transfer all or substantially all of its
assets into or consolidate with the Borrower or any wholly-owned Subsidiary of
the Borrower and (ii) any Person may merge with and into the Borrower if the
Borrower shall be the survivor thereof and such merger shall not cause, create
or result in the occurrence of any Default or Event of Default.
7.09 Enter into any transaction after the Closing Date, including,
without limitation, the purchase, sale, lease or exchange of property, real or
personal, or the rendering of any service, with any Affiliate, except (a) that
such Affiliate may render services to the Borrower or its Subsidiaries for
compensation at the same rates generally paid by Persons engaged in the same or
similar businesses for the same or similar services and (b) in the ordinary
course of and pursuant to the reasonable requirements of the Borrower's (or any
Subsidiary's) business consistent with past practice of the Borrower and its
Subsidiaries and upon fair and reasonable terms no less favorable to the
Borrower (or any Subsidiary) than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate.
7.10 With respect to all employee pension benefit plans maintained by
the Borrower or any ERISA Affiliate:
(i) terminate any of such employee pension benefit plans so as to
incur any liability to the PBGC established pursuant to ERISA or to any other
Person exercising similar duties and functions under any Foreign Benefit Law
where such termination would be reasonably likely to have or would have a
Material Adverse Effect;
(ii) engage in any prohibited transaction involving any of such
employee pension benefit plans or any trust created thereunder which would
subject the Borrower or an ERISA Affiliate to a tax or penalty or other
liability on prohibited transactions imposed under Code Section 4975 or ERISA or
under any Foreign Benefit Law where such liability would be reasonably likely to
have or would have a Material Adverse Effect;
(iii) fail to pay to any such employee pension benefit plan any
contribution which it is obligated to pay under the terms of such plan and such
failure shall continue for a period of ninety (90) days;
(iv) allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such employee pension benefit plan;
(v) allow or suffer to exist any occurrence of a reportable event or
any other event or condition, which presents a material risk of termination by
the PBGC, or to any other Person exercising similar duties and functions under
any Foreign Benefit Law, of any such employee pension benefit plan that is a
Single Employer Plan, which termination could result in any liability to the
PBGC or under any Foreign Benefit Law and where such liability would be
reasonably likely to have or would have a Material Adverse Effect; or
(vi) incur any withdrawal liability with respect to any Multi-employer
Plan which would be reasonably likely to have or would have a Material Adverse
Effect.
7.11 Change its Fiscal Year.
7.12 Declare or pay any dividends or make any other payment or
distribution of assets, property, cash, rights, obligations or securities on
account of any shares of stock of any class of the Borrower, now or hereafter
outstanding, or purchase, redeem or otherwise retire any such shares or apply or
set apart any of their assets therefor or make any other distribution (by
redemption of capital or otherwise) in respect of any such shares or otherwise
return any capital to its shareholders as such, or agree to do any of the
foregoing.
7.13 Incur, create, assume or permit to exist, in respect to leases of
real or personal property other than Capital Leases, aggregate rental
obligations of the Borrower and its Subsidiaries or other commitments thereunder
to make any direct or indirect payment, whether as rent or otherwise, for fixed
or minimum rentals, property taxes, or insurance premiums, in excess of
$45,000,000 for any period of twelve (12) consecutive calendar months.
7.14 Enter into any arrangement, directly or indirectly, with any Person
whereby it shall sell or transfer any property, real or personal, used or useful
in its business, whether now owned or hereafter acquired, for consideration,
including all installments thereof, in excess of $10,000,000 for any period of
twelve (12) consecutive calendar months and thereafter rent or lease such
property or other property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred.
7.15 Incur any Rate Hedging Obligations involving commodity options or
futures contracts or engage in any transaction involving risks that are
excessive or unusual in light of the circumstances.
8.01 If any one or more of the following events (herein called "Events
of Default") shall occur for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
law or pursuant to or in compliance with any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body), that is to say:
(a) if default shall be made in the due and punctual payment of any
Reimbursement Obligation, when and as the same shall be due and payable whether
pursuant to any provision of Article II hereof, at maturity, by acceleration or
otherwise; or
(b) if default shall be made in the due and punctual payment of any
Obligation hereunder, other than Reimbursement Obligations, when and as the same
shall be due and payable whether pursuant to any provision of Article II hereof,
at maturity, by acceleration or otherwise, and such default shall continue for a
period of five (5) or more days; or
(c) if default shall be made in the performance or observance of any
covenant set forth in Sections 6.10, 6.11, 6.18 or Article VII hereof; or
(d) if a default shall be made in the performance or observance of, or
shall occur under, any covenant, agreement or provision contained in this
Agreement (other than as described in clause (a), (b) or (c) above) and such
default shall continue unremedied for a period of ten (10) or more days, or if
an Event of Default shall occur under any of the other Letter of Credit
Documents or in any instrument or document evidencing or creating any
obligation, guaranty, or Lien in favor of the Agent or the Lenders or delivered
to the Agent or the Lenders in connection with or pursuant to this Agreement or
any of the Obligations and such default shall continue unremedied for a period
of ten (10) or more days, or if any provision of any Letter of Credit Document
ceases to be in full force and effect (other than by reason of any action by the
Agent), or if any provision of this Agreement or any other Letter of Credit
Document shall be disaffirmed or shall terminate, be terminable or be terminated
or become void or unenforceable for any reason whatsoever (other than
inaccordance with the terms of this Agreement or such Letter of Credit Document
in the absence of default or by reason of any action by the Agent or any
Lender); or
(e)if a default shall occur, which is not waived, (i)in the payment of
any principal, interest, premium or other amounts with respect to any
Indebtedness (other than the Obligations) of the Borrower or of any Subsidiary
or (ii)in the performance, observance or fulfillment of any term or covenant
contained in any agreement or instrument under or pursuant to which any such
Indebtedness was issued, created, assumed, guaranteed or secured by the Borrower
or any Subsidiary, and (A) such default shall continue for more than the period
of grace, if any, specified in such agreement or instrument as in effect on the
date hereof or as initially executed, and (B) if such default shall permit the
holder of any such Indebtedness to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact contained
herein or in any other Letter of Credit Document or in any writing, certificate,
report or statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower pursuant to or in connection with this Agreement or the
other Letter of Credit Documents, or otherwise, shall be false or misleading in
any material respect when given or made or deemed given or made; or
(g) if the Borrower or any Subsidiary shall be unable to pay its debts
generally as they become due; file a petition to take advantage of any
insolvency, reorganization, bankruptcy, receivership or similar law, domestic or
foreign; make an assignment for the benefit of its creditors; commence a
proceeding for the appointment of a receiver, trustee, liquidator or conservator
of itself or of the whole or any substantial part of its property; file a
petition or answer seeking reorganization or arrangement or similar relief under
the Federal bankruptcy laws or any other applicable law or statute, Federal,
state or foreign; or take any action approving or initiating any of the
foregoing; or
(h) if a court of competent jurisdiction shall (i) enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Borrower or any Subsidiary or of the whole or any substantial
part of its properties and such order, judgment or decree is unstayed, or (ii)
approves a petition filed against the Borrower or any Subsidiary seeking
reorganization or arrangement or similar relief under the Federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state or foreign country, province or other political subdivision, or (iii)
if, under the provisions of any other law for the relief or aid of debtors, a
court of competent jurisdiction shall assume custody or control of the
Borroweror any Subsidiary or of the whole or any substantial part of its
properties, or (iv) if there is commenced against the Borrower or any Subsidiary
any proceeding or petition seeking reorganization, arrangement or similar relief
under the Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state or foreign country, province or other
political subdivision which proceeding or petition remains undismissed for a
period of thirty (30) days, or (v) if the Borrower or any Subsidiary takes any
action to indicate its consent to or approval of any such proceeding or
petition; or
(i) if (i) any judgment where the amount not covered by insurance (or
the amount as to which the insurer denies liability) is in excess of $7,500,000
is rendered against the Borrower or any Subsidiary, or (ii) there is any
attachment, injunction, execution or other enforcement proceeding commenced upon
such judgement against any of the Borrower's or any Subsidiary's properties for
any amount in excess of $7,500,000 and such judgment, attachment, injunction or
execution remains unpaid, unstayed, undischarged, unbonded or undismissed for a
period of thirty (30) days; or
(j) if (i) 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 (x) cause a Material Adverse Effect, (y) have a material adverse
effect on the ability of the Borrower to perform its obligations under any
Letter of Credit Document, or (z) have a material adverse effect on the rights
and remedies of the Agent or any Lender under any material Letter of Credit
Document or (ii) there is any attachment, injunction, execution or other
enforcement proceeding commenced upon such judgement against any of the
Borrower's or any Subsidiary's properties and such judgment, attachment,
injunction or execution remains unpaid, unstayed, undischarged, unbonded or
undismissed for a period of thirty (30) days; or
(k) if the Borrower or any Subsidiary shall cease all or any part of its
operations and such cessation could reasonably be likely to have a Material
Adverse Effect; or
(l) if (i) the Borrower or any ERISA Affiliate shall engage in any
prohibited transaction (as described in Section 7.10(ii) hereof), which is not
subject to a statutory or administrative exemption, involving any employee
pension benefit plan of the Borrower or any ERISA Affiliate, (ii) any
accumulated funding deficiency (as referred to in Section 7.10(iv) hereof),
whether or not waived, shall exist with respect to any Single Employer Plan,
(iii) a reportable event (as referred to in Section 7.10(v) hereof) (other than
a reportable event for which the statutory notice requirement to the PBGC has
been waived by regulation) shall occur withrespect to, or proceeding shall
commence to have a trustee appointed, or a trustee shall be appointed to
administer or to terminate, any Single Employer Plan, which reportable event or
institution or proceedings is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Single Employer Plan for
purposes of Title IV of ERISA, and in the case of such a reportable event, the
continuance of such reportable event shall be unremedied for thirty (30) days
after notice of such reportable event pursuant to Section 4043(a), (c) or (d) of
ERISA is given, as the case may be, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, and such termination results in a
material liability of the Borrower or any ERISA Affiliate to such Single
Employer Plan or the PBGC, (v) the Borrower or any Subsidiary shall withdraw
from a Multi-employer Plan for purposes of Title IV of ERISA, and, as a result
of any such withdrawal, the Borrower or any ERISA Affiliate shall incur
withdrawal liability to such Multi-employer Plan, or (vi) any other material
event or condition shall occur or exist; and in each case in clauses (i) through
(vi) of this Section 8.01(k), such event or condition, together with all other
such events or conditions, if any, could reasonably be expected to subject the
Borrower or any ERISA Affiliate to any tax, penalty or other liabilities having
a Material Adverse Effect; or
(m) if the Borrower shall become a party to or the subject of any
agreement, transaction or related series of transactions pursuant to or as a
result of which any Person or group of Persons acting in concert acquires voting
control, directly or indirectly, whether by tender offer or in one or more
negotiated block or market transactions, of more than twenty-five percent (25%)
of the shares of the issued and outstanding capital stock of any class of the
Borrower; or
(n) a "Fundamental Change" shall have occurred under and as defined in
that certain Indenture dated as of June 1, 1991, pursuant to which the Borrower
has issued 7-3/4% convertible subordinated debentures; or
(o) any letter of credit other than those outstanding on the Closing Date
and listed on Schedule 1 hereto shall be issued or outstanding under the
Existing Letter of Credit Agreement; or
(p) the Existing Letter of Credit Agreement and all obligations and
Commitments (as defined therein) shall not have terminated on or before January
20, 1995;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be taken: (i) the Agent
may, and at the direction of the Required Lenders shall, declare any obligation
of NationsBank to issue Letters of Credit terminated, whereupon the obligation
of NationsBank to issue Letters of Credit, hereunder shall terminate
immediately, and (ii) the Agent shall at the direction of the Required Lenders,
at their option, declare by notice to the Borrower any or all of the Obligations
to be immediately due and payable, and the same, including all interest accrued
thereon and all other Obligations of the Borrower to the Agent and the Lenders
(other than contingent Reimbursement Obligations relating to outstanding Letters
of Credit), shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of any kind, all of
which are hereby expressly waived, anything contained herein or in any
instrument evidencing the Obligations to the contrary notwithstanding; provided,
however, that notwithstanding the above, if there shall occur an Event of
Default under clause (f) or (g) above, then the obligation of NationsBank to
issue Letters of Credit hereunder shall automatically terminate and any and all
of the Obligations shall be immediately due and payable without the necessity of
presentment, demand, protest, notice or other formality of any kind or any
action by the Agent or the Required Lenders or notice to the Agent or the
Lenders;
(B) the Borrower shall, upon demand of the Agent or the Required
Lenders, deposit cash with the Agent in an amount equal to 105% the amount of
all Letter of Credit Outstandings (the "Cash Collateral"); and
(C) the Agent and the Lenders shall have all of the rights and remedies
available under the Letter of Credit Documents or under any applicable law.
8.02 In case any one or more Events of Default shall occur and not have
been waived, the Agent may, and at the direction of the Required Lenders shall,
proceed to protect and enforce their rights or remedies either by suit in equity
or by action at law, or both, whether for the specific performance of any
covenant, agreement or other provision contained herein or in any other Letter
of Credit Document, or to enforce the payment of the Obligations or any other
legal or equitable right or remedy.
8.03 No right or remedy herein conferred upon the Lenders or the Agent
is intended to be exclusive of any other rights or remedies contained herein or
in any other Letter of Credit Document, and every such right or remedy shall be
cumulative and shall be in addition to every other such right or remedycontained
herein and therein or now or hereafter existing at law or in equity or by
statute, or otherwise.
8.04 No course of dealing between the Borrower and any Lender or the
Agent or any failure or delay on the part of any Lender or the Agent in
exercising any rights or remedies under any Letter of Credit Document or
otherwise available to it shall operate as a waiver of any rights or remedies
and no single or partial exercise of any rights or remedies shall operate as a
waiver or preclude the exercise of any other rights or remedies hereunder or of
the same right or remedy on a future occasion.
8.05 If an Event of Default has occurred and not been waived, all
payments received by the Agent hereunder, in respect of any principal of or
interest on the Obligations or any other amounts payable by the Borrower
hereunder shall be applied by the Agent in the following order:
(a) amounts due to NationsBank and the Lenders pursuant to Sections
2.03 and 10.05 hereof;
(b) payments of interest on Reimbursement Obligations;
(c) payments of principal on Reimbursement Obligations;
(d) payment of cash amounts to the Agent in respect of Letter of
Credit Outstandings pursuant to Section 8.01(B) hereof;
(e) amounts due to NationsBank pursuant to Section 2.04 hereof;
(f) amounts due to NationsBank and the Lenders pursuant to Sections
6.14 and 10.10 hereof;
(g) payments of all other amounts due under this Agreement, if any;
and
(h) any surplus remaining after application as provided for herein,
to the Borrower or otherwise as may be required by applicable law.
9.01 Each Lender (including NationsBank in its capacity as issuer of the
Letters of Credit) hereby irrevocably designates and appoints NationsBank as the
Agent of the Lenders under this Agreement, and each of the Lenders hereby
irrevocably authorizes NationsBank as the Agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and the other Letter
of Credit Documents and to exercise such powers as areexpressly delegated to the
Agent by the terms of this Agreement, together with such other powers as are
reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any of the Lenders, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Agent.
9.02 The Agent may execute any of its duties under this Agreement by or
through agents or attorneysinfact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible to the Lenders for the negligence, gross negligence or willful
misconduct of any agents or attorneysinfact selected by it with reasonable care.
9.03 Neither the Agent nor any of its officers, directors, employees,
agents or attorneys-in-fact shall be liable to the Lenders for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement except for its or their own gross negligence or willful
misconduct. Neither the Agent nor any of its affiliates shall be responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Borrower or any of its Subsidiaries, or any officer or
representative thereof, contained in this Agreement or in any of the other
Letter of Credit Documents, or in any certificate, report, statement or other
document referred to or provided for in or received by the Agent under or in
connection with this Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any of the other
Letter of Credit Documents, or for any failure of the Borrower to perform its
obligations thereunder, or for any recitals, statements, representations or
warranties made, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any collateral. The Agent shall not be under
any obligation to any of the Lenders to ascertain or to inquire as to the
observance or performance of any of the terms, covenants or conditions of this
Agreement or any of the other Letter of Credit Documents on the part of the
Borrower or to inspect the properties, books or records of the Borrower or its
Subsidiaries.
9.04 The Agent shall deliver to each Lender promptly, but no later than
the second succeeding Business Day after receipt, copies of each notice or
document delivered to it by the Borrower pursuant to Sections 6.01(c), 6.01(d),
6.10, 6.11, 6.12, 6.13 and 6.16.
9.05 Subject to the provisions hereof, the Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Applications for Letters
of Credit, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram,telegram, telecopy or telex message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement unless it shall first receive advice or concurrence of the
Lenders or the Required Lenders as provided in this Agreement and it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense (other than any liability or expense resulting from the gross
negligence or willful misconduct of the Agent) which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of all of the Lenders or the Required
Lenders, as applicable, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
9.06 The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless the Agent has received
notice from a Lender or an Authorized Representative referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall promptly give notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by all of the Lenders or the Required Lenders, as
applicable; provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.07 Each Lender expressly acknowledges that neither the Agent nor any
of its affiliates has made any representations or warranties to it and that no
act by the Agent hereafter taken, including any review of the affairs of the
Borrower or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the financial
condition, creditworthiness, affairs, status and nature of the Borrower and its
Subsidiaries and made its own decision to enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Agent 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 analysis,
appraisals and decisions in taking or not taking actionunder this Agreement and
to make such investigation as it deems necessary to inform itself as to the
status and affairs, financial or otherwise, of the Borrower and its
Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower or any of its Subsidiaries which may come into the possession of the
Agent or any of its affiliates.
9.08 The Lenders, severally and not jointly, agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting any obligations of the Borrower or any Subsidiary so to do),
including its employees, directors, officers and agents, ratably according to
their respective Applicable Commitment Percentages as then in effect 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 at any time be imposed on, incurred by or asserted
against the Agent, including its employees, directors, officers and agents, in
any way relating to or arising out of this Agreement or any other document
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted by the Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Notwithstanding any provision of this
Agreement to the contrary, the agreements in this Section 9.08 shall survive the
final payment in full of the Obligations, occurrence of the Facility Termination
Date and the expiration or termination of this Agreement and each Letter of
Credit.
9.09 NationsBank and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower and its
Subsidiaries as though it were not the Agent hereunder. With respect to any
Letter of Credit issued by it and all Letter of Credit Outstandings, NationsBank
shall have the same rights and powers under this Agreement as any Lender and may
exercise the same as though it were not the Agent, and the terms "Lender" and
"Lenders" shall, unless the context otherwise indicates, include NationsBank in
its individual capacity.
9.10 If the Agent shall resign as Agent under this Agreement, prior
written notice of which shall be delivered by the Agent to the Borrower and each
Lender thirty (30) days prior to its effectiveness, then, so long as there shall
not have occurred and be continuing a Default or Event of Default, the Borrower
may appoint and the Required Lenders may approve (which approval shallnot be
unreasonably withheld or delayed) a successor Agent for the Lenders, or if a
Default or Event of Default shall have occurred and be continuing, the Required
Lenders may appoint a successor Agent for the Lenders, which successor Agent
shall be any commercial bank organized under the laws of the United States or
any state thereof or licensed to do business in the United States or any state
thereof, having a combined surplus and capital of not less than $250,000,000,
whereupon such successor Agent shall succeed to the rights, powers and duties of
the former Agent and the obligations of the former Agent shall be terminated and
cancelled, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement; provided, however, that the
former Agent's resignation shall not become effective until such successor Agent
has been appointed and has succeeded of record to all right, title and interest
in any collateral held by the Agent; provided, further, that if the Required
Lenders and the Borrower cannot agree as to a successor Agent within ninety (90)
days after the effective date of such resignation, the Agent shall appoint a
successor Agent which satisfies the criteria set forth above in this Section
9.09 for a successor Agent and the parties hereto agree to execute whatever
documents are necessary to effect such action under this Agreement or any other
document executed pursuant to this Agreement; provided, however that in such
event all provisions of this Agreement and the other Letter of Credit Documents
shall remain in full force and effect. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article IX shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
9.11 Each Lender agrees that if it shall, through the exercise of a right
of banker's lien, set off, counterclaim or otherwise, obtain payment with
respect to its Obligations (other than pursuant to Article III) which results in
its receiving more than its pro rata share of the aggregate payments with
respect to all of the Obligations (other than any payment pursuant to Article
III), then (A) such Lender shall be deemed to have simultaneously purchased from
the other Lenders a share in their Obligations so that the amount of the
Obligations held by each of the Lenders shall be pro rata and (B) such other
adjustments shall be made from time to time as shall be equitable to insure that
the Lenders share such payments ratably; provided, however, that for purposes of
this Section 9.10 the term "pro rata" shall be determined with respect to both
the Letter of Credit Commitment of each Lender and to the Total Letter of Credit
Commitment after subtraction in each case of amounts, if any, by which any such
Lender has not funded its share of the outstanding Participations, as the case
may be. If all or any portion of any such excess payment is thereafter
recovered from the Lender which received the same, the purchase provided in this
Section 9.10 shall be rescinded to the extent of such recovery, without
interest. The Borrower expressly consents to the foregoing arrangements and
agrees that each Lender so purchasing a portion of the otherLenders' Obligations
may exercise all rights of payment (including, without limitation, all rights of
setoff, banker's lien or counterclaim) with respect to such portion as fully as
if such Lender were the direct holder of such portion.
10.01 (a) At any time after the Closing Date each Lender may, with
the prior written consent of the Agent and the Borrower, which consents shall
not be unreasonably withheld, assign to one or more financial institutions all
or a portion of its rights and obligations under this Agreement and the other
Letter of Credit Documents (including, without limitation, all or a portion of
any Note payable to its order); provided, that (i) each such assignment shall be
of a constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations (including Participations) under this Agreement, (ii) the
minimum Letter of Credit Commitment which shall be assigned is $5,000,000
(together with which the assigning Lender's applicable portion of Participations
shall also be assigned) or such lesser amount constituting all of such Lender's
Letter of Credit Commitment (and applicable portion of Participations), (iii)
such assignee shall have an office located in the United States, (iv) an
assignment (other than an assignment of 100% of its interest) by NationsBank
shall not include any portion of its obligation to issue Letters of Credit, and
(v) no consent of the Borrower or Agent shall be required in connection with any
assignment by a Lender to such Lender's parent or any wholly-owned subsidiary of
such Lender's parent, except to the extent such that such assignment would
result in any Additional Costs payable by the Borrower. Upon such execution,
delivery, approval and acceptance, 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 or under the
other Letter of Credit Documents have been assigned or negotiated to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and thereunder and (y) the assignor thereunder shall, to the extent
that rights and obligations hereunder or under the other Letter of Credit
Documents have been assigned or negotiated by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from that portion of its
obligations under this Agreement and the other Letter of Credit Documents
applicable to the rights so assigned. Any Lender who makes an assignment shall
pay to the Agent a one-time administrative fee of $3,000.00.
(b) By executing and delivering an Assignment and Acceptance, the
assignor thereunder and the assignee thereunder confirm to andagree with each
other and the other parties hereto as follows: (i) the assignment made under
such Assignment and Acceptance is made under such Assignment and Acceptance
without recourse to such assigning Lender; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any Subsidiary or the performance or
observance by the Borrower or any Subsidiary of any of its obligations under any
Letter of Credit Document or any other instrument or document furnished pursuant
hereto; (iii) such assigning Lender is the legal and beneficial owner of the
interest being assigned under such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 5.01(e) hereof or most recently
delivered pursuant to Section 6.01 hereof, as the case may be, and such other
Letter of Credit Documents and other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) 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; (vi) such assignee 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 Letter of Credit Documents as are delegated to the Agent
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations 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 herein a copy
of each Assignment and Acceptance delivered to and accepted by it.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, the Agent shall give prompt notice and shall forward a copy
thereof to Borrower.
(e) If, pursuant to this Section 10.01, any interest in this
Agreement is transferred to any assignee Lender which is organized under the
laws of any jurisdiction other than the United States or any state thereof, the
assigning Lender shall cause such assignee Lender, concurrently with the
effectiveness of such transfer, (i) to represent to the assigning Lender (for
the benefit of the assigning Lender, the Agent and the Borrower) that under
applicable law and treaties no taxes will be required to be withheld by the
Agent, the Borrower or the assigning Lender with respect to any payments to be
made to such assignee Lender in respect of the Loans and (ii) to furnish to the
assigning Lender, the Agent and the Borrower such certificates, documents and
other evidence as required to comply with the penultimate paragraph of Section
3.02hereof, and the assignee Lender shall comply from time to time with all
applicable United States laws and regulations with regard to such withholding
tax exemption.
(f) Each Lender may sell participations at its expense to one or more
banks as to all or a portion of its rights and obligations (including without
limitation its Participations) under this Agreement; provided, that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such participations shall be in a minimum
amount of $5,000,000, and shall include an allocable portion of such Lender's
Participations, (iv) 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 and with regard to any and all
payments to be made under this Agreement; provided, that the participation
agreement between a Lender and its participants may provide that such Lender
will obtain the approval of such participant prior to such Lender's agreeing to
any amendment or waiver of any provisions of this Agreement which would extend
the Commitment Termination Date or the Facility Termination Date or increase the
Letter of Credit Commitment of the Lender granting the participation and (v) the
sale of any such participations which require Borrower to file a registration
statement with the United States Securities and Exchange Commission or under the
securities regulations or laws of any state shall not be permitted.
(g) The Borrower may not assign any rights, powers, duties or
obligations under this Agreement or the other Letter of Credit Documents without
the prior written consent of all of the Lenders.
10.02 All notices shall be in writing, except as to telephonic notices
expressly permitted or required herein, and written notices shall be delivered
by hand delivery, telefacsimile, overnight courier or certified or registered
mail. Any notice shall be conclusively deemed to have been received by any
party hereto and be effective on the day on which delivered to such party
(against (except as to telephonic or telefacsimile notice) receipt therefor) at
the address set forth below or such other address as such party shall specify to
the other parties in writing, or if sent prepaid by certified or registered mail
return receipt requested on the third Business Day after the day on which
mailed, addressed to such party at said address:
(a) if to the Borrower:
Data General corporation
4400 Computer Drive
Westboro, Massachusetts 01580
Attention: Treasurer
Telephone: (508) 898-7080
Telefacsimile: (508) 898-5408
(b) if to the Agent:
NationsBank of Texas, National Association
901 Main Street
TX1-492-13-05
Dallas, Texas 75283
Attention: Gilda Digges
Telephone: (214) 508-2138
Telefacsimile: (214) 508-2515
with a copy to:
NationsBank of North Carolina, National Association
Corporate Banking
767 Fifth Avenue, 5th Floor
New York, New York 10153-0083
Attention: George Van
Telephone: (212) 407-5326
Telefacsimile: (212) 751-6909
(c) if to the Lenders:
At the addresses set forth on the signature pages hereof and on the signature
page of each Assignment and Acceptance.
10.03 The Borrower agrees that the Agent and each Lender shall have a
lien for all the Obligations of the Borrower upon all deposits or deposit
accounts, of any kind, or any interest in any deposits or deposit accounts
thereof, now or hereafter pledged, mortgaged, transferred or assigned to the
Agent or such Lender or otherwise in the possession or control of the Agent or
such Lender (other than for safekeeping) for any purpose for the account or
benefit of the Borrower and including any balance of any deposit account or of
any credit of the Borrower with the Agent or such Lender, whether now existing
or hereafter established, hereby authorizing the Agent and each Lender at any
time or times with or without prior notice to apply such balances or any part
thereof to such of the Obligations of the Borrower to the Lenders then past due
and in such amounts as they may elect, and whether or not any collateral or the
responsibility of other Persons primarily, secondarily or otherwise liable may
be deemed adequate. For the purposes of this paragraph, all remittances and
property shall be deemed to be in the possession of the Agent or such Lender as
soonas the same may be put in transit to it by mail or carrier or by other
bailee.
10.04 All covenants, agreements, representations and warranties made
herein shall survive the expiration of the Letters of Credit and the execution
and delivery to the Lenders of this Agreement and shall continue in full force
and effect so long as any of the Obligations remain outstanding or any Lender
has any commitment hereunder and until the Facility Termination Date. Whenever
in this Agreement, any of the parties hereto is referred to, such reference
shall be deemed to include the successors and permitted assigns of such party
and all covenants, provisions and agreements by or on behalf of the Borrower
which are contained in this Agreement and the other Letter of Credit Documents
shall inure to the benefit of the successors and permitted assigns of the
Lenders or any of them.
10.05 The Borrower agrees (a) to pay or reimburse the Agent for all its
reasonable out-of-pocket costs and reasonable expenses incurred in connection
with the preparation, negotiation and execution of this Agreement or any of the
other Letter of Credit Documents and the consummation of the transactions
contemplated hereby and thereby, and all such costs and expenses in connection
with any amendment, supplement or modification to this Agreement or any other
Letter of Credit Document, all disbursements of counsel to the Agent, all
reasonable due diligence expenses and syndication expenses, including, without
limitation, travel expenses of the Agent and its counsel in connection with due
diligence and syndication member meetings and copying and binding expenses for
syndication members, (b) to pay or reimburse the Agent and the Lenders for all
their reasonable costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement and the other Letter of
Credit Documents, including without limitation, the reasonable fees and
disbursements of their counsel and any payments in indemnification or otherwise
payable by the Lenders to the Agent pursuant to the Letter of Credit Documents
and (c) to pay, and indemnify and hold harmless the Agent and the Lenders from,
any and all recording and filing fees and any and all liabilities with respect
to, or resulting from any failure on the part of the Borrower to pay or delay in
paying, documentary, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of this Agreement or any other Letter of Credit Documents, or
consummation of any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement or any other Letter of Credit
Documents. All of the foregoing costs, liabilities and expenses will be paid by
the Borrower to the Agent except to the extent such cost, liability or expense
is found in a judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the party claiming
reimbursement or indemnification.
10.06 No amendment, modification or waiver of any provision of this
Agreement or any of the Letter of Credit Documents and no consent by the Lenders
to any departure therefrom by the Borrower shall be effective unless such
amendment, modification or waiver shall be in writing and signed by the Borrower
and the Agent, but only upon having received the written consent of the Required
Lenders, and the same shall then be effective only for the period and on the
conditions and for the specific instances and purposes specified in such
writing; provided, however, that, no such amendment, modification or waiver
(i) which changes, extends or waives any provision of Section 9.10
hereof or this Section 10.06, the amount of or the due date of any payment of or
the rate of interest or determination of any fee payable on or in connection
with any Obligation, changes the definition of Required Lenders, which permits
an assignment by Borrower of its Obligations hereunder, which reduces the
required consent of Lenders provided hereunder, which increases or decreases the
Letter of Credit Commitment of any Lender or extends the Commitment Termination
Date or the Facility Termination Date or which waives any condition to the
issuance of any Letter of Credit or which waives a Default or Event of Default
under Section 8.01(g) or (h) shall be effective unless in writing and signed by
each of the Lenders; or
(ii) which affects the rights, privileges, immunities or indemnities of the
Agent shall be effective unless in writing and signed by the Agent.
No notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances, except
as otherwise expressly provided herein. No delay or omission on any Lender's or
the Agent's part in exercising any right, remedy or option shall operate as a
waiver of such or any other right, remedy or option or of any Default or Event
of Default. No partial exercise by the Agent or the Lenders of any rights or
remedies hereunder shall operate as a waiver of any other rights or remedies
that may also be available hereunder.
10.07 Unless otherwise consented to in writing by the Borrower (which
consent shall not be unreasonably withheld with respect to actual or potential
Assignees and participants), 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, 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, (c) as requested or
required by any State, Federal or foreign authority or examiner regulating banks
or banking or (d) in connection with anylitigation relating to this Agreement or
the transactions contemplated hereby to which the Agent or any Lender is a
party, provided that the Agent or any Lender disclosing Proprietary Information
in connection with any such litigation shall notify the Borrower of its intended
disclosure of such Proprietary Information ten (10) days prior to such to such
disclosure, if legally permitted to do so, and shall use reasonable efforts to
keep such information confidential among the parties to such litigation by means
of protective orders or otherwise. For purposes of this Agreement, the term
"Proprietary Information" shall include all nonpublic 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.
10.08 This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such fully-executed counterpart.
10.09 The termination of this Agreement shall not affect any rights of
the Borrower, the Lenders or the Agent or any obligation of the Borrower, the
Lenders or the Agent, arising prior to the effective date of such termination,
and the provisions hereof shall continue to be fully operative until all
transactions entered into or rights created or obligations incurred prior to
such termination have been fully disposed of, concluded or liquidated and the
Obligations arising prior to or after such termination have been irrevocably and
finally paid in full. The rights granted to the Agent for the benefit of the
Lenders hereunder and under the other Letter of Credit Documents shall continue
in full force and effect, notwithstanding the termination of this Agreement,
until all of the Obligations have been paid in full after the termination hereof
and until the Facility Termination Date. All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination
hereof until payment in full of the Obligations and until the Facility
Termination Date unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment pursuant to the Letter of Credit
Documents of all or any part ofthe Obligations, any Lender is for any reason
compelled to surrender such payment to any Person because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force and the Borrower shall be liable to pay, and shall indemnify and
hold harmless such Lender for, the amount of such payment surrendered until such
Lender shall have been finally and irrevocably paid in full. The provisions of
the foregoing sentence shall be and remain effective notwithstanding any
contrary action which may have been taken by the Lenders in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
10.10 In consideration of the execution and delivery of this Agreement
by the Agent and each Lender and the extension of the Letter of Credit
Commitments, the Borrower hereby indemnifies, exonerates and holds free and
harmless the Agent and each Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") from
and against any and all actions, causes of action, suits, losses, costs,
liabilities and damages and expenses incurred in connection therewith whatsoever
with respect to or arising out of the execution, delivery, enforcement and
performance of this Agreement or any other Letter of Credit Document
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including attorneys' fees and
disbursements (collectively, the "Indemnified Liabilities") incurred by the
Indemnified Parties or any of them as a result of, or arising out of, or
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day and
year first above written.
DATA GENERAL CORPORATION
By:________________________________
Title:
____________________________
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, as Agent for the Lenders
By:________________________________
Title:
____________________________
NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION
By:
_______________________________
Name:
_____________________________
Title:
____________________________
Lending Office:
901 Main Street
TX1-492-13-05
Dallas, Texas 75283
Attention: Gilda Digges
Telephone: (214) 508-2138
Telefacsimile: (214) 508-2515
Wire Transfer Instructions:
NationsBank TX
ABA# 111000025
Reference: Data General
Corporation
Account No.:
Attention: Corporate Loans Funds
Transfer
THE BANK OF NEW YORK
By:
____________________________
Name:
__________________________
Title:
_________________________
Lending Office:
One Wall Street, 22nd Floor
New York, New York 10286
Attention: Kenneth P. Sneider,
Jr.
Telephone: (212) 635-6863
Telefacsimile: (212) 635-6999
With a copy to:
The Bank of New York
One Wall Street, 15th Floor
New York, New York 10286
Attention:
_____________________
Telephone: (212) 635-1517
Telefacsimile: (212) 635-1665
Wire Transfer Instructions:
The Bank of New York
ABA# 021000018
Reference: Data General
Account No.: GLA 111556
Attention: Commercial Loan Dept.
FLEET BANK OF MASSACHUSETTS, N.A.
By:
____________________________
Name: Thomas W. Davies
Title: Vice President
Lending Office:
75 State Street
MABOF04M
Boston, Massachusetts 02109
Attention: Thomas W. Davies
Telephone: (617) 346-1645
Telefacsimile: (617) 346-1633
Wire Transfer Instructions:
ABA# 011 000 138
Reference:Data General
Corporation Account Name: Fleet Bank
of Massachusetts
Account No.: 12098603156
Credit to: Incoming Commercial
Loan Wire Account
Attention: Agent Bank
EXHIBIT A
Letter of Credit Commitments
Lender Letter of Credit Commitment
NationsBank of Texas,
National Association $10,000,000
The Bank of New York $10,000,000
Fleet Bank of Massachusetts, N.A. $10,000,000
____________
Total Letter of Credit Commitment $30,000,000
EXHIBIT B
Form of Assignment and Acceptance
DATED , 19
Reference is made to the Letter of Credit and Reimbursement Agreement
dated as of __________, 1994 (as amended or supplemented and in effect from time
to time, the "Agreement") among Data General Corporation (the "Borrower"), the
Lenders (as defined in the Agreement), and NationsBank of Texas, National
Association, as Agent for the Lenders ("Agent"). Unless otherwise defined
herein, terms defined in the Agreement are used herein with the same meanings.
(the "Assignor")
and (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, WITHOUT
RECOURSE, and the Assignee hereby purchases and assumes from the Assignor, a
_______% interest in and to all of the Assignor's rights and obligations under
the Agreement and the other Letter of Credit Documents as of the Effective Date
(as defined below), including, without limitation, such percentage interest in
the Participations held by the Assignor on the Effective Date. Assignor.
2. The Assignor (i) represents and warrants that, as of the date
hereof, the aggregate outstanding principal amounts of Letters of Credit in
which it is deemed to have a Participation under the Agreement is $________;
(ii) represents and warrants that it is the legal and beneficial owner of the
interests being assigned by it hereunder and that such interests are free and
clear of any adverse claim; (iii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Agreement or any of the other
Letter of Credit Documents or any other instrument or document furnished
pursuant thereto, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Agreement or any of the other Letter of
Credit Documents or any other instrument or document furnished pursuant thereto;
and (iv) 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 the Agreement or any
of the other Letter of Credit Documents or any other instrument or document
furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statementsreferred to in
Sections 5.01(e) and delivered pursuant to Section 6.01 thereof, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor,
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 the Agreement; (iii) appoints and authorizes the Agent
to take such actions on its behalf and to exercise such powers under the Letter
of Credit Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Agreement are required to be performed by it as a Lender; and (v)
specifies as its address for notices the office set forth beneath its name on
the signature pages hereof.
4. The effective date for this Assignment and Acceptance shall be
_____________________________ (the "Effective Date"). Following the execution of
this Assignment and Acceptance and the consent thereto by the Borrower, it will
be delivered to the Agent for acceptance and recording by the Agent.
5. Upon such acceptance and recording, as of the Effective Date, (i)
the Assignee shall be a party to the Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Letter of Credit Documents and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Agreement and the other
Letter of Credit Documents.
6. Upon such acceptance and recording, from and after the Effective
Date, the Agent shall make all payments under the Agreement in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest, commitment fees and letter of credit fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Agreement for periods prior to the Effective
Date directly between themselves.
7. This Assignment and Acceptance shall be governed by and construed
in accordance with, the laws of the State of New York.
[NAME OF ASSIGNOR]
By:
Name:
Title:
Notice Address:
______________________________
______________________________
After the Effective Date:
Outstanding Participation in
Letters of Credit Outstanding:
$________________
[NAME OF ASSIGNEE]
By:
Name:
Title:
Notice Address/Lending Office
______________________________
______________________________
______________________________
Wire transfer Instructions:
______________________________
______________________________
______________________________
After the Effective Date:
Outstanding Participation in
Letters of Credit Outstanding:
$________________
Accepted this ____ day of _______, 19___
NATIONSBANK OF TEXAS, NATIONAL
ASSOCIATION, as Agent
By:
Name:
Title:
Consented to:
DATA GENERAL CORPORATION
By:
Name:
Title:
EXHIBIT C
Notice of Appointment (or Revocation) of Authorized
Representative
Reference is hereby made to the Letter of Credit and Reimbursement
Agreement dated as of __________, 1994 (as amended or supplemented and in effect
from time to time, the "Agreement") among Data General Corporation (the
"Borrower"), the Lenders (as defined in the Agreement), and NationsBank of
Texas, National Association, as Agent for the Lenders ("Agent"). Capitalized
terms used but not defined herein shall have the respective meanings therefor
set forth in the Agreement.
The Borrower hereby nominates, constitutes and appoints each individual
named below as an Authorized Representative under the Letter of Credit
Documents, and hereby represents and warrants that (i) set forth opposite each
such individual's name is a true and correct statement of such individual's
office (to which such individual has been duly elected or appointed), a genuine
specimen signature of such individual and an address for the giving of notice,
and (ii) each such individual has been duly authorized by the Borrower to act as
Authorized Representative under the Letter of Credit Documents:
Name and Address Office Specimen Signature
_________________ _____________________ ____________________
_________________
_________________
_________________ _____________________ ____________________
_________________
_________________
_________________ _____________________ ____________________
_________________
_________________
_________________ _____________________ ____________________
_________________
_________________
Borrower hereby revokes (effective upon receipt hereof by the Agent) the prior
appointment of ________________ as an Authorized Representative.
This the ___ day of __________________, 19__.
DATA GENERAL CORPORATION
By:
Name:
Title:
EXHIBIT D
Form of Opinion of Counsel to the Borrower
December __, 1994
NationsBank of Texas
National Association
901 Main Street
9th Floor, TX1-492-0901
Dallas, Texas 75202
Fleet Bank of Massachusetts,
National Association
75 State Street
Boston, MA 02109
The Bank of New York
One Wall Street
New York, New York 10286
Re: Letter of Credit and Reimbursement Agreement
Ladies and Gentlemen:
We have acted as counsel to Data General Corporation, a Delaware
corporation ("Data General"), in connection with the execution and delivery of
the Letter of Credit and Reimbursement Agreement, dated as of December __, 1994,
among Data General, NationsBank of Texas, National Association ("NationsBank"),
Fleet Bank of Massachusetts, National Association, The Bank of New York and
NationsBank, as Agent (the "Letter of Credit Agreement"). This opinion is being
rendered pursuant to Section 4.01(b) of the Letter of Credit Agreement. Each
capitalized term used herein and not otherwise defined herein shall have the
meaning specified for such term in the Letter of Credit Agreement.
In connection with this opinion, we have examined a copy of the Letter of
Credit Agreement and such certificates of corporate officers of Data General,
and of public officials, as we have deemed relevant and appropriate as a basis
for the opinions expressed herein, and we have made no effort to verify
independently the facts set forth in such certificates. Further, in making the
foregoing examinations, we have assumed the genuineness of all signatures, the
legal capacity of each Person signatory to any of the aforesaid documents, the
authenticity of all documents submitted to as originals and the conformity to
authentic original documents of all documents submitted to us as copies.
In rendering the opinions express herein, we have assumed that each of
the documents examined by us has been duly authorized, executed and delivered by
each of the parties thereto other thanData General, that each such party has the
requisite power and authority to execute, deliver and perform such documents to
which it is a party and that such documents constitute the legal, valid and
binding obligations of each such party.
OPINIONS
Based only upon the foregoing, and having due regard for such legal
considerations as we have deemed relevant, we are of the opinion, subject in all
respects to the assumptions, qualifications, exceptions and limitations set
forth herein, that:
1. Data General is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the requisite
corporate power and authority to own its property and to carry on its business
as now being conducted and is duly qualified as a foreign corporation in
Massachusetts and North Carolina.
2. Data General has the requisite corporate power and authority to
execute and deliver the Letter of Credit Agreement, to incur the obligations
provided for therein and to perform its obligations thereunder, and the
execution, delivery and performance of the Letter of Credit Agreement has been
duly authorized by all necessary corporate action.
3. The Letter of Credit Agreement has been validly executed and
delivered by Data General and, under the laws of the State of New York,
constitutes the legal, valid and binding obligation of Data General, enforceable
against Data General in accordance with its terms.
4. Neither the execution nor the delivery by Data General of the
Letter of Credit Agreement nor the performance by Data General of its
obligations thereunder will conflict with or violate, result in a breach of or
constitute a default under, or result in the creation or imposition of any Lien
(other than any Lien that may be created in favor of the Lenders) upon or with
respect to any of the real or personal properties of Data General under, (a) any
term or provision of the certificate of incorporation or by-laws of Data
General, (b) any material order known to us, (c) any statutory law or regulation
currently applicable to Data General, or (d) any contract or agreement filed as
an exhibit to Data General's Annual Report on Form 10-K dated December 20, 1994.
5. No consent, approval, order or authorization by any court or
other governmental authority of the federal government of the United States or
the State of New York (or any subdivision thereof) nor, solely to the extent
required under the General Corporation Law of the State of Delaware, of the
State of Delaware, is required in connection with the authorization, execution,
delivery or performance of the Letter of Credit Agreement by Data General.
6. To our knowledge, no action, suit, investigation or proceeding
before or by any Governmental Authority or arbitral authority is pending or
threatened against Data General which calls into question the validity or
enforceability of the Letter of Credit Agreement or the titles to their
respective offices or authority of any officer of Data General.
CERTAIN ASSUMPTIONS, QUALIFICATIONS
EXCEPTIONS AND LIMITATIONS
A. In rendering the opinion expressed in paragraph 1 above regarding
existence, good standing and qualification, we have relied on certificates of
public officials and have conducted no further investigation.
B. The foregoing opinions are subject to the fact that the
enforceability of the Letter of Credit Agreement may be limited or affected by
(a) bankruptcy, insolvency, reorganization, moratorium, liquidation,
rearrangement, fraudulent transfer, fraudulent conveyance and other similar laws
(including court decisions) now or hereafter in effect and affecting the rights
and remedies of creditors generally or providing for the relief of debtors, (b)
the refusal of a particular court to grant equitable remedies, including,
without limiting the generality of the foregoing, specific performance and
injunctive relief, (c) general principles of equity (regardless of whether such
remedies are sought in a proceeding in equity or at law), and (d) judicial
discretion.
C. In rendering the opinions expressed herein, we express no opinion
as to the legality, validity, enforceability or binding effect of provisions in
the Letter of Credit Agreement (i) relating to severability; (ii) relating to
waiver or ratification of future acts or defenses; (iii) relating to any
indemnification that might be limited by public policy or which might require
indemnification for losses or expenses caused by negligence, gross negligence,
willful misconduct, fraud or illegality of an indemnified party; or (iv)
purporting to waive obligations or standards of good faith, diligence,
reasonableness or care under applicable principles of common law and judicial
decisions.
D. In rendering the opinion expressed in paragraph 6 above, no
opinion is therein expressed or intended to be expressed regarding the outcome
or possible outcome of any action, suit, investigation or proceeding, and no
such opinion shall be inferred therefrom.
E. As used herein, the phrase "to our knowledge" or words of similar
import means conscious awareness of facts or other information by lawyers in our
firm who have devoted substantive attention to the transaction to which this
opinion relates, which attention did not include examination of any Governmental
Authority or arbitral authority with respect to any action, suit, investigation
or proceeding applicable to Data General.
F. The foregoing opinions are expressly limited to matters under and
governed by the internal substantive laws of the State of New York (exclusive of
principles of conflicts of laws), the federal laws of the United States as
applied in the Second Circuit, and the General Corporation Law of the State of
Delaware.
G. The opinions expressed herein are for the sole benefit of, and
may only be relied upon by, the addressees hereof in connection with the
transactions contemplated by the Letter of Credit Agreement. This opinion may
not be relied upon for any other purpose or furnished to or relied upon for any
purpose by any other Person without our prior written consent.
H. The opinions expressed herein are as of the date hereof and we
make no undertaking to amend or supplement such opinions as facts and
circumstances come to our attention or changes in the law occur which could
affect such opinions.
Very truly yours,
FULBRIGHT & JAWORSKI L.L.P.
EXHIBIT E
Compliance Certificate
To: NationsBank of Texas, National Association,
as Agent
901 Main Street
TX1-492-13-05
Dallas, Texas 75283
Telefacsimile: (214) 508-2515
Attention: Gilda Digges
Reference is hereby made to the Letter of Credit and Reimbursement
Agreement dated as of _________________, 1994 (as amended or modified and in
effect from time to time, the "Agreement") among Data General Corporation (the
"Borrower"), the Lenders (as defined in the Credit Agreement) and NationsBank of
Texas, National Association, as Agent for the Lenders ("Agent"). Capitalized
terms used but not defined herein shall have the respective meanings therefor
set forth in the Agreement. The undersigned, a duly authorized and acting
Authorized Representative, hereby certifies to you as of __________ [insert
Determination Date] as follows:
1. Calculations:
A.Compliance with Section 7.01. Consolidated
Total Debt Ratio
1. Consolidated Total Debt:$__________
2. Consolidated Total Capitalization:
(i) Consolidated Shareholders'
Equity$__________
(ii) Consolidated Total Debt
(long term)$__________
(iii) sum of (i) and (iii) $
3. Ratio of A.1. to A.2.____ to 1.00
Required: Not greater than .45 to 1.00
B.Compliance with Section 7.02. Consolidated Interest Coverage Ratio
1. Consolidated Operating Cash Flow
(i) Consolidated Net Income$__________
(ii) Consolidated Interest Expense$__________
(iii) Taxes on income$__________
(iv) Amortization depreciation and
other non-cash expense items$__________
2. Consolidated Interest Expense:$__________
3. Ratio of B.1 to B.2____ to 1.00
Required:Not less than 3.50 to 1.00
C. Compliance with Section 7.03.
Consolidated Tangible Net Worth
1. Consolidated Tangible Net Worth
(i) Consolidated Shareholders' Equity$__________
(ii) Net book value of intangible assets$__________
(iii) Sum of capitalized software research
and development costs, foreign
exchange cumulative translation
adjustments, recognized pension
liabilities and deferred service
contract revenues accounted for
as a liability and deferred gain
on sale of Manhattan Beach property $__________
(iv) (i) minus (ii) plus (iii)$
2.Consolidated Net Income for the period commencing on the
Closing Date and ending on the most recent Determination Date and without any
decrease as a result of any net loss during a Fiscal Quarter during such
period$__________
3. C.2. x .50$__________
4. C.3. + $340,000,000$__________
Required: C.1 must be equal to or greater than C.4
D. Compliance with Section 7.04.
Consolidated Cash and Eligible Securities
1. Consolidated Cash and Eligible
Securities $__________
2. Letter of Credit Outstandings$__________
3. Outstanding Senior Indebtedness$__________
4. D.2. + D.3. + $50,000,000$__________
Required: D.1. must be greater than D.4.
line spacing return; L/R margins back to 1"2. No Default
A. Since __________ (the date of the last similar certification),
(a) Borrower has not defaulted in the keeping, observance, performance or
fulfillment of any covenant or condition of the Letter of Credit Documents; and
(b) no Default or Event of Default has occurred.
B. If a Default or Event of Default has occurred since __________
(the date of the last similar certification), the Borrower proposes to take the
following action with respect to such Default or Event of
Default:
.
(Note, if no Default or Event of Default has occurred, insert "Not Applicable").
The Determination Date is the date of the last required financial
statements submitted to the Lenders in accordance with Section 6.01 of the
Agreement.
The undersigned Authorized Representative hereby certifies that the
information set forth above is true, correct and complete as of the date hereof.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 19___.
___________________________________
Authorized Representative for Data General Corporation
Schedule 1
Outstanding Letters of Credit
EXPIRATION
NAME AMOUNT DATE
REASON
Hartford Fire Insurance $ 150,000 03/29/95 General Liab.
Lumbermans Mutual Casualty Co. 264,000 04/30/95 Liabil.
American Motorists Insurance 66,000 04/30/95 Auto for claims
Scotia Bank Issued L/C 4,611,600 08/17/95 UK over-draft
facility
National Westminster Bank AG 760,000 09/08/95 Customs Excise
& Rent
National Union Fire Insurance 5,000,000 09/15/95 Surety bond
___________
$10,851,600
Schedule 5.01(d)
Subsidiaries
The following are the company's subsidiaries as of the close of the
fiscal year ended September 24, 1994. All beneficial interests are
wholly-owned, directly or indirectly, by the company, with the exception of Data
General Technology (1990) Limited which is 45% owned. All subsidiaries are
included in the company's consolidated financial statements.
State or
Jurisdiction
Name of
Organization
Asia Data General Corporation Delaware
China Data General Corporation Delaware
Clariion Storage Systems, Inc. Delaware
DG Argentina S.A. Argentina
DG Foreign Sales Corp., Inc. Virgin Islands
DG Venezuela C.A. Venezuela
Data General A.G. Switzerland
Data General A/S Norway
Data General A/S Denmark
Data General Africa SARL France
Data General Australia Pty., Ltd. Australia
Data General Bahamas, Ltd. Bahamas
Data General Chile S.A. Chile
Data General (Canada) Inc. Canada
Data General Computers Sdn, Bhd. Malaysia
Data General Gesellschaft mbH Austria
Data General AB Sweden
Data General Costa Rica, S.A. Costa Rica
Data General de Mexico, S.A. de C.V. Mexico
Data General del Peru, S.A. Peru
Data General Europe, Inc. Delaware
Data General France SARL France
Data General GmbH Germany
Data General Graphics, Inc. Delaware
Data General Nederland BV Netherlands
Data General Hong Kong, Ltd. Hong Kong
Data General Hong Kong Sales and Service, Ltd. Hong Kong
Data General Hungary Hungary
Data General International, Inc. Delaware
Data General International Manufacturing Pte., Singapore
Ltd.
Data General International Sales Corporation Delaware
Data General Investment Corporation Delaware
Data General Ireland, Ltd. Ireland
Data Genreal Israel, Ltd. Israel
Data General Japan YK Japan
Data General Korea Ltd. Korea
Data General Ltda. Brazil
Data General Latin America, Inc. Delaware
Data General Limited United Kingdom
Data General New Zealand, Limited New Zealand
Data General OY Finland
Data General Philippines, Inc. Philippines
Data General (Portugal) Sociedade de
Computadores Lda. Portugal
Data General Puerto Rico, Inc. Delaware
Data General S.A. Belgium
Data General S.A. Spain
Data General S.p.A. Italy
Data General Singapore Pte., Ltd. Singapore
Data General Technology (1990) Limited Israel
Data General Telecommunications, Inc. Delaware
Data General System (Thailand) Limited Thailand
Datagen, Inc. Delaware
Datagen Investment Trust Delaware
Digital Computer Controls, Inc. Delaware
General Risk Insurance Company Ltd. Bermuda
Schedule 5.01(f)
Liens
1. Research Triangle Park, NC $100,000
2. Apex, NC $700,000
Schedule 5.01(p)
Hazardous Materials
Site Status
Sunnyvale, CA Regional Water Quality Control Board issued order to
remediate contaminated groundwater under the property in 1988 (Order No.
88-081). Airstripper has been built, continues remediation and monitoring of the
groundwater.
EXHIBIT 11
DATA GENERAL CORPORATION
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
(Unaudited)
(In thousands, except per share amounts)
Quarter Ended
Dec. 24, Dec. 25,
1994 1993
Primary earnings per share:
Net income (loss). . . . . . . . . . . . . . . $24,206 $(21,091)
Weighted average shares outstanding. . . . . . 36,550 35,333
Incremental shares from use of treasury
stock method for stock options . . . . . . . 1,663 --
Common and common equivalent
shares, where applicable . . . . . . . . . . 38,213 35,333
Net income (loss) per share. . . . . . . . $.63 $(.60)
Earnings per share assuming full
dilution:
Net income (loss). . . . . . . . . . . . . . . $24,206 $(21,091)
Interest on convertible debentures,
net of income taxes. . . . . . . . . . . . . 2,422 --(a)
Net income (loss) for purposes of
calculating earnings per share
assuming full dilution . . . . . . . . . . . $26,628 $(21,091)
Weighted average shares outstanding. . . . . . 36,550 35,333
Incremental shares from use of treasury
stock method for stock options . . . . . . . 1,735 --(a)
Incremental shares from assumed conversion
of convertible debentures . . . . . . . . . 6,510 --(a)
Common shares, assuming issuance
of all dilutive contingent shares,
were applicable. . . . . . . . . . . . . . . 44,795 35,333
Net income (loss) per share. . . . . . . . $.59 $(.60)
(a) For the quarter ended December 25, 1993, the assumed conversion of
convertible debentures and the use of treasury stock method for
stock options, giving effect to the incremental shares and the
adjustment to reduce interest expense, results in anti-dilution and
have therefore been excluded from the computation.
Data General Corporation
First Quarter 1995 Interim Report
Period ending December 24, 1994
Bringing Common Sense to Computing
TO OUR STOCKHOLDERS, CUSTOMERS AND EMPLOYEES:
Data General reported net income of $24.2 million, or $.63 per
share ($.59 per share assuming full dilution) for its first quarter of
fiscal 1995, which ended December 24, 1994. The net income includes a
one-time pre-tax gain of $44.5 million resulting from the settlement
of a six-year software copyright infringement and trade secret lawsuit
against Northrop Grumman Corporation. During last year's first
quarter the company reported a net loss of $21.1 million.
From operations, the company reported a loss of $9.4 million,
compared with an operating loss of $18.5 million in the first quarter
last year. Revenues for the quarter were $282.2 million, compared
with last year's first quarter revenues of $261.2 million.
The first quarter has traditionally been a weak quarter for us.
However, despite this we were able to record a year-over-year revenue
increase of eight percent and reduce our operating loss by nearly 50
percent. This marks the fourth consecutive quarter in which total
revenues have shown an increase over the comparable quarter of the
prior year.
We continue to see year-over-year revenue growth in our AViiONR
product family, as well as increasing acceptance of our Open CLARiiONR
storage product line which had its strongest quarter to date.
Overall, our open systems products now represent slightly more than 90
percent of our total product revenues.
Approximately two-thirds of AViiON revenues came from sales of
our high-end servers. This is encouraging because it is consistent
with our market focus on commercial enterprises which need powerful
systems, such as our AViiON servers, to support large numbers of
users, handle large numbers of transactions and support large
databases.
Data General today is very well positioned within the high-end
commercial computing marketplace with our AViiON server and CLARiiON
storage system platform, our industry-leading commercial UNIX
operating system, our ability to provide a wide spectrum of systems
integration services, and through our relationships with software
partners who provide database and enterprise applications.
Our financial position remains strong. In the first quarter Data
General increased its cash position by more than $20 million to $211
million. The increase includes the cash received from the settlement
of litigation with Northrop Grumman Corporation.
During the quarter, the company's open systems product line was
strengthened with the introduction of two Windows-based systems
management products which allow users to monitor and manage their
enterprise-wide computer networks from anywhere in the world at any
time.
In addition, three software products were introduced by the
company's CLARiiON Business Unit during the first quarter. The new
products extend the unit's storage offerings for the Sun and IBM
server marketplaces, providing expanded systems management and fault
tolerant capabilities.
Our transition to a high-end open systems company is nearly
complete, and we believe we have the strategy, the product roadmap and
the financial resources required for long-term success.
Respectfully submitted,
(signature)
Ronald L. Skates
President and Chief Executive Officer
February 1, 1995
ANNUAL MEETING HIGHLIGHTS
The Annual Meeting of Stockholders of Data General Corporation
was held in Boston on Wednesday, January 25, 1995. Stockholders voted
on two proposals -- the election of company directors, and an
amendment to Data General's Employee 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.
W. Nicholas Thorndike -- Corporate Director and Trustee.
Donald H. Trautlein -- Retired Chairman and Chief Executive
Officer, Bethlehem Steel Corporation.
Richard L. Tucker -- Managing Director, Trinity Investment
Management Corporation.
During the meeting, stockholders voted to approve amendments to
the Employee Stock Option Plan increasing the number of shares from
4,000,000 to 7,000,000, extending the termination date from October 6,
1996 to November 2, 2004, and giving the Employee Option Plan
Committee discretion to designate options as transferable.
In his remarks to stockholders, Data General President and CEO
Ronald L. Skates said, "We were one of the first companies to adopt an
open systems strategy when we announced it in 1988. We have made as
significant a transition as any company in the industry. I believe we
have emerged as a company well positioned in growing markets of our
industry. However, we still have much to do as the pace of change in
the industry has accelerated."
Noting increased pressure on gross margins and Data General's
response in terms of changing the company cost structure, Skates
defined Data General: "Today, Data General is an open systems server
company focused on high-end commercial computing. We provide servers,
storage products and services to information systems users worldwide.
We work with partners to deliver software applications and tools."
"We are refining our business to focus on the largest area of
opportunity -- high-end commercial servers. This used to be the domain
of mainframes. But our high-end server technology can now meet these
needs, and the capabilities Data General has developed over the past
few years track line-for-line with the requirements of large
customers."
"The mission for Data General in 1995 is clear. We need to grow
our revenues from high-end commercial servers, continue our success
with CLARiiON storage, and manage our business to make a profit.
Today's gross margins simply do not support yesterday's business
models. We need to stay ahead of the curve."
"Over the past few years, we have assembled a management team
capable of carrying out our business strategy. We have people with the
talents and expertise to lead Data General back to profitability. All
the pieces are in place. We must grow our revenues to achieve success,
and we are committed to the task."
The full text of remarks made by Mr. Skates is available
electronically on the world-wide web (dg.com or gopher.dg.com). Copies
may also be obtained by writing to: Data General Corporation,
Corporate Communications Department, MS-B221, 4400 Computer Drive,
Westboro, Mass. 01580.
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended
Dec. 24, Dec. 25,
in thousands, except net income (loss) per share 1994 1993
Revenues:
Product . . . . . . . . . . . . . . . . . . . . . .$181,193 $163,697
Service . . . . . . . . . . . . . . . . . . . . . . 101,012 97,530
Total revenues . . . . . . . . . . . . . . . . 282,205 261,227
Costs and expenses:
Cost of product revenues. . . . . . . . . . . . . . 119,458 111,603
Cost of service revenues. . . . . . . . . . . . . . 64,495 57,556
Research and development. . . . . . . . . . . . . . 21,664 23,517
Selling, general, and administrative. . . . . . . . 85,990 87,022
Total costs and expenses . . . . . . . . . . . 291,607 279,698
Loss from operations. . . . . . . . . . . . . . . . . . (9,402) (18,471)
Interest income . . . . . . . . . . . . . . . . . . . . 2,192 1,454
Interest expense. . . . . . . . . . . . . . . . . . . . 3,556 3,474
Other income, net . . . . . . . . . . . . . . . . . . . 41,972 --
Income (loss) before income taxes . . . . . . . . . . . 31,206 (20,491)
Income tax provision. . . . . . . . . . . . . . . . . . 7,000 600
Net income (loss) . . . . . . . . . . . . . . . . . . $24,206 $(21,091)
Primary net income (loss) per share:
Net income (loss) per share . . . . . . . . . . . . . $.63 $(.60)
Weighted average shares outstanding . . . . . . . . . 38,213 35,333
Net income (loss) per share assuming full dilution:
Net income (loss) per share . . . . . . . . . . . . . $.59 $(.60)
Weighted average shares outstanding . . . . . . . . . .44,795 35,333
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. 24, Sept. 24,
dollars in thousands 1994 1994
Assets
Current assets:
Cash and temporary cash investments . . . . . . . . . $119,173 $142,448
Marketable securities . . . . . . . . . . . . . . . . 91,460 47,865
Receivables, net. . . . . . . . . . . . . . . . . . . 260,044 258,709
Inventories . . . . . . . . . . . . . . . . . . . . . 113,082 118,412
Other current assets. . . . . . . . . . . . . . . . . 28,799 30,642
Total current assets. . . . . . . . . . . . . . . . 612,558 598,076
Property, plant, and equipment, net . . . . . . . . . . 165,137 164,777
Other assets. . . . . . . . . . . . . . . . . . . . . . 61,529 59,011
$839,224 $821,864
Liabilities and stockholders' equity
Current liabilities:
Notes payable . . . . . . . . . . . . . . . . . . . . $ 2,383 $ 2,461
Accounts payable. . . . . . . . . . . . . . . . . . . 92,614 92,338
Other current liabilities . . . . . . . . . . . . . . 225,853 232,066
Total current liabilities . . . . . . . . . . . . . 320,850 326,865
Long-term debt. . . . . . . . . . . . . . . . . . . . . 154,869 156,942
Other liabilities . . . . . . . . . . . . . . . . . . . 30,971 29,445
Stockholders' equity:
Common stock:
Outstanding -- 36,660,000 shares at Dec. 24, 1994
and 36,457,000 shares at Sept. 24, 1994 (net of
deferred compensation of $9,586 at Dec. 24, 1994
and $9,348 at Sept. 24, 1994) . . . . . . . . . . . 436,719 434,757
Accumulated deficit . . . . . . . . . . . . . . . . . (92,717) (116,923)
Cumulative translation adjustment . . . . . . . . . . (11,468) (9,222)
Total stockholders' equity. . . . . . . . . . . . . 332,534 308,612
$839,224 $821,864
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)
Quarter Ended
Dec. 24, Dec. 25,
in thousands 1994 1993
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . $24,206 $(21,091)
Adjustments to reconcile net income (loss) to
net cash provided from operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . . . 18,530 19,356
Amortization of capitalized software development costs. 4,201 4,336
Other non-cash items, net . . . . . . . . . . . . . . . 5,834 7,267
Change in operating assets and liabilities . . . . . 205 (6,435)
Net cash provided from operating activities . . . . . 52,976 3,433
Cash flows from investing activities:
Expenditures for property, plant, and equipment . . . . (23,680) (20,886)
Net proceeds from (purchases of) marketable securitie . (43,595) 4,722
Capitalized software development costs. . . . . . . . . (5,350) (4,373)
Investment in securities. . . . . . . . . . . . . . . . (600) (2,000)
Net cash used by investing activities . . . . . . . . (73,225) (22,537)
Cash flows from financing activities:
Cash provided from stock plans. . . . . . . . . . . . . 751 621
Repayment of long-term debt . . . . . . . . . . . . . . (2,700) --
Net cash provided from (used by) financing activities (1,949) 621
Effect of foreign currency rate fluctuations
on cash and temporary cash investments. . . . . . . . . (1,077) (790)
Decrease in cash and temporary cash investments . . . . . (23,275) (19,273)
Cash and temporary cash investments - beginning of period 142,448 119,560
Cash and temporary cash investments - end of period . . .$119,173 $100,287
Supplemental disclosure of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . . .$ 5,054 $ 4,998
Income taxes paid . . . . . . . . . . . . . . . . . . .$ 883 $ 610
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these financial statements.
DATA GENERAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Consolidated Balance Sheet Details
Dec. 24, Sept. 24,
in thousands 1994 1994
Inventories:
Raw materials . . . . . . . . . . . . . . . . . . . $ 8,308 $ 11,791
Work in process . . . . . . . . . . . . . . . . . . 34,847 36,282
Finished systems. . . . . . . . . . . . . . . . . . 31,935 35,521
Field engineering parts and components. . . . . . . 37,992 34,818
$113,082 $118,412
Property, plant, and equipment:
Property, plant, and equipment. . . . . . . . . . . $619,669 $642,924
Accumulated depreciation. . . . . . . . . . . . . . (454,532) (478,147)
$165,137 $164,777
During the quarter the company retired fully depreciated computer
equipment spares with an original cost of $31,205.
Note 2. Letter of Credit and Reimbursement Agreement
Effective December 21, 1994, the company entered into a $30
million unsecured letter of credit facility with a group of banks.
This agreement, which is available to secure issuance of letters of
credit, has a duration of 364 days. The facility contains certain
covenants, including restrictions on the sale or pledge of certain
assets, the declaration of dividends, and the incurrence of other
debt. At December 24, 1994 there were $5.4 million letters of credit
secured by this facility. The new agreement will replace the company's
unsecured $40 million revolving credit facility and $30 million letter
of credit facility. At December 24, 1994, there were $5.5 million of
letters of credit secured by the expiring facility. This facility was
cancelled on January 18, 1995 upon liquidation of the outstanding
obligations. The revolving credit facility was cancelled prior to the
end of the fiscal quarter.
Note 3. Litigation
In the current quarter, the company settled with Northrop Grumman
Corporation its six-year software copyright infringement and trade
secrets litigation against Grumman Systems Support Corporation
("Grumman"). Under the terms of this settlement, Grumman paid the
company $53 million and the parties have dismissed all pending
litigation. The company recognized a pre-tax gain, net of related
legal fees and other expenses, of $44.5 million resulting from the
settlement, which is included in other income, net, in the current
quarter consolidated statement of operations. This amount has been
partially offset by certain other non-operating expenses.
Note 4. Basis of Presentation
In the current quarter, the company adopted Statement of Financial
Accounting Standards ("SFAS") 112, "Employers' Accounting for
Post-Employment Benefits" and SFAS 115, "Accounting for Certain
Investments in Debt and Equity Securities". SFAS 112 requires the
accrual of liabilities for the estimated cost of benefits provided by
the employer to former or inactive employees. SFAS 115 addresses
accounting and reporting for investments in certain debt and equity
securities that will not be held until maturity. All of the company's
marketable securities at September 24, 1994 and December 24, 1994 have
maturities of less than one year, and have been classified as being
'held-to-maturity'. The implementation of SFAS 112 and SFAS 115 did
not have a material effect on the company's consolidated financial
position or results of operations.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting
of normal recurring 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 1994 Annual
Report. The results of operations for the quarter ended December 24,
1994 are not necessarily indicative of the results for the entire
fiscal year.
