<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED MAY 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO .
---------- -----------
COMMISSION FILE NO. 001-12392
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NATIONAL DATA CORPORATION
-------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 58-977458
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 728-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -------------------
Common Stock, Par Value $.125 Per Share The New York Stock Exchange, Inc.
Junior Preferred Stock Purchase Rights The New York Stock Exchange, Inc.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
----
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
---- ----
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Form 10-K Cover Page - Continued
Indicate by check mark if disclosure of delinquent filer pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ x ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant was $1,072,109,235 based upon the last reported sale price on
The New York Stock Exchange on August 26, 1996 using beneficial ownership of
stock rules adopted pursuant to Section 13 of the Securities Exchange Act of
1934 to exclude voting stock owned by all directors and officers of the
registrant, some of whom may not be held to be affiliates upon judicial
determination.
The number of shares of the registrant's common stock, par value $.125,
outstanding as of August 26, 1996 was 25,940,956 shares.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
DOCUMENT FORM 10-K
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<S> <C>
Portions of the Company's Definitive Part III
Proxy Statement relating to the
1996 Annual Meeting of Stockholders
to be held on October 24, 1996
</TABLE>
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NATIONAL DATA CORPORATION
1996 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
PART I.
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<S> <C>
Item 1. BUSINESS..................................................... 2
Item 2. PROPERTIES................................................... 12
Item 3. LEGAL PROCEEDINGS............................................ 12
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.................................................. 12
EXECUTIVE OFFICERS OF THE REGISTRANT................................... 13
PART II
- -------
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.................................. 15
Item 6. SELECTED FINANCIAL DATA...................................... 15
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................ 15
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................. 15
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE....................... 15
Part III
- --------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT................................................... 16
Item 11. EXECUTIVE COMPENSATION....................................... 16
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT............................................... 16
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............... 16
PART IV
- -------
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K.......................................... 17
SIGNATURES............................................................. 20
APPENDIX A............................................................. 22
</TABLE>
<PAGE> 4
PART I
ITEM 1. BUSINESS
GENERAL
National Data Corporation (together with its subsidiaries herein referred
to as the "Company" or "NDC") is a Delaware corporation that was incorporated
in 1967. The Company is a leading provider of high-volume transaction
processing services and application systems to the health care and payment
systems markets. The Company serves a diverse customer base comprised of almost
70,000 health care providers, some 1,000 health care plans, more than 350,000
merchant locations, 35,000 corporations and 300 banking institutions, as well
as federal and state government agencies. The Company markets its services
directly to merchants and health care providers and indirectly through business
alliances with a wide range of banks, insurance companies and distributors. The
Company is one of the largest independent providers of health care transaction
processing and integrated payment systems services in the United States,
processing transactions at an annualized rate of approximately 2.25 billion at
the end of fiscal 1996.
NDC provides electronic claims processing and adjudication services,
practice management systems, electronic data interchange ("EDI") services,
billing services, accounts receivable resolution, business office management
services and clinical data base information for pharmacies, dentists,
physicians, hospitals, health maintenance organizations, managed care
companies, clinics and nursing homes, as well as other health care providers.
Management believes that the Company is the largest independent processor of
real-time health care transactions, and that it is well positioned to
capitalize on the growing demand for cost containment and improved patient care
in the health care industry. By the end of fiscal 1996, approximately 45% of
the Company's total revenue, including the impact of the CIS merger, was
derived from the Company's health care systems and services, which represent
the fastest growing portion of the Company's business.
The Company's Global Payment Systems LLC subsidiary ("Global Payment
Systems" or "Global") and Integrated Payment Systems businesses offer
transaction processing solutions to banks, merchants, corporations, health care
providers, universities and colleges and government agencies. Global offers
these services on an indirect basis through relationships with banks, while the
Integrated Payment Systems unit provides a broad range of services in
partnership with banks via its Bank Alliance Program, as well as through other
distribution channels. The Company is one of the largest providers of credit
card, debit card and check verification/guarantee processing services. Through
Global, the Company also offers electronic tax filing and payment services to
government and corporate customers. The Company recently introduced a purchase
card processing program that provides electronic payment capabilities for
business-to-business purchasing transactions. By the end of fiscal 1996,
approximately 23% of the Company's total revenue was derived from Global.
Global also provides cash management, information
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reporting and EDI services for government and corporate customers. By the end of
fiscal 1996, the Company's Integrated Payment Systems unit accounted for
approximately 32% of the Company's total revenue.
The Company's products offer greater convenience to purchasers and
providers of goods and services and reduce processing costs, settlement delays
and losses from fraudulent transactions. NDC's advanced high speed computer and
telecommunications network enables the Company to electronically process,
capture and transmit a high volume of point-of-service transactions 24 hours a
day, seven days a week. While the transition from paper-based to electronic
transaction processing continues, the earliest and most significant penetration
has occurred in the areas of credit card authorization and settlement and
pharmacy transaction processing. NDC believes that the rapid transition to
electronic transaction processing demonstrates the potential for automation of
other markets still dominated by paper-based processing, such as additional
health care applications and the transfer of information between businesses.
The Company's business strategy is to be a total solution provider of
value-added transaction processing systems and services in the markets it
serves. NDC believes that both the health care and the payment systems markets
present attractive opportunities for continued growth. In pursuing its
strategy, the Company seeks both to increase its penetration of existing
application systems and point-of-use transaction processing markets and to
continue to identify and create new markets for its services. The Company will
also continue to seek to enhance existing products and develop new systems and
services; such as, services relating to financial electronic data interchange
and medical claims processing.
To support its business strategy, the Company has expanded its focus on
acquisition opportunities and alliances with other companies that allow NDC to
increase its market penetration, technological capabilities, product offerings
and distribution capabilities. During fiscal year 1996, the Company completed
five (5) acquisitions and alliances with an aggregate cash purchase price of
approximately $145.8 million and the issuance of approximately 2,829,746 shares
of Company Common Stock in relation to the CIS Technologies, Inc. merger.
Included among the acquisitions and alliances were the merger of CIS
Technologies, Inc. with a subsidiary of the Company, the acquisition of the
Merchant Automated Point-of-Sale Program business ("MAPP") from MasterCard
International Incorporated and the simultaneous formation of Global Payment
Systems, the acquisition of Conceptual Systems and the creation of an
integrated payment systems merchant processing alliance between the Company and
Comerica Merchant Services, Inc. These acquisitions give NDC expanded
capabilities and customer bases in the managed care, hospital and medical
claims processing, EDI, and merchant processing markets.
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INDUSTRY BACKGROUND
Advances in computer software, telecommunications and hardware technology
have aided the development of on-line, real-time information processing systems
that electronically capture and transmit high volumes of information. These
advances in technology allow information processors to offer greater
convenience to purchasers and providers of goods and services and reduce
processing costs, settlement delays and losses from fraudulent transactions.
HEALTH CARE MARKET
The health care sector of the market for information systems is growing
rapidly due to the need of employers, health care payers and providers to
control costs and to improve quality of care. A high percentage of health care
claims are still processed using manual, paper-based systems. Third party
payers, managed care companies and health care providers continue to seek
methods to automate processing in order to reduce costs and improve the quality
of health care services. The Company believes the health care industry is one
of the largest potential markets for electronic information processing
services, including the electronic transmission and capture of data for on-line
eligibility verification and settlement of insurance claims. The application of
technology to improve the flow of information to address patient care quality
is expanding as well.
Since the late 1980s, electronic processing technology has been applied to
the transmission and capture of data for pharmacy claims and transaction
processing. This technology is being adapted to the processing of other health
care data, including insurance claims for dentists, physicians and hospitals.
The Company believes that the ability to offer total solutions will be an
important competitive factor as automated claims processing and the
availability of information in this market continues to grow. As electronic
processing of health care claims accelerates, the Company believes it will be
important for companies to be able to offer integrated, value-added systems and
services to industry participants who continue to automate. Included in the
market's requirements are practice management systems, outsourcing
capabilities, as well as new information processing services. The market
includes, among others, managed care companies, payers and providers in the
health care markets.
Consistent with this strategy, during fiscal 1996 the Company acquired
Conceptual Systems and CIS Technologies, Inc. ("CIS"). These transactions
provided additional penetration of the physician and hospital electronic claims
markets and expanded the scope of the Company's health care product offerings
to include managed care software and services and accounts receivable and
business office consulting and outsourcing services. With the CIS merger, the
Company became the worldwide leader in hospital electronic claims processing
services. Also, CIS acquired Hospital Cost Consultants, Inc.
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("HCC") effective June 1, 1995. HCC gives the Company further access to the
managed care market.
PAYMENT SYSTEMS MARKET
Electronic transaction processing for the payment systems market involves
transaction authorization, data capture and settlement for credit and debit
cards, check verification and guarantee services and financial electronic data
interchange. Most retail credit card transactions are no longer processed
through paper-based systems and are instead electronically authorized, with an
increasing number electronically settled as well. The Company believes that
the number of transactions will continue to grow and that an increasing
percentage of these transactions will be processed electronically due to
convenience, efficiency and a desire to reduce fraud and other processing costs
in a continually growing number of vertical markets in the U.S. and
internationally.
The Company believes that there are significant opportunities for
continued growth in the application of electronic transaction processing
services to the payment systems market. Utilization of debit cards as a general
payment mechanism for goods and services continues to increase, principally in
the supermarket, discount retail and gasoline industries. There is also
significant potential for growth in the use of credit and debit cards in other
traditional cash payment markets, such as fast-food restaurants, gaming
establishments, cinemas and convenience stores. The increased use of credit and
debit cards for such transactions is primarily driven by the convenience they
provide as well as the ability to efficiently track expenses and purchase
activity. In addition, the Company believes the proliferation of affinity or
co-branded cards that provide consumers with added benefits, such as discounts
on gasoline or airline tickets, should contribute to increased use of credit
and debit cards and the growth of the payment systems market.
Other independent service providers such as the Company provide high
volume electronic transaction processing services directly to merchants and
other customers as well as indirectly through banking institutions. The direct
electronic transaction processing business has shown increasing growth recently
as the result of a consolidation of the industry toward independent providers
and away from traditional providers. The Company believes this shift is due in
large part to more efficient distribution channels as well as the increased
technological capabilities required for the rapid and efficient creation,
processing, handling, storage and retrieval of information. These technological
capabilities have become increasingly complex, requiring significant capital
commitments to develop, maintain and update the systems necessary to provide
these technologically advanced services at a competitive price. As a result,
several large merchant processors, including the Company, have expanded their
operations through the creation of alliances or joint ventures with banks and
acquisitions of new merchant accounts from banks who previously serviced those
accounts. In addition, many small information processing organizations are
consolidating with larger service providers.
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In addition to services that enable merchants to accept credit and debit
cards, the payment systems market continues to expand to include increasing
levels of check verification and guarantee services. Demand for these services
has been growing in recent years as merchants seek to reduce losses related to
bad checks and use check acceptance to increase sales.
During fiscal 1996 the Company further expanded its presence in the
payment systems market. First, the Company formed Global Payment Systems for
the primary purpose of combining two of the industry's leading payment
processing operations to create one of the largest such operations in the world
and to expand its range of products and services. MasterCard's Merchant
Automated Point-of-Sale Program ("MAPP") was acquired by the Company and
combined with NDC's indirect payment services, certain of its merchant
processing back office processing services and the Company's information
systems and services business. This combination resulted in a broadening of
the products and services available to the Company's customers and the creation
of Global, an indirect payment and financial EDI enterprise, majority-owned by
the Company. The Company also succeeded in expanding its integrated payment
systems market penetration as a result of its alliance with Comerica Merchant
Services, Inc. (See Note 2 - Business Acquisitions of the Notes to Consolidated
Financial Statements for further discussion.)
BUSINESS STRATEGY
The Company's business strategy centers on providing total solution,
value-added information processing services and application systems in the
markets it serves. NDC believes that both the health care and payment systems
markets present attractive opportunities for continued growth. In pursuing its
business strategy, the Company seeks both to increase its penetration of
existing information processing and application systems markets and to continue
to identify and create new markets through the:
- development of value-added applications, enhancement of
existing products and development of new systems and services;
- expansion of distribution channels; and
- acquisition of, or alliance with, companies that have desirable
products and/ or distribution capabilities.
PRODUCTS AND SERVICES
HEALTH CARE
The Company is a leading provider of a full range of products and services
that address health care cost containment and improved patient care issues. The
Company's products include electronic claims processing, adjudication and
payment systems, funding capabilities, billing services, accounts receivable
resolution, business office management services, practice management systems
and clinical data base information for pharmacies,
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dentists, physicians, managed care organizations, hospitals, HMO's, clinics and
nursing homes. Revenue for the Company's Health Care units' products and
services consists of transaction processing fees and recurring monthly
maintenance and support fees, software license revenue and proceeds from the
sale of practice management systems as well as upgrade charges for additional
applications. Fees for electronic claims processing services are based on a per
transaction rate, with the rate varying depending upon the volume and scope of
services provided.
ELECTRONIC PROCESSING SERVICES
The Company's electronic processing services are offered to physicians,
managed care companies, pharmacies, dentists, hospitals, HMO's and preferred
provider organizations. These services include eligibility verification,
patient-specific benefit coverage, claims data capture and editing, claim
adjudication and retrospective and prospective drug utilization review. The
Company supports approximately almost 70,000 health care provider locations and
some 1,000 health care plans. Electronic processing for health care
transactions represents the Company's fastest growing service. The Company
recently expanded its presence in the health care claims processing market with
two acquisitions, CIS, specializing in hospital claims processing and financial
consulting services and Conceptual Systems, further expanding NDC's penetration
of the market for claims clearing and processing systems for physicians'
offices.
PRACTICE MANAGEMENT SYSTEMS
The Company's practice management systems are designed to provide the
health care market with applications solutions that improve the efficiency of
operations, address cost containment concerns and enhance overall quality of
patient care. In addition, NDC's practice management systems are offered with
the Company's claims processing services, credit and debit card processing
capabilities and other associated functions such as inventory reporting and
ordering.
PHARMACY MANAGEMENT SYSTEMS. The Company's pharmacy practice management
systems, provide solutions for independent and chain pharmacies, hospitals,
HMO's, clinics and nursing homes. These systems enable pharmacists to manage
and perform patient registration, drug record-keeping, private and third-party
billing, inventory control and ordering, price updates, management reporting
and drug database updates to detect potential clinical dispensing and
prescribing problems. In addition, the Company's systems provide value-added
claims processing services. The Company's systems are sold and maintained by
the Company and can be tailored to the needs of users utilizing micro- and
mini-computer platforms. In fiscal 1996, the Company expanded the capabilities
of its pharmacy practice management systems through the development of
sophisticated, new order entry, inventory management and enhanced retail
point-of-sale products. The Company also introduced products enhancing
customers' ability to order re-fill prescriptions via telephone and developed
physician/pharmacy connectivity products enabling physicians to electronically
transmit prescriptions directly to pharmacies utilizing NDC's pharmacy
management systems.
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DENTAL MANAGEMENT SYSTEMS. The Company's dental management systems are
designed to provide dentists with patient record accounting, patient scheduling
and recall, billing and collection, insurance claims information and electronic
processing to improve the efficiency of office management. The Company expanded
its dental management product line in fiscal 1994 with the introduction of the
NDC Dental System, which incorporates advanced clinical functionality with
customary business automation functions.
PHYSICIAN MANAGEMENT SYSTEM. The Company's physician management systems
are designed to provide physicians with patient scheduling, billing and
collection, patient record accounting, insurance claims information and
electronic processing designed to improve the efficiency of office management.
PAYMENT SYSTEMS
The Company's Payment Systems products provide a wide range of transaction
processing alternatives to the retail, hospitality, health care and government
markets. The Company offers merchant credit and debit card processing, check
verification and guarantee and other services directly to merchants and
indirectly through financial institutions.
INTEGRATED PAYMENT SYSTEMS
NDC is a leader in partnering with banks and others to offer merchant
processing support for approximately 350,000 merchant locations. NDC's merchant
processing services include credit and debit card authorization, data capture
and product and customer support functions, primarily for VISA and MasterCard
bank cards. The Company also performs the financial settlement between the
merchant and the card associations, reconciliation of the financial settlement
and resolution of disputes between the Company's merchants and cardholders.
Fees for the Company's merchant processing services are principally based on
the dollar volume of transactions processed directly for merchants and a per
transaction rate for transactions processed for banks on behalf of merchants.
The Integrated Payment Systems unit also offers merchants a check
verification service. In fiscal 1995, the Company expanded its payment system
services to include check guarantee services through the acquisition of two
check guarantee businesses. Check guarantee differs from check verification in
that the Company not only verifies the transaction but also guarantees payment.
If a check is not paid, the Company assumes the right to collect from the
individual writing the check. Fees for the Company's check verification
services are based on a per transaction rate, while fees for its check
guarantee services are based on a percentage, or discount, of the face value of
each check guaranteed by the Company.
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GLOBAL PAYMENT SYSTEMS
The Company provides payment processing services utilizing point-of-sale
terminals, electronic cash registers and proprietary personal computer
applications. These systems provide merchants with a comprehensive
authorization network for credit cards, debit cards and checks. Global also
provides electronic data capture ("EDC") systems that incorporate the
capabilities of its electronic point-of-sale authorization system, combined
with enhanced software, to enable Global to electronically capture the entire
transaction and transmit the necessary value-added information directly to
Global's central computer system for faster clearing through the banking
system. These systems allow the merchant quicker access to its funds and avoid
the necessity and cost of physically processing paper charge slips. Customized
value-added applications for retailers, restaurants, lodging and direct
marketers are marketed by Global. Global also offers extensive back office
support services such as charge back processing, terminal conversion and
deployment, help desk services, and credit-scoring systems to its customers.
Global's information systems and services products include cash
management, information reporting and EDI. Global recently introduced a new
cash management system specifically designed for use by large multi-national
corporations. This new offering is being marketed internationally through
Global's sales force and indirectly through relationships with several large
worldwide financial institutions. The services provide financial, management
and operational data to corporate and government institutions worldwide.
Corporate and government organizations use these services to collect,
consolidate and report financial, administrative and operating data from more
than 230,000 locations.
Global also offers a purchase card service. This service is aimed at high
volume corporate or government purchases of low dollar value items. The product
is card-based and is intended to significantly reduce the cost of making such
small purchases, while at the same time making available to corporate
purchasing departments needed controls and management information relating to
purchases. The Company also offers tax products that provide for the electronic
filing and payment of corporate taxes. The Company initiates the electronic
funds transfer process for payment of the taxes due, while delivering the
information summary to the appropriate government agency.
SALES AND MARKETING
The Company's electronic transaction processing services are offered to
the health care markets directly through Company personnel and through
alliances. The Company's pharmacy and dental practice management systems are
marketed primarily through the Company's personnel but also jointly through
alliances. The Company offers its physician practice management system directly
through Company personnel through value-added resellers and by direct
marketing. The Company markets its Payment Systems products
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and services through financial institutions, bank alliance programs, its own
sales personnel and also through independent contractors.
OPERATIONS AND SYSTEMS
The Company operates multiple data and voice center facilities. The
primary facilities are in Atlanta, Georgia, and St. Louis, Missouri with others
in Texas, California, Toronto, Canada and the United Kingdom.
Because of the large number and variety of NDC's products and services,
the Company does not rely on a single technology to satisfy its sophisticated
computer systems needs but instead employs the best available technology that
is suitable for each particular task. Given this approach, NDC utilizes (i)
Tandem and Stratus fault-tolerant computers for high volume, fast response
transaction processing; (ii) client-server technology for end-user data base
applications; (iii) the latest Unisys mainframe class systems and the OS/2200
operating system for large scale transaction and batch data base processing;
and (iv) UNIX and Windows based systems for focused communication applications
systems. These systems are linked via high speed, fiber optic-based networked
backbones for file exchange and inter-system communication purposes. NDC also
maintains storage systems connected to the backbones, including a robotic tape
library and optical storage for archival storage purposes. All of the Company's
systems are supported by a systems support, operations and production control
staff with an advanced network control center.
The Company's communications network is made up of several discrete
networks, each designed for a different purpose. NDC maintains three primary
networks: a high speed, short transaction network called FASTNET; a private
line nationwide high bandwidth backbone network; and a dial-up voice/data
network for interactive and voice traffic. The Company also maintains a number
of support services offering satellite, wireless, INTERNET and ISDN/DOV
connectivity.
COMPETITION
The markets for the application systems and services offered by the
Company are highly competitive. The Company has a number of actual and
potential competitors as to all of the systems and services that it offers.
Many of the Company's services compete directly with computer manufacturers
that encourage businesses to purchase or lease the manufacturers' computers and
establish in-house systems. In addition to this competition, the Company
believes that there are several companies that have the capability to offer
some of the Company's services in competition with the Company, certain of
which are substantially larger than the Company. The Company believes that its
ability to offer
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integrated solutions to its customers, including hardware, software, processing
and network facilities, is a positive factor pertaining to the competitive
position of the Company. The Company recognizes, however, that its industry
segment is increasingly competitive. The key competitive factors for the
Company are functionality of products, quality of service and price.
RESEARCH AND DEVELOPMENT
The Company has a research and development staff of approximately 452
persons. During fiscal 1994, 1995, and 1996, the Company spent approximately
$4.7 million, $7.7 million, and $8.8 million, respectively, on activities
relating to the development and improvement of new and existing products,
services and techniques.
EMPLOYEES
As of May 31, 1996 the Company and its subsidiaries had approximately 2,450
employees.
FINANCIAL INFORMATION RELATING TO INDUSTRY SEGMENT
AND CLASSES OF SERVICES
The Company operates in one reportable industry segment, Data Processing
Services. See Management's Discussion and Analysis of Financial Condition and
Results of Operations for a further discussion.
The following table sets forth the approximate contribution to
consolidated revenues of each class of service in the Data Processing Services
segment during the Company's last three fiscal years.
<TABLE>
<CAPTION>
Year ended May 31,
1996 1995 1994
---- ---- ----
(in thousands)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Health Care $144,879 $119,705 $ 94,870
Integrated Payments Systems 104,829 88,489 78,787
Global Payment Systems 76,095 69,889 64,002
- ----------------------------------------------------------------------------
Total $325,803 $278,083 $237,659
- ----------------------------------------------------------------------------
</TABLE>
NOTE: Certain reclassifications have been made to the fiscal 1995 and fiscal
1994 results to conform to the fiscal 1996 presentation (See Note 1 of the
Notes to Consolidated Financial Statements).
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ITEM 2. PROPERTIES
In January 1987, the Company took occupancy of a newly constructed
six-story, 120,000 square foot corporate headquarters building at Two National
Data Plaza in Atlanta, Georgia. Permanent financing for the building of
$12,000,000 is at a fixed rate of 9.375% per year for a 10-year term and
30-year amortization. See Note 11 of the Notes to the Consolidated Financial
Statements.
In addition to the above facility, the Company leases or rents a total of
53 other facilities to serve as regional operating centers or sales offices.
The Company owns or leases a variety of computers and other computer equipment
for its operational needs. In recent years the Company has significantly
upgraded and expanded its computers and related equipment in order to increase
efficiency, enhance reliability, and provide the necessary base for business
expansion.
The Company believes that its facilities and equipment are suitable and
adequate for the business of the Company as presently conducted.
Information about leased properties and equipment is incorporated by
reference from Note 7 of the Notes to the Consolidated Financial Statements on
page A-31 of this Report.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The names, titles, ages, and business experience of all present executive
officers of the Company are listed below. All officers hold office at the
pleasure of the Board of Directors, unless they earlier retire or resign.
<TABLE>
<CAPTION>
Name Business Experience Age
---- ------------------- ---
<S> <C> <C>
Robert A. Yellowlees Chairman of the Board of the Company since June 57
1992; President, Chief Executive Officer and Chief
Operating Officer of the Company since May 1992;
Director of John H. Harland Co. and Protective Life
Corporation. Mr. Yellowlees has been a director of
the Company since April 1985.
Jerry W. Braxton Chief Financial Officer of the Company since January 49
1992; Vice President -- Treasurer and Vice President
-- Controller of Contel Corporation from 1983
through 1991.
Richard S. Cohan General Manager, Health Care Information Network, of 43
the Company since April 1995; Senior Vice President,
Health Care Business Development from December 1993
through March 1995; Senior Vice President of the
Health Care Application Systems and Services unit of
the Company from September 1992 to November 1993;
Group Vice President and General Manager of the
Health Care Institutional Services unit of the
Company from December 1987 through August 1992.
Donald B. Graham General Manager, Health Care Application Systems, of 55
the Company since October 1995; Senior Vice
President, Operations, of the Company from January
1994 until October 1995; President and Chief
Executive Officer of Information Systems of America
from February 1988 until July 1993.
E. Michael Ingram General Counsel and Secretary of the Company since 44
January 1985.
Kevin C. Shea Executive Vice President, Corporate Development & 45
Business Strategy since August 1996; General
Manager, Integrated Payment Systems, of the Company
from April 1995 to August 1996;
</TABLE>
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<TABLE>
<S> <C> <C>
Executive Vice President, Integrated Payment Systems
from September 1992 through March 1995; Executive
Vice President, National Data Payment Systems, Inc.
("NDPS") from December 1990 through August 1992;
Group Vice President, NDPS from June 1988 through
November 1990.
M. P. Stevenson, Jr Vice President and Controller of the Company since 41
September 1992; Division Controller, NDPS from March
1992 to August 1992; Director, Internal Audit from
March 1986 to February 1992.
</TABLE>
14
<PAGE> 17
PART II
ITEM 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Market Price and Dividend Information appears on Page A-2 of this report.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data appear on Page A-1 of this report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations appears on pages A-3 to A-13 of this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial statements and supplementary information appear on pages A-14 to A-40
of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
15
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company hereby incorporates by reference the information contained
under the heading "Election of Directors - Certain Information Concerning
Nominees and Directors" and "Section 16(a) Reporting" from its definitive Proxy
Statement to be delivered to the stockholders of the Company in connection with
the 1996 Annual Meeting of Stockholders to be held on October 24, 1996. Certain
information relating to executive officers of the Company appears at pages 13
to 14 of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The Company hereby incorporates by reference the information contained
under the heading "Election of Directors - Compensation and Other Benefits"
from its definitive proxy statement to be delivered to the stockholders of the
Company in connection with the 1996 Annual Meeting of Stockholders to be held
on October 24, 1996. In no event shall the information contained in the proxy
statement under the sections entitled "Stockholder Return Analysis,"
"Comparison of Cumulative Total Returns," and "Report of the Compensation and
Stock Option Committees" be included in this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company hereby incorporates by reference the information contained
under the headings "Election of Directors - Common Stock Ownership of
Management" and " - Common Stock Ownership by Certain Other Persons" from its
definitive Proxy Statement to be delivered to the stockholders of the Company
in connection with the 1996 Annual Meeting of Stockholders to be held on
October 24, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
16
<PAGE> 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) The following consolidated financial statements for the Registrant
and its subsidiaries appear in Appendix A to this report and are filed as a
part hereof:
Consolidated Statements of Income for the three fiscal years ended May
31, 1996.
Consolidated Balance Sheets at May 31, 1996 and 1995.
Consolidated Statements of Changes in Stockholders' Equity for the
three fiscal years ended May 31, 1996.
Consolidated Statement of Cash Flows for the three fiscal years ended
May 31, 1996.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants
(a)(2) Other than as described below, Financial Statement Schedules are not
filed with this Report because the Schedules are either inapplicable or the
required information is presented in the Financial Statements or Notes thereto.
The following Schedule is filed in Appendix A as a part hereof:
Consolidated Schedule V - Valuation and Qualifying Accounts.
Report of Independent Public Accountants as to Schedule
(a)(3) Exhibits
2(i) Asset Purchase and Contribution Agreement, as amended, dated as of
February 22, 1996 among Registrant, MasterCard International Incorporated and
POS Acquisition Company LLC (filed as Exhibits 2.1 and 2.2 to the Registrant's
Current Report on Form 8-K dated April 15, 1996, File No. 001-12392, and
incorporated herein by reference.)
(ii) Agreement and Plan of Merger dated as of April 15, 1996 by and among the
Registrant, NDC Merger Corp. and C.I.S. Technologies, Inc. (included as Annex A
to the Proxy Statement/Prospectus included in the Registrant's Registration
Statement on Form S-4, Registration No. 333-2705, filed April 22, 1996, as
amended on April 30, 1996, and incorporated herein by reference.)
17
<PAGE> 20
(3)(i) Certificate of Incorporation of the Registrant, as amended (filed as
Exhibit 4(a) to the Registrant's Registration Statement on Form S-8
(Registration No. 333-05427) and incorporated herein by reference).
(ii) Bylaws of the Registrant, as amended (filed as Exhibit 3(ii) to the
Registrant's Annual Report on Form 10-K for the year ended May 31, 1991, File
No. 03966, and incorporated herein by reference).
(iii) Amendment to Bylaws of the Registrant, as previously amended (filed as
Exhibit 3(iii) to the Registrant's Annual Report on Form 10-K for the year
ended May 31, 1995, File No. 001-12392, and incorporated herein by reference).
(4) Rights Agreement, dated as of January 18, 1991, between the Registrant
and Trust Company Bank, as amended on June 18, 1992 to substitute Wachovia Bank
of North Carolina, N.A. as Rights Agent (incorporated by reference from Exhibit
2 to the Registrant's Registration Statement on Form 8-A as filed on October 5,
1993.)
(10)(i) Operating Agreement of Global Payment Systems LLC dated March 31, 1996
between MasterCard International Incorporated, GPS Holding Limited Partnership,
National Data Corporation of Canada, Ltd., National Data Corporation, NDC
International, Ltd. And National Data Payment Systems, Inc.
(ii) Registration Rights Agreement dated April 1, 1996 between Global Payment
Systems LLC and MasterCard International Incorporated.
(ii) Credit Agreement dated as of March 18, 1996 between the Registrant and
Wachovia Bank of Georgia, N.A., as Agent.
(iv) Credit Agreement dated as of July 16, 1996 between the Registrant and
the First National Bank of Chicago, as Agent.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
(v) Form of Executive Severance Compensation Agreement with certain
executive officers (filed as Exhibit 10(ii) to the Registrant's Annual Report
on Form 10-K for the year ended May 31, 1986, File No. 001-12392, and
incorporated herein by reference.)
(vi) Non-Employee Directors Stock Option Plan (filed as Exhibit 10(iv) to the
Registrant's Annual Report on Form 10-K for the year ended May 31, 1987, File
No. 03966, and incorporated herein by reference.)
(vii) 1995 Non-Employee Director Compensation Plan.
18
<PAGE> 21
(viii) Renewal Employment Agreement effective as of May 18, 1995 between
Robert A. Yellowlees and the Registrant (filed as Exhibit 10(x) to the
Registrant's Annual Report on Form 10-K for the year ended May 31, 1994, File
No. 001-12392, and incorporated herein by reference.)
(ix) Amended and Restated Retirement Plan for Non-Employee Directors,
dated as of April 20, 1994 (filed as Exhibit 10(xii) to the Registrant's Annual
Report on Form 10-K for the year ended May 31, 1994, File No. 001-12392, and
incorporated herein by reference.)
(x) Amendment to Amended and Restated Retirement Plan for Non-Employee
Directors (filed as Exhibit 4(xi) to the Registrant's Annual Report on Form
10-K for the year ended May 31, 1995, File No. 001-12392, and incorporated
herein by reference).
(xi) 1983 Restricted Stock Plan, as amended (incorporated by reference from
Exhibit 10 to the Registrant's Registration Statement on form S-8, No.
333-05451).
(xii) 1987 Stock Option Plan, as amended (incorporated by reference from
Exhibit 10 to the Registrant's Registration Statement on form S-8, No.
333-05449).
(xiii) Amended and Restated C.I.S. Technologies, Inc. Stock Option Plan
(incorporated by reference from Exhibit 10(a) to the Registrant's Registration
Statement on Form S-8, No. 333-05427).
(xiv) Amended and Restated C.I.S. Technologies, Inc. Employee Stock Option
Plan (incorporated by reference from Exhibit 10(b) to the Registrant's
Registration Statement on Form S-8, No. 333-05427).
(xv) C.I.S. Technologies, Inc. HCC Management Stock Option Plan (incorporated
by reference from Exhibit 10(c) to the Registrant's Registration Statement on
Form S-8, No. 333-05427).
(xvi) C.I.S. Technologies, Inc. 1995 Directors' Stock Option Plan
(incorporated by reference from Exhibit 10(d) to the Registrant's Registration
Statement on Form S-8, No. 333-05427).
(xvii) C.I.S. Technologies, Inc. 1995 Stock Incentive Plan (incorporated by
reference from Exhibit 10(e) to the Registrant's Registration Statement on Form
S-8, No. 333-05427).
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Public Accountants (included in Appendix A, page
A-43).
(27) Financial Data Schedule (for SEC use only).
19
<PAGE> 22
(b) The Registrant filed Current Reports on Form 8-K dated April 16,
1996, in which it reported under Item 2 - "Acquisition or Disposition of
Assets," and May 31, 1996, in which it reported under Item 2 - "Acquisition or
Disposition of Assets".
(c) The Exhibits to this Report are listed under Item 14(a)(3) above.
(d) The Financial Statement Schedule to this Report is listed under Item
14(a)(2) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, National Data Corporation has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
NATIONAL DATA CORPORATION
By: /s/ Robert A. Yellowlees
----------------------------
Robert A. Yellowlees, Chairman of the
Board and Chief Executive
Officer
(Principal Executive Officer)
By: /s/ Jerry W. Braxton
------------------------
Jerry W. Braxton, Chief Financial Officer
(Principal Financial Officer)
By: /s/ M. P. Stevenson
-----------------------
M. P. Stevenson Controller
(Principal Accounting Officer)
Date: August 29, 1996
20
<PAGE> 23
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by a majority of the Board of Directors of the
Registrant on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Robert A. Yellowlees Chairman of the Board, August 29, 1996
- ------------------------ Chief Executive Officer
Robert A. Yellowlees
/s/ Edward L. Barlow Director August 29, 1996
- --------------------
Edward L. Barlow
/s/ J. Veronica Biggins Director August 29, 1996
- -----------------------
J. Veronica Biggins
/s/ James B. Edwards Director August 29, 1996
- --------------------
James B. Edwards
/s/ Don W. Sands Director August 29, 1996
- -----------------
Don W. Sands
/s/ Neil Williams Director August 29, 1996
- -------------------
Neil Williams
</TABLE>
21
<PAGE> 24
APPENDIX A
to
ANNUAL REPORT ON FORM 10-K
NATIONAL DATA CORPORATION AND ITS SUBSIDIARIES
FINANCIAL STATEMENTS AND SCHEDULES
CONTENTS
Selected Financial Data............................................... A-1
Market Price and Dividend Information................................. A-2
Management's Discussion and Analysis of Financial Condition and
Results of Operations ........................................... A-3
Consolidated Statements of Income for the three years
ended May 31, 1996 .............................................. A-14
Consolidated Balance Sheets at May 31, 1996 and 1995 ................. A-16
Consolidated Statements of Changes in Stockholders' Equity for
the three years ended May 31, 1996............................... A-17
Consolidated Statements of Cash Flows for the three years ended
May 31, 1996 .................................................... A-15
Notes to Consolidated Financial Statements ........................... A-18
Consolidated Schedule V - Valuation and Qualifying Accounts .......... A-34
Report of Independent Public Accountants.............................. A-38
Report of Independent Public Accountants As to Schedule............... A-40
Index to Exhibits .................................................... A-41
Consent of Independent Public Accountants............................. A-43
22
<PAGE> 25
Selected Consolidated Financial Data
(In thousands except per share data)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue:
Integrated Payment Systems $104,829 $ 88,489 $ 78,787 $ 69,579 $ 80,207
Health Care 144,879 119,705 94,870 89,840 72,398
Global Payment Systems 76,095 69,889 64,002 80,391 90,074
-------------------------------------------------
Total $325,803 $278,083 $237,659 $239,810 $242,679
Operating Income (Loss) (11,834) 28,246 18,423 14,894 17,124
Net Income (Loss) (8,458) 18,421 12,226 8,045 9,917
Earnings (Loss) Per Share $ (.31) $ .79 $ .55 $ .37 $ .48
Dividends Per Share $ .30 $ .30 $ .29 $ .29 $ .29
Total Assets $369,254 $256,658 $214,864 $203,391 $219,100
Long-term Obligations $ 13,324 $ 26,410 $ 21,664 $ 20,254 $ 31,308
Total Stockholder's Equity $233,299 $164,651 $134,723 $124,001 $116,720
</TABLE>
A-1
<PAGE> 26
MARKET PRICE AND DIVIDEND INFORMATION
- -------------------------------------
National Data Corporation's common stock is traded on the New York Stock
Exchange under the ticker symbol "NDC." The high and low sales prices and
dividend paid per share of the Company's common stock for each quarter during
the last two fiscal years were as follows:
<TABLE>
<CAPTION>
High Low Dividend
Per Share
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Fiscal Year 1996
First Quarter $26.63 $20.50 $.075
Second Quarter 28.00 22.00 .075
Third Quarter 35.00 20.00 .075
Fourth Quarter 40.25 29.88 .075
Fiscal Year 1995
First Quarter 13.50 10.33 $.073
Second Quarter 14.67 12.92 .073
Third Quarter 17.58 13.83 .073
Fourth Quarter 21.38 16.75 .075
</TABLE>
The number of shareholders of record as of July 30, 1996 was 2,105.
* National Data Corporation effected a 3-for-2 stock split on March 20, 1995.
A-2
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For an understanding of the significant factors that influenced the Company's
results during the past three years, the following discussion should be read in
conjunction with the consolidated financial statements of the Company and
related notes appearing elsewhere in this report.
Results of Operations Fiscal Years 1996 and 1995
The following table is a summary of the Company's fiscal 1996 and 1995 results
of operations before and after effects of restructuring, impairment and merger
charges ("restructuring") and the CIS merger accounted for as a pooling of
interests:
($ Millions, except per share data)
<TABLE>
<CAPTION>
FY 96
--------------------------------------------
NDC Restructuring CIS Consolidated
------ ------------- ------- ------------
<S> <C> <C> <C> <C>
Revenue $281.0 - $ 44.8 $325.8
Operating Income (Loss) 36.2 (44.1) (3.9) (11.8)
Net Income (Loss) 24.7 (30.0) (3.2) (8.5)
Earnings (Loss) Per Share $ 1.01 ($1.10) ($.22) ($.31)
FY 95
--------------------------------------------
NDC Restructuring CIS Consolidated
------ ------------- ------- ------------
Revenue $242.0 - $ 36.1 $278.1
Operating Income 24.8 - 3.6 28.4
Net Income 15.4 - 3.0 18.4
Earnings Per Share $ .75 - $ .04 $ .79
</TABLE>
To assist in the understanding of the consolidated operating results,
Management's Discussion and Analysis will first address the performance of the
Company without the restructuring and the CIS operating results. The
restructuring charges and the results of operations for CIS will be discussed
separately.
A-3
<PAGE> 28
OVERVIEW 1996 AND 1995
FISCAL YEAR ENDED MAY 31, 1996 (EXCLUDING RESTRUCTURING, IMPAIRMENT AND MERGER
CHARGES AND CIS) COMPARED TO THE FISCAL YEAR ENDED MAY 31, 1995. The following
table reflects the relative percentage ratios and the percent change from the
prior year:
<TABLE>
<CAPTION>
($ Millions) FY 1996 FY 1995 Increase
$ % $ % %
--------------- ------------- --------
<S> <C> <C> <C> <C> <C>
Revenue:
Health Care 100.1 36% 83.7 35% 20%
Integrated Payment Systems 104.8 37% 88.4 36% 19%
Global Payment Systems 79.7 28% 69.9 29% 14%
Intercompany Revenue (3.6) (1%) - - -
------------- ------------- -------
Total Revenue 281.0 100% 242.0 100% 16%
------------- ------------- -------
Cost of Service:
Operations 109.6 39% 101.8 42% 8%
Depreciation and Amortization 19.9 7% 17.3 7% 15%
Hardware Sales 12.1 4% 11.2 5% 8%
------------- -------------- -------
Total Cost of Service 141.6 50% 130.3 54% 9%
------------- -------------- -------
Gross Margin 139.4 50% 111.7 46% 25%
Sales, General and Administrative 103.2 37% 86.9 36% 19%
------------- ------------- -------
Operating Margin 36.2 13% 24.8 10% 46%
Interest and Other Income 4.3 2% 1.7 1% 153%
Interest and Other Expense (2.4) (1%) (2.1) (1%) 14%
Minority Interest (0.6) - (0.4) - 50%
------------- ------------- -------
Income Before Income Taxes 37.5 13% 24.0 10% 56%
Provision for Income Taxes 12.8 4% 8.6 4% 49%
------------- ------------- -------
Net Income 24.7 9% 15.4 6% 60%
============= ============= =======
Earnings Per Share, Fully Diluted $ 1.01 $ .75 35%
</TABLE>
A-4
<PAGE> 29
REVENUE
Total revenue for fiscal 1996 was $281.0 million, an increase of $39.0
million (16%) from fiscal 1995. The revenue increase was the result of
increased revenue in Health Care, $16.4 million (20%), Integrated Payment
Systems, $16.4 million (19%), and Global Payment Systems, $9.8 million (14%).
Health Care. Health Care revenue increased 20% in fiscal 1996 as compared
to fiscal 1995 as a result of increases in electronic claims processing and
increases in revenue from the Company's practice management systems for the
pharmacy, dental, physician, government and institutional sectors.
Integrated Payment Systems. Integrated Payment Systems revenue consisting
of the direct payment services and the check guarantee businesses, increased
19% in fiscal 1996 compared to fiscal 1995. This increase was the result of
several factors. Direct payment services revenue for fiscal 1996 increased over
the same period in fiscal 1995, primarily due to increased volume of merchant
sales processed. The alliance with Comerica Bank's merchant credit card
portfolio was also consumated on April 1, 1996.
Global Payment Systems. Global Payment Systems consists of the Company's
indirect payment services and information systems and services business units,
the Merchant Automated Point-of-Sale Program ("MAPP") business acquired from
MasterCard International Incorporated on April 1, 1996 and certain of the
Company's back office processing functions. Revenue increased 14% for the
fiscal year ended May 31, 1996. This increase reflected growth in the credit
card processing business which included the acquisition of MAPP, partially
offset by decreased information systems and services revenue. Additionally,
the decline in revenue for the indirect payment services business unit
experienced over the last few years has leveled off with the greatest
improvement in the third and fourth quarters of fiscal 1996. A portion of
Global's revenue is derived from intercompany sales of back office services
from Global to the Integrated Payment Systems business unit.
COSTS AND EXPENSES
Cost of service for the fiscal year ended May 31, 1996 was $141.6 million,
an increase of $11.3 million (9%) compared to fiscal 1995. While the cost of
operations increased $7.8 million (8%), cost of operations as a percentage of
revenue decreased from 42% in fiscal 1995 to 39% in fiscal 1996. Depreciation
and amortization as a percentage of revenue held constant at 7%. Hardware costs
increased 8%, related to volume associated with increased equipment sales in
the Integrated Payment Systems business and increased obsolescence costs
associated with Health Care equipment.
Gross margin increased to 50% from 46% for the fiscal year related
principally to operating efficiencies and leveraging the Company's fixed
investments.
A-5
<PAGE> 30
Sales, general and administrative expense increased $16.3 million (19%)
for fiscal 1996 as compared to fiscal 1995. As a percentage of revenue, sales,
general and administrative expenses increased from 36% in fiscal year 1995 to
37% in fiscal year 1996. This increase was primarily due to expenses
associated with acquired businesses. Additional investments made in product
development and sales personnel for future revenue gowth also increased fiscal
1996 sales, general and administrative expense.
OPERATING MARGIN
Operating margin increased 46% from the prior year and as a percentage of
revenue increased to 13% in fiscal 1996 from 10% in fiscal 1995. Earnings
before interest, taxes, depreciation and amortization were $59.4 million for
fiscal 1996 and $45.8 million for fiscal 1995, and as a percentage of revenue
were 21% and 19%, respectively.
INTEREST AND OTHER INCOME
Interest and other income for fiscal 1996 was $4.3 million, an increase of
$2.6 million (153%) over the same period in fiscal 1995. This increase was
principally related to increased cash available for investment during the first
ten months of fiscal 1996 and increased interest rates on the investment of
those cash balances. The increased cash was the result of the secondary stock
offering completed in the first quarter of fiscal 1996.
INTEREST AND OTHER EXPENSE
Interest and other expense increased $0.3 million (14%) principally due to
interest paid on bank lines of credit.
INCOME TAXES
The provision for income taxes, as a percentage of taxable income, was 34%
and 36% for fiscal years 1996 and 1995, respectively. The decrease was largely
due to tax- exempt earnings from invested cash balances and tax credits related
to research and development expenditures.
NET INCOME
Net income was $24.7 million, an increase of $9.3 million (60%) compared
to fiscal 1995. Fully diluted earnings per share for fiscal 1996 and fiscal
1995 were $1.01 and $0.75, respectively. The fully diluted average number of
common and common equivalent shares outstanding before the effects of the CIS
merger for fiscal 1996 was 24,483,000, an increase of 3,872,000 (19%) as
compared to the same period in fiscal 1995. This increase in shares is
primarily due to the sale of approximately 3,162,500 additional shares of the
Company's Common Stock in June 1995.
A-6
<PAGE> 31
RESTRUCTURING, IMPAIRMENT AND MERGER EXPENSES
In connection with the creation of Global Payment Systems LLC and the
merger with CIS Technologies, Inc., the Company incurred a restructuring,
impairment and merger charge of $44.1 million in the fourth quarter of fiscal
1996. This charge consisted of non-cash items of $35.1 million for the
write-down of impaired assets to their realizable value. Cash items of $9.0
million were associated with investment banking, accounting and legal fees and
severance costs.
CIS OPERATING RESULTS
Revenue for fiscal 1996 was $44.8 million, an increase of $8.7 million
(24%) over fiscal 1995. The increase in revenue over prior year was largely due
to the acquisition of Hospital Cost Consultants ("HCC") in June, 1995 as well
as growth in the financial services and EDI areas. Operating expenses for
fiscal 1996 totaled $48.7 million, consisting of cost of services, $21.6
million, sales and general and administrative expenses, $27.1 million.
Expenses for fiscal 1996 included approximately $3.7 million of one-time
operating adjustments to reflect changes in estimates. Operating expenses for
fiscal 1995 totalled $32.5 million. Excluding one-time adjustments, these
increased operating expenses were largely due to the high operating and
acquisition integration costs for the HCC and AMSC business units.
Interest and other expense increased $0.9 million in fiscal 1996 due to
interest paid on notes issued to complete the HCC acquisition. Net loss for
fiscal 1996, before restructuring, was $3.2 million compared to fiscal 1995 net
income of $3.0 million.
A-7
<PAGE> 32
Results of Operations Fiscal Years 1995 and 1994
The following table is a summary of the Company's fiscal 1995 and 1994 results
of operations before and after the effects of the CIS merger accounted for as a
pooling of interests:
($ Millions, except per share data)
<TABLE>
<CAPTION>
FY 95
------------------------------------
NDC CIS Consolidated
------ ----- ------------
<S> <C> <C> <C>
Revenue $242.0 $36.1 $278.1
Operating Income 24.8 3.6 28.4
Net Income 15.4 3.0 18.4
Earnings Per Share $ .75 $ .04 $ .79
FY 94
-----------------------------------
NDC CIS Consolidated
------ ----- ------------
Revenue $206.1 $31.6 $237.7
Operating Income 15.8 2.6 18.4
Net Income 9.7 2.5 12.2
Earnings Per Share $ .50 $ .05 $ .55
</TABLE>
To assist in the understanding of the consolidated operating results,
Management's Discussion and Analysis will first address the performance of the
Company without the CIS operating results. The results of operations for CIS
will be discussed separately.
A-8
<PAGE> 33
OVERVIEW 1995 AND 1994
FISCAL YEAR ENDED MAY 31, 1995 COMPARED TO FISCAL YEAR ENDED MAY 31, 1994
The following table reflects the relative percentage ratios and the percent
change from the prior year (table excludes effects of CIS merger):
<TABLE>
<CAPTION>
($ Millions) FY 1995 FY 1994 Inc. (Dec.)
$ % $ % %
-------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Health Care 83.7 35% 63.3 31% 32%
Integrated Payment Systems 88.4 36% 68.2 33% 30%
Global Payment Systems 69.9 29% 74.6 36% (6%)
------------ ------------ ----------
Total Revenue 242.0 100% 206.1 100% 17%
------------ ------------ ----------
Cost of Service:
Operations 101.8 42% 94.7 46% 7%
Depreciation and Amortization 17.3 7% 14.7 7% 18%
Hardware Sales 11.2 5% 9.9 5% 13%
------------ ------------ ----------
Total Cost of Service 130.3 54% 119.3 58% 9%
------------ ------------ ----------
Gross Margin 111.7 46% 86.8 42% 29%
------------ ------------ ----------
Sales, General and Administrative 86.9 36% 68.5 33% 27%
Settlement of Shareholder Litigation - - 2.5 1% -
------------ ------------ ----------
Operating Margin 24.8 10% 15.8 8% 57%
Interest and Other Income 1.7 1% 1.5 - 13%
Interest and Other Expense (2.1) (1%) (2.5) (1%) 16%
Minority Interest (0.4) - - - -
------------ ------------ ----------
Income Before Income Taxes 24.0 10% 14.8 7% 62%
Provision for Income Taxes 8.6 4% 5.1 2% 69%
------------ ------------ ----------
Net Income 15.4 6% 9.7 5% 59%
============ ============ ==========
Earnings Per Share, Fully Diluted $ .75 $ .50 50%
</TABLE>
A-9
<PAGE> 34
REVENUE
Total revenue for fiscal 1995 was $242.0 million, an increase of $35.9
million (17%) from revenue of $206.1 million for fiscal 1994. The revenue
increase was the result of increased revenue in Health Care $20.4 million (32%),
Integrated Payment Systems, $20.2 million (30%), partially offset by a decrease
in Global Payment Systems, $4.7 million (6%).
Health Care. Health Care revenue increased 32% in fiscal year 1995 as
compared to fiscal 1994 as a result of (i) increases in electronic claims
processing, and (ii) increases in revenue for the Company's practice management
systems for the pharmacy, dental, physician, government and institutional
sectors, including the impact of acquisitions completed during fiscal 1995.
Integrated Payment Systems. Integrated Payment Systems revenue consisting
of the direct payment services and the check guarantee businesses, increased
30% in fiscal year 1995 compared to fiscal 1994. Direct payment services
revenue for fiscal 1995 increased over the same period in fiscal 1994,
primarily due to increased volume of merchant sales processed and equipment
sales. In addition, two check guarantee businesses were acquired during fiscal
year 1995.
Global Payment Systems. Global Payment Systems revenue consisting of the
indirect payment services and information systems and services business units,
for fiscal 1995 was $69.9 million, a decrease of $4.7 (6%) from revenue of
$74.6 million for fiscal 1994. Revenue in the Company's indirect merchant
processing business (distribution through the banks) decreased for fiscal year
1995 from the same period in fiscal 1994, as a result of price reductions. The
reduced prices were associated with contract renewals in exchange for increased
volume commitments. Information systems and services revenue decreased due to
decreased sales of software for electronic data interchange (EDI) applications
as compared to fiscal year 1994.
COSTS AND EXPENSES
Cost of service for fiscal 1995 was $130.3 million, an increase of $11.0
million (9%) from the same period in fiscal 1994. While the cost of operations
increased $7.1 million (7%) for fiscal 1995 as compared to the same period in
fiscal 1994, cost of operations as a percentage of revenue decreased from 46%
in fiscal 1994 to 42% in fiscal 1995. Depreciation and amortization as a
percentage of revenue held constant at 7%. Hardware costs increased $1.3
million (13%), primarily related to volume associated with increased equipment
sales in the Integrated Payment Systems business.
Gross margin increased to 46% from 42% for the fiscal year ended May 31,
1995 as compared to fiscal 1994.
A-10
<PAGE> 35
Sales, general and administrative expense increased $18.4 million (27%)
for fiscal year 1995 as compared to fiscal year 1994. As a percentage of
revenue, sales, general and administrative expenses increased from 33% in
fiscal year 1994 to 36% in fiscal year 1995. This increase was primarily due
to sales expansion and marketing programs in the Integrated Payment Systems and
Health Care areas as well as increased sales, general and administrative
expenses associated with acquired businesses.
The Company reflected a charge relating to the settlement of shareholder
litigation of $2.5 million in the first quarter of fiscal 1994, representing
the settlement costs of a lawsuit originally filed in 1990. (See Note 13 to
the Consolidated Financial Statements for further discussion).
OPERATING MARGIN
Operating margin increased 57% from the prior year and as a percentage of
revenue increased to 10% in fiscal 1995 from 8% in fiscal 1994. Earnings
before interest, taxes, depreciation and amortization were $45.8 million for
fiscal 1995 and $34.0 million for fiscal 1994, and as a percentage of revenue
were 19% and 16%, respectively.
INTEREST AND OTHER INCOME
Interest and other income for fiscal 1995 was $1.7 million, an increase of
$0.2 million (13%) over the same period in fiscal 1994. The increase in
interest and other income was principally related to increased cash available
for investment during the first six months of fiscal 1995 and increased
interest rates on the investment of those cash balances.
INTEREST AND OTHER EXPENSE
Fiscal 1995 showed a decrease in interest and other expense of $0.4
million (16%) from the same period in fiscal 1994.
INCOME TAXES
The provision for income taxes, as a percentage of taxable income, was 36%
and 34% for fiscal years 1995 and 1994, respectively. The lower rate in fiscal
1994 was primarily due to the resolution of issues associated with prior years.
NET INCOME
Net income for fiscal 1995 was $15.4 million, an increase of $5.8 million
(60%) as compared to the same period in fiscal 1994. Fully diluted earnings per
share for fiscal 1995 and fiscal 1994 were $0.75 and $0.50, respectively. The
fully diluted average number of common and common equivalent shares outstanding
before the effects of the CIS merger for fiscal 1995 was 20,611,000, an
increase of 1,130,000 (6%) as compared to the same period in fiscal 1994.
CIS OPERATING RESULTS
Revenue for fiscal 1995 was $36.1 million, an increase of $4.5 million
(14%) over fiscal 1994 principally as a result of growth in the EDI and
financial services areas. Cost
A-11
<PAGE> 36
of service for fiscal 1995 totalled $23.1 million, an increase of $2.8 million
(14%) from fiscal 1994. Sales, general and administrative expenses for fiscal
1995 were $9.4 million an increase of 8% over the prior year. Net income for
fiscal 1995 was $3.0 million, an increase of $0.5 million (21%) compared to
fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow generated from operations provides the Company with a
significant source of liquidity. At May 31, 1996, the Company and its
subsidiaries (including CIS) had cash and cash equivalents totaling $9.8
million. Cash provided by operations before changes in working capital was
$57.0 million, an increase of $13.0 million (30%) compared to the prior year.
Cash was required in 1996 to fund working capital of $11.7 million. This was
principally the result of increased accounts receivable relating to increased
revenue. Net cash provided by operating activities decreased 11% to $45.3
million for fiscal 1996, from $50.8 million in fiscal 1995. Significant cash
flows generated from operating activities are reinvested by the Company in
existing businesses and are used to fund acquisitions.
For fiscal 1996, cash used in investing activities increased to $146.7
million compared to $63.8 million in fiscal 1995. Capital expenditures were
$16.4 million and $14.1 in fiscal 1996 and 1995, respectively, an increase of
16%. The increase in the level of capital expenditures in 1996 is related to
continuing growth in the business and acceleration of certain strategic
programs. In addition to capital expenditures to support future growth and
improve profitability, in fiscal 1996, the Company completed three acquisitions
for an aggregate cash purchase price of approximately $131 million, net of cash
acquired. During fiscal 1995, the Company completed six acquisitions for an
aggregate cash purchase price of approximately $40 million, net of cash
acquired. The Company has financed its acquisition program through cash flows
from operations, equity offerings, and borrowings.
Net cash provided by financing activities increased to $80.1 million for
the fiscal year ended May 31, 1996 from $5.7 in the prior year period. The net
proceeds from the issuance of stock under the secondary offering (as discussed
in Note 5) were approximately $64 million, net of underwriting discount and
expenses. Dividends of $6.9 million and $5.7 were paid during fiscal years
1996 and 1995, respectively. Prior to its merger with the Company, CIS
expended cash in fiscal 1995 of approximately $11.0 million, net of cash
acquired, and issued notes payable of $5.0 million related to acquisitions. In
fiscal 1996, CIS obtained a term loan in the amount of $1.25 million. CIS's
outstanding long-term debt in the amount of approximately $12.0 million was
repaid when the merger with the Company was completed.
A-12
<PAGE> 37
The Company has a committed, unsecured $50 million credit facility which
expires August 1999. As of May 31, 1996, there were $30 million in borrowings
on the facility. Subsequent to May 31, 1996, the Company's Global Payment
Systems subsidiary entered into a committed, unsecured $60 million credit
facility which expires July 1999. The facility automatically reduces to $50
million on the first anniversary of the credit agreement. Management of the
Company believes that its current level of cash and borrowing capability along
with future cash flows from operations are sufficient to meet the needs of its
existing business. The Company regularly evaluates cash requirements for
current operations, commitments, development activities and strategic
acquisitions. The Company may elect to raise additional funds for these
purposes, either through the issuance of additional debt or equity or
otherwise, as appropriate.
A-13
<PAGE> 38
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
NATIONAL DATA CORPORATION
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
(in thousands except per share data) Fiscal Year Ended May 31,
----------------------------
1996 1995 1994
-------- -------- --------
<S> <C>
Revenue $325,803 $278,083 $237,659
- ---------------------------------------------------------------------------------------
Operating Expenses:
Cost of service 163,323 153,410 139,564
Sales, general and administrative 130,246 96,247 77,172
Restructuring,impairment and merger expenses 44,068 - -
Settlement of shareholder litigation - - 2,500
- ---------------------------------------------------------------------------------------
337,637 249,657 219,236
- ---------------------------------------------------------------------------------------
Operating income (loss) (11,834) 28,426 18,423
- ---------------------------------------------------------------------------------------
Other income (expense):
Interest and other income 4,476 2,079 1,528
Interest and other expense (3,750) (2,635) (2,600)
Minority interest (628) (393) -
- ---------------------------------------------------------------------------------------
98 (949) (1,072)
- ---------------------------------------------------------------------------------------
Income (loss) before income taxes (11,736) 27,477 17,351
Provision (benefit) for income taxes (3,278) 9,056 5,125
- ---------------------------------------------------------------------------------------
Net income (loss) ($8,458) $ 18,421 $ 12,226
============================
Primary earnings (loss) per common and common equivalent
shares ($ 0.31) $ 0.80 $ 0.55
============================
Fully diluted earnings (loss) per common and
common equivalent shares
($ 0.31) $ 0.79 $ 0.55
============================
</TABLE>
All prior period amounts have been restated to reflect the 1996 merger with CIS
in a pooling transaction
The accompanying notes are an integral part of these consolidated statements.
A-14
<PAGE> 39
CONSOLIDATED STATEMENTS OF CASH FLOWS
NATIONAL DATA CORPORATION
<TABLE>
<CAPTION>
(in thousands)
- ----------------------------------------------------------------------------------------------------
Fiscal Year Ended May 31,
-------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) ($8,458) $18,421 $12,226
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 17,874 16,342 13,800
Amortization of acquired intangibles and goodwill 10,739 8,196 5,981
Asset impairment loss and other non-cash restructuring items 35,116 - -
Provision for bad debts 1,658 971 582
Loss on disposal of fixed assets 76 67 59
Changes in current assets and liabilities which provided
(used) cash, net of the effects of acquisitions:
Accounts receivable, net (13,495) (7,136) 3,002
Merchant processing working capital (4,076) 4,993 422
Inventory 1,060 1,228 (855)
Prepaid expenses and other assets 9,024 5,982 9,702
Accounts payable and accrued liabilities 14,543 (131) (2,037)
Income taxes payable and deferred income taxes (18,757) 1,833 (418)
------------------------------
Net cash provided by operating activities 45,304 50,766 42,464
------------------------------
Cash flows from investing activities:
Capital expenditures (16,393) (14,101) (15,570)
Business acquisitions, net of cash acquired (130,542) (51,662) (400)
Decrease in investments and other non-current assets 275 1,933 542
------------------------------
Net cash used in investing activities (146,660) (63,830) (15,428)
------------------------------
Cash flows from financing activities:
Borrowings under lines of credit 28,017 1,622 1,203
Payments on notes and earn-out payable (3,509) (2,837) (2,772)
Principal payments under mortgage, capital lease
arrangements and other long-term debt (11,481) (3,770) (2,718)
Net proceeds from sale of common stock 63,652 11,692 -
Net proceeds from the issuance of stock
under employee stock plans 9,057 2,603 3,317
Issuance of term note 1,250 2,000 -
Dividends paid (6,877) (5,663) (5,503)
------------------------------
Net cash provided by (used in) financing activities 80,109 5,647 (6,473)
------------------------------
(Decrease) increase in cash and cash equivalents (21,247) (7,417) 20,563
Cash, beginning of period 31,015 38,432 17,869
------------------------------
Cash, end of period $ 9,768 $ 31,015 $ 38,432
==============================
Supplemental schedule of noncash investing and financing activities:
Promissory notes entered into in exchange for capital stock - $ 3,506 -
Capital leases entered into in exchange for property and
equipment 1,207 4,223 4,853
==============================
</TABLE>
All prior period amounts have been restated to reflect the 1996 merger with CIS
in a pooling transaction
The accompanying notes are an integral part of these consolidated statements.
A-15
<PAGE> 40
CONSOLIDATED BALANCE SHEETS
NATIONAL DATA CORPORATION
<TABLE>
<CAPTION>
(in thousands except share data)
- ---------------------------------------------------------------------------------------------------------------------
May 31, May 31,
1996 1995
--------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,768 $ 31,015
Accounts receivable (less allowances of $2,433 and $1,722) 61,618 53,542
Deferred income taxes 1,000 601
Inventory 1,869 2,900
Prepaid expenses and other current assets 7,152 7,155
-------- --------
Total current assets 81,407 95,213
-------- --------
Property and equipment, net 49,436 51,956
Acquired intangibles and goodwill, net 223,055 105,231
Deferred income taxes 11,505 -
Other 2,636 3,358
-------- --------
Total Assets $368,039 $255,758
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 48,561 $ 31,446
Line of credit payable 30,000 2,896
Notes and earn-out payable 1,637 9,104
Income taxes payable 1,548 8,095
Obligations under capital leases 3,011 3,009
Mortgage payable 10,936 164
Deferred income 5,996 6,890
------- -------
Total current liabilities 101,689 61,604
------- -------
Mortgage payable - 10,936
Notes payable on acquired businesses 3,138 5,882
Deferred income taxes - 2,701
Obligations under capital leases 4,439 6,190
Other long-term liabilities 5,747 3,402
------- -------
Total liabilities 115,013 90,715
------- -------
Minority interest in equity of subsidiaries 19,727 392
Commitments and contingencies (Note 13) - -
Shareholders' Equity:
Preferred stock, par value $1.00 per share, 1,000,000 shares authorized; none issued - -
Common stock, par value $.125 per share, 60,000,000 shares authorized 25,962,939
and 22,136,479 shares issued and outstanding at May 31, 1996 and 1995, respectively 3,246 2,767
Capital in excess of par value 168,732 84,051
Retained earnings 62,216 78,657
Cumulative translation adjustment (753) (550)
------- -------
233,441 164,925
Less: Deferred compensation (142) (274)
------- -------
Total Shareholders' Equity 233,299 164,651
Total Liabilities and Shareholders' Equity $368,039 $255,758
======== ========
</TABLE>
All prior period amounts have been restated to reflect the 1996 merger with CIS
in a pooling transaction
The accompanying notes are an integral part of these consolidated statements.
A-16
<PAGE> 41
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
NATIONAL DATA CORPORATION
<TABLE>
<CAPTION>
(in thousands except per share data)
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock
-------------------- Capital in Cumulative Deferred
Number Excess of Retained Translation Treasury Compen-
of Shares Amount Par Value Earnings Adjustment Stock sation
--------- ------ --------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at May 31, 1993 15,057 $1,882 $77,687 $58,872 ($393) - ($781)
Net income - - - 12,226 - - -
Cash dividends ($.44 per share) - - - (5,503) - - -
Foreign currency translation adjustment - - - - (140) - -
Stock issued under employee
stock plans 333 42 3,217 - - - -
Stock issued under restricted
stock plans 50 6 749 - - - (755)
Amortization of deferred
compensation - - - - - - 744
- -----------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1994 15,440 1,930 81,653 65,595 (533) 0 (792)
Net income - - - 18,421 - - -
Cash dividends ($.30 per share) - - - (5,663) - - -
Stock dividend in the form
of a stock split 6,422 802 - (802) - - -
Purchase of treasury stock (2)
Foreign currency translation adjustment - - - - (17) - -
Stock issued under employee
stock plans 237 30 2,571 - - - -
Stock issued under restricted
stock plans 38 5 359 - - - (362)
Amortization of deferred
compensation - - - - - - 880
- -----------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1995 22,137 $2,767 $84,583 $77,551 ($550) ($2) ($274)
- -----------------------------------------------------------------------------------------------------------------------
Net income (loss) - - - (8,458) - - -
Cash dividends ($.30 per share) - - - (6,877) - - -
Secondary stock offering 3,163 395 63,257 - -
Purchase of treasury stock - - - - - 1
Foreign currency translation adjustment - - - - (203) - -
Stock issued under employee
stock plans 614 78 4,946 - - - -
Stock issued under non-employee
stock plans 49 6 500 - - - -
Stock issued under restricted
stock plans - - 64 - - - (100)
Tax benefit from exercise of
stock options - - 3,330 - - - -
Increase in capital due to
issuance of subsidiary
ownership interest - - 12,052 - - - -
Amortization of deferred
compensation - - - - - - 232
- -----------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1996 25,963 $3,246 $168,732 $62,216 ($753) ($1) ($142)
=======================================================================================================================
</TABLE>
All prior period amounts have been restated to reflect the 1996 merger with CIS
in a pooling transaction
The accompanying notes are an integral part of these consolidated statements.
A-17
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of operations - The Company is a provider of transaction processing
services and application systems to the health care and payments systems
markets. The principal markets for the Company's products and services are
retailers, banks and financial institutions, healthcare providers, insurance
companies and managed care organizations.
Basis of presentation - The consolidated financial statements include the
accounts of the Company and its majority-owned subsidiaries including the
retroactive effect of the CIS merger which has been accounted for under the
pooling-of-interests method of accounting. Significant intercompany
transactions have been eliminated in consolidation. Certain reclassifications
have been made to the fiscal 1995 and 1994 consolidated financial statements to
conform to the fiscal 1996 presentation.
Use of estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements as well as reported amounts
of revenues and expenses during the reported period. Actual results could
differ from these estimates.
Cash and cash equivalents - For purposes of reporting cash flows, cash and cash
equivalents include cash on hand and all liquid investments with a maturity of
three months or less when purchased.
Inventory - Inventory, which is composed primarily of microcomputer hardware
and peripheral equipment and electronic point-of-sale terminals, is stated at
the lower of cost or market. Cost is determined by using the average inventory
cost method.
Property and equipment - Property and equipment, including equipment under
capital leases, is stated at cost. Depreciation and amortization are
calculated using the straight-line method for financial reporting purposes and
primarily accelerated methods for tax purposes. Equipment is depreciated over
two- to five-year lives, and buildings are depreciated over a forty-year life.
Leasehold improvements and property acquired under capital leases are amortized
over the shorter of the useful life of the asset or the term of the lease. The
costs of purchased and internally developed software used to provide services
to customers or internal administrative services are capitalized and amortized
on a straight-line basis over their estimated useful lives, up to five years.
A-18
<PAGE> 43
Acquired intangibles and goodwill - Acquired intangibles primarily represent
customer contracts and covenants-not-to-compete associated with the Company's
acquisitions. Acquired intangibles are amortized using the straight-line
method over their estimated useful lives of four to twenty years. Goodwill
represents the excess of the cost of acquired businesses over the fair market
value of their tangible and identifiable net assets. Goodwill is being
amortized on a straight-line basis over periods ranging from ten to forty
years. Subsequent to an acquisition, the Company regularly evaluates whether
events and circumstances have occurred that indicate the carrying amount of
goodwill may warrant revision or may not be recoverable. When factors indicate
that goodwill should be evaluated for possible impairment, the Company uses an
estimate of the future undiscounted net cash flows of the related businesses
over the remaining life of the goodwill in measuring whether the goodwill is
recoverable (see also Note 2).
Income taxes - Deferred income taxes are determined based on the difference
between financial statement and tax bases of assets and liabilities using
enacted tax laws and rates at which the taxes are expected to be paid. (see
also Note 4).
Earn-out payables - Earn-out payables represent the present value of estimated
future payments under earn-out agreements related to the Company's business
acquisitions.
Foreign currency translation - The assets and liabilities of foreign
subsidiaries are translated at the year-end rate of exchange, and income
statement items are translated at the average rates prevailing during the year.
The resulting translation adjustment is recorded as a component of
stockholders' equity. Exchange gains and losses on intercompany balances of a
long-term investment nature are also recorded as a component of stockholders'
equity.
New accounting standard - The Financial Accounting Standards Board has issued
Statement No. 121 ("SFAS No. 121"), Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed of. This statement requires that
long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. The Company adopted the new rules for the fiscal year ended May
31, 1996.
Revenue - Revenue related to services provided, including the Company's
government cost-plus contracts, is recognized as services are performed.
Revenue related to software sales, software license agreements and hardware
sales is recognized upon shipment.
Earnings per common share - Earnings per common and common equivalent share on
a primary basis are computed by dividing net income by the weighted average
number of common shares and common equivalent shares outstanding during the
period. Common equivalent shares represent stock options that, if exercised,
would have a dilutive effect on earnings per share. All options with an
exercise price less than the average market share price for the period are
assumed to have a dilutive effect on earnings per share.
A-19
<PAGE> 44
Earnings per common and common equivalent share, on a fully diluted basis, are
computed by the same method as described for primary earnings per share except
that the higher of (1) the ending market share price or (2) the average market
share price is used to compute the fully diluted earnings per share, as
compared to the average market share price for primary earnings per share.
The effects of the stock split and the supplemental offering (discussed in Note
5) and the shares issued to effect the pooling-of-interests merger of CIS
Technologies, Inc. into a subsidiary of the Company (see Note 2) have been
retroactively applied to all periods for which financial statements are
presented.
The primary and fully diluted weighted average number of common and common
equivalent shares outstanding is as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended May 31,
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Primary 27,189 23,065 22,316
Fully Diluted 27,189 23,481 22,351
</TABLE>
A-20
<PAGE> 45
NOTE 2 - BUSINESS ACQUISITIONS
During fiscal 1996 and 1995, the Company acquired the following businesses:
<TABLE>
<CAPTION>
Date Ownership
Business Acquired Percentage
-------------------------------------------------------------
<S> <C> <C>
Yes Check Services, Inc. June 1994 80%
Lytec Systems July 1994 100%
Mercantile Systems, Inc. September 1994 100%
Zadall Systems Group, Inc. October 1994 100%
AMSC, Inc. November 1994 100%
Learned-Mahn, Inc. January 1995 100%
Physician's Practice Management May 1995 100%
Hospital Cost Consultants, Inc. June 1995 100%
Conceptual Systems January 1996 100%
Merchant Automated
Point of Sale Program ("MAPP") April 1996 92.5%
Comerica Bank merchant portfolio April 1996 51%
</TABLE>
Each of the foregoing acquisitions has been recorded using the purchase method
of accounting and, accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed based on their estimated fair value as
of the date of acquisition. The allocation of the purchase price of the fiscal
year 1996 acquisitions is preliminary and will be adjusted when the necessary
information is available. The operating results of the acquired businesses are
included in the Company's consolidated financial statements of income from the
respective dates of acquisition.
In order to effect the MAPP acquisition, the Company organized a new Georgia
limited liability company, Global Payment Systems LLC, ("Global"), to which it
transferred its Payment Services business unit, its Information Systems and
Services business unit and certain back office support functions from the
Company's Payment Systems business unit. In addition, the Company contributed
$60 million and loaned $50 million to Global. The total cash from the Company,
$110 million, transferred to Global was paid using cash on-hand of
approximately $104 million with the remaining $6 million borrowed under an
existing acquisition line of credit. Global then acquired MAPP from MasterCard
International Incorporated ("MasterCard"). The net assets of MAPP consisted
primarily of tangible personal property, leased personal and real property,
customer contracts, assembled work force and the goodwill of the business. The
consideration paid for MAPP was $110 million plus the granting of a 7.5%
membership interest in Global to MasterCard. The gain from the issuance of the
7.5% membership interest in Global has been reflected as a capital transaction
in the Consolidated Statements of Changes in Shareholders' Equity.
A-21
<PAGE> 46
The total consideration paid for the MAPP business was estimated at $130.4
million, which consists of $111.4 million in cash and the 7.5% minority
interest with an estimated value of $18.8 million. The net value of the
tangible assets acquired was approximately $4.3 million creating an excess cost
over tangible assets of $126.1 million. The aggregate estimated life of the
intangible assets is 34 years.
Other purchase acquisitions completed in fiscal 1996 consisted of Hospital Cost
Consultants, Inc. ("HCC"), Conceptual Systems Corp. Inc., and the merchant
credit card portfolio of Comerica Bank. The aggregate price paid for these
acquisitions was $34.4 million consisting of cash of $29.4 million and notes
payable of $5 million. The excess cost over tangible assets acquired of $42.1
million was allocated to goodwill and intangible assets and will be amortized
over periods ranging from ten to twenty years.
In addition to the purchase acquisitions, the Company merged with C.I.S.
Technologies, Inc. ("CIS") on May 31, 1996. CIS provides transaction
processing, consulting and outsourcing services to the health care market,
primarily hospitals and physicians. In the merger, each share of CIS Common
Stock and Series A Preferred Stock ceased to be outstanding and was converted
into the right to receive .08682 shares of the Company's Common Stock. The
Company issued approximately 2,829,746 shares of its Common Stock, valued at
approximately $109 million, in exchange for the outstanding CIS Common Stock
and Series A Preferred Stock. The acquisition was accounted for using the
pooling of interests method. In accordance with the pooling of interests
method, the consolidated financial statements of the Company include the
financial statements of CIS for all periods presented. Prior to its merger
with the Company, CIS reported on a calendar year basis ending December 31.
CIS's financial statements for the 12 month periods ending June 30, 1995 and
1994 were combined with the Company's financial statements for the fiscal years
1995 and 1994, respectively. For fiscal 1996 reporting, CIS's financial
position and operating results were restated to coincide with the Company's
fiscal year ended May 31, 1996.
In connection with the CIS combination, the Company accrued certain direct
transaction and integration costs totaling $6.4 million which were reflected as
part of restructuring, impairment and merger expenses in the Company's fiscal
1996 consolidated statement of income. Such fees and expenses consist of $3.75
million of direct transaction costs (including investment banking fees, legal,
accounting and printing costs) and $2.7 million of severance and exit costs.
A reconciliation of revenue, net income and earnings per share of the Company,
as previously reported, CIS and combined is as follows (in thousands, except
per share data):
A-22
<PAGE> 47
<TABLE>
<CAPTION>
Fiscal Year Ended May 31,
1995 1994
-------- --------
<S> <C> <C>
Revenue:
NDC, as previously reported $242,031 $206,133
CIS 36,052 31,526
Combined $278,083 $237,659
------------------
Net Income:
NDC, as previously reported $ 15,389 $ 9,710
CIS 3,032 2,516
------------------
Combined $ 18,421 $ 12,226
------------------
Fully Diluted Earnings Per Share:
NDC, as previously reported $ .75 $ .50
------------------
Combined $ .79 $ .55
------------------
</TABLE>
All of the acquisitions completed in fiscal 1995 have been accounted for as
purchases, and their results have been included in the consolidated statements
of income (loss) from the date of acquisition. The aggregate price paid for
these acquisitions was $51.4 million. Additional consideration may be paid
which would result in additional goodwill for both the Yes Check and Lytec
transactions based on their future operating performance. Cash from internally
generated funds was used to finance $42.6 million of the purchase price, common
stock in the amount of $2.0 million and non-negotiable installment notes in the
face amount of $5.5 million, were issued to finance the remainder. The net
value of the tangible assets acquired was $1.9 million. The excess of cost over
tangible assets acquired of $49.5 million was allocated to goodwill and
identifiable intangible assets. Goodwill and identifiable intangible assets
will be amortized over their estimated useful life, which in the aggregate
approximates twenty years.
The following unaudited pro forma information for the acquisitions discussed
above has been prepared as if these acquisitions had occurred on June 1, 1994.
The information is based on historical results of the separate companies and
may not necessarily be indicative of the results that could have been achieved
or of results which may occur in the future. The pro forma information
includes the expense for amortization of goodwill and other intangible assets
resulting from these transactions and interest expense related to financing
costs but does not reflect any synergies or operating cost reductions that may
be achieved from the combined operations.
<TABLE>
Fiscal Year Ended Fiscal Year Ended
In thousands, except per share data May 31, 1996 May 31, 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
Revenue $382,813 $355,046
Income $ 23,886 $ 16,998
Earnings per Share, fully diluted $ .87 $ .64
</TABLE>
A-23
<PAGE> 48
NOTE 3 - RESTRUCTURING, IMPAIRMENT AND MERGER EXPENSES
In connection with the creation of Global and the merger with CIS, the Company
incurred a total charge of $44.1 million. Included in this charge was $34.4
million for asset impairment, $5.2 million for restructuring, and $4.5 million
for merger transaction costs.
As a result of the creation of Global and the merger with CIS, the Company
performed an evaluation to determine, in accordance with SFAS 121 (see Note 1),
whether future undiscounted cash flows impacted by these events in certain of
the Company's Integrated Payment Systems and Health Care businesses will be
less than the aggregate carrying amount of the related assets. As a result of
the evaluation, management determined that the estimated future cash flows will
be less than the carrying amount of the related assets, and therefore are
impaired as defined by SFAS 121. Assets impaired included certain intangible
assets and capitalized software. The restructuring charge reflects the
anticipated severance benefits and other related costs as a result of the
Company's formal plan to downsize personnel in areas of redundant operations
and activities. Merger transaction costs primarily consist of investment
banker and professional fees related to the CIS merger.
A-24
<PAGE> 49
NOTE 4 - INCOME TAXES
The provision for income taxes includes:
<TABLE>
<CAPTION>
Fiscal Year Ended May 31,
1996 1995 1994
(in thousands) -----------------------------
<S> <C>
Current tax expense:
Federal $10,989 $7,444 $4,293
State 338 1,489 (118)
------- ------ ------
11,327 8,933 4,175
Deferred tax expense:
Federal (13,833) 259 661
State (772) (136) 289
------- ------ ------
(14,605) 123 950
Total $(3,278) $9,056 $5,125
======= ====== ======
</TABLE>
The Company's effective tax rates differ from federal statutory rates as
follows:
<TABLE>
<CAPTION>
Fiscal Year Ended May 31,
1996 1995 1994
----------------------------
<S> <C> <C>
(in thousands)
Federal statutory rate (35.0%) 35.0% 35.0%
State income taxes, net of
federal income tax benefit (1.3%) 3.2% .7%
Non-taxable interest income (3.1%) (.5%) (1.4%)
Non-deductible amortization
and write-off of intangible assets 23.3% (.5%) (.1%)
Utilization of tax loss carryforwards (3.0%) - -
Tax credits (3.1%) (1.2%) -
Recognition of tax assets (10.5%) (3.8%) (4.6%)
Other 4.8% .8% (.2%)
------- ------ ------
Total (27.9%) 33.0% 29.4%
======= ====== ======
</TABLE>
A-25
<PAGE> 50
Deferred income taxes as of May 31, 1996 and 1995 reflect the impact of
temporary differences between the amounts of assets and liabilities for
financial accounting and income tax purposes. Net deferred tax assets at May
31, 1996 consisted of net current deferred tax assets of $1,000,000 and net
non-current deferred tax assets of $11,505,000. Net deferred tax liabilities
at May 31, 1995 consist of net current deferred tax assets of $601,000 and net
non-current deferred tax liabilities of $2,701,000. As of May 31, 1996 and
1995, principal components of deferred tax items are as follows (in thousands):
<TABLE>
1996 1995
------ -------
<S> <C> <C>
Deferred tax liabilities:
Property and equipment $ 7,476 $ 7,831
Prepaid expenses 1,376 1,215
Other 557 408
------- -------
9,409 9,454
Deferred tax assets:
Accrued expenses $ 1,056 $ 1,772
Net operating loss and
credit carryforwards 13,971 9,309
Acquired intangibles 1,958 1,412
Accrued restructuring
and impairment charge 8,771 -
Employee benefit plans 565 511
Other 244 77
Valuation allowance (4,651) (5,727)
------- -------
21,914 7,354
Net deferred tax asset (liability) $12,505 ($2,100)
======= =======
</TABLE>
A valuation allowance is provided when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Realization of
the operating loss and credit carryforwards are considered by management to be
uncertain. The Company has established valuation allowances for a portion of
these tax assets. Net operating loss and credit carryforwards expire between
the years 2001 and 2011.
A-26
<PAGE> 51
NOTE 5- STOCKHOLDERS' EQUITY
In June 1995, the Company completed a secondary public offering of 3,162,500
shares of its Common Stock. The stock was sold at a price of $21.25 per share.
This transaction, net of underwriting discount and expenses associated with
this offering, added approximately $63,652,000 in cash to the Company.
On January 24, 1995, the Company's Board of Directors approved a three-for-two
stock split, effected in the form of a dividend, of the Company's $.125 par
value Common Stock and the rights to purchase one one-hundredth of a share of
the $1.00 par value Series A Junior Participating Preferred Stock.
Shareholders of record on February 20, 1995 were entitled to the stock
distribution resulting from the three-for-two split. The stock split was
effective March 20, 1995. As a result of the stock split the Company issued an
additional 6,422,544 shares of Common Stock and rights to purchase one
one-hundredth of a share of the $1.00 par value Series A Junior Participating
Preferred Stock. All per share and weighted average share amounts have been
restated to reflect this stock split.
Stock Option Plans - The Company has one employee option plan at May 31, 1996,
the 1987 Stock Option Plan (1987 Plan). The Plan provides for granting
options, to certain officers and key employees to purchase the Company's common
stock. Under the Plan, options may be issued at, below, or above the fair
market value of the common stock at the time of grant. Options granted become
exercisable in various annual increments and terminate over a period not to
exceed ten years.
Transactions in stock options under this plan are summarized as follows:
(Information presented reflects the effects of the stock split).
<TABLE>
<CAPTION>
Shares Under Option Price
Option Per Share
- --------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at May 31, 1993 2,209,072 $5.33 - $86.39
Granted 843,908 9.67 - 69.11
Exercised (362,585) 5.33 - 78.44
Expired or terminated (288,741) 6.50 - 78.44
- --------------------------------------------------------------------------------
Outstanding at May 31, 1994 2,401,654 $5.33 - $86.39
Granted 962,974 11.17 - 37.44
Exercised (304,493) 5.33 - 30.24
Expired or terminated (243,450) 5.33 - 69.11
- --------------------------------------------------------------------------------
</TABLE>
A-27
<PAGE> 52
<TABLE>
<S> <C> <C>
Outstanding at May 31, 1995 2,816,685 $5.33 - $86.39
Granted 682,875 21.00 - 37.44
Exercised (566,411) 5.33 - 30.24
Expired or terminated (244,984) 5.33 - 69.11
- -------------------------------------------------------------------------------
Outstanding at May 31, 1996 2,688,165 $5.33 - $86.39
</TABLE>
There were 600,555 shares exercisable at May 31, 1996, and there were 1,464,260
shares available for future grants under the 1987 Plan.
Other Stock Plans - The Company has an Employee Stock Purchase Plan under
which the sale of 1,350,000 shares of its Common Stock has been authorized.
Employees may designate up to the lesser f $25,000 or 20% of their annual
compensation for the purchase of stock. The price for shares purchased under
the plan is the lower of 85% of market value on the first day or the last day
of the purchase period. At May 31, 1996, 963,761 shares have been issued under
this plan with 386,239 shares reserved for future issuance.
The Company also has a Non-employee Directors Stock Option Plan which provides
for grants of options, consisting of 5,000 shares of the Company's Common Stock
for each completed year of service, to directors who are not employees of the
Company. A maximum of five options may be granted to each such director, and
the maximum number of shares for which options may be granted is 345,000.
Options granted prior to October 26, 1995 are exercisable immediately at the
current market value on the date of grant. Options granted on or after October
26, 1995 vest 20% two years after the date of grant, an additional 25% after
four years, and the remaining 30% after five years. During fiscal years 1996,
1995 and 1994, options for 25,000, 7,500 and 37,500 shares, respectively, were
issued under the Plan, and during fiscal year 1996 and 1995, 51,000 and 9,000
shares were exercised, respectively. None were exercised in fiscal 1994. As
of May 31, 1996, 42,500 shares were available for future grants.
The Company's 1983 Restricted Stock Plan (Restricted Plan) authorizes 750,000
shares of the Company's Common Stock to be awarded to key employees. Shares
awarded under the Restricted Plan are held in escrow and released to the
grantee upon the grantee's satisfaction of conditions of the grantee's
restricted stock agreement. Awards are recorded as deferred compensation, a
reduction of stockholders' equity based on the quoted fair market value of the
Company's Common Stock at the award date. Compensation expense is recognized
ratably during the escrow period of the award.
During fiscal years 1996, 1995 and 1994, 3,864, 38,250 and 74,250 shares,
respectively, of the Company's Common Stock were awarded under the Restricted
Plan with restriction periods of one to four years. As of May 31, 1996,
40,614 shares remain in escrow. There were 476,134 shares reserved for future
issuance under this plan. The Company expensed $233,000, $880,000 and $744,000
for the years ended May 31, 1996, 1995 and 1994, respectively, in connection
with the Restricted Plan.
A-28
<PAGE> 53
The Financial Accounting Standards Board has issued Statement No. 123,
Accounting for Stock-Based Compensation to be effective in the first quarter of
fiscal 1997 for the Company. This statement establishes a fair-value-based
method of accounting for employee stock options. This method provides for a
compensation cost to be charged to the results of operations at the grant date.
However, the statement allows companies to continue following the accounting
prescribed by Accounting Principles Bulletin Opinion No. 25, which requires
compensation cost to be recognized only for the excess of quoted market price
over employee exercise price. The Company has elected to continue with the
accounting treatment outlined in APB Opinion No. 25.
NOTE 6 - PENSION PLAN
The Company has a noncontributory defined benefit pension plan covering
substantially all of its United States employees who have met the eligibility
provisions of the plan. Benefits are based on years of service and the
employee's compensation during the highest five consecutive years of earnings
of the last ten years of service. Plan provisions and funding meet the
requirements of the Employee Retirement Income Security Act of 1974, as
amended.
The following table sets forth the plan's funded status and amounts recognized
in the Company's consolidated financial statements at May 31, 1996 and 1995 (in
thousands):
<TABLE>
<CAPTION>
May 31,
1996 1995
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $15,898 and $13,692,
respectively $16,902 $14,454
Projected compensation increases 5,410 4,341
------- -------
Projected benefit obligation for services
rendered to date 22,312 18,795
Plan assets at fair market value,
primarily stocks and bonds 18,314 15,995
------- -------
Projected benefit obligation
in excess of plan assets (3,998) (2,800)
Unrecognized net loss from past experience
different from that assumed and effect of
changes in assumptions 2,962 3,169
Unrecognized prior service cost 556 645
Unrecognized net asset at June 1, 1985, being
amortized over 17 years (1,385) (1,620)
----------------------
Accrued Pension Cost ($1,865) ($606)
----------------------
</TABLE>
A-29
<PAGE> 54
Net pension expense included the following components for the fiscal years
ending May 31:
<TABLE>
<CAPTION>
(in thousands)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost-benefits earned during the
period $1,272 $1,000 $1,052
Interest cost on projected benefit
obligation 1,603 1,397 1,283
Actual return on plan assets (2,858) (1,521) (852)
Net amortization and deferral 1,242 (49) (638)
Curtailment loss - - 66
-----------------------------------
Net Pension Expense 1,259 827 911
-----------------------------------
</TABLE>
Significant assumptions used in determining net pension expense and related
obligations were as follows:
<TABLE>
<CAPTION>
May 31,
1996 1995
-------------------------
<S> <C> <C>
Discount rate 8.00% 8.25%
Rate of increase in compensation levels 4.33% 4.33%
Expected long-term rate of return on assets 10.00% 10.00%
</TABLE>
On December 18, 1991, the Company adopted a retirement plan for non-employee
directors of the Company with five or more years of service (The Directors'
Plan). The Directors' Plan benefits are based on 50% of the annual Director
retainer amount in effect on the date of a director's retirement plus 10% for
each year of service up to 100% of the base amount for ten years' service. The
benefits are payable upon retirement, at or after age 70, for a period equal to
the number of years of service as a Director but not more than 15 years for
participants with 15 or more years of Board Service as of the effective date of
the Directors' Plan and not more than 10 years for all other participants. The
expense related to the Directors' Plan was immaterial in both fiscal 1996 and
1995.
Effective March 23, 1995, the Board of Directors amended the Directors' Plan to
provide for early retirement benefits so that a combination of age and service
(minimum 10 years service) totaling 60 will qualify the retiring participant
for benefits under the Directors' Plan. The Directors' Plan was also amended
to limit eligibility under the plan to members of the Board of Directors of the
Company elected prior to January 1, 1995.
A-30
<PAGE> 55
NOTE 7 - LEASE OBLIGATIONS
The Company conducts a major part of its operations using leased facilities and
equipment. Many of these leases have renewal and purchase options and provide
that the Company pay the cost of property taxes, insurance and maintenance.
Rent expense on all operating leases for fiscal years 1996, 1995 and 1994 was
$9,037,000, $7,349,000 and $6,533,000, respectively.
Asset balances for property acquired under capital leases consist of the
following
(in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Equipment $16,107 $15,583
Less: accumulated amortization 8,421 5,966
--------------------------
$ 7,686 $ 9,617
</TABLE>
Future minimum lease payments for all noncancelable leases at May 31, 1996 were
as follows (in thousands):
<TABLE>
<CAPTION>
Capital Operating
------- ---------
Leases Leases
------ ------
<S> <C> <C> <C>
1997 $3,144 $ 6,689
1998 2,697 4,060
1999 1,640 2,618
2000 734 1,458
2001 - 1,200
Thereafter - 5,592
-----------------------
Total future minimum lease payments $8,215 $21,617
Less: amount representing interest 765
------
Present value of net minimum lease payments $7,450
Less: current portion 3,011
------
Long-term obligations under capital leases at
May 31, 1996 $4,439
------
</TABLE>
A-31
<PAGE> 56
NOTE 8 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
(In thousands) 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 402 $ 402
Building 6,503 6,503
Equipment 40,465 82,178
Software 23,450 42,956
Leasehold improvements 14,709 14,851
Furniture and fixtures 7,216 11,094
Work in progress 6,358 3,633
-----------------------
99,103 161,617
Less: Accumulated depreciation and amortization 57,353 119,278
-----------------------
41,749 42,339
Property acquired under capital leases, net of
accumulated amortization 7,686 9,617
-----------------------
$49,436 $51,956
-----------------------
</TABLE>
NOTE 9 - INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
May 31,
(In thousands) 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Customer base $ 93,012 54,951
Trademarks 28,273 -
Goodwill and other intangibles 145,538 90,990
------------------------
266,823 145,941
Less: Accumulated amortization 43,768 40,710
------------------------
$223,055 $105,231
------------------------
</TABLE>
Significant increase in intangible assets during fiscal 1996 is primarily due
to the acquisition of MAPP (see Note 2).
A-32
<PAGE> 57
NOTE 10 - SOFTWARE COSTS
The following table sets forth information regarding the Company's software
costs for the years ended May 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unamortized software costs $8,840 $16,681 $14,475
Capitalization of internally developed software 6,872 4,880 6,163
Research and development primarily associated with
software development 8,834 7,665 4,708
Software amortization expense 5,920 4,766 3,126
</TABLE>
In fiscal 1996, as part of a restructuring, impairment and merger charge, the
Company wrote down software of approximately $6.7 million to reduce the
carrying value of certain software to net realizable value. The Company
capitalizes costs related to the development of certain software products. In
accordance with Statement of Financial Accounting Standards No. 86,
capitalization of costs begins when technological feasibility has been
established and ends when the product is available for general release to
customers. Amortization is computed on an individual product basis and has
been recognized for those products available for market based on the products'
estimated economic lives, not to exceed 5 years.
NOTE 11 - MORTGAGE AND OTHER DEBT PAYABLE
The Company has financing on its headquarters building consisting of a mortgage
at a 9.375% fixed rate due in January 1997. Principal payments due in the
fiscal year ending May 31, 1997 are $10,936,000. The carrying amount of the
mortgage payable approximates its fair value.
The Company also has a line of credit with an outstanding balance of
$30,000,000 at May 31, 1996. This credit facility accrues interest, payable
monthly, equal to a base rate plus an applicable margin (5.7% at May 31, 1996)
with the principal payment due on June 28, 1996. Subsequent to the end of the
fiscal year, this amount was renewed for another 60 days.
A-33
<PAGE> 58
NOTE 12 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of the following:
<TABLE>
<CAPTION>
May 31,
(in thousands) 1996 1995
- ------------------------------------------------------------- ------- -------
<S> <C> <C>
Trade accounts payable $14,959 $9,563
Accrued compensation and benefits 7,532 7,268
Accrued restructuring and merger expenses 8,343 -
Other accrued liabilities 17,727 14,615
--------------------------
$48,561 $31,446
--------------------------
</TABLE>
NOTE 13 - COMMITMENTS AND CONTINGENCIES
The Company and certain of its previous officers were party to three lawsuits,
which were consolidated as "National Data Corporation Shareholder Litigation."
The plaintiffs, purporting to act on behalf of a class, alleged violations of
rule 10(b)(5) under the Securities Exchange Act of 1934 under a "fraud on the
market" theory for alleged misrepresentations and omissions relating to
expected earnings which resulted in, the plaintiffs contend, the Company's
common stock being overvalued in the market. The Company and the plaintiffs
signed an agreement on September 27, 1993 to settle this matter for $6,950,000.
The Company's insurer bore two-thirds of the settlement and related future
costs. The cost to the Company, net of insurance proceeds, was approximately
$2,500,000. Both the Company and its insurer paid their full share of the
settlement amount on December 1, 1993, and the settlement received final
approval from the court on December 16, 1993.
The Company is party to a number of other claims and lawsuits incidental to its
business. In the opinion of management, the ultimate outcome of such matters,
in the aggregate, will not have a material adverse impact upon the Company's
financial position, liquidity or results of operations.
In fiscal year 1996, the Company entered into a $50,000,000 committed line of
credit to fund the Company's acquisition requirements and a $10,000,000
uncommitted line of credit to fund working capital requirements. The lines of
credit are not secured. The agreements require the Company to maintain certain
financial ratios and contain other restrictive covenants. As of May 31, 1996,
the Company was in compliance with all such covenants. The committed line of
credit expires in 1999. Subsequent to May 31, 1996, the Company's Global
Payment Systems subsidiary entered into a committed $60,000,000 line of credit.
The line of credit automatically reduces to $50,000,000 on the first
anniversary of the agreement.
A-34
<PAGE> 59
As of May 31, 1996, the Company processed credit card transactions for
approximately 90,000 direct merchant locations. The Company's merchant
customers have liability for charges disputed by cardholders. However, in the
case of merchant fraud, or insolvency or bankruptcy of the merchant, the
Company may be liable for any of such charges disputed by cardholders. The
Company requires cash deposits and other types of collateral by certain
merchants to minimize any such contingent liability. In addition, the Company
believes that the diversification of its merchant portfolio among industries
and geographic regions minimizes its risk of loss. Based on its historical
loss experience, the Company has established reserves for estimated losses on
transactions processed through May 31, 1996 (See also Note 15). In the opinion
of management, such reserves for losses are adequate.
In connection with the Company's acquisition of merchant credit card operations
of banks, the Company has also entered into depository and processing
agreements ("the Agreements") with certain of the banks. These Agreements
allow the Company to use the banks' "Bank Identification Number" to clear
credit card transactions through VISA and MasterCard. Certain of the
Agreements contain financial covenants, and the Company was in compliance with
all such covenants as of May 31, 1996.
NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow disclosures for the years ended May 31, 1996, 1995 and
1994 are as follows:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes, net of refunds $9,331 $7,877 $3,529
Interest 3,306 2,150 1,870
</TABLE>
In fiscal 1996, 1995 and 1994, the Company acquired various businesses that
were accounted for as purchases (see also Note 2). In conjunction with these
transactions, liabilities were assumed as follows:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fair value of assets acquired $181,575 $54,714 $400
Cash paid for acquisitions 140,779 42,621 400
Notes and deferred payments 9,392 3,506 -
Liabilities assumed 31,404 8,587 -
</TABLE>
A-35
<PAGE> 60
NOTE 15 - PROVISION FOR BAD DEBT, SALES ALLOWANCES AND OPERATIONAL LOSSES
The Company establishes reserves for bad debts based upon analyses of its trade
accounts receivable aging and any identified collection issues.
Reserves are established for sales returns and allowances based principally on
historical and projected experiences and any identified return issues.
The Company processes VISA and MasterCard charges for its direct merchant
customers. The Company's customers have liability for the charges disputed by
the cardholders, based on VISA and MasterCard rules and regulations. However,
in the case of merchant fraud, insolvency or bankruptcy by the merchant, the
Company may be liable for any such charges disputed by the cardholder. The
Company recognizes revenue based on a percentage of the gross amount charged
and has a potential liability for the full amount of the charge. The Company
establishes reserves for operational losses based on historical and projected
experiences concerning such charges. (See Note 13 for further description of
contingencies).
The following table details the amounts charged to expense for the above
activities:
<TABLE>
<CAPTION>
Fiscal Year Ended May 31,
(in thousands) 1996 1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bad Debt $4,725 $ 850 $1,067
Sales Returns and Allowances 2,650 3,888 3,498
Operation Losses 752 774 787
-------------------------------------
$8,127 $5,512 $5,352
-------------------------------------
</TABLE>
In fiscal 1996, CIS recorded one-time charges in the amount of $2.8 million to
adjust accounts receivable balances to their net realizable value. The Company
made two acquisitions of check guarantee businesses in the first part of fiscal
year 1995. Similar to the credit card business, the Company charges its
merchants a percentage of the gross amount of the check and guarantees payment
of the check to the merchant in the event the check is not honored by the
checkwriter's bank. As a result of these acquisitions, the Company also
incurs operational charges in this line of business. The Company has the right
to collect the full amount of the check from the checkwriter but has not
historically recovered 100% of the guaranteed checks. The Company establishes
reserves for this activity based upon historical and projected loss
experiences. Expenses of $7,120,000 and $4,648,000 were recorded for fiscal
1996 and 1995, respectively.
A-36
<PAGE> 61
NOTE 16 - RELATED PARTY TRANSACTIONS
During fiscal 1996, Global, a subsidiary of the Company, purchased MAPP from
MasterCard International (see Note 2). In addition, MasterCard International
holds a 7.5% minority interest in Global Payment Systems. There are agreements
in place for MasterCard International to provide certain services for the MAPP
business unit during the transition period. There was a net receivable of
$1,328,000 at May 31, 1996, consisting of accounts receivable of $4,763,000
less accounts payable of $3,435,000.
NOTE 17 - QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except per share data) Quarter Ended
Aug. 31 Nov. 30 Feb. 29 May 31
------- ------- ------- ------
<S> <C> <C> <C> <C>
Fiscal Year 1996
Revenue $78,290 $78,064 $77,622 $91,827
Operating Income 8,079 10,002 8,323 (38,238)
Net Income 4,854 6,775 5,964 (26,051)
Earnings per share .18 .25 .22 (.94)
Fiscal Year 1995
Revenue $63,626 $68,743 $70,551 $75,163
Operating Income 5,585 6,485 7,150 9,206
Net Income 3,581 4,177 4,707 5,956
Earnings per share .16 .18 .20 .25
</TABLE>
A-37
<PAGE> 62
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
National Data Corporation:
We have audited the accompanying consolidated balance sheets of
National Data Corporation (a Delaware corporation) and subsidiaries as of May
31, 1996 and 1995, and the related consolidated statements of income (loss),
changes in stockholders' equity, and cash flows for each of the three years in
the period ended May 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
National Data Corporation and subsidiaries as of May 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended May 31, 1996 in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
July 12, 1996
A-38
<PAGE> 63
NATIONAL DATA CORPORATION
CONSOLIDATED SCHEDULE V
VALUATION & QUALIFYING ACCOUNTS
<TABLE>
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
(In Thousands)
Column A Column B Column C Column D Column E
1 2
Balance at Charged to Uncollectible Balance a
Beginning Cost and Acquired Accounts End
Description of Period Expenses Balances Write-off of Period
<S> <C> <C> <C> <C> <C>
Trade Receivable Allowances:
May 31, 1994 $1,370 $3,150 $12 $3,060 $1,472
May 31, 1995 1,472 4,425 365 4,540 1,722
May 31, 1996 1,722 4,398 - 3,687 2,433
</TABLE>
A-39
<PAGE> 64
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE
We have audited in accordance with generally accepted auditing standards, the
financial statements included in National Data Corporation's annual report to
shareholders in this Form 10-K, and have issued our report thereon dated July
12, 1996. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in the index on page 22 is
the responsibility of the company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Atlanta, Georgia
July 12, 1996
A-40
<PAGE> 65
NATIONAL DATA CORPORATION
FORM 10-K
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Numbers Description
<S> <C>
10(i) Operating Agreement of Global Payment Systems LLC
10(ii) Registration Rights Agreement
10(iii) Credit Agreement
10(iv) Credit Agreement
10(vii) 1995 Non-Employee Director Compensation Plan
(21) Subsidiaries of the Registrant
(included in Appendix A).
(23) Consent of Independent Public Accountants
(included in Appendix A).
(27) Financial Data Schedule (for SEC use only)
</TABLE>
A-41
<PAGE> 66
Exhibit 21
Subsidiaries of the Registrant
The Registrant had the following subsidiaries at May 31, 1996, each of
which was wholly-owned by the Registrant, except as noted below:
Jurisdiction of
Name Incorporation
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National Data Payment Systems, Inc. New York
Modular Data, Inc. Delaware
NDC Federal Systems, Inc. Delaware
NDC International, Ltd. Georgia
National Data Realty, Inc. Georgia
National Data Corporation of Canada, Ltd. Canada
NDC/Yes Check, Inc. (Note 1) Georgia
NDC Check Services, Inc. Illinois
Zadall Systems Group, Inc. Texas
Learned-Mahn, Inc. Idaho
NDPS Comerica Alliance, LLC (Note 2) Delaware
Global Payment Systems LLC (Note 3) Georgia
Global Payment Holding Company Delaware
GPS Holding Limited Partnership Georgia
Global Payment Systems of Canada, Ltd. Canada
C.I.S. Technologies, Inc. Delaware
C.I.S., Inc. Oklahoma
AMSC, Inc. Florida
AMSC Midwest, Inc. Florida
ClinLab, Inc. Florida
Note 1. NDC/Yes Check, Inc. is 80% owned by the
Registrant
Note 2. NDPS Commercial Alliance, LLC is 51% owned by
the Registrant
Note 3. Global Payment Systems LLC is 92.5% owned
by the Registrant
A-42
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EXHIBIT 10(i)
OPERATING AGREEMENT
OF
GLOBAL PAYMENT SYSTEMS LLC
AS OF MARCH 31, 1996
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TABLE OF CONTENTS
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Article 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Article 2 Formation of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Article 3 Name and Principal Office of Company; Registered Agent;
Statutory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Principal Office and Place of Business; Registered Agent . . . . . . . . . . . . 9
3.3 Statutory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Article 4 Purpose of Company; Use of Company Assets; Title to Property;
Limited Liability of Members . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Company Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Limited Liability of Members . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Article 5 Duration of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Article 6 Percentage Ownership Interests; Net Earnings Interest; Certificates . . . . . . . 11
6.1 Percentage Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Net Earnings Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Certificates; Authorized Units . . . . . . . . . . . . . . . . . . . . . . . . . 11
Article 7 Capital of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Contribution by MasterCard . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Contribution by the National Data Members . . . . . . . . . . . . . . . . . . . 12
7.3 MasterCard Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.4 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.5 Interest On and Return of Capital . . . . . . . . . . . . . . . . . . . . . . . 13
7.6 No Third-Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Article 8 Additional Financial Contributions . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Working Capital Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Additional Funds for Company . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Article 9 Allocation of Profits and Losses . . . . . . . . . . . . . . . . . . . . . . . . 14
9.1 Net Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.2 Allocation of Sale Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.3 Net Loss and Sale Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.4 Book Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.5 Section 704(c) Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.6 Limitation on Net Loss Allocation . . . . . . . . . . . . . . . . . . . . . . . 16
9.7 Qualified Income Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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9.8 Gross Income Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.9 Minimum Gain and Member Minimum Gain Chargeback . . . . . . . . . . . . . . . . 16
9.10 Member Nonrecourse Deductions . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.11 Target Final Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.12 Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Article 10 Distribution of Company Property . . . . . . . . . . . . . . . . . . . . . . . . 17
10.1 Annual Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10.2 Net Sales Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.3 Consent to Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.4 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Article 11 Management of Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11.1 Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11.2 Initial Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.3 Meetings of Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.4 Action by Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11.5 Expenses and Compensation of Board of Directors . . . . . . . . . . . . . . . . 21
11.6 Restrictions on Authority of Board of Directors . . . . . . . . . . . . . . . . 21
11.7 Voting Rights of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.8 Authority of Members; Meetings; Action by Members Without a Meeting . . . . . . 22
11.9 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.10 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.11 Removal of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.12 Compensation for Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.13 Liability of the Members, Officers and Directors . . . . . . . . . . . . . . . . 23
11.14 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Article 12 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Article 13 Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Article 14 Accounting; Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14.1 Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14.2 Method of Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
14.3 Financial and Operating Statements . . . . . . . . . . . . . . . . . . . . . . . 24
14.4 Income Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
14.5 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Article 15 Conversion of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Article 16 Admission of Additional Members . . . . . . . . . . . . . . . . . . . . . . . . . 26
Article 17 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Article 18 Transfer of Members' Interests; Admission of Additional Members . . . . . . . . . 27
18.1 Transfers of Members' Interests . . . . . . . . . . . . . . . . . . . . . . . . 27
18.2 Section 754 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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Article 19 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Article 20 Put Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
20.1 Put Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
20.2 Exercise of Put Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
20.3 Determination of Put Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
20.4 Payment of Put Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Article 21 Right to Compel Sale; Right to Participate in Sale . . . . . . . . . . . . . . . 30
21.1 Obligation to Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
21.2 Right to Participate in Sale . . . . . . . . . . . . . . . . . . . . . . . . . . 31
21.3 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
21.4 Withdrawal from Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
21.5 Participation by MasterCard . . . . . . . . . . . . . . . . . . . . . . . . . . 32
21.6 Priorities and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Article 22 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22.1 Location and Governing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22.2 Selection of Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Article 23 Dissolution and Liquidation of the Company . . . . . . . . . . . . . . . . . . . 33
23.1 Dissolving Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
23.2 Method of Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
23.3 Reasonable Time for Liquidating . . . . . . . . . . . . . . . . . . . . . . . . 34
23.4 Date of Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
23.5 Right to Continue Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Article 24 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
24.1 Waiver of Right of Partition . . . . . . . . . . . . . . . . . . . . . . . . . . 34
24.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
24.3 Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
24.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
24.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
24.6 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
24.7 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
24.8 Sections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
24.9 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
24.10 Additional Documents and Acts . . . . . . . . . . . . . . . . . . . . . . . . . 37
24.11 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
24.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
24.13 Complete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
24.14 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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<PAGE> 5
OPERATING AGREEMENT OF
GLOBAL PAYMENT SYSTEMS LLC LIMITED LIABILITY COMPANY
THIS AGREEMENT is made and entered into as of this 31st day of March,
1996, by and between MASTERCARD INTERNATIONAL INCORPORATED, a Delaware
corporation ("MasterCard"), GPS HOLDING LIMITED PARTNERSHIP, a Georgia limited
partnership ("GPS"), NATIONAL DATA CORPORATION OF CANADA, LTD., an Ontario
Canada corporation ("NDC Canada"), NATIONAL DATA CORPORATION, a Delaware
Corporation ("National Data"), NDC INTERNATIONAL, LTD., a Georgia Corporation
("NDCI") and NATIONAL DATA PAYMENT SYSTEMS, INC., a New York corporation
("NDPS");
W I T N E S S E T H:
WHEREAS, National Data has formed a limited liability company under the
provisions of the Georgia Limited Liability Company Act for the limited
purposes hereinafter described and desires to admit MasterCard, GPS, NDC
Canada, NDCI, and NDPS as members on the terms hereinafter described, with
Modular Data, Inc. and National Data withdrawing as members without having put
any assets in Company;
WHEREAS, National Data is the ultimate parent Company of GPS, NDC Canada,
NDCI and NDPS, and National Data is vitally interested in Company, has
undertaken several obligations with respect to Company , and is joining in this
Agreement to recognize such obligations; and
WHEREAS, the parties hereto desire to set forth their respective rights,
duties and responsibilities with respect to the Company;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the
mutual promises, obligations and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby
agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, each of the following terms, when used in
the singular or plural form, shall have the meaning hereinafter provided:
1.1 "AAA" has the meaning set forth in Section 22.1.
1.2 "ACT" means the Georgia Limited Liability Company Act, as it may
be amended from time to time.
1.3 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, as of any particular
date, the deficit balance, if any, in such Member's capital account as of such
date, as determined in the manner
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provided in Section 7.4 hereof and by then adjusting such capital account as so
determined as follows:
(a) such capital account shall be increased to reflect the
amounts, if any, which such Member is deemed to be obligated to restore
pursuant to Treasury Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) such capital account shall be reduced to reflect any items
described in Treasury regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5)
and (6).
The foregoing definition shall be interpreted in a manner consistent with the
provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
1.4 "ADJUSTMENT EVENT" means a Conversion.
1.5 "AFFILIATE" means, with respect to any Entity, an Entity
controlling, controlled by or under common control with such original Entity.
1.6 "APPROVAL OF" or "APPROVED BY THE BOARD OF DIRECTORS" means the
affirmative vote of a majority of Directors then in office, provided, however,
unless waived by GPS , such approval must include the affirmative vote of at
least one (1) of the three (3) Directors designated by the National Data
Members.
1.7 "APPROVE," "APPROVED," or "APPROVAL" means, as to the subject
matter thereof and as the context may require or permit, an express
ratification or approval contained in a written statement signed by or on
behalf of an approving Entity.
1.8 "ARTICLES" means the Articles of Organization of the Company dated
February 21, 1996, as amended hereafter.
1.9 "BANKRUPTCY OF A MEMBER" means (a) a general assignment for the
benefit of creditors by a Member; (b) the insolvency of a Member (the term
"insolvency" means the inability of the party to pay its debts as they come due
in the ordinary course of its business) which continues for more than sixty
(60) consecutive days after notice thereof has been given to the insolvent
party by the complaining Member; (c) the appointment of a receiver, trustee or
custodian for all or any substantial part of the property and assets of a
Member in, or the commencement by a Member of, any voluntary proceeding under
present or future federal bankruptcy laws or under any other state or local
bankruptcy, insolvency or other laws respecting debtor's rights which is not
dismissed within sixty (60) days thereafter; or (d) the entry against a Member
of any "order for relief" or of any other judgment or decree by any court of
competent jurisdiction in any involuntary proceeding against a Member under
present or future federal bankruptcy laws or under any other state or local
bankruptcy, insolvency or other laws respecting debtor's rights, but only if
such order, judgment or decree continues unstayed and in effect for a period of
sixty (60) consecutive days.
1.10 "BANKRUPTCY OF THE COMPANY" means (a) a general assignment by the
Company for the benefit of creditors, (b) the appointment of a receiver,
trustee or custodian for all or any substantial part of the Company's property
and assets which is not dismissed within sixty (60) days thereafter, (c) the
entry of any "order for relief" against the Company in, or the commencement by
the Company of, any voluntary proceeding under present or future federal
bankruptcy laws or
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under any other state or local bankruptcy, insolvency or other laws respecting
debtor's rights which is not dismissed within sixty (60) days thereafter, or
(d) the entry against the Company of any "order for relief" or any other
judgment or decree by any court of competent jurisdiction in any involuntary
proceeding against the Company under present or future federal bankruptcy laws
or under any other state or local bankruptcy, insolvency or other laws
respecting debtor's rights, but only if such order, judgment or decree
continues unstayed and in effect for a period of sixty (60) consecutive days.
1.11 "BENEFICIAL OWNER", "BENEFICIAL OWNERSHIP", BENEFICIALLY OWN and
"BENEFICIALLY OWNED" have the meanings contemplated by Rule 13d-3 under the
Exchange Act.
1.12 "BOARD OF DIRECTORS" means the Board of Directors established
pursuant to Article 11 hereof and having the powers and duties delegated to it
by the Members as set out in this Agreement; provided, however, that it is
mutually agreed and understood that the management and control of the Company
is vested exclusively in the Members in the manner and under the terms provided
in this Agreement, and that the Board of Directors does not constitute, for the
purposes hereof, a separate managing Entity, but rather is a body of agents
appointed as set forth in Article 11 by the Members and represents the
administrative mechanism chosen by the Members to exercise absolute management
and control of the Company.
1.13 "BOOK DEPRECIATION" means, for each Fiscal Year, an amount
computed for each asset equal to the depreciation, amortization or other cost
recovery deduction allowable for federal income tax purposes with respect to
such asset for such year or other period, except that if the Book Value of such
asset differs from its adjusted basis for federal income tax purposes at the
beginning of such year or other period, Book Depreciation shall be an amount
which bears the same ratio to such beginning Book Value as the federal income
tax depreciation, amortization or other cost recovery deduction for such year
or other period bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization or other cost
recovery deduction for such year is zero because the basis of such asset has
been fully recovered, Book Depreciation shall be determined with reference to
such beginning Book Value using any reasonable method selected by Approval of
the Board Of Directors. All computations with respect to assets contributed or
deemed contributed to the Company called for herein shall be made in a manner
consistent with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(g)(3).
1.14 "BOOK VALUE" means, as of any particular date, the asset's
adjusted basis for federal income tax purposes, except that with respect to any
asset contributed or deemed contributed to the Company the initial Book Value
shall be the agreed-upon fair market value thereof as reflected by the values
determined for purposes of valuing the Capital Account of the contributing
Member with respect to such asset. With respect to the National Data Group
Contributed Assets and the MasterCard Contributed Assets, the Book Values
thereof shall be as set forth in the Purchase Agreement and as set forth in
Sections 7.1 and 7.2 and with respect to all other circumstances the Book Value
of contributed assets shall be determined by Approval of the Board of
Directors. The Book Value of any Company assets distributed to a Member shall
be the gross fair market value of such asset on the date of distribution as
determined by Approval of the Board of Directors, provided the determination of
the value of assets distributed to a Member having a Majority in Interest shall
be subject to the related party transaction provisions of Article 12. The Book
Value of Company assets shall be adjusted to equal their respective gross fair
market values as of the following times: (a) the acquisition (other than a pro
rata acquisition by existing Members) of an additional Membership Interest in
the Company by any new or existing Member in exchange for more than a de
minimis contribution of capital to the Company and other than occurring in the
first
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six (6) months of this Company, (b) the distribution other than a pro rata
distribution to existing Members by the Company to any Member of more than a de
minimis amount of assets as consideration for an interest in the Company; (c)
the liquidation of the Company; and (d) a Conversion.
1.15 "BREACH" means a breach by a Member of any provision of this
Agreement, the Purchase Agreement, or the Parent Services Agreement which
remains uncured for a period of thirty (30) days after receipt of written
notice of such breach from another Member.
1.16 "BUSINESS" means the business of providing electronic transaction
processing services involving the authorization (including voice authorization)
and capture, settlement and clearing of transactions involving credit, debit
and similar cards through utilization of an electronic telecommunications and
computer network indirectly to persons or entities that honor credit, debit and
similar cards through banks and other associations and institutions that
participate in the handling of transactions involving credit, debit and similar
cards throughout the United States as well as check verification, cash
management, electronic data interchange, electronic tax payment and filing, and
other ancillary services directly and indirectly to merchants through
utilization of an electronic telecommunications and computer network and any
other legal business or businesses in any area or areas Approved by the Board
of Directors.
1.17 "CAPITAL ACCOUNT" or "CAPITAL ACCOUNT" has the meaning set forth
in Section 7.4 hereof.
1.18 "CHANGE IN CONTROL" means any transaction, other than an IPO,
whereby, directly or indirectly, National Data Group ceases to be the largest
Beneficial Owner of Company, or after a Conversion, its successor.
1.19 "CODE" means the Internal Revenue Code of 1986, as amended from
time to time. All references herein to specific sections of the Code shall be
deemed to refer also to corresponding provisions of any succeeding law.
1.20 "COMPANY" means Global Payment Systems LLC, a Georgia limited
liability company operated pursuant to this Agreement.
1.21 "CONVERSION" means a change in the legal status of the Company
from a limited liability company into a business corporation organized under
the laws of Delaware or one of the other United States, in such form and manner
(including, without limitation, by merger, reorganization, liquidation,
transfer of Membership Interests or assets of the Company, or by any other
means permissible under applicable law) and with such classes of stock having
such rights, preferences and other terms as may be approved by a Majority in
Interest; provided, however, that immediately following the effective time of
the Conversion, the interests of the Members in the corporation into which
Company is converted shall be exactly proportionate to their Percentage
Ownership Interest immediately prior to such effective time.
1.22 "COST OF FUNDS" means, with respect to any loan made by any member
of the National Data Group (or any Affiliate thereof,) to the Company, a
variable rate equal to (a) the lowest rate of interest reasonably available to
that Entity for Available Loans of the same term and having the same collateral
(if any), either individually or pursuant to a larger credit facility (the
"Senior Credit Agreement") or (b) if there shall be no Senior Credit Agreement
in existence, the rate applicable to the 13 week Treasury Bill as published in
the Wall Street Journal (or other
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nationally recognized business publication in the event the Wall Street Journal
is not published) on the first Monday of each month. "Available Loans" means
any loans pursuant to which such Entity can draw down funds at the time any
such loan is made to Company.
1.23 "DIRECTOR" has the meaning set forth in Section 11.1 hereof.
1.24 "DISABLING EVENT" means the dissolution of a Member or the
Bankruptcy of a Member.
1.25 "ENTITY" means any person, corporation, limited liability company,
partnership (general or limited), joint venture, association, joint stock
company, trust or other business entity or organization.
1.26 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
1.27 "FISCAL YEAR" means the annual period of the Company for purposes
of accounting and tax reporting selected by Approval of the Board of Directors.
The first Fiscal Year shall commence on the date hereof, and each succeeding
Fiscal Year shall commence on the date immediately following the last day of
the immediately preceding Fiscal Year, unless otherwise Approved by the Board
of Directors. Each Fiscal Year shall end on the earliest to occur after the
commencement of such Fiscal Year of (a) the Fiscal Year end, or (b) the date on
which the Company is liquidated under Section 23.4 hereof.
1.28 "IPO" means (a) a public offering of equity securities of the
Company, or its successor after a Conversion, that is effected through a firm
commitment underwriting and pursuant to a registration statement declared
effective under the Securities Act of 1933; (b) a distribution of equity
securities of the Company, or its successor after a Conversion, by National
Data to its shareholders; (c) a distribution of equity securities of all of the
businesses of National Data and subsequent merger of the Company, or its
successor after a Conversion, with and into National Data; or (d) any other
transaction which has the effect of causing the equity securities or additional
equity securities of the Company, or its successor after a Conversion, to
become publicly traded in an established market, including but not limited to a
transaction with another Entity.
1.29 "LAST DAY" has the meaning set forth in Section 9.2 hereof.
1.30 "LIQUIDATION PROCEEDS" means all cash or other assets held by the
Company at the time of the happening of a dissolving event described in Section
23.1 hereof and all cash or other assets received by the Company after the
happening of such dissolving event (irrespective of whether such cash or other
assets were or would otherwise have been considered Net Cash Flow or Net Sales
Proceeds under the terms of this Agreement).
1.31 "MAJORITY IN INTEREST" means Members owning more than fifty
percent (50%) of the Percentage Ownership Interests, or, with respect to its
successor after a Conversion, more than 50% of the voting common stock.
1.32 "MANAGER" has the meaning set forth in the Act.
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<PAGE> 10
1.33 "MASTERCARD" means MasterCard International Incorporated, a
Delaware corporation, and any permitted transferees of MasterCard's Membership
Interest pursuant to Article 18 hereunder.
1.34 "MASTERCARD CONTRIBUTED ASSETS" has the meaning ascribed to the
term "Seller Contributed Assets" in the Purchase Agreement.
1.35 "MASTERCARD PURCHASED ASSETS" has the meaning ascribed to the term
"Purchased Assets" in the Purchase Agreement.
1.36 "MEMBER" means MasterCard, each Entity which is a member of the
National Data Group, each Entity that acquires all or any percentage (excluding
the acquisition of only an Economic Interest) of the respective Membership
Interests originally issued to any of the foregoing, and any Entity admitted as
a Member with respect to newly issued Membership Interests. Any Entity ceases
to be a Member when the Entity no longer owns any Membership Interest or when
the Entity withdraws from the Company in accordance with this Agreement.
1.37 "MEMBERSHIP INTEREST" means all of those rights (including rights
to Net Cash Flow, Net Sales Proceeds and other distributions and rights to
participate in the management of the Company) and duties held by a particular
Member as defined herein and under applicable law.
1.38 "MINIMUM EQUITY" means, with respect to MasterCard, a Percentage
Ownership Interest or the equivalent equity of a successor after a Conversion
equal to 50% times the result of its initial Percentage Ownership Interest or
the equivalent equity of a successor after a Conversion less any dilution
therein from the issue of new Membership Interests or the equity of a successor
after a Conversion.
1.39 "NATIONAL DATA" means National Data Corporation, a Delaware
corporation.
1.40 "NATIONAL DATA GROUP" means collectively the National Data Members
and National Data.
1.41 "NATIONAL DATA GROUP CONTRIBUTED ASSETS" has the meaning ascribed
to the term "Parent Contributed Assets" in the Purchase Agreement.
1.42 "NATIONAL DATA MEMBER" means each of GPS, NDC Canada, NDCI, NDPS,
and any permitted transferees of the Membership Interest of any of those
Entities pursuant to Article 18 hereunder. Any action to be taken by the
National Data Members shall be done by GPS and any writing signed by GPS shall
be binding on all National Data Members as if signed by all such Members.
1.43 "NDCI SERVICE AGREEMENT" has the meaning ascribed to the term
"NDCI Service Agreement" in the Purchase Agreement.
1.44 "NET CASH FLOW" means, for any given period, all receipts
(including working capital loan proceeds) from the conduct of the business of
the Company for such period, from whatever source derived (but specifically
excluding any Net Sale Proceeds), which are available for distribution by the
Company following (a) the payment of all operating, debt service and capital
expenses of the Company for such period to the extent not paid from reserves
(including, without limitation, any principal and interest due during any such
period with respect to any debt of the
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<PAGE> 11
Company), and (b) the establishment or replenishment, as deemed reasonably
necessary by Approval of the Board of Directors, of reserves for taxes, debt
service, maintenance, repairs and other expenses and other working capital
requirements of the Company or for contingent and unforeseen liabilities of the
Company, or for any other Company purpose.
1.45 "NET EARNINGS" means for each Fiscal Year the net operating
earnings of the Company, before extraordinary gains or losses, as computed in
accordance with generally accepted accounting principles consistently applied
("GAAP"). Such extraordinary gains or losses are those that are reported
separately as extraordinary pursuant to GAAP.
1.46 "NET EARNINGS INTEREST" has the meaning set forth in Article 6.
1.47 "NET PROFIT" and/or "NET LOSS" means, for each Fiscal Year, the
Company's taxable income or taxable loss for such Fiscal Year, as determined
under Section 703(a) of the Code and Treasury Regulation Section 1.703-1. For
this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included
in taxable income or taxable loss, but with any adjustments required by
Treasury Regulations Section 1.704-1(b) and the following adjustments:
(a) any tax-exempt income, as described in Section 705(a)(1)(B)
of the Code, realized by the Company during such Fiscal Year shall be
taken into account in computing such taxable income or taxable loss as if
it were taxable income;
(b) any expenditures of the Company described in Section
705(a)(2)(B) of the Code for such Fiscal Year, including any items
treated under Treasury Regulation Section 1.704-1(b)(2)(iv)(i) as items
described in Section 705(a)(2)(B) of the Code, shall be taken into
account in computing such taxable income or taxable loss as if they were
deductible items;
(c) in lieu of the depreciation, amortization, or other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Book Depreciation for such
Fiscal Year or other period;
(d) any gain or loss included in the computation of Sale Gain or
Sale Loss shall not be included in the computation of Net Profit or Net
Loss and any other gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of
the asset disposed of, notwithstanding that the adjusted tax basis of
such asset is different;
(e) any item of income, gain, loss or deduction that is required
to be allocated to the Members under Section 9.4, 9.5, 9.7, 9.8, 9.9 or
9.10 hereof shall not be taken into account in computing such taxable
income or taxable loss.
If the Company's taxable income or taxable loss for such Fiscal Year, as
adjusted in the manner provided above, is a positive amount, such amount shall
be the Company's Net Profit for such Fiscal Year; and if negative, such amount
shall be the Company's Net Loss for such Fiscal Year.
1.48 "NET SALES PROCEEDS" means (a) the net proceeds from all sales and
other dispositions of all or any part of the assets of the Company (other than
a sale or exchange of a de minimis portion of the Company's assets occurring in
the ordinary course of business), less any reserves established by the Board of
Directors, and (b) all loan proceeds (other than any working capital
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<PAGE> 12
loans) from borrowings by the Company, less any portion thereof (i) used to
establish reserves, (ii) used for the expansion or financing of the business of
the Company, or (iii) applied in payment of any outstanding indebtedness as, in
each case, approved by the Board of Directors.
1.49 "NOTICE" has the meaning set forth in Section 24.2 hereof.
1.50 "OFFICERS" has the meaning set forth in Section 11.5(m) hereof.
1.51 "PERCENTAGE OWNERSHIP INTEREST" has the meaning set forth in
Article 6.
1.52 "PROHIBITED ACTIVITY" means each of (i) the business of providing
electronic transaction processing services involving the authorization
(including voice authorization) and capture, settlement and clearing of
transactions involving credit, debit and similar cards through utilization of
an electronic telecommunications and computer network directly to an Entity
that honors credit, debit or similar cards, and (ii) the business of issuing
credit, debit and similar cards, provided, however, that it shall not
constitute a Prohibited Activity for the Company (x) to provide services
pursuant to any Parent Contract (as defined in the Purchase Agreement)
consistent with past practices of National Data or (y) to engage in any conduct
the purpose of which is to retain, renew or expand any Parent Contract
(provided that any such retention, renewal or expansion of such Parent Contract
does not expand the scope of services to be provided by the Company to include
a service described in either of the preceding clauses (i) or (ii)).
1.53 "PROHIBITED TRANSFEREE" means each of Visa International Services
Association, American Express Company, and Dean Witter, Discovery, Inc.
1.54 "PURCHASE AGREEMENT" means that certain Asset Purchase and
Contribution Agreement, dated as of February 22, 1996, by and among National
Data, GPS, NDPS, NDCI and NDC Canada, MasterCard and the Company, as amended by
Amendment No. 1 thereto dated as of March 31, 1996.
1.55 "PUT" has the meaning set forth in Section 20.2 hereof.
1.56 "PUT DATE" has the meaning set forth in Section 20.2 hereof.
1.57 "PUT EQUITY" has the meaning set forth in Section 20.1 hereof.
1.58 "PUT EVENT" has the meaning set forth in Section 20.1 hereof.
1.59 "PUT NOTICE" has the meaning set forth in Section 20.2 hereof.
1.60 "PUT PRICE" has the meaning set forth in Section 20.3 hereof.
1.61 "PUT RIGHT" has the meaning set forth in Section 20.1 hereof.
1.62 "RULES" has the meaning set forth in Section 22.1 hereof.
1.63 "SALE" has the meaning set forth in Section 21.1 hereof.
1.64 "SALE GAIN" and/or "SALE LOSS" means any gain or loss realized by
the Company for income tax purposes in any Fiscal Year by reason of the sale
or exchange of all or any part of
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<PAGE> 13
the assets of the Company (other than a sale or exchange of a minor portion of
the Company's assets occurring in the ordinary course of business) and any
adjustment in the Book Value of assets provided in the last sentence of Section
1.16, except that, with respect to any item of property the Book Value of which
differs from its adjusted basis for federal income tax purposes, Sale Gain and
Sale Loss means any gain or loss recognized by the Company for book purposes in
any Fiscal Year by reason of the sale or exchange of any such item of property,
and such book gain and book loss with respect to any such item of property
shall be computed by reference to the Book Value of such item of property as of
the date of such sale rather than by reference to the tax basis of the item of
property as of such date.
1.65 "SALE NOTICE" has the meaning set forth in Section 21.1 hereof.
1.66 "SALE PRICE" has the meaning set forth in Section 21.1 hereof.
1.67 "TARGET FINAL BALANCES" has the meaning set forth in Section 9.11
hereof.
1.68 "TAX MATTERS PARTNER" has the meaning set forth in Section 14.5
hereof.
1.69 "TRANSFEROR" has the meaning set forth in Section 18.4 hereof.
1.70 "TREASURY REGULATIONS" means the federal income tax regulations
promulgated under the Code, as such regulations may be amended from time to
time. All references herein to a specific section of the Treasury Regulations
shall be deemed also to refer to any corresponding provisions of succeeding
Treasury Regulations.
ARTICLE 2
FORMATION OF COMPANY
National Data has formed the Company under the Act and, notwithstanding
the withdrawal by National Data and Modular Data, Inc. from the Company, all
Members are hereby consenting to continue the Company in accordance with the
Act.
ARTICLE 3
NAME AND PRINCIPAL OFFICE OF COMPANY; REGISTERED AGENT;
STATUTORY COMPLIANCE
3.1 NAME. The name of the Company is "Global Payment Systems LLC."
3.2 PRINCIPAL OFFICE AND PLACE OF BUSINESS; REGISTERED AGENT. The
registered agent of the Company shall be National Data. The principal and
registered office of the Company shall be located at c/o National Data
Corporation, National Data Plaza, Atlanta, Georgia 30329-2010 or at such other
place designated by Approval of the Board of Directors from time to time and at
any time after giving written notice of such designation to the Members. The
principal place of business in the State of Georgia shall be at National Data
Plaza, Atlanta, Georgia 30329-2010 or at such other place designated by
Approval of the Board of Directors from time to time and at any time after
giving written notice of such designation to the Members.
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<PAGE> 14
3.3 STATUTORY COMPLIANCE. The Company shall exist under and be
governed by, and this Agreement shall be construed in accordance with, the
internal laws of the State of Georgia, without reference to the conflicts of
laws or choice of law provisions thereof. GPS, on behalf of the Members, shall
make all filings and disclosures required by, and shall otherwise comply with,
all such laws. GPS, on behalf of the Members, shall have executed and filed in
the appropriate records any certificate or certificates and reports required by
law to be filed in connection with the formation and operation of the Company
or any amendments to this Agreement and shall execute and file such other
documents and instruments as may be necessary or appropriate with respect to
the formation of, or the conduct of business by, the Company or the amendment
of this Agreement in accordance with the terms of this Agreement, including in
every instance any amendments to the Articles.
ARTICLE 4
PURPOSE OF COMPANY; USE OF COMPANY ASSETS; TITLE TO PROPERTY;
LIMITED LIABILITY OF MEMBERS
4.1 COMPANY PURPOSES. The sole purposes of the Company shall be to
operate the Business in accordance with the terms of this Agreement. The
Company may also engage in such other activities and businesses as Approved by
the Board of Directors or as a Majority in Interest Approves, subject to the
terms and conditions of this Agreement and to compliance with, and any
limitations imposed by, applicable law, provided, however, Company shall not
engage, so long as MasterCard is a Member and there has been no IPO, in the
Prohibited Activities without Approval of MasterCard.
4.2 TITLE TO PROPERTY. All real and personal property owned by the
Company shall be owned by the Company as an Entity and, insofar as permitted by
applicable law, no Member shall have any ownership interest in such property in
its individual name or right and each Membership Interest shall be personal
property for all purposes.
4.3 LIMITED LIABILITY OF MEMBERS. Each Member's liability shall be
limited as set forth in this Agreement, the Act and other applicable law. A
Member shall not be bound by, or be personally liable for, the expenses,
liabilities or obligations of the Company beyond the amount contributed by the
Member to the capital of the Company.
ARTICLE 5
DURATION OF COMPANY
The duration of the Company shall continue until the Company is dissolved
and liquidated as provided in Article 23 hereof.
ARTICLE 6
PERCENTAGE OWNERSHIP INTERESTS; NET EARNINGS INTEREST; CERTIFICATES
6.1 PERCENTAGE OWNERSHIP INTEREST. The National Data Members and
MasterCard shall be the initial Members of the Company. The initial
"Percentage Ownership Interest" in the Company of each of the Members shall be
as follows:
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<PAGE> 15
<TABLE>
<CAPTION>
MEMBER PERCENTAGE OWNERSHIP INTEREST
------ -----------------------------
<S> <C>
GPS 78.79% [15,758,000 Units]
NDC Canada 0.3% [60,000 Units]
NDPS 13.4% [2,680,000 Units]
NDCI 0.01% [2,000 Units]
Total National Data Group 92.5% [18,500,000 Units]
MasterCard 7.5% [1,500,000 Units]
</TABLE>
The Percentage Ownership Interest of a Member may change from time to time as
provided in Articles 8, 16, and 18.
6.2 NET EARNINGS INTEREST. Notwithstanding the foregoing, the "Net
Earnings Interests" of the National Data Members and MasterCard shall be 99%
for National Data Members and 1% for MasterCard through May 31, 1998; 97% for
the National Data Members and 3% for MasterCard from June 1, 1998, through May
31, 1999; 95% for the National Data Members and 5% for MasterCard from June 1,
1999, through May 31, 2000; and at the Percentage Ownership Interests of the
Members after May 31, 2000, provided, however, the above percentages are based
on the National Data Members having an aggregate Percentage Ownership Interest
of 92.5% and MasterCard's having a Percentage Ownership Interest of 7.5% and if
the Members have different Percentage Ownership Interests, the respective Net
Earnings Interests will be adjusted proportionally. For example if at any time
MasterCard's Percentage Ownership Interest were reduced to 3.75%, its Net
Earnings Interest thereafter would be 50% of the above amounts. The aggregate
Net Earnings Interest allocated to the National Data Members shall be
reallocated among the National Data Members based on their respective
Percentage Ownership Interests.
6.3 CERTIFICATES; AUTHORIZED UNITS. A Membership Interest shall be
evidenced by a certificate issued by the Company in the name of the Member,
which certificate shall bear the legend set forth in Section 24.14. Such
certificate shall be based on units, with the total number of authorized units
of the Company initially being 20,000,000. The number of authorized units may
be adjusted from time to time by a Majority in Interest.
ARTICLE 7
CAPITAL OF COMPANY
7.1 CONTRIBUTION BY MASTERCARD. Contemporaneously with the execution
of this Agreement and pursuant to the Purchase Agreement, MasterCard shall
contribute to the Company the MasterCard Contributed Assets. On account of its
contribution to the Company of the MasterCard Contributed Assets, MasterCard
shall receive a credit to its Capital Account in an amount equal to 7.5% of the
initial aggregate Capital Accounts of all of the Members.
7.2 CONTRIBUTION BY THE NATIONAL DATA MEMBERS. Contemporaneously with
the execution of this Agreement and pursuant to the Purchase Agreement, the
National Data Members
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<PAGE> 16
shall collectively contribute to the Company the National Data Group
Contributed Assets and sixty million and 00/100 dollars ($60,000,000) in cash.
On account of their contribution to the Company of the National Data Group
Contributed Assets and the $60,000,000, GPS shall receive a credit to its
Capital Account in an amount equal to 78.79% of all Capital Accounts, NDC
Canada shall receive a credit to its Capital Account in an amount equal to 0.3%
of all Capital Accounts, NDCI shall receive a credit to its Capital Account in
an amount equal to 0.01% of all Capital Accounts, and NDPS shall receive a
credit to its Capital Account in an amount equal to 13.4% of all Capital
Accounts (which in the aggregate constitute 92.5% of the initial aggregate
Capital Accounts of all of the Members).
7.3 MASTERCARD PURCHASED ASSETS. Contemporaneously with the execution
of this Agreement and pursuant to the Purchase Agreement, MasterCard shall sell
and the Company shall buy the MasterCard Purchased Assets. The value of the
MasterCard Purchased Assets shall not be a credit to the MasterCard Capital
Account and the price for such assets shall not be a debit thereto, the sale of
the MasterCard Purchased Assets constituting a transaction between a partner
and a partnership other than in its capacity as a partner for federal income
tax purposes.
7.4 CAPITAL ACCOUNTS. A separate capital account (each a "Capital
Account") shall be maintained for each Member, and the amount of such capital
account, as of any particular date, shall be the sum of the following amounts:
(a) the aggregate amount of cash that has been contributed to
the capital of the Company by such Member as of such date; plus
(b) the net fair market value (as Approved by the Board of
Directors as of the date of contribution) of any property that has been
contributed by such Member to the capital of the Company as of such date;
plus
(c) the aggregate amount of the Company's Net Profit and Sale
Gain for all Fiscal Years ending prior to such date that has been, or is
required to be, allocated to such Member pursuant to Sections 9.1 and 9.2
hereof; plus
(d) the aggregate amount of items of income for all Fiscal Years
ending prior to such date that has been, or is required to be, allocated
to such Member pursuant to Sections 9.7, 9.8 and 9.9 hereof and the
positive items described in Sections 9.4 and 9.11; minus
(e) the aggregate amount of the Company's Net Loss and Sale Loss
for all Fiscal Years ending prior to such date that has been, or is
required to be, allocated to such Member pursuant to Section 9.3 hereof;
and minus
(f) the aggregate amount of items that have been, or are
required to be, allocated to such Member pursuant to Sections 9.6 and
9.10 and the negative items described in Sections 9.4 and 9.11 hereof for
all Fiscal Years ending prior to such date; and minus
(g) the aggregate amount of cash and the agreed upon net fair
market value (as of the date of distribution) of all other property that
has been distributed to such Member by the Company as of such date.
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<PAGE> 17
The value of any property contributed by or distributed to a Member which holds
a Majority in Interest shall be subject to the provisions of Article 12. A
Member's capital account shall also be increased or decreased to reflect any
items described in Treasury Regulation Section 1.704-1(b)(2)(iv) that are
required to be reflected in such Member's capital account under such Regulation
and which are not otherwise taken into account in computing such capital
account as provided above.
7.5 INTEREST ON AND RETURN OF CAPITAL. No Member shall be entitled to
any interest on such Member's Capital Account or on such Member's contributions
to the capital of the Company; and except as otherwise provided in Articles 10
and 23 hereof, no Member shall have the right to demand or to receive the
return of all or any part of such Member's Capital Account or of such Member's
contributions to the capital of the Company.
7.6 NO THIRD-PARTY RIGHTS. Nothing contained in this Article 7 nor
any other provision of this Agreement shall be construed to create any rights
or benefits in any Entity, other than the Members, and their respective legal
representatives and permitted transferees, successors and assigns, subject to
the limitations on transfer contained herein.
ARTICLE 8
ADDITIONAL FINANCIAL CONTRIBUTIONS
8.1 WORKING CAPITAL COMMITMENT. National Data shall make available to
Company working capital of no less than $15 million through (a) direct loans to
Company from one or more members of the National Data Group, (b) loans to
Company from third party lenders, or (c) retained earnings or other cash flow
of Company. Any such working capital loans from any member of the National
Data Group (or any Affiliate thereof) shall bear interest at National Data's
Cost of Funds plus the amount computed in accordance with Exhibit A. To the
extent that the Company has at any time a working capital loan from an Entity
or Entities other than National Data or has retained earnings or cash flow
available for working capital purposes, National Data's obligation hereunder
shall be correspondingly reduced; and at the earlier of an IPO or the time that
such other funds available for working capital purposes equals or exceeds $15
million, National Data's obligation hereunder shall cease.
8.2. ADDITIONAL FUNDS FOR COMPANY. Unless otherwise provided in this
Agreement, the Members may, but are not obligated to, make such additional
contributions of capital to the Company in such manner and at such times as the
Members unanimously may agree. In addition, the National Data Members shall
have the right at any time to make additional contributions of capital to the
Company in such manner and on such terms as are determined by Approval of the
Board of Directors to be fair to and in the best interests of the Company and
the Members. The additional capital provided by any National Data Member
shall, at such National Data Member's sole election, be treated as either (i) a
loan, or (ii) as an acquisition of additional equity. In the event such
capital contribution is treated as a Term Loan (as hereinafter defined) or as
an acquisition of additional equity, MasterCard shall have the right to
participate in such Term Loan or acquisition of equity on the same terms as the
National Data Member(s). MasterCard's participation shall not exceed a
percentage equal to its Percentage Ownership Interest at the time of the
contribution divided by the sum of (x) MasterCard Percentage Ownership Interest
and (y) the aggregate Percentage Ownership Interests of all of the National
Data Members. A "Term Loan" shall be any loan, other than (a) extensions of
credit consistent with the terms in Section 8.1, (b) loans that bear interest
at no more than National Data's Cost of Funds, or (c) unsecured loans that have
an aggregate principal balance at any time in the aggregate of less than ten
million dollars
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<PAGE> 18
($10,000,000). Any transaction involving a Term Loan or additional equity in
which MasterCard has been offered the opportunity to participate in accordance
with the terms of this Section 8.2 shall not be subject to the provisions of
Article 12. MasterCard shall be given written notice of any such opportunity
to make a capital contribution or loan and shall be given sixty (60) days to
elect to make such contribution or loan. A National Data Member or Members may
make the entire contribution in accordance with the provisions of Article 12
for the period preceding the time MasterCard communicates its decision to
participate in the contribution or loan. The participation rights granted to
MasterCard under this Article 8 shall cease to exist upon the first to occur of
(a) an IPO or (b) MasterCard's having less than the Minimum Equity.
ARTICLE 9
ALLOCATION OF PROFITS AND LOSSES
9.1 NET PROFIT. The Company's Net Profit, if any, for each Fiscal
Year shall be allocated to the Members in the following manner and in the
following order of priority:
(a) first, to the Members, in proportion to, and to the extent
of, their respective shares of any distributions made or to be made by
the Company pursuant to Section 10.1 hereof with respect to such Fiscal
Year; then
(b) second, to the Members, in proportion to, and to the extent
of, the respective excesses, if any, of any distributions made or to be
made by the Company pursuant to Section 10.1 hereof with respect to such
Fiscal Year and for all prior Fiscal Years over the respective aggregate
amounts of Net Profit theretofore allocated to such Members pursuant to
Section 9.1(a) hereof above (including Net Profit allocated to the
Members under Section 9.1(a) hereof for such Fiscal Year) and this
Section 9.1(b); and then
(c) to the Members in proportion to their Percentage Ownership
Interests.
9.2 ALLOCATION OF SALE GAIN. Any Sale Gain recognized by the
Company in any Fiscal Year shall be allocated in the following order of
priority:
(a) first, to the Members in an amount and in a manner so as to
cause their Capital Accounts to be in proportion to their respective
Percentage Ownership Interests; and
(b) second, to the Members in proportion to their respective
Percentage Ownership Interests as of the last day of such Fiscal Year
(the "Last Day").
For purposes of this Section 9.2, the amount of a Member's capital account as
of a Last Day shall be computed as of such Last Day in the manner provided in
Section 7.4 hereof, but shall be adjusted to reflect the allocation to such
Member of all amounts required to be allocated to such Member for such Fiscal
Year under Article 9 hereof (other than pursuant to this Section 9.2).
9.3 NET LOSS AND SALE LOSS. The Company's Net Loss and any Sale Loss
for each Fiscal Year shall be allocated to the Members:
(a) first in such amount and in such proportion as to cause
their respective Capital Accounts to be in proportion to their respective
Percentage Ownership Interests; and
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<PAGE> 19
(b) thereafter, in proportion to their respective Percentage
Ownership Interests.
9.4 BOOK DEPRECIATION. Book Depreciation and any other loss or
deduction (including loss on sale) with respect to ownership of the Company's
assets shall be included in the calculation of Net Income and Net Loss
provided, however, that the Book Depreciation and any other loss or deduction
(including loss on sale) with respect to the following assets shall not be so
included, but shall be allocated in the manner indicated:
(a) With respect to $60,000,000 of the MasterCard Purchased
Assets, such items shall be specially allocated to the Members in accordance
with their Net Earnings Interests until an Adjustment Event;
(b) With respect to the National Data Group Contributed Assets,
such items shall be specially allocated to the Members in accordance with their
Net Earnings Interests until an Adjustment Event;
(c) With respect to $50,000,000 of the MasterCard Purchased
Assets, such items shall be allocated to the Members in accordance with their
Percentage Ownership Interests until an Adjustment Event.
9.5 SECTION 704(C) ALLOCATION. Any items of income, gain, loss and
deduction with respect to any property that has been contributed by a Member to
the capital of the Company and which is required or permitted to be allocated
to the Members for income tax purposes under Section 704(c) of the Code so as
to take into account the variation between the tax basis of such property and
its agreed upon fair market value at the time of its contribution shall be
allocated to the Members solely for income tax purposes in accordance with the
traditional method set forth in Treasury Regulation Section 1.704-3(b) with
respect to contributions by MasterCard and the National Data Members and
otherwise by Approval of the Board of Directors.
9.6 LIMITATION ON NET LOSS ALLOCATION. Notwithstanding the provisions
of Section 9.3 hereof, if the amount of Net Loss and Sale Loss that would
otherwise be allocated to a Member in any Fiscal Year under Section 9.3 hereof
would cause (or increase) an Adjusted Capital Account Deficit for any Member as
of the Last Day of such Fiscal Year, then a proportionate part of such Net Loss
and Sale Loss equal to the sum of such Net Loss and Sale Loss, to the extent it
creates (or increases) such Member's Adjusted Capital Account Deficit, shall be
allocated to the other Member(s) to the extent possible.
9.7 QUALIFIED INCOME OFFSET. Notwithstanding any provision hereof to
the contrary, if any Member unexpectedly receives in any Fiscal Year any
adjustment, allocation or distribution described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and if such Member has an
Adjusted Capital Account Deficit as of the Last Day of such Fiscal Year, then
all items of income and gain (including Sale Gain) of the Company (consisting
of a pro rata portion of each item of Company income and gain, including gross
income and Sale Gain) for such Fiscal Year (and, if necessary, for subsequent
Fiscal Years) shall be allocated to such Member in the amount and in the manner
necessary to eliminate such Adjusted Capital Account Deficit as quickly as
possible.
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9.8 GROSS INCOME ALLOCATION. Notwithstanding any provision hereof to
the contrary, if a Member has an Adjusted Capital Account Deficit as of the
Last Day of any Fiscal Year, then items of income and gain (including Sale
Gain) of the Company (after taking into account allocations otherwise to be
made to such Member other than those provided in Section 9.7 and this Section
9.8) shall be allocated to such Member in the amount and in the manner
necessary to eliminate such Adjusted Capital Account Deficit as quickly as
possible.
9.9 MINIMUM GAIN AND MEMBER MINIMUM GAIN CHARGEBACK. Notwithstanding
any provision hereof to the contrary, any item of Company income or gain
(including Sale Gain) for any Fiscal Year (or any portion of any such item)
that is required to be allocated to the Members under Treasury Regulations
Section 1.704-2(f) or 1.704(2)(i)(4) shall be allocated to the Members for such
Fiscal Year (and, if necessary, for succeeding years) in the manner so required
by such Treasury Regulations.
9.10 MEMBER NONRECOURSE DEDUCTIONS. Except to the extent otherwise
allocated pursuant to Section 9.4, any item of Company loss, deduction or
expenditure described in Section 705(a)(2)(B) of the Code for any Fiscal Year
(or any portion of any such item) that is required to be allocated to the
Members under Treasury Regulation Section 1.704-2(i)(1) shall be allocated to
the Members in proportion to their respective allocations of Net Income or Net
Loss for such Fiscal Year.
9.11 TARGET FINAL BALANCES. The allocations of Net Profit, Net Loss,
Sale Gain and Sale Loss and the allocations in Section 9.4 of this Agreement
are intended to produce final Capital Account balances (Capital Account
balances immediately prior to the liquidation of the Company or of a Membership
Interest, after taking into account all allocations for fiscal periods through
such point in time) that are at levels ("Target Final Balances") that permit
liquidating distributions which, if made in accordance with such final Capital
Account balances would equal the distributions that would occur if such
liquidating proceeds were distributed in accordance with Percentage Ownership
Interests at that time. To the extent that the allocation provisions of this
Agreement would not produce the Target Final Balances, the Members agree to
take such actions as are necessary to amend such allocation provisions to
produce such Target Final Balances. Notwithstanding the other provisions of
this Agreement, allocations of income, gain, loss and deduction (including
items of gross income, gain, loss and deduction) shall be made to the maximum
extent possible to produce such Target Final Balances.
9.12 TAX ALLOCATIONS. Except to the extent otherwise provided
specifically in this Article 9, all items of Company income, gain, loss, and
deduction for federal, state, and local income tax reporting for any Fiscal
Year shall be divided among the Members in the same proportion as the sum of
items that are allocated to their respective Capital Accounts for the year are
divided.
ARTICLE 10
DISTRIBUTION OF COMPANY PROPERTY
10.1 ANNUAL DISTRIBUTIONS. The Company shall distribute to the
Members as soon as possible following the close of a Fiscal Year (except in the
year of a Conversion in which case such distribution shall be made no later
than immediately prior to the Conversion) the following amounts in the
following order and priority:
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(a) For any period prior to an Adjustment Event, an
amount equal to the Net Earnings of the Company shall be distributed
to the Members in proportion to their respective Net Earnings
Interests and any Net Cash Flow in excess of the Net Earnings shall be
distributed to the Members in proportion to their respective
Percentage Ownership Interests. If Company does not have sufficient
Net Cash Flow to make the foregoing distribution, to the extent such
actual distributions are less than the required amount, the Company
will be deemed to have made the distribution and to have borrowed the
funds from the Members in accordance with Section 8.2.
(b) For any period following an Adjustment Event, Net
Cash Flow shall be distributed to the Members in proportion to their
respective Percentage Ownership Interests.
The total amount distributed to the Members under paragraph (a) or (b) hereof
shall, with respect to each Fiscal Year, be no less than the total federal,
state and local income taxes that the Company would have paid if it had been a
corporation.
10.2 NET SALES PROCEEDS. Subject to the provisions of Section 23.2
hereof, Net Sales Proceeds shall be distributed by the Company to the Members
in the proportion to their respective Percentage Ownership Interests.
10.3 CONSENT TO DISTRIBUTIONS. All distributions provided for herein
shall be made only as and when determined by Approval of the Board of
Directors, consistent with the provisions of this Article 10.
10.4 WITHHOLDING. If the Code or applicable state law requires the
Company to withhold any tax with respect to a distributive share of Company
income, gain, loss, deduction or credit, or a distribution of cash or property,
the Company shall withhold and pay the tax. If at any time the amount required
to be withheld exceeds the amount that would otherwise be distributed to the
Member to whom the withholding requirement applies, then that Member shall make
a contribution to the Company equal to the excess of the amount required to be
withheld over the amount, if any, that would otherwise be distributed to that
Member and which is available to be withheld. Any amount withheld with respect
to a Member shall be deducted from the amount that would otherwise be
distributed to that Member but shall be treated as though it had been
distributed to such Member.
ARTICLE 11
MANAGEMENT OF COMPANY
11.1 BOARD OF DIRECTORS. The management and control of the business
affairs of the Company shall be vested in the Members, which have chosen, as a
matter of administrative convenience, to exercise such management and control
through the Board of Directors, composed of one member designated by
MasterCard, three members (in the aggregate) designated by the National Data
Members, and such additional members as may from time to time be designated by
a Majority in Interest (the members of the Board of Directors being hereinafter
collectively referred to as the "Directors," and individually as a "Director");
provided, however, that (a) in no event shall the Board of Directors have fewer
than two (2) members and (b) until an IPO, no employee or director of a
Prohibited Transferee shall serve as a Director without first obtaining the
Approval of the Director designated by MasterCard; and provided further that
MasterCard shall not be entitled
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to appoint a Director after an IPO or after MasterCard owns less than the
Minimum Equity. The foregoing restriction on the designation of an employee or
director of a Prohibited Transferee shall not apply to any person from and
after such person's retirement, resignation or other termination of services as
such employee or director of a Prohibited Transferee. Each Member agrees that
the Director(s) appointed by such Member shall have the authority to act on
such Member's behalf to effectuate the purposes of this Agreement, to execute
documents on its behalf (unless such Member provides to the other Member(s)
prior written notice to the contrary) and, acting as a member of the Board of
Directors, to determine policy for the Company. Directors serve solely at the
pleasure of the Member or Members appointing them and a Member or Members may
at any time and from time to time replace such Director(s). Each Director
shall have the right to rely on the authority of the other Directors to act
hereunder until such time as the Director receives written notice that a
Director has been removed or his authority has been limited. Each Member
entitled to designate a Director, by written notice to the other, may designate
an individual to serve as an alternate Director but each Director shall have
only one (1) vote on the Board of Directors, in connection with an Approval by
the Board of Directors under this Agreement. No Director shall have the
authority to execute any instrument or bind the Company in any way without the
express Approval of the Board of Directors.
11.2 INITIAL BOARD OF DIRECTORS. The initial Board of Directors shall
be as follows:
Director appointed by MasterCard: William I Jacobs
Directors appointed by the National Robert A. Yellowlees
Data Members: Edward L. Barlow
Neil Williams
11.3 MEETINGS OF BOARD OF DIRECTORS. Meetings of the Board of
Directors may be called by any Director on no less than 36 hours notice;
provided, however, that any Director may, within 24 hours of a called meeting,
request a delay in such meeting by up to 24 hours, and such delay shall be
granted if it is impractical for such Director to attend the meeting at the
original time. The Board of Directors may meet at any place within or without
the State of Georgia, as set forth in the notice of the meeting; a Director who
is unable to attend a meeting in person may attend at his election via
telephone by providing notice of such participation and the telephone number at
which he can be reached at least three (3) hours prior to such meeting.
Regular and special meetings shall be held at any place designated from time to
time by Approval of the Board of Directors, including, but not limited to,
meetings by telephone conference call in which each participant is able to
speak to and hear each other participant.
11.4 ACTION BY BOARD OF DIRECTORS. Any action required herein to
be Approved or taken by the Board of Directors may be Approved or taken only
upon (a) Approval of the Board of Directors at a validly-held meeting, or (b)
through an executed written consent signed by all of the Directors specifying
the actions Approved and/or to be taken and such consent is filed in the minute
book of the Company. Any such written consent shall be sent to each Director
as promptly as practicable. Notwithstanding the provisions of . Section
14-11-308(b) of the Act, except as expressly limited by this Agreement, the
Board of Directors shall have the sole and exclusive right to manage and
control, and complete and exclusive discretion in the management and control
of, the affairs and business of the Company on behalf of the Members; and shall
have all of the rights and powers
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of a Manager (as defined in the Act) of a limited liability company to the
extent permitted by the Act, including, without limitation but subject to the
other provisions of this Agreement, the exclusive right and power to:
(a) acquire by purchase, lease, or otherwise any real or personal
property;
(b) borrow money for the Company from such Entities, including
banks, other lending institutions, Members, or Affiliates of
any one or more Members and on such terms as the Directors
deem appropriate, and in connection with such borrowing, to
hypothecate, encumber and grant security interests in any and
all of the Property to secure repayment of the borrowed sums;
(c) purchase liability and other insurance on behalf of the
Company;
(d) hold and own any property in the name of the Company;
(e) invest any Company funds (directly or by loans to any Entity
in the National Data Group or any Affiliate thereof)
temporarily (by way of example but not limitation) in time
deposits, short-term governmental obligations, commercial
paper or other investments;
(f) transfer any or all of the property;
(g) execute or cause to be executed and delivered on behalf of the
Company all contracts in such form as the Directors may
approve, including, without limitation, checks, drafts, notes
and other negotiable instruments, mortgages, security
agreements, financing statements, documents providing for the
acquisition or disposition of property, assignments, bills of
sale, leases, partnership agreements, operating agreements,
and any other instruments or documents necessary or
appropriate, in the opinion of the Directors, to the business
of the Company;
(h) employ accountants, legal counsel, consultants, agents and
other Entities to perform services for the Company and to
compensate them from Company funds;
(i) distribute funds to Members by way of cash, income, return of
capital, or otherwise, all in accordance with this Agreement;
(j) institute, prosecute, defend, settle, compromise, and dismiss
lawsuits and other judicial or administrative proceedings
brought on, in behalf of or against the Company, Directors or
Members in connection with activities arising out of,
connected with, or incidental to this Agreement, and to engage
counsel or others in connection therewith;
(k) do and perform all other acts necessary or appropriate to the
conduct of the Company's business;
(l) take, or refrain from taking, all actions, not expressly
proscribed or limited by this Agreement, necessary or
appropriate to accomplish the purposes of the Company;
(m) establish offices of the Company, such as but not limited to
president, vice president, secretary and treasurer, designate
persons ("Officers") to serve in such
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offices at the pleasure of the Board of Directors, and
delegate certain of the above-described authority to such
officers as provided in Section 11.11 below; and
(n) make any and all elections and decisions with respect to any
federal, state, local or foreign tax or the reporting thereof.
11.5 EXPENSES AND COMPENSATION OF BOARD OF DIRECTORS. All the
out-of-pocket expenses incurred by each of the Directors in connection with
their service on the Board of Directors and any compensation to Directors that
are not officers or employees of MasterCard or any Entity in the National Data
Group for service on such Board of Directors, as determined by a Majority in
Interest, shall be borne by the Company.
11.6 RESTRICTIONS ON AUTHORITY OF BOARD OF DIRECTORS.
(a) Without the consent of each Member and except as otherwise
expressly permitted herein, the Board of Directors may not:
(i) do any act in contravention of this Agreement;
(ii) possess property, or assign rights in specific
property, for other than a Company purpose; or
(iii) knowingly perform any act that would subject any
Member to liability for the obligations of the
Company in any jurisdiction.
(b) Without the consent of a Majority in Interest and MasterCard
(prior to the earlier of an IPO or MasterCard's no longer
being a Member), the Board of Directors may not:
(i) amend the Articles or this Agreement except to admit
new Members in accordance with this Agreement;
(ii) cause or permit the issuance or transfer of any
equity interest in the Company or any successor to a
Prohibited Transferee, or otherwise cause or permit a
Prohibited Transferee to become a Beneficial Owner of
any such equity interest;
(iii) amend Section 7.2(c) of the Parent Services Agreement
(relating to indemnification of the Company by
National Data with respect to the Parent Benefit
Plans), the NDCI Service Agreement or the Software
License Agreement (each as defined in the Purchase
Agreement) or take any other action (including
without limitation canceling such agreements) if the
effect of such amendment or other action would be to
adversely affect the benefits and protections
afforded to the Company by Section 7.2(c) of the
Parent Services Agreement, the NDCI Service Agreement
or the Software License Agreement; or
(iv) cause or permit the Company to guarantee or furnish
any collateral for any obligation of any Member or
any Affiliate of any Member.
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(c) Without the consent of a Majority in Interest and except as
otherwise expressly permitted herein, the Board of Directors
may not:
(i) do any act which would (A) make it impossible to
carry on the ordinary Business of the Company or (B)
change the Business of the Company;
(ii) dissolve and liquidate the Company except in
accordance with Article 23;
(iii) merge the Company;
(iv) sell all or substantially all of the assets of the
Company; or
(v) admit new members to the Company and amend the
Articles and/or the Agreement to reflect such
admissions.
11.7 VOTING RIGHTS OF MEMBERS. Except as provided in Section 11.6(a)
of this Agreement, the consent of a Majority in Interest is required to take
any action or give any Approval as Members including, but not limited to, any
of the actions listed in Section 14-11-308(b) of the Act. The Members
expressly agree that unanimous approval of Members is not required for the
actions in Section 14-11-308(b) of the Act.
11.8 AUTHORITY OF MEMBERS; MEETINGS; ACTION BY MEMBERS WITHOUT A
MEETING. Members shall have no authority to execute any instrument or bind the
Company in any way without the express Approval of a Majority in Interest. A
meeting of Members shall be called by the Directors whenever they deem
necessary or by any Member. Any such meeting shall be held at the principal
place of business of the Company, or at such other location as the Members may
mutually agree, and may be held in person or by telephonic conference call in
which each participant can speak to and hear each other participant. The Board
of Directors or the Member shall send each Member a written notice of each
meeting, stating the time, date, place and purpose of the meeting, not less
than five (5) days before the scheduled date of such meeting. Action required
or permitted to be taken at a meeting of Members may be taken without a meeting
if the action is evidenced by one or more written consents describing the
action taken, signed by a Majority in Interest or such other vote as may be
required pursuant to Section 11.6 and delivered to the Secretary or other
person designated by the Members for inclusion in the minutes or for filing
with the Company records. Any such consent shall be sent to each Member as
promptly as practicable. Action taken under this Section 11.8 is effective
when a Majority in Interest, or all Members, as the case may be, has signed the
consent, unless the consent specifies a different effective date. The record
date for determining Members entitled to take action without a meeting shall be
the date the first Member signs a written consent.
11.9 WAIVER OF NOTICE. When any notice is required to be given to any
Director or Member, a written waiver of notice signed by the Member or Director
entitled to such notice, whether before, at, or after the time stated in the
notice, shall be equivalent to the giving of such notice.
11.10 OFFICERS. The Board of Directors is hereby authorized by the
Members to appoint Officers by resolution to implement the decisions of the
Board of Directors, including, but not limited to, the administration of the
day-to-day business of the Company, and, subject to the terms of Section 11.7
hereof and the other provisions of this Agreement, the administration of the
ordinary and usual business affairs of the Company, except as expressly limited
by this Agreement,
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and the Officers so appointed shall be responsible for such implementation.
Except as expressly provided to the contrary in this Agreement, and except as
otherwise directed by the Board of Directors, the Officers are authorized to
make decisions relating to the day-to-day affairs of the Company and to
implement such decisions. In addition, the Board of Directors is hereby
authorized to delegate to the Officers such responsibilities as deemed
appropriate by Approval of the Board of Directors, including, but not limited
to, the right to execute and deliver instruments on behalf of the Company.
11.11 REMOVAL OF OFFICERS. Any of the Officers may be removed by
Approval of the Board of Directors, by written notice of such removal given
without any prior notice or warning, for any reason whatsoever, and the Board
of Directors shall appoint such Officer's successor.
11.12 COMPENSATION FOR SERVICES. No Member or Affiliate of any Member
shall receive any compensation from the Company for its services as a Member of
the Company without having first obtained the Approval of the Board of
Directors for the payment of any such compensation by the Company.
Compensation of Officers shall be as Approved by the Board of Directors.
11.13 LIABILITY OF THE MEMBERS, OFFICERS AND DIRECTORS. As long as a
Member, an Officer or a Director, as applicable, shall act in good faith with
respect to the conduct of the business and affairs of the Company, no such
Member, Officer or Director shall be liable to the Company or to the Members,
in damages or otherwise, for any error of judgment, for any mistake of fact or
of law, or for any other act or thing which such Member, Officer or Director,
as applicable, may do or refrain from doing in connection with the business and
affairs of the Company, except in the case of gross negligence, willful
misconduct, fraud or bad faith.
11.14 INDEMNITY. The Company does hereby agree to indemnify and to
hold the Officers, the Directors, and the Members wholly harmless from any
loss, expense or damage suffered by any Officer, Director or Member by reason
of anything such Officer, Director or Member, as applicable, may do or refrain
from doing hereafter for and on behalf of the Company and in furtherance of its
interests to the extent authorized hereunder; provided, however, that the
Company shall not be required to indemnify any Officer, Director or Member for
any loss, expense or damage which such Officer, Director, or Member, as
applicable, might suffer as a result of such Officer's, Director's or Member's,
as applicable, gross negligence, willful misconduct, fraud or bad faith.
ARTICLE 12
RELATED PARTY TRANSACTIONS
Except as otherwise provided in this Article 12 and elsewhere in this
Agreement, any of the Members or their Affiliates may engage in transactions
with the Company in addition to those contemplated by this Agreement (an
"Affiliate Transaction"), provided, that each Member shall, in good faith,
cause the transaction with the Company to be on a commercial arm's length
basis, and the Board of Directors shall not permit or Approve any such
transaction, including but not limited to any transaction involving matters
affecting the working capital of the Company, unless it shall have determined
that the transaction satisfies the foregoing requirement and is in the best
interest of the Company and the Members, provided, however, that the foregoing
obligations shall not apply to MasterCard with respect to transactions not
involving MasterCard or any of its Affiliates. In determining whether a
particular transaction with the Company satisfies the criteria of this Article
12, all aspects of such transaction and all facts and circumstances surrounding
such
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transaction taken together (and if such transaction is one of a series of
related transactions, including pursuant to any pre-established contract or
arrangement, then all of such related transactions, and the terms of such
contract or arrangement) shall be taken into account. In the event that a
Member reasonably believes that any Member has entered into an Affiliate
Transaction with the Company that does not comply with the foregoing
provisions, such Member shall have the right to submit the question to
Arbitration as provided in Article 22. Notwithstanding anything to the
contrary contained in Section 11.8, MasterCard shall have the right to enforce
on behalf of the Company any and all agreements between the Company and any
Entity in the National Data Group (or any Affiliate thereof) including, without
limitation, the Purchase Agreement, the NDCI Service Agreement and the Software
License Agreement. The rights granted to MasterCard under this Article shall
cease to exist upon the first to occur of (a) an IPO or (b) MasterCard's having
less than the Minimum Equity.
ARTICLE 13
BANKING
The funds of the Company shall be kept in one or more separate bank
accounts in the name of the Company in such banks or other federally-insured
depositories as may bed by the Board of Directors, or shall otherwise be
invested in the name of the Company upon such terms and conditions as Approved
by the Board of Directors from time to time. All withdrawals from any such
bank accounts or investments established by the Company hereunder shall be made
on such signature or signatures as may from time to time be Approved by the
Board of Directors.
ARTICLE 14
ACCOUNTING; APPRAISAL
14.1 BOOKS OF ACCOUNt. GPS shall maintain for the Company true and
accurate books of account at such locations as may receive Approval of the
Board of Directors, and each Member shall at all times have access thereto.
14.2 METHOD OF ACCOUNTING. The Company's books of account shall be
maintained, and its income, gains, losses and deductions shall be determined
and accounted for in accordance with GAAP and using the methods Approved by the
Board of Directors.
14.3 FINANCIAL AND OPERATING STATEMENTS. Within seventy-five (75) days
after the close of each Fiscal Year, GPS, at the expense of the Company, shall
have a full audit and financial statements of the Company for such Fiscal Year
prepared and distributed to the Members. Such financial statements and audit
results shall be prepared by the Company and shall be true and correct, shall
be certified in the customary manner by a so-called "Big Six" firm of
independent certified public accountants as may be Approved by the Board of
Directors, shall be in accordance with the Board of Directors' requirements and
specifications therefor, and shall include an income and expense statement and
balance sheet which shall reflect the results of the operations of the Company
for such Fiscal Year, the financial condition of the Company, and all other
information customarily reflected in financial statements prepared in
accordance with generally-accepted accounting principles. Within forty-five
(45) days after the end of each quarter, the Company shall also have prepared
and delivered to each Member (a) a profit and loss statement and Company
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balance sheet, and a comparison to the income and expenses of the Company
through the previous calendar quarter, and (b) a cash flow statement, setting
out current quarter and year-to-date figures.
14.4 INCOME TAX RETURNS. Following the close of each Fiscal Year, the
Company shall have prepared and delivered to each Member, at the expense of the
Company, information with respect to the business transactions of the Company
for such Fiscal Year in sufficient detail to enable each Member to prepare such
Member's federal, state and local income tax returns in accordance with all
then applicable laws, rules and regulations. The Company shall also cause any
federal, state or local income tax returns to be prepared and submitted for
review and Approval of the Board of Directors prior to the due date thereof (as
the same may be extended), and following appropriate modifications and final
approval thereof shall cause the same to be properly filed. The Members
acknowledge and agree that the Company is a partnership for income tax
purposes, and that they shall file tax returns and otherwise conduct their
affairs in a manner consistent with such characterization.
14.5 TAX MATTERS PARTNER. GPS shall be the "Tax Matters Partner" for
Code purposes and shall notify the Members promptly of any tax audit or other
tax examination or determination of which it is notified materially affecting
the Company or the Members and shall provide any Member upon request copies of
all notices or communications with respect thereto. GPS specifically shall
have the power to (a) extend the statute of limitations or any period of
limitations with respect to the Company in any matter; (b) agree to any
settlement of any tax matter affecting the Company, (c) file any petition for
judicial review, or any other judicial proceeding with respect to the Company
in any matter; or (d) file any requests for administrative review or
adjustment, or other administrative relief, on behalf of the Company, in any
matter.
ARTICLE 15
CONVERSION OF THE COMPANY
At any time on or after Closing, GPS may request a Conversion. Upon such
request, GPS and the Board of Directors shall prepare and GPS shall have the
right to require the Company and any of its Members to execute and deliver any
agreements, instruments or other documents reasonably required by GPS to
consummate the Conversion. The articles of incorporation, bylaws and
organizational minutes of the surviving corporation shall be Approved by GPS.
Each Member agrees that it will execute and deliver all such agreements,
instrument and documents as are required, in the reasonable judgment of GPS, to
be executed by such Member in order to consummate the Conversion, provided
those documents otherwise satisfy all the requirements of this Agreement.
Upon consummation of a Conversion, each Member will be entitled to
receive that number of shares of stock of the surviving corporation obtained by
multiplying the total number of shares of common stock to be issued by the
surviving corporation in connection with the Conversion by the Percentage
Ownership Interest held by such Member as of the date of Conversion. Such
Member's Percentage Ownership Interest may be changed immediately prior to the
Conversion pursuant to Article 20. In addition, the surviving corporation will
assume all of the outstanding debt and other liabilities of the Company. No
Member shall be subject to any obligations in any way permitting, restricting
or limiting its ability to participate fully in such Conversion. Except as the
provisions of this Agreement specifically state otherwise, all rights,
protections and benefits of the Members
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under this Agreement shall continue to be available to them in their capacity
as stockholders of the surviving corporation. Further, the articles of
incorporation and bylaws of the surviving corporation shall incorporate the
governance and other operating provisions of this Agreement and a shareholders'
agreement shall incorporate the various rights, protections and benefits
provided to a Member by this Agreement, including but not limited to the rights
provided for in Articles 20 and 21 hereof, except to the extent expressly
waived in writing by the Member or Members entitled to such right, protection
or benefit.
The Members acknowledge that a Conversion may be undertaken in connection
with other events, such as an IPO, an acquisition of another business or Entity
or the sale of equity in the surviving corporation to other persons and that
such Conversion shall be deemed completed immediately prior to any such event.
ARTICLE 16
ADMISSION OF ADDITIONAL MEMBERS
Subject to and except as otherwise provided in Article 18, no additional
Entity shall be admitted to the Company as a Member (whether as a result of
issuance of new Membership Interests or transfers of existing Membership
Interests) without the Approval of the Board of Directors and Approval of a
Majority in Interest. Any adjustment to the Membership Interests of the Member
that may occur as a result of the issuance of new Membership Interests when
admitting another Entity to the Company as a Member shall be shared by all
Members on a pro-rata basis according to such Member's Percentage Ownership
Interest.
ARTICLE 17
WITHDRAWALS
Each of the Members does hereby covenant and agree that such Member will
not withdraw or retire from the Company except as the result of a permitted
transfer of such Member's entire interest in the Company pursuant to Article
18, 20 or 21 hereof, and that such Member will otherwise carry out such
Member's duties and responsibilities hereunder until the Company is dissolved
and liquidated pursuant to Article 23 hereof.
ARTICLE 18
TRANSFER OF MEMBERS' INTERESTS;
ADMISSION OF ADDITIONAL MEMBERS
18.1 TRANSFERS OF MEMBERS' INTERESTS. Each of the Members hereby
covenants and agrees that such Member will not at any time sell, assign,
transfer, mortgage, pledge, encumber, hypothecate or otherwise dispose of all
or any part of such Member's interest (excluding, however, such Member's right
to distributions hereunder, if such Member otherwise retains its status as a
Member) in the Company to any Entity, other than pursuant to the following
provisions of this Section 18.1 or the applicable provisions of Article 20 or
21 hereof, without first having obtained the Approval of any such proposed
disposition from a Majority in Interest of the other Members
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(excluding Affiliates) and without having complied with all applicable federal
and state securities laws. Notwithstanding the foregoing, a Member other than
GPS may assign or otherwise transfer all or any part of such Member's
Membership Interest in the Company to an Affiliate of such Member or by
operation of law (any such transfer being deemed "Approved" for purposes of the
remaining provisions of this Section 18.1). Any transfer in excess of those
permitted under the preceding two sentences must be approved by a Majority in
Interest of the Members that are not Affiliates of the Member making the
transfer. Following a Conversion or an IPO, all of the foregoing restrictions
on transfer shall terminate. Any Member seeking to transfer solely the
economic portion of its Membership Interest (including a Member seeking to
transfer its Membership Interest under the applicable provisions of Article 21)
may do so without such approval and any transferee of such rights shall not be
considered a Member. In order to effectuate any assignment or transfer of a
Member's interest in the Company to any Entity which is Approved hereunder to
be admitted as a Member in the Company as permitted under this Section 18.1,
the retiring Member shall require any such assignee or transferee to accept in
writing all of the applicable terms of this Agreement and may require such
assignee or transferee to execute any other instruments and agreements and pay
any fees desired by the retiring Member. The remaining Member(s) agree(s), at
the retiring Member's request, to join with the retiring Member and any such
assignee or transferee in the execution of an amendment to this Agreement
admitting such assignee or transferee as a Member and, if only a portion of the
retiring Member's interest in the Company is being transferred, modifying such
terms hereof as are reasonably necessary to allocate, between the retiring
Member and such assignee or transferee, such of the retiring Member's rights
and obligations hereunder as the retiring Member wishes to allocate. The
foregoing procedure for effectuating transfers or assignments of the retiring
Member's interest in the Company and the substitution or admission as a Member
of the Company of such transferees or assignees shall apply to all such
transfers, substitutions and admissions, but shall have no effect after an IPO
or with respect to any stock of a corporation into which the Company may be
converted pursuant to Article 15. The foregoing restrictions have no
application to any new Membership Interests in the Company that are issued
pursuant to the terms of this Agreement except and to the extent this Article
is made to apply to such Membership Interests after they have been issued by
Approval of the Board of Directors and a Majority in Interest. The Members
agree that, until an IPO, no Membership Interest or a Member's right to
distributions under this Agreement will be transferred to a Prohibited
Transferee without the Approval of MasterCard provided MasterCard is then a
Member or to a competitor of the Company without the Approval of a Majority in
Interest. NDC agrees that, until an IPO, NDC shall not cause of permit any
Prohibited Transferee to Beneficially Own any equity or debt security of any
Entity which is controlled by NDC (but specifically excluding NDC itself), such
that as a result of such Beneficial Ownership such Prohibited Transferee would
Beneficially Own any Membership Interest, provided MasterCard is then a Member.
18.2 SECTION 754 ELECTION. In the event of a transfer of all or part
of a Member's interest in the Company, the Company shall elect, at the request
of any existing Member or any person being admitted as a Member, to adjust the
basis of the Company's assets pursuant to Section 754 of the Code or the
corresponding provision of subsequent law. In the case of a newly-admitted
Member, the election shall be filed by the Company as constituted prior to such
admission. The transferee of the Membership Interest shall pay all costs of
preparing and filing such election and for any increased accounting costs
thereafter attributable to such election.
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ARTICLE 19
DAMAGES
Any payment of a damage, loss, liability, tax or expense (including
without limitation reasonable expenses of investigation and reasonable
attorneys' fees and expenses in connection with any action, suit or proceeding)
(collectively referred to herein as "Damages") incurred or suffered by the
Company with respect to the National Data Group Contributed Assets, or the
MasterCard Contributed Assets or the MasterCard Purchased Assets arising out
of, or attributable to, any misrepresentation or breach of warranty, covenant
or agreement made or to be performed by either Member pursuant to the Purchase
Agreement shall not be treated as a transaction between a partner and a
partnership. Notwithstanding the foregoing, in the event any National Data
Member or MasterCard fails to pay for any Damages in accordance with its
obligations under the Purchase Agreement, the amount of such Damages may be
withheld from any amount otherwise distributable or payable to such Member
hereunder.
ARTICLE 20
PUT RIGHTS
20.1 PUT RIGHT. At any time after the Closing of the Purchase
Agreement and from time to time, but not sooner than the earlier of (a) four
(4) years after the date hereof, (b) a Change in Control of the Company, or (c)
a knowing or intentional Breach of this Agreement by any National Data Member
(a "Put Event") (and no later in the case of clause (a) than the earlier of six
(6) years after the date hereof or the completion of an IPO and no later in the
case of clause (c) than the completion of an IPO), MasterCard may put to the
Company ("Put Right") all or any portion of its Membership Interest in the
Company (the "Put Equity"). In addition, an IPO shall be a Put Event for up to
fifty percent (50%) of MasterCard's Membership Interest; and three (3) years
after the date hereof without an IPO having occurred (but ending this Put Event
with the earlier of an IPO or six (6) years after the date hereof) shall be a
Put Event for up to fifty percent (50%) of MasterCard's Membership Interest,
provided MasterCard must retain the Minimum Equity after the exercise of any
and all such Put Rights with respect to the Put Events in this sentence.
20.2 EXERCISE OF PUT RIGHT. MasterCard's Put Right shall be
exercised ("Put") by providing the Company with notice (the "Put Notice")
specifying (i) the percentage of its Membership Interest to be put; (ii) the
date on which the Put Price (as hereinafter defined) is to be paid (the "Put
Date"); and (iii) the proposed Put Price. The Put Notice shall be given at
least ninety (90) days in advance of a Put Date. If the event is an IPO, the
Put Price shall be due at the initial closing pursuant to the IPO. MasterCard
may not exercise more than two (2) Puts during any twelve (12) month period.
20.3 DETERMINATION OF PUT PRICE. If a Put Event occurs, the value
of MasterCard's Membership Interest (the "Put Price") shall be determined as
follows:
(a) in the event of an IPO by the Company, or its
successor after a Conversion, that is a Put Event, the Put Price shall
be the initial IPO price per share, less Registration Expenses per
share that would be payable by MasterCard pursuant to the Registration
Rights Agreement of even date herewith if MasterCard were to sell its
Put Equity in the IPO, including, but not limited to, any
underwriters' commissions or
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<PAGE> 32
discounts, all as reflected on the cover page of the final prospectus
of the IPO, times the number of shares that MasterCard would have
been entitled to receive for the Put Equity in the Conversion; and
(b) in any other event, that is a Put Event, the Put
Price shall be approved by MasterCard and GPS, or failing such
approval shall be determined by an appraiser appointed by agreement
between MasterCard and GPS. If there is no agreement upon a single
appraiser within thirty (30) days after notice of the Put Event, the
Put Price shall be determined by the majority vote of a board of three
(3) appraisers, GPS appointing one (1) appraiser, MasterCard
appointing one (1) appraiser and the two appointed appraisers
appointing the third appraiser. If either of the two appraisers is
not so appointed or if the two appraisers refuse or fail to appoint
the third appraiser within thirty (30) days after notice of the Put
Event, either MasterCard or GPS may request the American Arbitration
Association to make the appointments in default in accordance with its
rules then obtaining and the parties shall abide by any appointment so
made. The appraisers shall determine the value of the Put Equity
based on the fair market value of the Company on a stand alone basis
without regard to the rights of any controlling person multiplied by
the Percentage Ownership Interests in the Put Equity. The costs of
the appraisal shall be borne equally by MasterCard and the Company.
The Put Date shall be extended to such time after completion of the
appraisal as MasterCard may reasonably designate.
(c) MasterCard may withdraw a Put if the Put Price
determined by the appraisal is not satisfactory to MasterCard.
20.4 PAYMENT OF PUT PRICE. On the Put Date, upon delivery to the
Company of Certificates representing the Put Equity, which instrument shall
contain a full warranty of title, to the effect that MasterCard has good and
marketable title to the Put Equity free and clear of all claims and
encumbrances (other than the restrictions created by or provided for in this
Agreement), and such other instruments as the Company may reasonably request,
the Company shall pay to MasterCard or its designee the Put Price in cash for
the Put Equity so delivered. If the Put Event is an IPO, the Put Price
(payable in cash) shall be due at the initial closing pursuant to the IPO.
20.5 TERMINATION OF PUT. All Puts and Calls shall terminate at an
IPO except the Put Right provided with respect to the Put Event related to a
Change In Control, which shall terminate and be of no further force and effect
at any time that (a) MasterCard no longer has any equity interest in the
Company or its successor after a Conversion, (b) MasterCard's equity interest
in the Company or its successor after a Conversion is tradable in an
established market without restrictions pursuant to the federal securities
laws, or (c) the aggregate interest of the National Data members in the Company
or its successor after a Conversion becomes less than a Majority in Interest as
a result of any IPO. In addition after an IPO, but before the earlier of (i)
MasterCard's having the right to cause its equity interest in the Company or
its successor after a Conversion to be registered under the Registration Rights
Agreement, or (ii) MasterCard's equity interest in the Company or its successor
after a Conversion is tradable in an established market without restrictions
pursuant to the federal securities laws, if the Company or its successor after
a Conversion permits an employee or director of a Prohibited Transferee to
become a Director without the Approval of MasterCard, MasterCard will be
entitled to treat such permission as a Put Event with respect to its remaining
equity interest in the Company or its successors after a Conversion and to
exercise its Put Right in respect thereof, but any such Put Right must be
exercised within 90 days of such Put Right becoming known to MasterCard.
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<PAGE> 33
ARTICLE 21
RIGHT TO COMPEL SALE; RIGHT TO PARTICIPATE IN SALE
21.1 OBLIGATION TO SELL. If the National Data Members, in the
aggregate and as part of a single transaction, should sell any of their
Membership Interests in a bona fide transaction to any Third Party, or if
National Data, in the aggregate and as part of a single transaction, should
sell issue or cause or permit to be issued any equity or debt securities of any
Entity which is controlled by NDC (but specifically excluding NDC itself and
the Company), such that, as a result of such sale(s) or issuance(s), the Third
Party would, together with such Third Party's Affiliates, Beneficially Own
directly or indirectly, more than 50% of the Membership Interests in the
Company and on terms such that no National Data Member retains any direct or
indirect beneficial interest in or option or right over the Membership
Interest(s) being disposed of other than as a bona fide creditor with a bona
fide security interest therein and that National Data does not retain any
direct or indirect beneficial interest in or option or right over the
securities being sold or issued other than as a bona fide creditor with a bona
fide security interest therein (a "Sale"), the National Data Members may, at
their option, except as set forth below in Section 21.3, require MasterCard to
participate in such Sale. National Data shall provide written notice of such
Sale to MasterCard ("Sale Notice"). The Sale Notice shall identify the
purchaser, the amount of Membership Interest, the consideration for which a
sale is proposed to be made (the "Sale Price") and all other material terms and
conditions of the Sale. MasterCard shall be required, as set forth below, to
tender a percentage of its respective Percentage Ownership Interest equal to
the percentage of the aggregate Percentage Ownership Interests of all of the
National Data Members that the National Data Members intend to sell.
MasterCard shall cooperate with the representative of the National Data Members
designated in the Sale Notice and shall deliver all documents the
representative may reasonably request that may be required to be executed in
connection with such Sale. A transfer under this Article 21 is subject to the
provisions of Section 18.1 and any transfer made hereunder without the Approval
therein required shall be a transfer solely of the economic portion of such
Membership Interest, and references in this Article 21 to Membership Interest
in such context shall be a reference solely to such economic portion, the
remaining rights of such Membership Interest continuing to reside in the
transferring Member.
21.2 RIGHT TO PARTICIPATE IN SALE. For purposes of this Section 21.2
(and the corresponding provisions of the remaining Sections of this Article
21), the requirement in the definition of "Sale" in Section 21.1 that the sale
or issuance of equity or debt securities in any Entity controlled by NDC be "as
a part of a single transaction" shall not apply prior to a Conversion. If the
National Data Members should participate in a Sale, National Data shall give
MasterCard a Sale Notice and MasterCard shall have the right and option,
exercisable as set forth below, to participate in such Sale pro rata in
accordance with its respective Membership Interests based on Percentage
Ownership Interests in the Company in the Sale, in which event the Membership
Interest(s) or the securities to be sold by the National Data Members or
National Data, as the case may be, in the Sale shall be reduced to the extent
MasterCard elects to participate and such reduction is required. Within
fifteen (15) business days after the date the Sale Notice is given, MasterCard
shall provide National Data with written irrevocable notice authorizing
National Data to sell or otherwise dispose of MasterCard's Membership Interest
pursuant to the terms of the Sale. Delivery of such notice authorizing
National Data to sell or otherwise dispose of such Membership Interests shall
constitute an irrevocable acceptance of the Sale on the terms set forth in the
Sale Notice. After delivery of such notice, MasterCard shall not be entitled to
participate in the sale of Membership Interests pursuant to the Sale if it does
not execute any
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<PAGE> 34
agreements, certificates or other documents required to consummate the transfer
of the Membership Interests pursuant to this Section. If MasterCard shall have
elected not to participate in the Sale, (i) MasterCard will be deemed to have
waived any of and all of its rights under this Section 21.2 with respect to the
sale or other disposition of its Membership Interests pursuant to the Sale, and
(ii) the National Data Members or National Data, as the case may be, shall have
ninety (90) days from the date the Sale Notice is given in which to sell the
applicable Membership Interests or securities on terms no more favorable to
the National Data Members or National Data than those set forth in the Sale
Notice, and in no event at a price higher than that contained in the Sale
Notice. MasterCard's sole remedy for a Breach of this provision is to exercise
its Put Right pursuant to Section 20.1(c).
21.3 CONSIDERATION. The consideration to be paid to the National Data
Members or National Data, as the case may be, and MasterCard in a Sale shall be
their respective share of the Sale Price based upon their respective
percentages of the Membership Interests based on Percentage Ownership Interests
included in the Sale. In the event the consideration to be paid pursuant to
the Sale is (a) other than cash, debt or Marketable Securities or (b)
marketable securities of a Prohibited Transferee, unless MasterCard agrees to
participate in the Sale, the Company shall be obligated to pay MasterCard's
share of the Sale Price to MasterCard in cash. If MasterCard receives cash
hereunder, it shall be entitled to use the appraisal procedure with respect to
the consideration received by the National Data Members or National Data as set
out in Section 20.3(b) (except that the value shall be the fair market value of
the consideration received by the National Data Members and shall not be the
value of the Company) to determine its appropriate amount of cash. "Marketable
Securities" are securities traded on NASDAQ or a national securities exchange
or any comparable successor markets for public trading of securities if the
number of shares traded in such markets are sufficiently large to permit
MasterCard to dispose of its shares reasonably promptly after closing and any
holding period for pooling of interest accounting without materially adversely
affecting the market price for such shares. The provisions of this Section
21.3 are applicable to the consideration payable to MasterCard in any sale of
its Membership Interest in connection with any merger of the Company with, or
sale of all or substantially all of the assets or Membership Interests of the
Company to, another Entity, and none of the rights, protections, benefits or
obligations in this Agreement with respect to Members, including MasterCard and
the National Data Members, shall be applicable after a transaction referred to
in this sentence.
21.4 WITHDRAWAL FROM SALE. If, within one hundred twenty (120) days
after National Data gives the Sale Notice, the sale of all the Membership
Interests subject to the Sale has not been completed, any Member shall be
entitled to withdraw its Membership Interest from such Sale and National Data
shall not be permitted to require MasterCard to include its Membership Interest
in any Sale without again complying with the provisions of this Section.
Notwithstanding anything contained in this Article 21 to the contrary, there
shall be no liability on the part of the National Data Members or National Data
to MasterCard if the Sale of the Membership Interests or securities pursuant to
Section 21.1 or 21.2 is not consummated for whatever reason. Any decision as
to whether to sell Membership Interests shall be within the sole and absolute
discretion of National Data.
21.5 PARTICIPATION BY MASTERCARD. MasterCard shall have the right to
participate in the closing for the Sale and to inspect all documents executed
in connection therewith. Promptly after the consummation of the Sale of the
Membership Interests of the National Data Members and MasterCard pursuant to
this Article 21, the National Data Members shall remit or cause to be remitted
to MasterCard the total consideration for its Membership Interest sold pursuant
thereto as computed pursuant to this Article 21, and shall furnish such other
evidence of the completion and
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<PAGE> 35
time of completion of such sale or other disposition and the terms thereof as
may be reasonably requested by MasterCard.
21.6 PRIORITIES AND TERMINATION. If at any time after notice of a Sale
has been given to MasterCard hereunder in good faith, the contemplated Sale
involves a pooling of interest accounting and a tax free transaction with
respect to the securities serving as consideration in the Sale, exercise of the
Put Right could cause the Sale not to qualify for such accounting and the Sale
is proceeding to completion in a diligent manner and in good faith, MasterCard
shall not be entitled to a Put, provided that this prohibition shall not extend
for longer than 90 days after receipt of such Sale notice plus such reasonable
time (not to exceed an additional 90 days) as may be necessary to get any
regulatory or stockholder approvals that are required for the Sale. In the
event MasterCard is prevented from exercising its Put Right because of a
proposed Sale during the period commencing on the fifth (5th) anniversary and
ending on the sixth (6th) anniversary hereof and the Sale does not occur, the
six year limit for exercising the Put Right shall be extended for the period
during which MasterCard was prevented from exercising the Put Right pursuant to
this section. The provisions of this Article 21 shall terminate and have no
further force and effect upon an IPO.
ARTICLE 22
ARBITRATION
22.1 LOCATION AND GOVERNING RULES. Any dispute arising out of or
in connection with this Agreement, including any question regarding its
existence, validity or termination, shall be referred to and finally resolved
by arbitration in Washington, D.C. under the Rules of Commercial Arbitration
(the "Rules") of the American Arbitration Association (the "AAA"), which Rules
are deemed to be incorporated by reference into this Section 22.1. Judgment
upon the award rendered by the arbitrators in any such arbitration may be
entered in any court having jurisdiction thereof. Except as the arbitrators
may otherwise award or assess the expenses of any such arbitration and except
as otherwise provided in this Agreement, each party shall bear its own costs
and expenses, including the expense of its counsel. The parties agree that
service of any notice in the course of any such arbitration at their respective
addresses for notice and in the manner provided in Section 24.2 of this
Agreement shall be valid and sufficient notice for purposes of such
arbitration.
22.2 SELECTION OF ARBITRATORS. In any arbitration pursuant to this
Article 22, the award shall be rendered by a majority of the members of a board
of arbitration consisting of three members. One arbitrator shall be appointed
by a party to the dispute and one arbitrator shall be appointed by the other
party to the dispute within sixty (60) days after the commencement of the
arbitration proceeding. The third arbitrator shall be appointed by mutual
agreement of the two selected arbitrators and shall be experienced in corporate
contractual matters relating to transactions of the nature contemplated by this
Agreement. In the event of the failure of said two arbitrators to agree as to
the third arbitrator within sixty (60) days after the appointment of the last
of the two arbitrators, the third arbitrator shall be appointed by the
Washington, D.C. office of the AAA in accordance with its then-existing rules.
Notwithstanding the foregoing, in the event that either party shall fail to
appoint the arbitrator it is required to appoint within the specified time
period, such arbitrator and the third arbitrator shall be appointed by the
Washington, D.C. office of the AAA in accordance with its then-existing rules.
For purposes of this Section 22.2, the commencement of the arbitration
proceeding shall be deemed to be the date upon which a written demand for
arbitration is received by the Washington, D.C. office of the AAA from one of
the parties.
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ARTICLE 23
DISSOLUTION AND LIQUIDATION OF THE COMPANY
23.1 DISSOLVING EVENTS. Subject to the right, if applicable, to elect
to continue the business of the Company pursuant to Section 23.5, the Company
shall be dissolved and liquidated in the manner hereinafter provided upon the
happening of any of the following events:
(a) the agreement of a Majority in Interest to dissolve the
Company;
(b) the sale of all or substantially all of the Company's
assets;
(c) the Bankruptcy of the Company;
(d) the occurrence of a Disabling Event with respect to a
Member; or
(e) if not previously terminated, December 31, 2045.
23.2 METHOD OF LIQUIDATION. Upon the happening of any of the events
specified in Section 23.1 hereof which require the Company to be dissolved and
liquidated, the Company, unless otherwise required by the Act, shall apply and
distribute any Liquidation Proceeds in the following manner and in the
following order of priority:
(a) to the payment of the debts and liabilities of the
Company (other than the capital accounts of the Members) and to the
expenses of liquidation in the order of priority as provided by law; then
(b) to the establishment of any reserves deemed reasonably
necessary by Approval of the Board of Directors for the payment of any
contingent or unforeseen liabilities or obligations of the Company and,
at the expiration of such period as reasonably deemed advisable by
Approval of the Board of Directors, the balance of such reserves shall
be applied and distributed in the manner hereinafter provided in this
Section 23.2; then
(c) to the Members in proportion to, and in payment of,
the remaining respective capital accounts of the Members as of the date
of distribution, as adjusted and computed pursuant to Article 9 and any
other applicable provisions hereof through the anticipated liquidation of
the Company.
23.3 REASONABLE TIME FOR LIQUIDATING. A reasonable time shall be
allowed for the orderly liquidation of the Company's assets pursuant to Section
23.2 hereof in order to reduce the risk of losses which might be attendant upon
such a liquidation.
23.4 DATE OF LIQUIDATION. The Company shall be deemed liquidated and
wound up when all of its assets shall have been applied and distributed in
accordance with the provisions of Section 23.2 hereof. The establishment of
any reserves in accordance with the provisions of Section 23.2 hereof shall not
have the effect of extending the duration of the Company, but any such reserves
shall be distributed in the manner provided in Section 23.2 hereof upon
expiration of the period of such reserve.
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<PAGE> 37
23.5 RIGHT TO CONTINUE BUSINESS. Upon an event of Dissolution, the
Members shall have the right pursuant to Section 14-11-602(4) of the Act to
continue the Company by written consent of a Majority in Interest.
ARTICLE 24
GENERAL PROVISIONS
24.1 WAIVER OF RIGHT OF PARTITION. Each of the Members does hereby
agree to and does hereby waive any right such Member may otherwise have to
cause any of the Company's assets to be partitioned among the Members or to
file any complaint or to institute any proceeding at law or in equity seeking
to have any such assets partitioned.
24.2 NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be delivered (a) in person or by
courier, (b) mailed by first class registered or certified mail, or (c)
delivered by facsimile transmission, as follows:
(a) If to MasterCard:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attn: William I Jacobs
Executive Vice President
Telephone: (914) 249-5200
Telecopier: (914) 249-5475
with a copy (which shall not constitute notice) to:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attn: Robert E. Norton, Jr., Esq.
General Counsel
Telephone: (914) 249-5301
Telecopier: (914) 249-4262
with a copy (which shall not constitute notice) to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attn: John A. Healy, Esq.
Telephone: (212) 878-8000
Telecopier: (212) 878-8375
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<PAGE> 38
(b) If to any National Data Member:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attn: Mr. Robert A. Yellowlees
Chief Executive Officer
Telephone: (404) 728-2000
Telecopier: (404) 728-3509
with a copy (which shall not constitute notice) to:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attn: E. Michael Ingram, Esq.
General Counsel
Telephone: (404) 728-2504
Telecopier: (404) 728-2551
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: B. Harvey Hill, Jr., Esq.
Telephone: (404) 881-7446
Telecopier: (404) 881-7777
or to such other address as the parties hereto may designate in writing to the
other in accordance with this Section 24.2. Any party may change the address
to which notices are to be sent by giving written notice of such change of
address to the other parties in the manner above provided for giving notice.
If delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery
is made and if delivered by facsimile transmission or mail as aforesaid, the
date on which such notice, request, instruction or document is received shall
be the date of delivery.
24.3 MODIFICATIONS. No change or modification of this Agreement or
the Articles shall be valid or binding upon the Members, nor shall any waiver
of any term or condition hereof, unless such change, modification or waiver
shall be in writing and signed by all of the Members.
24.4 BINDING EFFECT. This Agreement shall inure to the benefit of
and shall be binding upon the Members, their legal representatives, permitted
transferees, heirs, successors and permitted assigns.
24.5 COUNTERPARTS. For the convenience of the Members, this
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same instrument.
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<PAGE> 39
24.6 CONSTRUCTION. This Agreement shall be governed by, and
interpreted and construed in accordance with, the internal laws of the State of
Georgia, without reference to conflicts of laws or choice of laws provisions
thereof. The titles of the Articles and Sections herein have been inserted as
a matter of convenience of reference only and shall not control or affect the
meaning or construction of any of the terms or provisions herein.
24.7 EXHIBITS. Any and all exhibits which are referenced herein
and attached hereto are incorporated herein by this reference.
24.8 SECTIONS. References herein to specific sections shall be
deemed to refer to sections of this Agreement, unless otherwise provided.
24.9 TIME OF ESSENCE. Time is of the essence of this Agreement and
each and every provision hereof.
24.10 ADDITIONAL DOCUMENTS AND ACTS. In connection with this
Agreement, as well as all transactions contemplated by this Agreement, each
Member agrees to execute and deliver such additional acts as may be necessary
or appropriate to effectuate, carry out and perform all of the terms,
provisions and conditions of this Agreement, and all such transactions.
24.11 TERMS. Common nouns and pronouns shall be deemed to refer to
the masculine, feminine, neuter, singular, and plural, as the identity of the
person or persons, firm or corporation may in the context require. Any
reference to the Code or other statutes or laws shall include all amendments,
modifications, or replacements of the specific sections and provisions
concerned.
24.12 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
24.13 COMPLETE AGREEMENT. This Agreement together with the Purchase
Agreement constitutes the complete and exclusive statement of the agreement
between the Members with respect to the operation of the Company. This
Agreement supersedes all prior written and oral statements and no
representation, statement, or condition or warranty not contained in this
Agreement shall be binding on the Members or have any force or effect
whatsoever. It is agreed that no Member has rendered any services to or on
behalf of either the other Members or the Company and that no Member shall have
any rights with respect to any services which might be alleged to have been
rendered.
24.14 LEGEND. Each certificate representing a Membership Interest
shall be endorsed with the following legend:
PURCHASERS OF MEMBERSHIP INTERESTS ("INTERESTS") IN GLOBAL PAYMENT
SYSTEMS LLC (THE "COMPANY") WILL BE REQUIRED TO BEAR THE RISK OF THEIR
INVESTMENTS FOR AN INDEFINITE PERIOD OF TIME. THE INTERESTS HAVE NOT
BEEN REGISTERED (I) UNDER ANY STATE SECURITIES LAW (THE "STATE ACT"),
OR (II) UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "FEDERAL ACT"), AND NEITHER
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THE INTERESTS NOR ANY PART THEREOF MAY BE SOLD, EXCHANGED OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF
ARTICLE 18 OF THE OPERATING AGREEMENT OF THE COMPANY, WHICH RESTRICT
THE TRANSFER OF INTERESTS, AND (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER EACH APPLICABLE STATE ACT OR IN A
TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER SUCH STATE ACT OR
FOR WHICH SUCH REGISTRATION OTHERWISE IS NOT REQUIRED, AND (2)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE FEDERAL ACT
OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE
FEDERAL ACT OR FOR WHICH SUCH REGISTRATION OTHERWISE IS NOT REQUIRED.
THESE INTERESTS, IF CONSTITUTING SECURITIES UNDER APPLICABLE LAW, HAVE
BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION
10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973, AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
[Signatures on following page]
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<PAGE> 41
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to
be executed by its duly authorized signatory, effective as of the date first
set forth above.
MASTERCARD INTERNATIONAL
INCORPORATED
By: /s/ William I. Jacobs
---------------------------------
William I. Jacobs
Executive Vice President
GPS HOLDING LIMITED PARTNERSHIP
By: National Data Corporation,
its General Partner
By: /s/ E. Michael Ingram
---------------------------------
E. Michael Ingram
Senior Vice President
[signatures continued on the following page]
THIS IS THE SECOND SIGNATURE PAGE OF THAT CERTAIN OPERATING
AGREEMENT OF GLOBAL PAYMENT SYSTEMS LLC DATED AS OF MARCH 31, 1996
<PAGE> 42
NDC INTERNATIONAL, LTD.
By: /s/ E. Michael Ingram
---------------------------------
E. Michael Ingram
Secretary
NATIONAL DATA CORPORATION OF
CANADA, LTD.
By: /s/ E. Michael Ingram
---------------------------------
E. Michael Ingram
Secretary
NATIONAL DATA PAYMENT SYSTEMS, INC.
By: /s/ E. Michael Ingram
---------------------------------
E. Michael Ingram
Secretary
NATIONAL DATA CORPORATION
By: /s/ E. Michael Ingram
---------------------------------
E. Michael Ingram
Senior Vice President
THIS IS THE SECOND SIGNATURE PAGE OF THAT CERTAIN OPERATING
AGREEMENT OF GLOBAL PAYMENT SYSTEMS LLC DATED AS OF MARCH 31, 1996
<PAGE> 43
OPERATING AGREEMENT
EXHIBIT A
Pursuant to Section 8.1 of the Operating Agreement, the additional
charges for loans from any Entity in the National Data Group (or any Affiliate
thereof) shall be equal to the pro rata portion of out-of-pocket costs incurred
by such Entity (or such Affiliate) with respect to such loans including,
without limitation, the pro rata portion of any loan commitment, legal fees and
expenses and other fees.
<PAGE> 1
EXHIBIT 10(ii)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of this 1st day of April, 1996, among GLOBAL PAYMENT SYSTEMS
LLC (formerly named POS Acquisition Company LLC), a Georgia limited liability
company (the "Company"), and MASTERCARD INTERNATIONAL INCORPORATED, a Delaware
corporation ("MasterCard");
W I T N E S S E T H:
WHEREAS, MasterCard and National Data Corporation, a Delaware
corporation ("NDC"), jointly formed the Company pursuant to that certain Asset
Purchase and Contribution Agreement dated as of February 22, 1996, as amended
(the "Purchase Agreement") by contributing certain of the assets utilized in
their respective businesses and having the Company assume certain of the
liabilities of their respective businesses;
WHEREAS, NDC and MasterCard have respective ownership interests (the
"Membership Interests") in the Company of ninety-two and one-half percent
(92.5%) and seven and one-half percent (7.5%);
WHEREAS, pursuant to the Company's Operating Agreement dated as of
March 31, 1996 by and between MasterCard and NDC, the Membership Interests may
be converted into shares of stock (the "Shares") upon a Conversion (as defined
in the Operating Agreement), or the Membership Interests may be converted into
or exchanged for other equity securities ("Other Securities"), in connection
with a business combination or other extraordinary transaction with respect to
the Company; and
WHEREAS, it is in the best interests of the Company and MasterCard
that certain aspects of their relationship be regulated and that certain
registration rights be granted to MasterCard;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
(a) "Affiliate" means, as to any Person, any other Person which,
directly or indirectly, controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
means possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities,
or partnership or other ownership interests, by contract or otherwise).
<PAGE> 2
(b) "Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia or New York, New York
are authorized by law to close.
(c) "Commission" means the Securities and Exchange Commission and
any successor commission or agency having similar powers.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(e) "Holders" means MasterCard and its successors, transferees and
assigns, and any combination of them, and the term "Holder" shall mean any such
person.
(f) "IPO" means (i) a public offering of any class of equity
securities of the Issuer that is effected through a firm commitment
underwriting and pursuant to a registration statement declared effective under
the Securities Act (any such offering will be deemed to have occurred for
purposes of this Agreement on the date of the first closing at which the Issuer
receives payment for the securities offered and sold thereby); (ii) any
transaction which results in any class of equity securities of the Issuer being
publicly traded in an established market and (iii) any transaction as a result
of which the Issuer becomes subject (by law or by contract) to periodic
reporting obligations under the Exchange Act.
(g) "Issuer" means the Company and any successor entity, including
without limitation any issuer of Shares or Other Securities.
(h) "Minimum Registration Amount" means that number of Registrable
Securities which represent not less than 30% of the Registrable Securities then
outstanding.
(i) "NASD" means the National Association of Securities Dealers,
Inc.
(j) "Operating Agreement" means that certain Operating Agreement
by and between MasterCard and Ambassador dated as of March 31, 1996.
(k) "Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts and other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
(l) "Registrable Securities" means the Membership Interests, the
Shares and the Other Securities that are beneficially owned from time to time
by a Holder or Holders. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities (i) when a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall
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<PAGE> 3
have been disposed of in accordance with such registration statement, (ii) when
they shall have been distributed to the public pursuant to Rule 144 (or any
successor provision) or may be distributed to the public without registration
pursuant to Rule 144(k) (or any successor provision) under the Securities Act,
(iii) when they shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall have been
delivered by the Issuer and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any similar
state law then in force, (iv) when they shall have ceased to be outstanding.
(m) "Registration Expenses" means all expenses incident to the
Issuer's performance of or compliance with Sections 3.1 and 3.3, including,
without limitation, all printing expenses, messenger, telephone, duplication,
word processing and delivery expenses incurred by the Issuer, the fees and
disbursements of counsel for the Issuer and of its independent public
accountants, and the fees and expenses incurred in connection with the listing
of the securities to be registered on any securities exchange, but not
including such holders' proportionate share of underwriting discounts and
commissions, applicable transfer taxes, all registration and filing fees, all
fees and expenses of complying with securities or blue sky laws, fees and other
expenses associated with filings with the NASD and the fees and disbursements
of counsel retained by such holders.
(n) "Securities Act" means the Securities Act of 1933, as amended.
ARTICLE II
RESTRICTIONS ON TRANSFER
2.1. General Restrictions.
(a) Prior to any proposed transfer of any Registrable Securities
(other than under the circumstances described in Article III hereof), the
Holder thereof shall give written notice to the Issuer of its intention to
effect such transfer. Each such notice shall describe the manner of the
proposed transfer and, if requested by the Issuer, shall be accompanied by an
opinion of counsel reasonably satisfactory to the Issuer (it being agreed that
Rogers & Wells shall be acceptable to render such opinion) to the effect that
the proposed transfer may be effected without registration under the Securities
Act, whereupon such Holder shall be entitled to transfer the Registrable
Securities in accordance with the terms of its notice. Each certificate or
instrument transferred as above provided shall bear the legend set forth in
Section 2.1(b), except that such certificate or instrument shall not bear such
legend if (i) such transfer is in accordance with the provisions of Rule 144
under the Securities Act (or any other rule permitting public sale without
registration under the Securities Act) or (ii) the opinion of counsel referred
to above is to the further effect that the transferee and any subsequent
transferee would be entitled to transfer such Registrable Securities in a
public sale without registration under the Securities Act.
- 3 -
<PAGE> 4
(b) Except as provided in Section 2.1(a) and (c), each certificate
evidencing Registrable Securities issued to any Holder shall bear a legend in
substantially the following form:
PURCHASERS OF THESE SECURITIES WILL BE REQUIRED TO BEAR THE RISK OF
THEIR INVESTMENTS FOR AN INDEFINITE PERIOD OF TIME. THE SECURITIES
HAVE NOT BEEN REGISTERED (i) UNDER ANY STATE SECURITIES LAW (THE
"STATE ACT"), OR (ii) UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "FEDERAL ACT"), AND NEITHER THE SECURITIES NOR ANY
PART THEREOF MAY BE SOLD, EXCHANGED OR OTHERWISE TRANSFERRED EXCEPT
(1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER EACH
APPLICABLE STATE ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER SUCH STATE ACT OR FOR WHICH SUCH REGISTRATION
OTHERWISE IS NOT REQUIRED, AND (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE FEDERAL ACT OR IN A TRANSACTION WHICH
IS EXEMPT FROM REGISTRATION UNDER THE FEDERAL ACT OR FOR WHICH SUCH
REGISTRATION OTHERWISE IS NOT REQUIRED.
(c) In the event that any Registrable Securities shall cease to be
subject to the restrictions on transfer set forth in this Agreement, the Issuer
shall, upon the written request of the Holder thereof, issue to such Holder a
new certificate evidencing such Registrable Securities without the legend
required by Section 2.1(b) hereof endorsed thereon.
ARTICLE III
REGISTRATION RIGHTS
Section 3.1 Registration on Request of Holders.
(a) The Holders shall have the right, at any time following the
end of the eleventh month after an IPO, by written notice (the "Demand Notice")
given to the Issuer, to request the Issuer to register under and in accordance
with the provisions of the Securities Act all or any portion of the Registrable
Securities designated by such Holders, provided that the number of securities
to be registered are not less than the Minimum Registration Amount. Upon
receipt of any such Demand Notice, the Company shall promptly notify all other
Holders of the receipt of such Demand Notice and allow them the opportunity to
include Registrable Shares held by them in the proposed registration by
submitting their own Demand Notice. Notwithstanding the foregoing, the
following limitations shall be applicable to any such requested registration:
(i) The right to participate in the requested
registration shall be determined in accordance with Section 3.1(d) and
(e) hereof.
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<PAGE> 5
(ii) The Issuer shall be entitled on two occasions during
each Demand Period (as defined in Section 3.1(b)) to postpone the
filing of any registration statement otherwise required to be prepared
and filed by the Issuer pursuant to this Section 3.1 for a reasonable
period of time, but not in excess of 90 days (a "Delay Period"), if
any executive officer of the Issuer determines in good faith that in
such executive officer's reasonable judgment the registration and
distribution of the Registrable Securities covered or to be covered by
such registration statement would materially interfere with any
pending or contemplated material public offering of equity securities
by the Issuer or would require premature disclosure by the Issuer of
any material corporate development (including potential material
business combination and merger and acquisition transactions)
affecting the Issuer and the Issuer promptly gives the Holders written
notice of such determination, containing a general statement of the
reasons for such postponement and an approximation of the period of
the anticipated delay; provided, however, that (i) the aggregate
number of days include in all Delay Periods during any Demand Period
(as defined in Section 3.1(b)) shall not exceed the aggregate of (x)
90 days minus (y) the number of days occurring during all Hold Back
Periods (as defined in Section 3.3) (other than any Hold Back Period
with respect to an offering in which the Holders had the opportunity
to participate and in which the Holders were able to sell at least 50%
of the Registrable Securities that the Holders requested be included
in such Registration Statement) during the Demand Period, and (ii) a
period of at least 90 days shall elapse between the termination of any
Delay Period or Hold Back Period and the commencement of the next
succeeding Delay Period (regardless of whether the commencement of
such succeeding Delay Period occurs during the same Demand Period as
the preceding Delay Period). If the Issuer shall so postpone the
filing of a registration statement, the Holders of Registrable
Securities to be registered shall have the right to withdraw the
request for registration by giving written notice from the Holders of
a majority of the Registrable Securities that were to be registered to
the Issuer (x) within 30 days after receipt of the notice of
postponement or, if earlier, (y) the date such Delay Period is
terminated (and, in the event of such withdrawal, such request shall
not be counted for purposes of determining the number of requests for
registration to which the Holders of Registrable Securities are
entitled pursuant to this Section 3.1). The Issuer shall not be
entitled to initiate a Delay Period pursuant to Section 3.1 unless it
shall (A) concurrently prohibit sales by other security holders of the
Issuer under registration statements covering securities held by such
other security holders and (B) in accordance with the Issuer's
policies from time to time in effect, prohibit purchases and sales in
the open market by officers and directors (and persons holding
equivalent positions) of the Issuer.
(iii) Holders of a majority in number of the Registrable
Securities to be included in a registration statement pursuant to this
Section 3.1 may, at any time prior to the effective date of the
registration statement relating to such registration, revoke such
request by providing a written notice to the Issuer revoking such
request. The Holders who revoke such request shall reimburse the
Issuer for all its
- 5 -
<PAGE> 6
out-of-pocket expenses incurred in the preparation, filing and
processing of the registration statement through the date of
revocation; provided, however, that, if such revocation was based on
the Issuer's failure to comply in any material respect with its
obligations under this Agreement, such reimbursement shall not be
required. In the event the Holder revokes such request for
registration and such revocation was not based upon the Issuer's
failure to comply in any material respect with the obligations
hereunder, the Holders whose Registrable Securities were to be
included in such registration may not submit a Demand Request for 180
days after such revocation.
(b) Except as otherwise provided in this Agreement, the Issuer
shall be obligated to register Registrable Securities pursuant to this Section
3.1 on three occasions only; provided that (i) the Issuer shall only be
obligated to effect one registration of Registrable Securities pursuant to this
Section 3.1 during each 12 month period commencing following the end of the
eleventh month after an IPO (each such period referred to as "Demand Period");
and (ii) such obligation shall not be deemed satisfied if (x) the registration
statement does not become effective because of a material adverse change in the
Issuer; (y) such registration statement does become effective and the method of
disposition is an underwritten public offering and any of the Registrable
Securities included in such registration are not sold after execution of an
underwriting agreement with respect thereto because the obligations of any
underwriter to purchase any Registrable Securities are excused for any reason
other than default or consent by a Holder; or (iii) the number of Registrable
Securities to be sold is reduced by greater than 15 percent pursuant to Section
3.1(d) or (e).
(c) Subject to Section 3.1(a)(ii), from the date of receipt of a
Demand Notice from the Holders pursuant to Section 3.1(a) until the completion
of the period of distribution of the registration contemplated therein not to
exceed the period determined in accordance with Section 3.5(b), the Issuer will
not file with the Commission any other registration statement with respect to
its equity securities, whether for its own account or that of other security
holders, provided that the Issuer shall not be prohibited from filing any
registration statements on Forms S-4 or S-8 or any successor form. Except for
a period of 120 days from receipt of a Demand Notice from the Holders (or from
the end of any Delay Period if such Demand Notice has not been withdrawn or
revoked during such Delay Period) with respect to a requested registration
which provides for offers and sales of Registrable Securities on a continuous
or delayed basis pursuant to Rule 415 under the Securities Act (or any
successor provision), the restriction on the filing of a registration statement
by the Issuer set forth in this Section 3.1(c) shall not apply. The Issuer
shall be entitled to include in any registration statement referred to in this
Section 3.1 shares of its capital stock to be sold by the Issuer for its own
account or by other stockholders of the Issuer pursuant to other registration
rights agreements, provided the registration statement relates to an
underwritten public offering and in the opinion of the managing underwriter
such inclusion would not adversely affect the marketing of the securities to be
sold by the Holders of Registrable Securities.
- 6 -
<PAGE> 7
(d) Notwithstanding anything to the contrary in this Section 3.1,
the amount of Registrable Securities to be included in an underwritten public
offering may be reduced if and to the extent the managing underwriter shall be
of the opinion that such inclusion would adversely affect the marketing of the
Registrable Securities to be sold in such underwritten public offering
including the price at which such Registrable Securities will be sold. If such
a determination is made, (i) the number of shares to be included by the Issuer
and the number of shares to be included by stockholders other than the Holders
shall be reduced first; and then (ii) the number of Registrable Securities to
be sold shall be reduced as provided in Section 3.1(e).
(e) If a requested registration pursuant to this Section 3.1
involves an underwritten public offering and the number of Registrable
Securities requested to be included in such registration is required to be
reduced as described in Section 3.1(d), then the Issuer will reduce the number
of Registrable Securities requested to be included by each Holder pro rata in
the proportion that the percentage of Restricted Shares requested by that
Holder to be included bears to the total number of Registrable Securities
requested to be included in that registration; provided, however, that the
Holders requesting registration may agree among themselves a different
priority.
(f) If any requested registration pursuant to this Section 3.1 is
in the form of an underwritten public offering, the Holders of a majority in
number of the Registrable Securities to be included in the offering shall be
entitled, after consultation with the Issuer, to select the manager or
co-managers that will administer the offering.
3.2. Incidental Registration. If the Issuer at any time proposes
to register any of its equity securities under the Securities Act (other than
pursuant to a registration statement on Forms S-4 or S-8, or any successor
forms), whether or not for sale for its own account, and the registration form
to be used may be used for the registration of Registrable Securities, it shall
at such time give each Holder of Registrable Securities prompt written notice
of its intentions and, upon the written request of any such Holder made within
twenty (20) days after the receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by such Holder
and the intended method of disposition thereof), the Issuer shall use its
commercially reasonable efforts to effect the registration under the Securities
Act of all Registrable Securities which the Issuer has been so requested to
register by the Holders thereof, to the extent required to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, provided that:
(a) if, at any time after giving written notice of its intention
to register any securities and, prior to the effective date of the registration
statement filed in connection with such registration, the Issuer shall
determine for any reason not to register such securities, the Issuer may, at
its election, give written notice of such determination to each Holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith);
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<PAGE> 8
(b) if such registration shall be in connection with the Issuer's
initial underwritten public offering (the "Initial Offering"), the Holders
shall only be entitled to request registration of up to the number of
Registrable Securities equal to one-half of the number of Registrable
Securities (the "Maximum Number") which Maximum Number shall be reduced by the
number of Registrable Securities previously sold pursuant to exercise of the
Put Right (as defined in the Operating Agreement); and further provided, that
if the managing underwriter advises the Issuer that, in its view, the
registration and distribution of the number of equity securities of the Issuer
(including the Registrable Securities) which the Issuer, the Holders, and all
other persons intend to include in such registration exceeds the largest number
of equity securities which can be sold without materially adversely affecting
the marketing of the securities to be sold in such underwritten public offering
(including the price at which such securities may be sold)(the "Maximum
Offering Size"), the Issuer shall include in such registration, in the
following priority, up to the Maximum Offering Size: (i) first, the number of
Registrable Securities proposed to be sold by the Holders, which shall have
priority in being included in such registration, (ii) second, all securities
proposed to be sold by the Issuer the ), and (iii) third, the number of shares
proposed to be sold by all other security holders; and
(c) if such registration shall be in connection with an
underwritten public offering other than the Initial Offering and the managing
underwriter advises the Issuer that, in its view, the registration and
distribution of the number of equity securities of the Issuer (including the
Registrable Securities) which the Issuer, the Holders, and all other persons
intend to include in such registration exceeds the Maximum Offering Size, the
Issuer shall include in such registration, in the following priority, up to the
Maximum Offering Size: (i) first, all securities being sold by the Issuer,
which shall have priority in being included in such registration, (ii) second,
all securities proposed to be sold by the Holders and all security holders
other than Ambassador pro rata in proportion to the number of shares proposed
to be sold by them (or based on the proposed offering price of the total number
of securities included in such underwritten public offering requested to be
included by them if shares of common stock are not being offered), and (iii)
third, the securities proposed to be sold by Ambassador.
3.3. Holdback Agreements.
(a) If requested by the managing underwriter in connection with
any underwritten public offering by the Issuer, each Holder of Registrable
Securities, if requested by the managing underwriter of such public offering,
will agree not to effect any public sale or distribution under the Securities
Act, of any Registrable Securities, and not to effect any such public sale or
distribution of any other equity security of the Issuer or other security
convertible into or exchangeable or exercisable for any equity security of the
Issuer (in each case, other than as part of such public offering) during the
five (5) Business Days prior to, and during the 120-day period (or such longer
period as requested by the underwriters and agreed to by the Holders) which
begins on the effective date of such registration statement (each such period
being referred to in this Agreement as a "Hold
- 8 -
<PAGE> 9
Back Period"), provided that (i) Ambassador and the executive officers and
directors of the Issuer shall be bound by the same selling restrictions as are
applied to the Holders and the managing underwriter will not grant waiver of
such restrictions to any other Person unless waivers on substantially the same
terms are granted to the Holders; and (ii) each Holder of Registrable
Securities shall receive written notice of such registration at least two (2)
Business Days prior to the anticipated beginning of the five (5) day period
referred to above.
(b) The Issuer shall not effect any public sale or distribution of
any of its equity securities or of any security convertible into or
exchangeable or exercisable for any equity security of the Issuer (other than
any such sale or distribution of such securities in connection with any merger
or consolidation by the Issuer or any subsidiary of the Issuer or the
acquisition by the Issuer or a subsidiary of the Issuer of the capital stock or
substantially all the assets of any other person or in connection with an
employee stock ownership or other benefit plan) during the five (5) Business
Days prior to the effective date of such registration statement.
3.4 Designation of Underwriter. In the case of any registration
pursuant to the provisions of Section 3.2 hereof which is proposed to be
effected pursuant to a firm commitment underwriting, the Issuer shall select
the managing underwriter after consultation with MasterCard, and all Holders of
Registrable Securities participating in the registration shall sell their
Registrable Securities only pursuant to such underwriting.
3.5. Registration Procedures. If and whenever the Issuer is
required to use its commercially reasonable efforts to effect the registration
of any Registrable Securities under the Act, the Issuer shall:
(a) promptly, and in any event within 30 days, prepare and file
with the Commission a registration statement with respect to such securities,
make all required filings with the NASD and use commercially reasonable efforts
to cause such registration statement to become effective as promptly as
practicable thereafter;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
until such time as all of such securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement, but in no event for a period of more than
six months after such registration statement becomes effective; provided,
however, that in the case of a registration statement on Form S-3 (or any
successor form) which the Holders shall have requested providing for offers and
sales of Registrable Securities on a continuous or delayed basis pursuant to
Rule 415 under the Securities Act (or any successor provision), the Issuer's
obligations under this paragraph 3.5(b) shall not be subject to the foregoing
six month limitation;
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<PAGE> 10
(c) furnish to the Holders and to counsel (if any) selected by
Holders of a majority in number of the Registrable Securities covered by such
registration statement for review and comment (but not approval of the Holders
or their counsel except with respect to any statement in the registration
statement which relates to the Holder) copies of all documents proposed to be
filed with the Commission in connection with such registration;
(d) furnish to each Holder of the securities being sold such
number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits, except
that the Issuer shall not be obligated to furnish any Holder with more than two
copies of such exhibits), such number of copies of the prospectus included in
such registration statement (including such preliminary prospectus and any
summary prospectus), in conformity with the requirements of the Act, and such
other documents, as such Holder may reasonably request in order to facilitate
the disposition of the securities owned by such selling Holder;
(e) use its commercially reasonable efforts to register or qualify
such securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each seller of the
Registrable Securities shall reasonably request, and do any and all other acts
and things which may be necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the securities owned by
such seller, except that the Issuer shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified, or to consent to service of
process in any such jurisdiction other than process served in connection with
alleged violations by the Issuer of the securities laws of such jurisdiction;
(f) notify the Holders of any Registrable Securities covered by
such registration statement promptly and (if requested) confirm such notice in
writing, (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to such registration statement or
any post-effective amendment, when the same has become effective, (ii) of any
request by the Commission for amendments or supplements to such registration
statement or the related prospectus or for additional information regarding
such Holders, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or the initiation
of any proceedings for that purpose, (iv) of the receipt by the Issuer of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (v) of the happening of any event that requires the making of any
changes in such registration statement, prospectus or documents incorporated or
deemed to be incorporated therein by reference so that they will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading;
(g) otherwise use its commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its security
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<PAGE> 11
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months, but not more than eighteen (18) months,
beginning with the first month after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Act;
(h) use its commercially reasonable efforts to list such
securities on any stock market on which the Shares are then listed, if such
securities are not already so listed and if such listing is then permitted
under the rules of such exchange, and to provide a transfer agent and registrar
for such Registrable Securities not later than the effective date of such
registration statement.
(i) if such registration is with respect to an underwritten
offering undertaken pursuant to Section 3.1, take all appropriate and
commercially reasonable actions requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith (including those
reasonably requested by the managing underwriters) in order to expedite or
facilitate the disposition of such Registrable Securities;
(j) if such offering is in connection with an underwritten public
offering (i) use commercially reasonable efforts to obtain opinions of counsel
to the Issuer and updates thereof (which opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters and
their counsel) as to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such counsel and underwriters and have such opinions addressed to each selling
Holder of Registrable Securities, (ii) use commercially reasonable efforts to
obtain "cold comfort" letters and updates thereof from the independent
certified public accountants of the Issuer (and, if necessary, any other
independent certified public accountants of any subsidiary of the Issuer or of
any business acquired by the Issuer for which financial statements and
financial data are, or are required to be, included in the registration
statement), addressed to each selling Holder of Registrable Securities covered
by the registration statement (unless such accountants shall be prohibited from
so addressing such letters by applicable standards of the accounting
profession) and each of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings, (iii) if requested, provide
indemnification provisions and procedures substantially to the effect set forth
in Section 3.7 hereof with respect to all parties to be indemnified pursuant to
said Section (the above shall be done at each closing under such underwriting
or similar agreement, or as and to the extent required thereunder).
For purposes of paragraph (b) of this Section 3.5, (i) the period of
distribution of securities in an underwritten public offering shall be deemed
to extend until the later of the date each underwriter has completed the
distribution of all securities purchased by it and the termination of the
period in which prospectuses must be delivered under Rule 174 of the Securities
Act, and (ii) the period of distribution of securities in any other
registration shall be deemed to extend until the earlier of the sale of all
securities covered thereby and one hundred twenty (120) days after the
effective date thereof; provided, however, in the
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<PAGE> 12
case of a registration statement on Form S-3 (or any successor provision) which
the Holders shall have requested providing for offers and sales pursuant to
Rule 415 under the Securities Act (or any successor provision), the Issuer
shall comply with its obligations under Section 5(b) until the Registrable
Securities covered by such registration statement have been disposed of, but no
more than a period of one year following the filing of such registration
statement, it being understood and agreed that the Issuer may suspend its
obligations to amend or supplement such registration statement for reasonable
periods of time not to exceed 90 days from time to time (a "Suspension
Period") if any executive officer of the Issuer determines in good faith that
such amendment or supplement would require disclosure of any material corporate
development affecting the Issuer and the Issuer promptly gives notice to the
Holders of the Registrable Securities included in such Registration Statement
of such determination. The one year period during which the Issuer is obligated
to maintain such registration statement shall be extended for the duration of
any Suspension Period.
The Issuer may require each Holder of any securities as to which any
registration is being effected to furnish to the Issuer such information
regarding such Holder and the distribution of such securities as the Issuer may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such Holder agrees to furnish promptly to the
Issuer all information required to be disclosed in order to make the
information previously furnished to the Issuer by such Holder not materially
misleading.
In connection with each registration pursuant to Section 3.1 or 3.2
hereof covering an underwritten public offering, the Issuer and each selling
Holder agrees to enter into a written agreement with the managing underwriter
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between major underwriters and companies of the Issuer's size and investment
stature and selling security holders, provided that such agreement shall not
contain any such provision applicable to the Issuer or any Holder which is
inconsistent with the provisions hereof.
By acquisition of Registrable Securities, each Holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Issuer of the happening of any event of the kind described in
Section 3.5(f) hereof, such Holder shall promptly discontinue such Holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3.5(f)
hereof. If so directed by the Issuer, each Holder of Registrable Securities
shall deliver to the Issuer (at the Issuer's expense) all copies, other than
permanent file copies, then in such Holder's possession of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Issuer shall give any such notice, the period
mentioned in Section 3.5(b) shall be extended by the number of days during the
period from and including the date of the giving of such notice to and
including the date when each seller of any Registrable Securities covered by
such registration statement shall
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<PAGE> 13
have received the copies of the supplemented or amended prospectus contemplated
by Section 3.5(f).
3.6. Expenses. Except as otherwise expressly provided in this
Agreement, the Issuer shall pay all Registration Expenses in connection with
each registration of Registrable Securities.
3.7. Indemnification by the Issuer. The Issuer shall indemnify and
hold harmless each Holder of Registrable Securities, each person who controls
such Holder of Registrable Securities within the meaning of either Section 15
of the Act or Section 20(a) of the Exchange Act and the officers, directors,
employees and agents of each such Holder and control Person (each such Person
being sometimes hereinafter referred to as an "Indemnified Holder") from and
against all losses, claims, damages, liabilities, costs (including costs of
preparation and attorneys' fees) and expenses (including expenses of
investigation) (collectively, "Losses") arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue statement or omission
or allegation thereof based upon information relating to such Indemnified
Holder and furnished in writing to the Issuer by such Indemnified Holder
expressly for use therein. This indemnity shall be in addition to any
liability which the Issuer may otherwise have.
If any action or proceeding (including any governmental investigation
or inquiry) shall be brought or asserted against an Indemnified Holder in
respect of which indemnity may be sought from the Issuer, such Indemnified
Holder shall promptly notify the Issuer in writing, and the Issuer shall, at
its expense, assume the defense thereof, including the employment of counsel
satisfactory to such Indemnified Holder and the payment of all expenses. The
failure so to notify the Issuer shall not relieve the Issuer from any
obligation or liability except to the extent (but only to the extent) that it
shall finally be determined by a court of competent jurisdiction (which
determination is not subject to appeal) that the Issuer has been materially
prejudiced by such failure. Such Indemnified Holder shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Holder unless (i) the Issuer has agreed to pay such fees and
expenses or (ii) the Issuer shall have failed promptly to assume the defense of
such action or proceeding or has failed to employ counsel satisfactory to such
Indemnified Holder or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Holder and the
Issuer or an Affiliate of the Issuer, and there may be one or more defenses
available to such Indemnified Holder which are additional to, or in conflict
with, those available to the Issuer or such Affiliate (in which case, if such
Indemnified Holder notifies the Issuer in writing that it elects to employ
separate counsel at the expense of the Issuer, the Issuer shall have the right
to approve such counsel (and
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<PAGE> 14
such approval may not be unreasonably withheld) and the Issuer shall not have
the right to assume the defense of such action or proceeding on behalf of such
Indemnified Holder, it being understood, however, that the Issuer shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for such Indemnified Holder. The Issuer shall not
be liable for any settlement of any such action or proceeding effected without
its written consent, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such action or proceeding, the Issuer
agrees to indemnify and hold harmless such Indemnified Holders from and against
any loss or liability by reason of such settlement or judgment. Whether or not
such defense is assumed by the Issuer, no Indemnified Holder shall be subject
to any liability for any settlement made without its consent (but such consent
shall not be unreasonably withheld). The Issuer shall not consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
Indemnified Holder of a release, in form and substance satisfactory to the
Indemnified Holder, from all liability in respect of such proceeding for which
such Indemnified Holder would be entitled to indemnification hereunder (whether
or not any Indemnified Holder is a party thereto).
3.8. Indemnification by Holders of Registrable Securities. Each
Holder of Registrable Securities agrees (severally but not jointly) to
indemnify and hold harmless the Issuer, its directors and officers and each
Person, if any, who controls the Issuer within the meaning of either Section 15
of the Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuer to such Holders, but only to the extent
that such Losses arise from information relating to such Holder furnished in
writing by such holder expressly for use in any registration statement or
prospectus, or any amendment or supplement thereto, or any preliminary
prospectus. In case any action or proceeding shall be brought against the
Issuer or its directors or officers or any such controlling person, in respect
of which indemnity may be sought against a Holder of Registrable Securities,
such Holder shall have the rights and duties given to the Issuer and the Issuer
or its directors or officers or such controlling person shall have the rights
and duties given to each Holder by the preceding paragraph.
3.9. Contribution. If the indemnification provided for in this
Article III is unavailable to or insufficient to hold harmless an indemnified
party under Section 3.7 or Section 3.8 hereof (other than by reason of
exceptions or other limitations provided in those Sections) in respect of any
Losses referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative benefits received by the Issuer on the one hand and the Holders on the
other hand from their sale of Registrable Securities or if such allocation is
not permitted by applicable law, the relative fault of the Issuer on the one
hand and of the Indemnified Holder on the other in connection with the
statements or omissions which resulted in such losses, claims,
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<PAGE> 15
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of the Issuer on the one hand and of the
Indemnified Holder on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 3.7, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Issuer and each Holder of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 3.9
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
3.10. Participation in Public Offering. No Holder may participate
in any public offering under Section 3.2 unless such Holder (a) agrees to sell
such Holder's Registrable Securities on the basis provided in any underwriting
arrangements complying with the requirements set forth in Section 3.5,
including provisions for indemnification of underwriters and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and this Agreement.
3.11. Other Indemnification. Indemnification similar to that
specified herein (with appropriate modifications) shall be given by the Issuer
and each Holder of Registrable Securities with respect to any required
registration or other qualification of securities under any state law or
regulation or governmental authority other than the Securities Act.
3.12 Public Reports. If the Issuer shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act, the
Issuer thereafter shall use its commercially reasonable efforts to file the
reports required to be filed by it under the Exchange Act on a timely basis.
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<PAGE> 16
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company represents, warrants and covenants to each Holder as
follows:
(a) The execution, delivery and performance of this Agreement by
the Company have been duly authorized by all requisite action and will not
violate any provision of law, any order of any court or other agency of
government, the Articles of Organization or Operating Agreement, or any
provision of any indenture, agreement or other instrument to which it or any of
its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
(c) Neither the Company nor any successor Issuer will consummate a
Conversion or other transaction resulting in the issuance of Shares or Other
Securities unless and until proper provision shall have been made for the
assumption and performance by the successor Issuer of all the Company's and
Issuer's obligations under this Agreement.
ARTICLE V
MISCELLANEOUS
5.1. Headings. The headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning or construction
of any provisions thereof.
5.3. No Inconsistent Agreements. The Issuer will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement. The Issuer has not previously entered into any continuing agreement
with respect to any of its debt or equity securities granting any registration
rights to any person.
5.4. Remedies. The Issuer acknowledges and agrees that in the
event of any breach of this agreement by it, the Holders would be irreparably
harmed and could not be made whole by monetary damages. The Issuer accordingly
agrees (a) to waive the defense in any action for specific performance that a
remedy at law would be adequate, and (b) that the Holders, in addition to any
other remedy to which they may be entitled at law or in equity, shall be
entitled to compel specific performance of this Agreement.
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<PAGE> 17
5.5. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein, and there are no restrictions, promises,
representations, warranties, covenants, or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
herein or therein. This Agreement supersedes all prior agreements and
understandings between the parties hereto with respect to the subject matter
hereof.
5.6. Notices. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be delivered (a) in
person or by courier, (b) mailed by first class registered or certified mail,
or (c) delivered by facsimile transmission, as follows:
(a) If to MasterCard:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: William I. Jacobs
Executive Vice President
Telephone: (914) 249-5200
Telecopier: (914) 249-5475
with a copy (which shall not constitute notice) to:
MasterCard International Incorporated
2000 Purchase Street
Purchase, New York 10577-2509
Attention: Robert E. Norton, Jr.
General Counsel
Telephone: (914) 249-5301
Telecopier: (914) 249-4262
with a copy (which shall not constitute notice) to:
Rogers & Wells
200 Park Avenue
New York, New York 10166-0153
Attention: John A. Healy, Esq.
Telephone: (212) 878-8281
Telecopier: (212) 878-8375
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<PAGE> 18
(b) If to the Issuer:
Global Payment Systems LLC
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: Mr. Robert A. Yellowlees
Chief Executive Officer
Telephone: (404) 728-2000
Telecopier: (404) 728-3509
with a copy (which shall not constitute notice) to:
Global Payment Systems LLC
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: E. Michael Ingram, Esq.
Telephone: (404) 728-2504
Telecopier: (404) 728-2551
with a copy (which shall not constitute notice) to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: B. Harvey Hill, Jr., Esq.
Telephone: (404) 881-7446
Telecopier: (404) 881-7777
or to such other address as the parties hereto may designate in writing to the
other in accordance with this Section 5.6. Any party may change the address to
which notices are to be sent by giving written notice of such change of address
to the other parties in the manner above provided for giving notice. If
delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery
is made and if delivered by facsimile transmission or mail as aforesaid, the
date on which such notice, request, instruction or document is received shall
be the date of delivery.
5.7. Applicable Law. The laws of the State of Georgia shall govern
the interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under applicable principles of
conflicts of laws.
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<PAGE> 19
5.8. Severability. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
5.9. Successors, Assigns, Transferees. The provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, successors, and assigns. Without limiting the
generality of the foregoing, the registration rights conferred herein on the
Holders of the Registrable Securities shall inure to the benefit of any and all
subsequent Holders from time to time of the Registrable Securities, unless
otherwise agreed to by such subsequent Holders; provided that such subsequent
Holders promptly provide the Issuer with their names and addresses.
5.10. Defaults. A default by any party to this Agreement in such
party's compliance with any of the conditions or covenants hereof or
performance of any of the obligations of such party hereunder shall not
constitute a default by any other party.
5.11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.
5.12. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
5.13. Recapitalization, etc. In the event that any capital stock or
other securities are issued in respect of, in exchange for, or in substitution
of, any Registrable Securities by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Issuer, appropriate adjustment shall be made in the provisions
of this Agreement so as to fairly and equitably preserve, as far as
practicable, the original rights of the Holders under this Agreement.
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<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HOLDER:
MASTERCARD INTERNATIONAL
INCORPORATED
By: /s/ William I. Jacobs
---------------------------------
William I Jacobs
Executive Vice President
THE COMPANY:
GLOBAL PAYMENT SYSTEMS LLC
By: GPS Holding Limited Partnership,
a Member
By: National Data Corporation, its
General Partner
By: /s/ E. Michael Ingram
---------------------------------
E. Michael Ingram
Senior Vice President
THIS IS THE SIGNATURE PAGE OF THAT CERTAIN REGISTRATION RIGHTS
AGREEMENT DATED AS OF APRIL 1, 1996
<PAGE> 1
EXHIBIT 10(iii)
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of July 16, 1996, among GLOBAL PAYMENT
SYSTEMS LLC, a limited liability company organized under the laws of Georgia,
the LENDERS listed on the signature pages hereof, and THE FIRST NATIONAL BANK
OF CHICAGO, as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section
1.01 shall, for all purposes of this Agreement and any amendment hereto (except
as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
Lender for the relevant Absolute Rate Interest Period, the rate of interest per
annum (rounded to the nearest 1/10,000 of 1%) offered by such Lender and
accepted by the Borrower pursuant to Section 2.04(f).
"Absolute Rate Advance" means a Borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Absolute Rate
Interest Period.
"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.04.
"Absolute Rate Interest Period" means, with respect to an Absolute
Rate Advance or Absolute Rate Loan, a period of not less than 7 and not more
than 180 days commencing on a Business Day selected by the Borrower pursuant to
this Agreement, but in no event extending beyond the Facility Termination Date.
If an Absolute Rate Interest Period would end on a day which is not a Business
Day, such Absolute Rate Interest Period shall end on the next succeeding
Business Day.
"Absolute Rate Loan" means a Loan which bears interest at the Absolute
Rate.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation, limited liability
company or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such
<PAGE> 2
power only by reason of the happening of a contingency) or a majority (by
percentage or voting power) of the outstanding ownership interests of a
partnership or limited liability company.
"Advance" means a Borrowing hereunder (or, in the case of a Committed
Advance, the conversion or continuation thereof) consisting of the aggregate
amount of the several Loans made by some or all of the Lenders to the Borrower
on the same Borrowing Date (or date of conversion or continuation), of the same
Type (or, in the case of a Competitive Bid Advance, on the same interest basis)
and, in the case of a Fixed Rate Advance, for the same Interest Period, and
includes both a Committed Advance and a Competitive Bid Advance.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person"),
(ii) any Person (other than the Borrower) which is controlled by or is under
common control with a Controlling Person, or (iii) any Person of which the
Borrower owns, directly or indirectly, 20% or more of the common stock or
equivalent equity interests. As used herein, the term "control" means
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means The First National Bank of Chicago, a national banking
association organized under the laws of the United States of America, in its
capacity as agent for the Lenders hereunder, its successors and permitted
assigns in such capacity, and any other Person appointed as Agent in accordance
with Section 8.09.
"Agent's Letter Agreement" means that certain letter agreement dated
as of May 16, 1996, between the Borrower and the Agent relating to certain fees
from time to time payable by the Borrower to the Agent, together with all
amendments and supplements thereto.
"Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as reduced from time to time pursuant to the terms hereof.
"Agreement" means this Credit Agreement, together with all amendments
and supplements hereto and all restatements hereof.
"Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the
sum of the Federal Funds Effective Rate for such day plus 1/2%.
"Applicable Margin" means, at any date of determination thereof with
respect to any Committed Advance, the respective rates per annum for such
Committed Advance calculated in accordance with Section 2.05(c).
"Approved Investment Policy" means, with respect to the Borrower or
any Subsidiary, the cash investments policy formally approved by its Board of
Directors from time to time, a copy of
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<PAGE> 3
which policy as in effect on the Closing Date has been delivered to the Agent,
together with any subsequent amendment, exception or supplement thereto, to the
extent a copy of such amendment, exception or supplement has previously been
delivered to the Agent.
"Asset Purchase and Contribution Agreement" means the Asset Purchase
and Contribution Agreement dated as of February 22, 1996, among Mastercard
International Incorporated, National Data Corporation, and POS Acquisition
Company LLC, as amended by Amendment No. 1 to Asset Purchase and Contribution
Agreement dated as of February 22, 1996, among National Data Corporation,
Mastercard International Incorporated, Global Payment Systems LLC, GPS Holding
Limited Partnership, National Data Corporation of Canada, Ltd., National Data
Payment Systems, Inc., and NDC International, Ltd.
"Assignee" has the meaning set forth in Section 9.08(c)
"Assignment Agreement" means an Assignment Agreement executed in
accordance with Section 9.08(c) in the form attached hereto as Exhibit F.
"Authorized Officer" means any of the President, Chief Financial
Officer, Treasurer, or Secretary of the Borrower, acting singly.
"Borrower" means Global Payment Systems LLC, a Georgia limited
liability company, and its successors and permitted assigns (including, without
limitation, a business corporation organized under the laws of any state of the
United States succeeding to all the assets and businesses of Global Payment
Systems LLC in a Permitted LLC Conversion).
"Borrowing" means a borrowing hereunder consisting of Loans made to
the Borrower pursuant to Article II.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Business Day" means (i) with respect to any borrowing, payment or
rate selection of Eurodollar Advances, a day (other than a Saturday or Sunday)
on which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.
"Capital Expenditures" means, without duplication, any expenditures
for any purchase or other acquisition of any asset that would be classified as
a fixed or capital asset on a consolidated balance sheet of the Borrower and
its Subsidiaries prepared in accordance with GAAP.
"Capital Stock" means any nonredeemable capital stock (or in the case
of a limited liability company, the members' equivalent equity interest) of the
Borrower or any Consolidated
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<PAGE> 4
Subsidiary (to the extent issued to a Person other than the Borrower), whether
common or preferred.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee that would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response Compensation
and Liability Act, 42 U.S.C. Section 9601 et. seq. and its implementing
regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response Compensation
and Liability Inventory System established pursuant to CERCLA.
"Closing Date" means the date on which all conditions set forth in
Section 3.01 are fulfilled.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor Federal tax code.
"Commitment" means, for each Lender, the obligation of such Lender to
make Committed Loans not exceeding the applicable amount set forth opposite its
signature below or as set forth in any Notice of Assignment relating to any
assignment that has become effective pursuant to Section 9.08(c), as such
amount may be reduced from time to time pursuant to the terms hereof.
"Commitment Reduction Date" means July 16, 1997.
"Committed Advance" means a borrowing hereunder (or conversion or
continuation thereof) consisting of the aggregate amount of the several
Committed Loans made by the Lenders to the Borrower, on the same Borrowing Date
(or date of conversion or continuation), of the same Type and, in the case of a
Fixed Rate Committed Advance, for the same Interest Period.
"Committed Borrowing Notice" is defined in Section 2.03(f).
"Committed Loan" means, with respect of a Lender, a Loan made by such
Lender pursuant to Section 2.03.
"Committed Note" means a promissory note, substantially in the form of
Exhibit "A-1" hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Lender and payable to the
order of such Lender in the amount of its Commitment, including any amendment,
modification, renewal or replacement of such promissory note.
"Competitive Bid Advance" means a borrowing hereunder consisting of
the aggregate amount of the several Competitive Bid Loans made by some or all
of the Lenders to the Borrower on the same Borrowing Date, at the same interest
basis, and for the same Interest Period.
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"Competitive Bid Borrowing Notice" is defined in Section 2.04(f).
"Competitive Bid Loan" means, with respect of a Lender, a Loan made by
such Lender pursuant to Section 2.04.
"Competitive Bid Margin" means the margin above or below the
applicable Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan,
expressed as a percentage (rounded to the nearest 1/100 of 1%) to be added or
subtracted from such Eurodollar Base Rate.
"Competitive Bid Note" means a promissory note, substantially in the
form of Exhibit "A-2" hereto, with appropriate insertions, duly executed and
delivered to the Agent by the Borrower for the account of a Lender and payable
to the order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"Competitive Bid Quote" means a Competitive Bid Quote, substantially
in the form of Exhibit "D" hereto, completed and delivered by a Lender to the
Agent in accordance with Section 2.04(d).
"Competitive Bid Quote Request" means a Competitive Bid Quote Request,
substantially in the form of Exhibit "B" hereto, completed and delivered by the
Borrower to the Agent in accordance with Section 2.04(b).
"Compliance Certificate" means a compliance certificate, substantially
in the form of Exhibit "E" hereto, signed by the chief financial officer or
chief accounting officer of the Borrower, showing the calculations necessary to
determine compliance with this Agreement and stating that no Default or Event
of Default exists, or if any Default or Event of Default exists, stating the
nature and status thereof.
"Consolidated Cash Flow" means, as at any date of determination for
any period, with respect to the Borrower and its Consolidated Subsidiaries on a
consolidated basis for such period and in accordance with GAAP, Consolidated
Net Income, plus (to the extent deducted in calculating such Consolidated Net
Income) the sum of (i) depreciation and amortization, (ii) non-cash interest on
the Subordinated Distribution Notes, and (iii) all other non-cash charges (less
non-cash gains).
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Fixed Charges" means, without duplication, as at any
date of determination for any period, with respect to the Borrower and its
Consolidated Subsidiaries on a consolidated basis for such period and in
accordance with GAAP, the sum of (i) Consolidated Interest Expense, and (ii)
all payment obligations of the Borrower and its Consolidated Subsidiaries under
all Operating Leases and rental agreements.
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"Consolidated Funded Debt" means at any date, with respect to the
Borrower and its Consolidated Subsidiaries on a consolidated basis as of such
date and in accordance with GAAP, Consolidated Debt (excluding therefrom,
however, (i) Guarantees of Debt of the Borrower or any Subsidiary,
respectively, by the Borrower or any Subsidiary, and (ii) the aggregate
principal amount of the Subordinated Distribution Notes up to a maximum sum
equal to the Subordinated Distribution Threshold).
"Consolidated Interest Expense" means, as at any date of determination
for any period, without duplication, interest, whether expensed or capitalized,
in respect of outstanding Consolidated Debt of the Borrower and its
Consolidated Subsidiaries during such period; provided, that, in determining
Consolidated Interest Expense, (i) interest on Debt referred to in clauses
(viii) and (ix) of the definition of Debt shall only be included to the extent
that the Borrower's or any Consolidated Subsidiary's obligation to pay such
Debt is not contingent in nature, as of any date of determination, and (ii)
non-cash interest provided in the Subordinated Distribution Notes shall only be
included to the extent payable in respect of Subordinated Distribution Notes in
excess of the Subordinated Distribution Threshold.
"Consolidated Net Income" means, as at any date of determination for
any period, the Net Income of the Borrower and its Consolidated Subsidiaries
determined on a consolidated basis for such period, but excluding (i)
extraordinary items (including, without limitation, the Excluded Organizational
Charges) and (ii) any equity interests of the Borrower or any Subsidiary in the
unremitted earnings of any Person that is not a Subsidiary.
"Consolidated Net Worth" means, at any date, the shareholders' (or in
the case of a limited liability company, the members') equity of the Borrower
and its Consolidated Subsidiaries, as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries
prepared in accordance with GAAP, but excluding any Redeemable Preferred Stock
of the Borrower or any of its Consolidated Subsidiaries. Shareholders' equity
generally would include, but not be limited to (i) the par or stated value of
all outstanding Capital Stock, (ii) capital surplus, (iii) retained earnings,
and (iv) various deductions such as (A) purchases of treasury stock, (B)
valuation allowances, (C) receivables due from an employee stock ownership
plan, (D) employee stock ownership plan debt guarantees, and (E) translation
adjustments for foreign currency transactions.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated financial statements as of such
date.
"Contribution Agreement" means a Contribution Agreement substantially
in the form of Exhibit "J" executed and delivered by one or more Subsidiary
Guarantors in favor of the Agent, for the ratable benefit of the Lenders,
together with all amendments and supplements thereto.
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"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.03(g).
"Corporate Base Rate" means a rate per annum equal to the corporate
base rate of interest announced by First Chicago from time to time, changing
when and as said corporate base rate changes.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under
Capitalized Leases, (v) all obligations of such Person to reimburse any bank or
other Person in respect of amounts payable under a banker's acceptance, (vi)
all Redeemable Preferred Stock of such Person, (vii) all obligations
(regardless of whether contingent or absolute) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (ix) all Debt
of others Guaranteed by such Person, and (x) the present value of estimated
future payments payable in connection with earn-out agreements executed in
connection with Acquisitions by such Person, all as determined in accordance
with GAAP.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Dollars" or "$" means dollars in lawful currency of the United States
of America.
"Environmental Authorizations" means all licenses, permits, orders,
approvals, notices, registrations or other legal prerequisites for conducting
the business of the Borrower required by any Environmental Requirement.
"Environmental Authority" means any foreign, federal, state, local or
regional government that exercises any form of jurisdiction or authority under
any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments, decrees or
orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
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"Environmental Liabilities" means any liabilities, whether accrued,
contingent or otherwise, arising from and in any way associated with any
Environmental Requirements.
"Environmental Notices" means notice from any Environmental Authority
or by any other person or entity, of possible or alleged noncompliance with or
liability under any Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental Authority or
from any other person or entity for correction of any, violation of any
Environmental Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" means releases as defined in CERCLA or under
any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement relating to
health, safety or the environment and applicable to the Borrower, any
Subsidiary or the Properties, including but not limited to any such requirement
under CERCLA or similar state legislation and all federal, state and local
laws, ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Eurodollar Advance" means a Eurodollar Committed Advance or a
Eurodollar Bid Rate Advance, as applicable.
"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Competitive Bid Margins pursuant to Section 2.04.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for
the relevant Eurodollar Interest Period, the rate determined by the Agent to be
the rate at which First Chicago offers to place deposits in U.S. dollars with
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, in the approximate amount of First Chicago's relevant
Eurodollar Loan, or, in the case of a Eurodollar Bid Rate Advance, the amount
of the Eurodollar Bid Rate Advance requested by the Borrower, and having a
maturity approximately equal to such Eurodollar Interest Period.
"Eurodollar Bid Rate" means, with respect to a Eurodollar Bid Rate
Loan made by a Lender for the relevant Eurodollar Interest Period, the sum of
(i) the Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by
such Lender and accepted by the Borrower pursuant to Section 2.04(f).
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"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which
bears interest at a Eurodollar Bid Rate.
"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate.
"Eurodollar Committed Advance" means a Committed Advance which bears
interest at a Eurodollar Rate.
"Eurodollar Committed Loan" means a Committed Loan which bears
interest at a Eurodollar Rate.
"Eurodollar Interest Period" means, with respect to a Eurodollar
Advance, a period of one, two, three or six months commencing on a Business Day
selected by the Borrower pursuant to this Agreement. Such Eurodollar Interest
Period shall end on the day which corresponds numerically to such date one,
two, three or six months thereafter, provided, however, that if there is no
such numerically corresponding day in such next, second, third or sixth
succeeding month, such Eurodollar Interest Period shall end on the last
Business Day of such next, second, third or sixth succeeding month. If a
Eurodollar Interest Period would otherwise end on a day which is not a Business
Day, such Eurodollar Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day falls in a
new calendar month, such Eurodollar Interest Period shall end on the
immediately preceding Business Day.
"Eurodollar Loan" means a Eurodollar Committed Loan or a Eurodollar
Bid Rate Loan, as applicable.
"Eurodollar Rate" means, with respect to a Eurodollar Committed
Advance for the relevant Eurodollar Interest Period, the sum of (i) the
quotient of (a) the Eurodollar Base Rate applicable to such Eurodollar Interest
Period, divided by (b) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Eurodollar Interest Period, plus (ii) the
Applicable Margin. The Eurodollar Rate shall be rounded to the next higher
multiple of 1/16 of 1% if the rate is not such a multiple.
"Event of Default" has the meaning set forth in Section 7.01.
"Excluded Organizational Charges" means those restructuring and asset
impairment charges, as described in the April 29, 1996 press release issued by
National Data Corporation, in an aggregate amount not to exceed $22,500,000
(before taxes) to the extent, if any, such charges may be reflected on the
Borrower's financial statements for the Fiscal Quarter ending May 31, 1996 or
August 31, 1996, in connection with the organization of the Borrower and
related transactions.
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"Facility Termination Date" means July 16, 1999 or any earlier date on
which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.
"Federal Funds Effective Rate" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 10 a.m.
(Chicago time) on such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent in its
sole discretion.
"Financial Institution" has the meaning ascribed thereto in O.C.G.A.
Section 7-1-4(21) as of the date hereof.
"First Chicago" means The First National Bank of Chicago in its
individual capacity, and its successors.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Rate" means the Absolute Rate, the Eurodollar Rate, or the
Eurodollar Bid Rate.
"Fixed Rate Advance" means an Advance which bears interest at a Fixed
Rate.
"Fixed Rate Committed Advance" means a Committed Advance which bears
interest at a Fixed Rate.
"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.
"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate for such day, in each case changing when and as the
Alternate Base Rate changes.
"Floating Rate Advance" means a Committed Advance which bears interest
at the Floating Rate.
"Floating Rate Loan" means a Committed Loan which bears interest at the
Floating Rate.
"Funded Debt to Cash Flow Ratio" means, as of the end of any Fiscal
Quarter, the ratio of Consolidated Funded Debt as of such date to Consolidated
Cash Flow for the period indicated.
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"GAAP" means generally accepted accounting principles applied on a
basis consistent with those which, in accordance with Section 1.02, are to be
used in making the calculations for purposes of determining compliance with the
terms of this Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to provide collateral security, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
(ii) entered into for the purpose of assuring in any other manner the obligee
of such Debt or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part), provided that
the term Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Materials" includes, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. Section 6901 et. seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or
in any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976,
or in any applicable state or local law or regulation or (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Income Available for Fixed Charges" means, as at any date of
determination for any period, without duplication, Consolidated Net Income plus
the sum of the following items (to the extent deducted in calculating such
Consolidated Net Income): (i) Consolidated Interest Expense, (ii) all payment
obligations of the Borrower and its Consolidated Subsidiaries for such period
under all operating leases and rental agreements, and (iii) taxes on income,
all determined with respect to the Borrower and its Consolidated Subsidiaries
for such period on a consolidated basis and in accordance with GAAP.
"Interest Period" means an Absolute Rate Interest Period or a
Eurodollar Interest Period.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of obligations or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
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"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes, substantially in the form of Exhibit "C" hereto,
completed and delivered by the Agent to the Lenders in accordance with Section
2.04(c).
"Lender" means each bank or other financial institution or lender
listed on the signature pages hereof as having a Commitment, and its successors
and permitted assigns.
"Lending Installation" means, with respect to a Lender or the Agent,
any office, branch, subsidiary or affiliate of such Lender or the Agent.
"Lending Office" means, as to each Lender, its office located at its
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as such Lender may
hereafter designate as its Lending Office by notice to the Borrower and the
Agent.
"Level I Status" exists at any date if the Funded Debt to Cash Flow
Ratio is less than 1.0 to 1.0.
"Level II Status" exists at any date if the Funded Debt to Cash Flow
Ratio is greater than or equal to 1.0 to 1.0, but less than 2.0 to 1.0.
"Level III Status" exists at any date if the Funded Debt to Cash Flow
Ratio is greater than or equal to 2.0 to 1.0, but less than 3.0 to 1.0.
"Level IV Status" exists at any date if the Funded Debt to Cash Flow
Ratio is greater than or equal to 3.0 to 1.0.
"Lien" means, with respect to any asset, any mortgage, deed to secure
debt, deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement, which has the practical effect of constituting a
security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law. For
the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"LLC Conversion" means the transaction or series of related
transactions (including, without limitation, a merger, reorganization,
liquidation, or transfer of members' interests or assets) pursuant to which a
business corporation organized under the laws of a state of the United States,
the shares of which are owned by the members of the Borrower immediately prior
to such transaction(s) in the same proportion as their respective members'
interests in the Borrower immediately following such transaction(s), succeeds
to all assets and businesses of the Borrower as in existence immediately prior
to such transaction(s).
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"LLC Conversion Date" means the date on which a Permitted LLC
Conversion is consummated and effective.
"LLC Operating Agreement" means the Operating Agreement of Global
Payment Systems LLC Limited Liability Company dated as of March 31, 1996, among
Mastercard International Incorporated, GPS Holding Limited Partnership,
National Data Corporation of Canada, Ltd., National Data Corporation, NDC
International, Ltd., and National Data Payment Systems, Inc., as amended and in
effect from time to time.
"Loan" means, with respect to a Lender, a loan made by such Lender
pursuant to Article II (or, in the case of a Committed Loan, any conversion or
continuation thereof).
"Loan Documents" means this Agreement and the Notes and the other
documents and agreements contemplated hereby and executed by the Borrower in
favor of the Agent or any Lender.
"Long-Term Debt" means at any date any Consolidated Debt which matures
(or the maturity of which may at the option of the Borrower or any Consolidated
Subsidiary be extended such that it matures) more than one year after such
date.
"Margin Stock" means "margin stock" as defined in Regulations G, T, U
or X.
"Material Adverse Effect" means, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (a) the
financial condition, operations, business, properties or prospects of Borrower
and its Consolidated Subsidiaries taken as a whole, (b) the rights and remedies
of the Agent or the Lenders under the Loan Documents, or the ability of the
Borrower or any Subsidiary Guarantor to perform its obligations under the Loan
Documents to which it is a party (such obligations to include, without
limitation, payment of the Obligations and observance and performance of the
covenants set forth in Articles V and VI hereof), as applicable, or (c) the
legality, validity or enforceability of any Loan Document.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a) (3) of ERISA.
"Net Income" means, as applied to any Person for any period, the
aggregate amount of net income of such Person, after taxes and, in the case of
the Borrower, after deducting all payments made pursuant to Section 6.04(a),
for such period, as determined in accordance with GAAP.
"Net Proceeds of Capital Stock" means any proceeds received or deemed
received by the Borrower or a Consolidated Subsidiary in respect of the
issuance or sale of Capital Stock or conversion of any Debt to Capital Stock,
after deducting therefrom all reasonable and customary
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<PAGE> 14
costs and expenses incurred by the Borrower or such Consolidated Subsidiary
directly in connection with such issuance or sale of such Capital Stock or
conversion of such Debt.
"Notes" means, collectively, the Committed Notes and the Competitive
Bid Notes; and "Note" means any one of the Notes.
"Notice of Assignment" means a Notice of Assignment to be delivered
pursuant to the provisions of the Assignment Agreement.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the
Lenders or to any Lender, the Agent or any indemnified party hereunder arising
under the Loan Documents.
"Operating Lease" of a Person means any lease of Property (other than
a Capitalized Lease) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of
the lessor) of one year or more.
"Operating Subsidiary" means any Subsidiary which owns or acquires
assets.
"Participant" has the meaning set forth in Section 9.08(b).
"Payment Date" means the first Business Day of each calendar month,
commencing August 1, 1996.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted LLC Conversion" means an LLC Conversion effected and
implemented in accordance with the conditions and requirements of Section
6.10(b).
"Person" means an individual, a corporation, a limited liability
company, a partnership, an unincorporated association, a trust or any other
entity or organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by a member of the
Controlled Group for employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions.
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"Properties" means, as of the date of any determination, all real
property currently owned, leased or otherwise used or occupied by the Borrower
or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any preferred stock
(or in the case of a limited liability company, the members' equivalent equity
interest) issued by such Person which is at any time prior to the Facility
Termination Date either (i) mandatorily redeemable (by sinking fund or similar
payments or otherwise) or (ii) redeemable at the option of the holder thereof.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of
the notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"Required Lenders" means at any time Lenders having more than 50% of
the Aggregate Commitment or, if the Aggregate Commitment is no longer in
effect, Lenders holding more than 50% of the aggregate outstanding principal
amount of the sum of the Loans.
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"Reserve Requirement" means, with respect to a Eurodollar Interest
Period, the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under Regulation D
on new non-personal time deposits of $100,000 or more with a maturity equal to
that of such Eurocurrency liabilities (in the case of Eurodollar Advances).
"Restricted Investments" means cash investments in U.S. dollars in (i)
U.S. Government securities and United States agency securities, including
repurchase agreements with a short-term rating of A1 by Standard & Poor's
Corporation ("S&P") or P1 by Moody's Investors Services, Inc. ("Moody's"), (ii)
municipal securities rated AAA by S&P or AA by Moody's, (iii) certificates of
deposit issued by a bank rated A1 by S&P or P1 by Moody's, (iv) commercial
paper rated A1 by S&P or P1 by Moody's, (v) tender bonds or variable rate
demand bonds supported by a letter of credit issued by a United States bank
whose long-term certificates of deposit are rated AA by S&P or Aa by Moody's,
and (vi) auction rate municipal securities (35-day auction cycle) with
long-term debt ratings of AAA by S&P or Aaa by Moody's, provided that all such
cash investments shall be made in accordance with the guidelines and other
requirements of the Approved Investment Policy as in effect on the Closing
Date, including without limitation, the requirement that an amount estimated to
meet a minimum seven day cash requirement of the Borrower be held in overnight
funds, and without giving effect to any exceptions to any such guidelines or
requirements.
"Restricted Payment" means (i) any dividend or other distribution on
any of the Borrower's Capital Stock (except dividends payable solely in its
Capital Stock) or (ii) any payment on account of the purchase, redemption,
retirement or acquisition of (a) any of the Borrower's Capital Stock (except as
acquired upon the conversion thereof into additional Capital Stock) or (b) any
option, warrant or other right to acquire any of the Borrower's Capital Stock.
"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"Status" means, at any date of determination, whichever of Level I
Status, Level II Status, Level III Status, or Level IV Status exists at such
time.
"Subordinated Distribution Notes" means, collectively, the
subordinated promissory notes in the form of Exhibit "G" hereto (including any
"payment-in-kind" promissory notes issued thereunder) issued by the Borrower to
its members as distributions under the LLC Operating Agreement.
"Subordinated Distribution Threshold" means an aggregate principal
amount of Subordinated Distribution Notes (excluding any "payment-in-kind"
promissory notes issued thereunder) equal to $70,000,000.
"Subsidiary" of a Person means (i) any corporation more than 50% of
the outstanding securities having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and
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<PAGE> 17
one or more of its Subsidiaries, or (ii) any partnership, limited liability
company, association, joint venture or similar business organization more than
50% of the ownership interests having ordinary voting power of which shall at
the time be so owned or controlled. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of the Borrower.
"Subsidiary Guarantee" means a Subsidiary Guarantee substantially in
the form of Exhibit "I" executed and delivered by one or more Subsidiary
Guarantors in favor of the Agent, for the ratable benefit of the Lenders,
together with all amendments and supplements thereto.
"Subsidiary Guarantor" means an Operating Subsidiary which has
executed a Subsidiary Guarantee in connection herewith or will execute a
Subsidiary Guarantee pursuant to Section 5.03.
"Third Parties" means all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business and on a temporary basis.
"Transferee" has the meaning set forth in Section 9.08(d)
"Type" means (i) with respect to any Advance, its nature as an
Absolute Rate Advance, a Eurodollar Bid Rate Advance, a Eurodollar Committed
Advance, or a Floating Rate Advance and (ii) with respect to any Committed
Advance, its nature as a Eurodollar Committed Advance or a Floating Rate
Advance.
"Wholly Owned Subsidiary" means any Subsidiary all of the capital
stock (or in the case of a limited liability company, the members' equivalent
equity interest) or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the
Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared in accordance with GAAP, applied on a basis consistent (except for
changes concurred in by the Borrower's independent public accountants or
otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Lenders unless with respect to any such change
concurred in by the Borrower's independent public accountants or required by
GAAP, in determining compliance with any of the provisions of any of the Loan
Documents: (i) the Borrower shall have objected to determining such compliance
on such basis at the time of delivery of such financial statements, or (ii) the
Required Lenders shall so object in writing within 30 days after the delivery
of such financial statements, in either of which events such calculations shall
be made on a basis consistent with those used in the preparation of the latest
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<PAGE> 18
financial statements as to which such objection shall not have been made
(which, if objection is made in respect of the first financial statements
delivered under Section 5.01, shall mean the financial statements referred to
in Section 4.04).
SECTION 1.03. References. Unless otherwise indicated, references
in this Agreement to "Articles", "Exhibits", "Schedules", "Sections" and other
Subdivisions are references to Articles, exhibits, schedules, sections and
other subdivisions hereof.
SECTION 1.04. Use of Defined Terms. All terms defined in this
Agreement shall have the same defined meanings when used in any of the other
Loan Documents, unless otherwise defined therein or unless the context shall
require otherwise.
SECTION 1.05. Terminology.
(a) General. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural, and the
plural shall include the singular. Titles of Articles and Sections in this
Agreement are for convenience only, and neither limit nor amplify the
provisions of this Agreement.
(b) Special Corporate Terminology. All references to
corporate nature, the capital stock, stockholders, directors, articles or
certificate of incorporation and by-laws, or such similar terms, of any Person
shall, if such Person is a limited liability company, refer respectively to the
limited liability company nature, the equity interest, members, managing
member, articles of organization and operating agreement of such Person. In
addition, after a Permitted LLC Conversion, all references to the Borrower's
limited liability status, equity interest, members, managing member, articles
of organization and operating agreement shall be deemed to refer respectively
to Borrower's corporate nature, the capital stock, stockholders, directors,
articles or certificate of incorporation and by-laws.
ARTICLE II
THE CREDITS
SECTION 2.01. Description of Facility. Upon the terms and subject
to the conditions set forth in this Agreement, the Lenders hereby grant to the
Borrower a revolving credit facility pursuant to which: (i) each Lender
severally agrees to make Committed Loans to the Borrower in accordance with
Section 2.03; and (ii) each Lender may, in its sole discretion, make bids to
make Competitive Bid Loans to the Borrower in accordance with Section 2.04;
provided that in no event may the aggregate principal amount of all outstanding
Advances (including both the Committed Advances and the Competitive Bid
Advances) exceed the Aggregate Commitment.
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<PAGE> 19
SECTION 2.02. Availability of Facility. Subject to the terms and
conditions of this Agreement, the revolving credit facility is available from
the date of this Agreement to the Facility Termination Date, and the Borrower
may borrow, repay and reborrow at any time prior to the Facility Termination
Date.
SECTION 2.03. Committed Advances.
(a) Commitment. From and including the date of this
Agreement and prior to the Facility Termination Date, each Lender severally
agrees, on the terms and conditions set forth in this Agreement, to make
Committed Loans to the Borrower from time to time in amounts not to exceed in
the aggregate at any one time outstanding the amount of its Commitment then in
effect. The Commitments to lend hereunder shall expire on the Facility
Termination Date.
(b) Required Payments; Termination. Any outstanding
Committed Advances and all other unpaid Obligations shall be paid in full by
the Borrower on the Facility Termination Date.
(c) Ratable Loans. Each Committed Advance hereunder
shall consist of Committed Loans made from the several Lenders ratably in
proportion to the ratio that their respective Commitments bear to the Aggregate
Commitment.
(d) Types of Committed Advances. The Committed Advances
may be Eurodollar Committed Advances, Floating Rate Advances or a combination
thereof, selected by the Borrower in accordance with Sections 2.03(f) and
2.03(g). The Committed Advances shall be evidenced by the Committed Notes.
(e) Minimum Amount of Each Committed Advance; Maximum
Number of Advances. Each Eurodollar Committed Advance shall be in the minimum
amount of $1,000,000 (and in multiples of $500,000 if in excess thereof), and
each Floating Rate Advance shall be in the minimum amount of $500,000 (and in
multiples of $100,000 if in excess thereof); provided, however, that any
Floating Rate Advance may be in the amount of the unused Aggregate Commitment,
and any Eurodollar Committed Advance may be in the amount of the unused
Aggregate Commitment so long as such Advance is not less than $1,000,000; and
provided, further, that the total combined number of Committed Advances and
Competitive Bid Advances outstanding at any time shall not exceed ten (10)
(with all Floating Rate Advances for purposes of the foregoing limitation being
deemed to constitute a single Advance).
(f) Method of Selecting Types and Interest Periods for
New Committed Advances. The Borrower shall select the Type of Committed
Advance and, in the case of each Eurodollar Committed Advance, the Interest
Period applicable to each such Eurodollar Committed Advance from time to time.
The Borrower shall give the Agent irrevocable notice (a "Committed Borrowing
Notice") not later than 10:00 a.m. (Chicago time) at least one Business Day
before the Borrowing Date of each Floating Rate Advance and three Business Days
before the Borrowing Date for each Eurodollar Committed Advance, specifying:
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<PAGE> 20
(i) the Borrowing Date, which shall be a Business Day, of such
Committed Advance,
(ii) the aggregate amount of such Committed Advance,
(iii) the Type of Committed Advance selected, and
(iv) in the case of each Eurodollar Committed Advance, the Interest
Period applicable thereto.
Not later than noon (Chicago time) on each Borrowing Date, each Lender shall
make available its Committed Loan or Loans, in funds immediately available in
Chicago to the Agent at its address specified pursuant to Article IX. The
Agent will make the funds so received from the Lenders available to the
Borrower at the Agent's aforesaid address not later than 2:00 p.m. (Chicago
time) on such date.
(g) Conversion and Continuation of Outstanding Committed
Advances. Floating Rate Advances shall continue as Floating Rate Advances
unless and until such Floating Rate Advances are converted into Eurodollar
Committed Advances. Each Eurodollar Committed Advance of any Type shall
continue as a Eurodollar Committed Advance of such Type until the end of the
then applicable Interest Period therefor, at which time such Eurodollar
Committed Advance shall be automatically converted into a Floating Rate Advance
unless the Borrower shall have given the Agent a Conversion/Continuation Notice
requesting that, at the end of such Interest Period, such Eurodollar Committed
Advance either continue as a Eurodollar Committed Advance of such Type for the
same or another Interest Period or be converted into a Committed Advance of
another Type. Subject to the terms of Section 2.03(e), the Borrower may elect
from time to time to convert all or any part of a Committed Advance of any Type
into any other Type or Types of Committed Advances; provided that any
conversion of any Eurodollar Committed Advance shall be made on, and only on,
the last day of the Interest Period applicable thereto. The Borrower shall
give the Agent irrevocable notice (a "Conversion/Continuation Notice") of each
conversion of a Committed Advance or continuation of a Eurodollar Committed
Advance not later than 10:00 a.m. (Chicago time) at least one Business Day, in
the case of a conversion into a Floating Rate Advance, or three Business Days,
in the case of a conversion into or continuation of a Eurodollar Committed
Advance, prior to the date of the requested conversion or continuation,
specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of Committed Advance(s) which is
[are] to be converted or continued; and
(iii) the amount and Type(s) of Committed Advance(s) into which such
Committed Advance is to be converted or continued and, in the
case of a conversion into or continuation
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<PAGE> 21
of a Eurodollar Committed Advance, the duration of the
Interest Period applicable thereto.
SECTION 2.04. Competitive Bid Advances.
(a) Competitive Bid Option; Repayment of Competitive Bid
Advances. In addition to Committed Advances pursuant to Section 2.03, but
subject to the terms and conditions of this Agreement (including, without
limitation, the limitations set forth in Section 2.01 as to the maximum
aggregate principal amount of all outstanding Advances hereunder and as to the
maximum combined number of Committed Advances and Competitive Bid Advances that
may be outstanding at any time hereunder), the Borrower may, as set forth in
this Section 2.04, request the Lenders, prior to the Facility Termination Date,
to make offers to make Competitive Bid Advances to the Borrower. Each Lender
may, but shall have no obligation to, make such offers and the Borrower may,
but shall have no obligation to, accept any such offers in the manner set forth
in this Section 2.04. Competitive Bid Advances shall be evidenced by the
Competitive Bid Notes. Each Competitive Bid Advance shall be repaid in full by
the Borrower on the last day of the Interest Period applicable thereto.
(b) Competitive Bid Quote Request. When the Borrower
wishes to request offers to make Competitive Bid Loans under this Section 2.04,
the Borrower shall transmit to the Agent by telex or facsimile transmission a
Competitive Bid Quote Request so as to be received not later than (x) 10:00
a.m. (Chicago time) at least five Business Days prior to the Borrowing Date
proposed therein, in the case of a Eurodollar Auction, or (y) 10:00 a.m.
(Chicago time) at least one Business Day prior to the Borrowing Date proposed
therein, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Agent shall have mutually agreed
upon and shall have notified to the Lenders not later than the date of the
Competitive Bid Quote Request for the first Eurodollar Auction or Absolute Rate
Auction for which such change is to be effective), specifying:
(i) the proposed Borrowing Date for the proposed Competitive Bid
Advance;
(ii) the aggregate principal amount of such Competitive Bid
Advance, which shall be in the minimum amount of $5,000,000
and in multiples of $1,000,000 if in excess thereof);
(iii) whether the Competitive Bid Quotes requested are to set forth
a Competitive Bid Margin or an Absolute Rate, or both; and
(iv) the Interest Period applicable thereto.
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for a Eurodollar Auction and an Absolute Rate Auction in a
single Competitive Bid Quote Request. No Competitive Bid Quote Request shall
be given within five Business Days (or, upon reasonable
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<PAGE> 22
prior notice to the Lenders, such other number of days as the Borrower and the
Agent may agree upon) of any other Competitive Bid Quote Request. A
Competitive Bid Quote Request that does not conform substantially to the format
of Exhibit "B" hereto shall be rejected, and the Agent shall promptly notify
the Borrower of such rejection by telex or facsimile transmission.
(c) Invitation for Competitive Bid Quotes. Promptly upon
receipt of a Competitive Bid Quote Request that is not rejected pursuant to
Section 2.04(b), the Agent shall send to each of the Lenders by telex or
facsimile transmission an Invitation for Competitive Bid Quotes, which shall
constitute an invitation by the Borrower to each Lender to submit Competitive
Bid Quotes offering to make the Competitive Bid Loans to which such Competitive
Bid Quote Request relates in accordance with this Section 2.04.
(d) Submission and Contents of Competitive Bid Quotes.
(i) Each Lender may, in its sole discretion, submit a Competitive
Bid Quote containing an offer or offers to make Competitive
Bid Loans in response to any Invitation for Competitive Bid
Quotes. Each Competitive Bid Quote must comply with the
requirements of this Section 2.04(d) and must be submitted to
the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Article IX not later than (i) 1:00
p.m. (Chicago time) at least four Business Days prior to the
proposed Borrowing Date in the case of a Eurodollar Auction,
or (ii) 9:00 a.m. (Chicago time) on the proposed Borrowing
Date in the case of an Absolute Rate Auction (or, in either
case, such other time or date as the Borrower and the Agent
shall have mutually agreed up and shall have notified to the
Lenders not later than the date of the first Eurodollar
Auction or Absolute Rate Auction for which such change is to
be effective); provided that Competitive Bid Quotes submitted
by the Agent (or any Affiliate of the Agent) in the capacity
of a Lender may be submitted, and may only be submitted, if
the Agent or such Affiliate notifies the Borrower of the terms
of the offer or offers contained therein not later than (x) 15
minutes prior to the deadline for the other Lenders, in the
case of a Eurodollar Auction, or (y) 15 minutes prior to the
deadline for the other Lenders, in the case of an Absolute
Rate Auction. Subject to Articles III and VII, any
Competitive Bid Quote so made shall be irrevocable except with
the written consent of the Agent given on the instructions of
the Borrower.
(ii) Each Competitive Bid Quote shall in any case specify:
(A) the proposed Borrowing Date, which shall be the same
as that set forth in the applicable Invitation for
Competitive Bid Quotes;
(B) the principal amount of the Competitive Bid Loan for
which each such offer is being made, which principal
amount (1) may be greater than, less than or equal to
the Commitment of the quoting Lender, but in no case
greater than
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<PAGE> 23
the unutilized Aggregate Commitment, (2) must be at
least $2,500,000 (and an integral multiple of
$500,000 if in excess thereof), and (3) may not
exceed the principal amount of Competitive Bid Loans
for which offers were requested;
(C) in the case of a Eurodollar Auction, the Competitive
Bid Margin offered for each such Competitive Bid Loan;
(D) in the case of an Absolute Rate Auction, the Absolute
Rate offered for each such Competitive Bid Loan;
(E) the minimum or maximum amount, if any, of the
Competitive Bid Loan which may be accepted by the
Borrower;
(F) the applicable Interest Period; and
(G) the identity of the quoting Lender.
(iii) The Agent shall reject any Competitive Bid Quote that:
(A) is not substantially in the form of Exhibit "D"
hereto or does not specify all of the information
required by Section 2.04(d)(ii);
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Competitive
Bid Quotes; or
(D) arrives after the time set forth in Section
2.04(d)(i).
(iv) If any Competitive Bid Quote shall be rejected pursuant to
Section 2.04(d)(iii), then the Agent shall notify the relevant
Lender of such rejection as soon as practicable.
(e) Notice to Borrower. The Agent shall, as soon as
practicable but in any event prior to 10:00 a.m. on the date specified in
Section 2.04(f) for the Borrower's acceptance or rejection of offers, notify
the Borrower of the terms (i) of any Competitive Bid Quote submitted by a
Lender that is in accordance with Section 2.04(d) and (ii) of any Competitive
Bid Quote that is in accordance with Section 2.04(d) and amends, modifies or is
otherwise inconsistent with a previous Competitive Bid Quote submitted by such
Lender with respect to the same Competitive Bid Quote Request. Any such
subsequent Competitive Bid Quote shall be disregarded by the Agent unless such
subsequent Competitive Bid Quote specifically states that it is submitted
solely to correct a manifest error in such former Competitive Bid Quote. The
Agent's notice to the Borrower shall
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<PAGE> 24
specify the aggregate principal amount of Competitive Bid Loans for which
offers have been received for each Interest Period specified in the related
Competitive Bid Quote Request and the respective principal amounts and
Competitive Bid Margins or Absolute Rates, as the case may be, so offered.
(f) Acceptance and Notice by Borrower. Subject to the
receipt of the notice from the Agent referred to in Section 2.04(e), not later
than (i) 10:00 a.m. (Chicago time) at least three Business Days prior to the
proposed Borrowing Date, in the case of a Eurodollar Auction, or (ii) 10:00
a.m. (Chicago time) on the proposed Borrowing Date, in the case of an Absolute
Rate Auction (or in either case, such other time or date as the Borrower and
the Agent shall have mutually agreed upon and shall have notified to the
Lenders not later than the date of the Competitive Bid Quote Request for the
first Eurodollar Auction or Absolute Rate Auction for which such change is to
be effective), the Borrower shall notify the Agent of the Borrower's acceptance
or rejection of the offers so notified to it pursuant to Section 2.04(e);
provided, however, that the failure by the Borrower to give such notice to the
Agent shall be deemed to be a rejection by the Borrower of all such offers. In
the case of acceptance, such notice (a "Competitive Bid Borrowing Notice")
shall specify the aggregate principal amount of offers for each Interest Period
that are accepted. The Borrower may accept or reject any Competitive Bid Quote
in whole or in part (subject to the terms of Section 2.04(d)(ii)(E)); provided
that:
(i) the aggregate principal amount of each Competitive Bid Advance
may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request;
(ii) the principal amount of each Competitive Bid Advance must be
at least $5,000,000 (and an integral multiple of $1,000,000 if
in excess thereof);
(iii) acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins or Absolute Rates, as the
case may be; and
(iv) the Borrower may not accept any offer of the type described in
Section 2.04(d)(iii) or that otherwise fails to comply with
the requirements of this Agreement in respect of obtaining a
Competitive Bid Loan under this Agreement.
(g) Allocation by the Agent. If offers are made by two
or more Lenders with the same Competitive Bid Margins or Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in
respect of which offers are permitted to be accepted for the related Interest
Period, the principal amount of Competitive Bid Loans in respect of which such
offers are accepted shall be allocated by the Agent among such Lenders as
nearly as possible (in such multiples as the Agent may deem appropriate) in
proportion to the aggregate principal amount of such offers; provided, however,
that no Lender shall be allocated a portion of any Competitive Bid Advance
which is less than the minimum amount which such Lender has indicated that it
is willing to accept. Allocations by the Agent of the amounts of Competitive
Bid Loans shall be conclusive in the absence of manifest error. The Agent
shall promptly, but in any
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event on the same Business Day, in the case of Eurodollar Bid Rate Advances,
and by 11:00 a.m. (Chicago time) on the same Business Day, in the case of
Absolute Rate Advances, notify each Lender of its receipt of a Competitive Bid
Borrowing Notice and the aggregate principal amount of each Competitive Bid
Advance allocated to each participating Lender.
(h) Funding of Competitive Bid Advances. Not later than
noon (Chicago time) on each Borrowing Date for a Competitive Bid Advance, each
Lender participating in such Advance shall make available its Competitive Bid
Loan or Loans, in funds immediately available in Chicago to the Agent at its
address specified pursuant to Article IX. The Agent will make the funds so
received from such Lenders available to the Borrower at the Agent's aforesaid
address not later than 2:00 p.m. (Chicago time) on such date.
SECTION 2.05. General Facility Terms.
(a) Fees; Reductions in Aggregate Commitment.
(i) Fees. The Borrower agrees to pay to the Agent the following
fees:
(A) For the account of each Lender, a facility fee equal
to the total Commitment of such Lender in effect from
time to time (whether or not used by the Borrower)
multiplied by the applicable per annum facility fee
rate set forth in Section 2.05(c), payable quarterly
in arrears on the first Business Day of each Fiscal
Quarter, commencing September 1, 1996, and on the
Facility Termination Date.
(B) For the account of the Agent, the fees due under the
Agent's Letter Agreement payable as provided therein.
(ii) Voluntary Reductions in Aggregate Commitment. The Borrower
may permanently reduce the Aggregate Commitment in whole, or
in part ratably among the Lenders in integral multiples of
$5,000,000, upon at least five Business Days' written notice
to the Agent, which notice shall specify the amount of any
such reduction, provided, however, that the amount of the
Aggregate Commitment may not be reduced below the aggregate
principal amount of the outstanding Advances.
(iii) Automatic Reductions in Commitments. On the Commitment
Reduction Date, the Aggregate Commitment shall automatically
be reduced to $50,000,000 and the Commitment of each Lender
shall automatically be reduced to the respective amounts
specified on the signature pages for such Lenders at the end
of this Agreement. If on such date the aggregate principal
amount of all outstanding Advances exceeds $50,000,000, the
Borrower shall immediately pay all such
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<PAGE> 26
excess amount, together with all applicable amounts specified
in Section 2.09 payable as a result of such payment.
(b) Optional Principal Payments. The Borrower may from
time to time pay, without penalty or premium, any outstanding Floating Rate
Advance in full, or in part in a minimum aggregate amount of $500,000 or any
integral multiple of $100,000 in excess thereof, upon one Business Day's prior
notice to the Agent. Any Fixed Rate Advance may be paid in full, or in part in
a minimum aggregate amount of $1,000,000 or any integral multiple of $500,000
in excess thereof, upon three Business Days' prior notice to the Agent (i)
without penalty or premium if paid on the last day of an applicable Interest
Period, and (ii) with payment of all applicable amounts specified in Section
2.09 if paid on any other day.
(c) Applicable Margin and Facility Fee Rates. The
Applicable Margin set forth below with respect to each Eurodollar Committed
Advance and the applicable rates set forth below for the facility fees payable
pursuant to Section 2.05(a) shall be subject to adjustment (upwards or
downwards, as appropriate) based on Borrower's Status as at the end of each
fiscal quarter in accordance with the table set forth below. The Borrower's
Status as at the last day of each fiscal quarter shall be determined from the
then most recent annual or quarterly financial statements of the Borrower
delivered by the Borrower pursuant to Section 5.01(a) or 5.01(b) and the
Compliance Certificate delivered by the Borrower pursuant to Section 5.01(c).
The adjustment, if any, to the Applicable Margin shall be effective with
respect to all Eurodollar Committed Advances made, and all conversions to and
continuations of Eurodollar Committed Advances occurring, on and after the next
Business Day following the delivery to the Lenders of such financial statements
and Compliance Certificate (the "Adjustment Effective Date"); the adjustment,
if any, to the facility fee rates shall be effective on the Adjustment
Effective Date. No adjustment in Applicable Margin shall be effective with
respect to Eurodollar Committed Advances outstanding on and prior to the
Adjustment Effective Date until such Advances are subsequently continued or
converted as Eurodollar Committed Advances with a new Interest Period. In the
event that the Borrower shall at any time fail to furnish to the Lenders such
financial statements and Compliance Certificate within the applicable time
limitations specified by Section 5.01, then the maximum Applicable Margin and
facility fee rates shall apply from the date of such failure until the next
Business Day after such financial statements and Compliance Certificate are so
delivered. Notwithstanding anything to the contrary contained herein, the
Borrower's Status as of the date of this Agreement shall be deemed to be Level
II Status and shall be adjusted as set forth above.
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<PAGE> 27
<TABLE>
<CAPTION>
Applicable
Margin for
Eurodollar
Committed Facility
Status Advances Fee Rates
------ ---------- ---------
<S> <C> <C>
Level I .250% .125%
Level II .300% .150%
Level III .400% .200%
Level IV .500% .250%
</TABLE>
(d) Changes in Interest Rate, etc. Each Floating Rate
Advance shall bear interest on the outstanding principal amount thereof, for
each day from and including the date such Floating Rate Advance is made or is
converted from a Fixed Rate Committed Advance into a Floating Rate Advance
pursuant to Section 2.03(f) to but excluding the date it becomes due or is
converted into a Fixed Rate Committed Advance pursuant to Section 2.03(f)
hereof, at a rate per annum equal to the Floating Rate for such day. Changes
in the rate of interest on that portion of any Committed Advance maintained as
a Floating Rate Advance will take effect simultaneously with each change in the
Alternate Base Rate. Each Fixed Rate Advance shall bear interest on the
outstanding principal amount thereof from and including the first day of the
Interest Period applicable thereto to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such Fixed
Rate Advance. No Interest Period may end after the Facility Termination Date.
The Lenders shall have no obligation to fund any Fixed Rate Advance with an
Interest Period selected by the Borrower such that it would be necessary to
repay a portion of a Fixed Rate Advance prior to the last day of the
applicable Interest Period in order to make a mandatory repayment required
pursuant to Section 2.05(a)(iii).
(e) Rates Applicable After Default. Notwithstanding
anything to the contrary contained in Section 2.03(e) or 2.03(f), during the
continuance of a Default or Event of Default the Required Lenders may, at their
option, by notice to the Borrower (which notice may be revoked at the option of
the Required Lenders notwithstanding any provision of Section 9.06(a) requiring
unanimous consent of the Lenders to changes in interest rates), declare that no
Committed Advance may be made as, converted into or continued as a Fixed Rate
Committed Advance. During the continuance of an Event of Default, the Required
Lenders may, at their option, by notice to the Borrower (which notice may be
revoked at the option of the Required Lenders notwithstanding any provision of
Section 9.06(a) requiring unanimous consent of the Lenders to changes in
interest rates), declare that (i) each Fixed Rate Advance shall bear interest
for the remainder of the applicable Interest Period at the rate otherwise
applicable to such Interest Period plus 2% per annum and (ii) each Floating
Rate Advance shall bear interest at a rate per annum equal to the Floating Rate
otherwise applicable to the Floating Rate Advance plus 2% per annum.
(f) Method of Payment. All payments of the Obligations
hereunder shall be made, without setoff, deduction, or counterclaim, in
immediately available funds to the Agent at the Agent's address specified
pursuant to Article IX, or at any other Lending Installation of the Agent
specified in writing by the Agent to the Borrower, by noon (local time at the
Lending
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Installation) on the date when due and the Agent will promptly distribute to
each Lender its ratable share of each such payment received by the Agent for
the account of the Lenders; provided, however, that if on any date the Borrower
shall pay less than the full amount of Obligations owing on such date, such
payment shall be distributed to the Lenders ratably based upon the ratio that
the aggregate amount of Obligations owing to each such Lender on such date
bears to the aggregate amount of Obligations owing to all the Lenders on such
date. Each payment delivered to the Agent for the account of any Lender shall
be delivered promptly by the Agent to such Lender in the same type of funds
that the Agent received at its address specified pursuant to Article IX or at
any Lending Installation specified in a notice received by the Agent from such
Lender. The Agent is hereby authorized to charge the account of the Borrower
maintained with First Chicago for each payment of principal, interest and fees
as it becomes due hereunder.
(g) Notes; Telephonic Notices. Each Lender is hereby
authorized to record the principal amount of each of its Loans and each
repayment on the schedule attached to its applicable Notes, provided, however,
that neither the failure to so record nor any error in such recordation shall
affect the Borrower's obligations under any such Note. The Borrower hereby
authorizes the Lenders and the Agent to extend, convert or continue Advances,
effect selections of Types of Advances and to transfer funds based on
telephonic notices made by any person or persons the Agent or any Lender in
good faith believes to be acting on behalf of the Borrower. The Borrower
agrees to deliver promptly to the Agent a written confirmation, if such
confirmation is requested by the Agent or any Lender, of each telephonic notice
signed by an Authorized Officer. If the written confirmation differs in any
material respect from the action taken by the Agent and the Lenders, the
records of the Agent and the Lenders shall govern absent manifest error.
(h) Interest Payment Dates; Interest and Fee Basis.
Interest accrued on each Floating Rate Advance shall be payable on each Payment
Date, commencing with the first such date to occur after the date hereof, on
any date on which the Floating Rate Advance is prepaid, whether due to
acceleration or otherwise, and at maturity. Interest accrued on that portion
of the outstanding principal amount of any Floating Rate Advance converted into
a Fixed Rate Committed Advance on a day other than a Payment Date shall be
payable on the date of conversion. Interest accrued on each Fixed Rate Advance
shall be payable on the last day of its applicable Interest Period, on any date
on which the Fixed Rate Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Fixed Rate Advance having
an Interest Period longer than three months shall also be payable on the last
day of each three-month interval during such Interest Period. Interest on
Advances and facility fees shall be calculated for actual days elapsed on the
basis of a 360-day year. Interest shall be payable for the day an Advance is
made but not for the day of any payment on the amount paid if payment is
received prior to noon (local time) at the place of payment. If any payment of
principal of or interest on an Advance shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
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(i) Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions. Promptly after receipt thereof, the Agent will
notify each Lender of the contents of each Aggregate Commitment reduction
notice, Committed Borrowing Notice, Competitive Bid Borrowing Notice,
Conversion/Continuation Notice and repayment notice received by it hereunder.
The Agent will notify each Lender of the interest rate applicable to each Fixed
Rate Advance promptly upon determination of such interest rate and will give
each Lender prompt notice of each change in the Alternate Base Rate.
(j) Lending Installations. Each Lender may book its
Loans at any Lending Installation selected by such Lender and may change its
Lending Installation from time to time. All terms of this Agreement shall
apply to any such Lending Installation and the Notes shall be deemed held by
each Lender for the benefit of such Lending Installation. Each Lender may, by
written or telex notice to the Agent and the Borrower, designate a Lending
Installation through which Loans will be made by it and for whose account Loan
payments are to be made.
(k) Non-Receipt of Funds by the Agent. Unless the
Borrower or a Lender, as the case may be, notifies the Agent prior to the date
on which it is scheduled to make payment to the Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment
of principal, interest or fees to the Agent for the account of the Lenders,
that it does not intend to make such payment, the Agent may assume that such
payment has been made. The Agent may, but shall not be obligated to, make the
amount of such payment available to the intended recipient in reliance upon
such assumption. If such Lender or the Borrower, as the case may be, has not
in fact made such payment to the Agent, the recipient of such payment shall, on
demand by the Agent, repay to the Agent the amount so made available together
with interest thereon in respect of each day during the period commencing on
the date such amount was so made available by the Agent until the date the
Agent recovers such amount at a rate per annum equal to (i) in the case of
repayment by a Lender, the Federal Funds Effective Rate for such day or (ii) in
the case of repayment by the Borrower, the interest rate applicable to the
relevant Loan.
SECTION 2.06. Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation to
any tax, duty, charge or withholding on or from payments due
from the Borrower (excluding taxation of the overall net
income of any Lender or applicable Lending Installation
imposed by the jurisdiction or taxing authority in which such
Lender's principal executive office or Lending Installation is
located), or changes the basis of taxation of payments to any
Lender in respect of its Loans or other amounts due it
hereunder, or
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(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender or any
applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest
rate applicable to Fixed Rate Advances), or
(iii) imposes any other condition the result of which is to increase
the cost to any Lender or any applicable Lending Installation
of making, funding or maintaining loans or reduces any amount
receivable by any Lender or any applicable Lending
Installation in connection with loans, or requires any Lender
or any applicable Lending Installation to make any payment
calculated by reference to the amount of loans held or
interest received by it, by an amount deemed material by such
Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Loans and its Commitment.
SECTION 2.07. Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required or expected to be maintained by such
Lender, any Lending Installation of such Lender or any corporation controlling
such Lender is increased as a result of a Change, then, within 15 days of
demand by such Lender, the Borrower shall pay such Lender the amount necessary
to compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after taking
into account such Lender's then-existing policies as to capital adequacy
applicable to comparable credit facilities generally). "Change" means (i) any
change after the date of this Agreement in the Risk-Based Capital Guidelines or
(ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i) the
risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (ii) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
SECTION 2.08. Availability of Types of Advances. If any Lender
determines that maintenance of its Eurodollar Committed Loans or Eurodollar Bid
Rate Loans at a suitable Lending Installation would violate any applicable law,
rule, regulation, or directive, whether or not having the force of law, or if
the Required Lenders determine that (i) deposits of a type and
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maturity appropriate to match fund Fixed Rate Advances (other than Absolute
Rate Advances) are not available or (ii) the interest rate applicable to a Type
of Committed Advance does not accurately reflect the cost of making or
maintaining such Committed Advance, then the Agent shall suspend the
availability of the affected Type of Advance or Committed Advance, as the case
may be, and require any Fixed Rate Advances of the affected Type to be repaid
or, in the case of a Fixed Rate Committed Advance, promptly converted into an
unaffected Type of Committed Advance.
SECTION 2.09. Funding Indemnification. If any payment of a Fixed
Rate Advance occurs on a date which is not the last day of the applicable
Interest Period, whether because of acceleration, prepayment or otherwise, or a
Fixed Rate Advance is not made on the date specified by the Borrower for any
reason other than default by the Lenders, the Borrower will indemnify each
Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any lost profits and any loss or cost in liquidating or
employing deposits acquired to fund or maintain the Fixed Rate Advance.
SECTION 2.10. Lending Installation; Lender Statements; Survival of
Indemnity. To the extent reasonably possible, each Lender shall designate an
alternate Lending Installation with respect to its Fixed Rate Loans to reduce
any liability of the Borrower to such Lender under Sections 2.06 and 2.07 or to
avoid the unavailability of a Type of Advance under Section 2.08, so long as
such designation is not disadvantageous to such Lender in such Lender's
reasonable judgment. Each Lender shall deliver a written statement of such
Lender to the Borrower (with a copy to the Agent) as to the amount due, if any,
under Section 2.06, 2.07, or 2.09. Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such
amount and shall be conclusive in the absence of manifest error. Determination
of amounts payable under such Sections in connection with a Fixed Rate Loan
shall be calculated as though each Lender funded its Fixed Rate Loan through
the purchase of a deposit of the type and maturity corresponding to the deposit
used as a reference in determining the Fixed Rate applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement of any Lender shall be payable on
demand after receipt by the Borrower of such written statement. The
obligations of the Borrower under Sections 2.06, 2.07, and 2.09 shall survive
payment of the Obligations and termination of this Agreement.
SECTION 2.11. Withholding Tax Exemption. Prior to or
simultaneously with becoming a "Lender" for purposes of this Agreement, each
Lender that is not incorporated under the laws of the United States of America,
or a state thereof, agrees that it will deliver to each of the Borrower and the
Agent two duly completed copies of United States Internal Revenue Service Form
1001 or 4224, certifying in either case that such Lender is entitled to receive
payments under this Agreement and the Notes without deduction or withholding of
any United States federal income taxes. Each Lender which so delivers a Form
1001 or 4224 further undertakes to deliver to each of the Borrower and the
Agent two additional copies of such form (or a successor form) on or before the
date that such form expires (currently, three successive calendar years for
Form 1001 and one
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calendar year for Form 4224) or becomes obsolete or after the occurrence of any
event requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax.
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The obligation of
each Lender to make a Loan on the occasion of the first Borrowing is subject to
the satisfaction of the conditions set forth in Section 3.02 and receipt by the
Agent of the following (in sufficient number of counterparts (except as to the
Notes)) for delivery of a counterpart to each Lender and retention of one
counterpart by the Agent):
(a) from each of the parties to the Loan Documents of
either (i) a duly executed counterpart of each of the Loan Documents
signed by such party or (ii) a telex or facsimile transmission stating
that such party has duly executed a counterpart of each of the Loan
Documents and sent such counterparts to the Agent;
(b) a duly executed Committed Note and Competitive Bid
Note for the account of each Lender;
(c) a duly executed Subsidiary Guarantee and Contribution
Agreement from each of Modular Data, Inc. and Global Payment Systems
of Canada, Ltd.;
(d) the opinions of (i) Michael Ingram, general counsel
of the Borrower and the Subsidiary Guarantors, (ii) Alston & Bird,
special counsel for the Borrower and the Subsidiary Guarantors, and
(iii) Blake, Cassels & Graydon, special counsel for Global Payment
Systems of Canada, Ltd., in each case dated as of the date hereof,
substantially in the forms of Exhibit "H-1", "H-2", and "H-3",
respectively, and covering such additional matters relating to the
transactions contemplated hereby as the Agent or any Lender may
reasonably request;
(e) a certificate, dated as of the date hereof, signed on
behalf of the Borrower by a principal financial officer of the
Borrower, to the effect that (i) no Default or Event
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of Default has occurred and is continuing on such date and (ii) the
representations and warranties of the Borrower contained in Article IV
are true on and as of such date;
(f) all documents which the Agent or any Lender may
reasonably request relating to the existence of the Borrower, the
authority for and the validity of this Agreement, the Notes, and any
other matters relevant hereto, all in form and substance satisfactory
to the Agent, including, without limitation, a certificate of the
Borrower signed by the Secretary or an Assistant Secretary of the
Borrower, certifying as to the names, true signatures and incumbency
of the officer or officers of the Borrower authorized to execute and
deliver the Loan Documents, and certified copies of the following
items: (i) the articles of organization of the Borrower, (ii) the LLC
Operating Agreement, (iii) a certificate of the Secretary of State of
Georgia as to the good standing of the Borrower, and (iv) the action
taken by the Board of Directors of the Borrower authorizing the
execution, delivery and performance of this Agreement, the Notes and
the other Loan Documents to which it is a party;
(g) a copy of the Asset Purchase and Contribution
Agreement certified as true and complete by an Authorized Officer;
(h) written money transfer instructions, in substantially
the form of Exhibit "K" hereto, addressed to the Agent and signed by
an Authorized Officer, together with such other related money transfer
authorizations as the Agent may have reasonably requested;
(i) a copy of the Borrower's and each Subsidiary's cash
investments policy as formally approved by its Board of Directors as
in effect on the Closing Date;
(j) an opinion of King & Spalding, special counsel for
the Agent, addressed to the Agent and the Lenders and dated the date
hereof, as to the enforceability of the Loan Documents and covering
such additional matters relating to the Loan Documents as the Agent or
any Lender may reasonably request; and
(k) a Notice of Borrowing.
SECTION 3.02. Conditions to All Borrowings. The obligation of each
Lender to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing;
(b) the fact that, immediately after such Borrowing, no
Default or Event of Default shall have occurred and be continuing;
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(c) the fact that the representations and warranties of
the Borrower contained in Article IV of this Agreement shall be true
on and as of the date of such Borrowing except for changes expressly
permitted herein and except to the extent that such representations
and warranties relate solely to an earlier date; and
(d) the fact that, immediately after such Borrowing (i)
the aggregate outstanding principal amount of the Loans of each Lender
will not exceed the amount of its Commitment, except where such excess
amount results from such Lender's having made one or more Competitive
Bid Loans, and (ii) the aggregate outstanding principal amount of all
Loans of all Lenders will not exceed the amount of the Aggregate
Commitment.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in
paragraphs (b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
On the Closing Date, and at such other times as specified in Section
3.02, the Borrower represents and warrants that:
SECTION 4.01. Existence and Power. The Borrower (i) is a limited
liability company (or, after the LLC Conversion Date, a corporation) duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (ii) is duly qualified to transact business in
every jurisdiction set forth on Schedule 4.01, and the failure of the Borrower
to be so qualified in any other jurisdiction could not reasonably be expected
to have or cause a Material Adverse Effect, and (iii) has all powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except where the failure to have any such
licenses, authorizations, consents and approvals could not reasonably be
expected to have or cause a Material Adverse Effect.
SECTION 4.02. Organizational and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of
this Agreement, the Notes and the other Loan Documents (i) are within the
Borrower's powers as a limited liability company (or, after the LLC Conversion
Date, a corporation), (ii) have been duly authorized by all necessary
organizational action, (iii) require no action by or in respect of or filing
with, any governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the Borrower's articles of organization or the LLC Operating Agreement (or,
after the LLC Conversion Date, the articles or certificate of incorporation or
by-laws) or of any material agreement, judgment, injunction, order,
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decree or other instrument binding upon the Borrower or any of its
Subsidiaries, and (v) do not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid
and binding agreement of the Borrower enforceable in accordance with its terms,
and the Notes and the other Loan Documents to which the Borrower or any
Subsidiary is a party, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of the Borrower or
such Subsidiary, as the case may be, enforceable in accordance with their
respective terms, provided that the enforceability hereof and thereof is
subject in each case to general principles of equity and to bankruptcy,
insolvency, fraudulent transfer, and similar laws affecting the enforcement of
creditors' rights generally.
SECTION 4.04. Financial Information.
(a) The balance sheet of the Borrower as of April 30,
1996 and the accompanying statements of income, members' equity and cash flows
for the period shown thereon, copies of which have been delivered to each of
the Lenders, fairly present in all material respects and in accordance with
GAAP (subject to year-end audit adjustments and the absence of notes thereto)
the financial position of the Borrower as of such date and its results of
operations and cash flows for such period stated.
(b) As of the date prepared, the pro forma consolidated
balance sheet of National Data Corporation dated December 31, 1995, and the
accompanying pro forma statements of income and cash flows of the Borrower for
the periods ended May 31, 1993, May 31, 1994 and May 31, 1995, all prepared
based upon reasonable assumptions and the best knowledge of National Data
Corporation and the Borrower, copies of which have been delivered to each of
the Lenders, fairly presented in all material respects National Data
Corporation's and the Borrower's best estimate of the financial position of
National Data Corporation as of May 31, 1995 and the Borrower's results of
operations and cash flows for the periods ended May 31, 1993, May 31, 1994 and
May 31, 1995, assuming for the purpose of such pro forma balance sheets and
statements that the Borrower was in existence as a separate business unit on
each of such dates.
(c) Since April 30, 1996, there has been no event, act,
condition or occurrence (excluding, for these purposes, the effect of the
Excluded Organizational Charges) having or reasonably expected to have or cause
a Material Adverse Effect.
SECTION 4.05. No Litigation, Contingent Liabilities. There is no
action, suit or proceeding pending, or to the knowledge of the Borrower
threatened, against or affecting the Borrower or any of its Subsidiaries before
any court or arbitrator or any governmental body, agency or official which
could reasonably be expected to have or cause a Material Adverse Effect.
Neither the Borrower nor any of its Subsidiaries has any material Contingent
Obligations
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not provided for or disclosed in the financial statements previously delivered
to the Lenders pursuant to Section 5.01.
SECTION 4.06. Compliance with ERISA.
(a) The Borrower and each member of the Controlled Group
have fulfilled their obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan and are in compliance in all material
respects with the presently applicable provisions of ERISA and the Code, and
have not incurred any liability to the PBGC under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled
Group is or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Compliance with Laws; Taxes. The Borrower and its
Subsidiaries are in compliance with all applicable laws, regulations and
similar requirements of governmental authorities, except where such compliance
is being contested in good faith through appropriate proceedings. There have
been filed on behalf of the Borrower and its Subsidiaries all Federal, state
and local income, excise, property and other tax returns which are required to
be filed by them and all taxes due pursuant to such returns or pursuant to any
assessment received by or on behalf of the Borrower or any Subsidiary have been
paid or contested as permitted by Section 5.06. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Borrower, adequate.
SECTION 4.08. Subsidiaries. Each of the Subsidiaries, if any,
listed on Schedule 4.08 is a corporation (or a limited liability company or
limited partnership) duly organized, validly existing and in good standing
under the laws of the jurisdiction where it was created and organized, is
qualified to transact business in every jurisdiction where the failure of any
such Subsidiary to be so qualified in any other jurisdictions could reasonably
be expected to have or cause a Material Adverse Effect, and has all powers and
all governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except where the failure to have any
such licenses, authorizations, consents and approvals could not reasonably be
expected to have or cause a Material Adverse Effect. The Borrower has no
Subsidiaries except for those Subsidiaries listed on Schedule 4.08, as the same
may be supplemented from time to time in writing by the Borrower, which
accurately sets forth their respective jurisdictions of creation.
SECTION 4.09. Not an Investment Company. Neither the Borrower nor
any Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
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SECTION 4.10. Ownership of Property; Liens. Each of the Borrower
and its Consolidated Subsidiaries has title to its properties sufficient for
the conduct of its business, and none of such property is subject to any Lien
except as permitted in Section 6.07.
SECTION 4.11. No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party (including, without
limitation, the Subsidiary Guarantees) or by which it or any of its property is
bound which could reasonably be expected to have or cause a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
SECTION 4.12. Full Disclosure. All (i) information, whether
written or oral, heretofore furnished by any officer of the Borrower, and (ii)
written information heretofore furnished by any of the other employees of the
Borrower, to the Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby (excluding pro forma financial
projections for periods ending after April 30, 1996, and any superseded
information corrected or updated by delivery to the Agent, prior to the Closing
Date, of corrected, updated or restated information) is, and all such
information hereafter furnished by such representatives of the Borrower to the
Agent or any Lender will be, true, accurate and complete in every material
respect or based on reasonable estimates on the date as of which such
information is stated or certified. The Borrower has disclosed to the Lenders
in writing any and all facts known to the Borrower, after due inquiry, which
could reasonably be expected to have or cause a Material Adverse Effect.
SECTION 4.13. Environmental Matters.
(a) Neither the Borrower nor any Subsidiary is subject to
any Environmental Liability which could reasonably be expected to have or cause
a Material Adverse Effect and, to the best of the Borrower's knowledge, neither
the Borrower nor any Subsidiary has been designated as a potentially
responsible party under CERCLA or under any state statute similar to CERCLA.
To the best of the Borrower's knowledge, none of the Properties has been
identified on any current or proposed (i) National Priorities List under 40
C.F.R. Section 300, (ii) CERCLIS list or (iii) any list arising from a state
statute similar to CERCLA.
(b) No Hazardous Materials are being, and, to the best of
the Borrower's knowledge, have been, used, produced, manufactured, processed,
treated, recycled, generated, stored, disposed of, managed or otherwise handled
at, or shipped or transported to or from the Properties or are otherwise
present at, on, in or under the Properties, or, to the best of the knowledge of
the Borrower, without independent inquiry, at or from any adjacent site or
facility, except for Hazardous Materials used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed of, managed, or
otherwise handled in minimal amounts in the ordinary course of business in
compliance in all material respects with all applicable Environmental
Requirements.
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(c) Borrower and each of its Subsidiaries is in
compliance in all material respects with all Environmental Requirements in
connection with the operation of the Properties and Borrower's and each of its
Subsidiary's respective businesses.
SECTION 4.14. Capital Stock. All Capital Stock, debentures, bonds,
notes and all other securities and equity interests of the Borrower and its
Subsidiaries presently issued and outstanding are validly and properly issued
in accordance with all applicable laws, including but not limited to, the "Blue
Sky" laws of all applicable states and the federal securities laws. The
Capital Stock of the Borrower's Wholly Owned Subsidiaries is owned by the
Borrower free and clear of any Lien or adverse claim. At least a majority of
the Capital Stock of each of the Borrower's other Subsidiaries (other than
Wholly Owned Subsidiaries) is owned by the Borrower free and clear of any Lien
or adverse claim.
SECTION 4.15. Margin Stock. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent
with, the provisions of Regulation U or Regulation X.
SECTION 4.16. Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loans under this
Agreement, the Borrower will not be "insolvent," within the meaning of such
term as used in O.C.G.A. Section 18-2-22 or as defined in Section 101 of Title
11 of the United States Code, as amended from time to time, or be unable to pay
its debts generally as such debts become due, or have an unreasonably small
capital to engage in any business or transaction, whether current or
contemplated.
SECTION 4.17. LLC Status. At all times prior to the LLC Conversion
Date, (i) the Borrower is and will be a validly existing limited liability
company not subject to federal income tax at the entity level, (ii) no event
described in Section 23.1 ("Dissolving Events") of the LLC Operating Agreement
has occurred, and (iii) no action has been taken by the Borrower or its members
that would render inaccurate the matters stated in the preceding clauses (i)
and (ii).
SECTION 4.18. Senior Debt. All of the Obligations constitute
senior indebtedness for purposes of all the Subordinated Distribution Notes
(including all "payment-in-kind" notes issued thereunder), and the Agent and
the Lenders will have all rights and benefits of holders of senior indebtedness
as provided therein.
SECTION 4.19. Asset Purchase and Contribution Agreement. All
material assets required to be contributed or sold to the Borrower by National
Data Corporation or Mastercard International Incorporated pursuant to the terms
of the Asset Purchase and Contribution Agreement have been received or
purchased by the Borrower, and the conveyances and other transactions
contemplated by the terms of the Asset Purchase and Contribution Agreement have
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been made and consummated in all material respects in accordance with the terms
thereof. As of the Closing Date, there is no Indemnification Claim (as defined
in the Asset Purchase and Contribution Agreement) pending against any party
thereunder, and the Borrower has no knowledge of any such claim or potential
claim that, if not promptly satisfied, could reasonably be expected to have or
cause a Material Adverse Effect.
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower agrees that, from and after the Closing Date and for so
long as any Lender has any Commitment hereunder or any amount payable hereunder
or under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to each of
the Lenders:
(a) as soon as available and in any event within 95 days
after the end of each Fiscal Year, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such
Fiscal Year and the related consolidated statements of income,
members' equity (or, for periods after the LLC Conversion Date,
shareholders' equity) and cash flows for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous
fiscal year, all certified by Arthur Andersen LLP or other independent
public accountants of nationally recognized standing, with such
certification to be free of exceptions and qualifications not
acceptable to the Required Lenders; provided, however, that for the
Fiscal Year ending May 31, 1996, the Borrower will deliver to each of
the Lenders (i) the foregoing consolidated balance sheet and
statements of income, members' equity and cash flows for such Fiscal
Year on an unaudited basis and without figures in comparative form for
the previous Fiscal Year, all certified as to fairness of presentation
in all material respects, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting
officer of the Borrower, and (ii) a consolidated balance sheet of
National Data Corporation as of the end of such Fiscal Year and the
related consolidated statements of income, shareholders' equity and
cash flows for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all
certified by Arthur Andersen LLP or other independent public
accountants of nationally recognized standing, with such certification
to be free of exceptions and qualifications not acceptable to the
Required Lenders;
(b) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each Fiscal Year,
a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related statements
of income and cash flows for such quarter and for the portion of the
Fiscal
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Year ended at the end of such quarter, setting forth in each case
(commencing with the financial statements delivered for the Fiscal
Quarter ending August 31, 1997) in comparative form the figures for
the corresponding quarter and the corresponding portion of the
previous Fiscal Year, all certified (subject to normal year-end
adjustments) as to fairness of presentation in all material respects,
generally accepted accounting principles and consistency by the chief
financial officer or the chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in Sections 5.01(a) and (b) above, a
certificate, substantially in the form of Exhibit "E" (a "Compliance
Certificate"), of the chief financial officer or the chief accounting
officer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 6.01 through 6.10,
inclusive, on the date of such financial statements and (ii) stating
whether any Default or Event of Default exists on the date of such
certificate and, if any Default or Event of Default then exists,
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(d) within five Business Days after the delivery of each
set of annual financial statements referred to in paragraph (a) above,
a statement of the firm of independent public accountants which
reported on such statements to the effect that nothing has come to
their attention in the course of their audit to cause them to believe
that any Default or Event of Default existed on the date of such
financial statements;
(e) within five Business Days after the chief executive
officer, chief financial officer, chief accounting officer, controller
or chief legal officer of the Borrower (or any other individual having
similar duties and responsibilities as any of the foregoing although
not having the same title) becomes aware of the occurrence of any
Default or Event of Default, a certificate of the chief financial
officer or the chief accounting officer or such other Person of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the members or
shareholders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statement on Form S-8 or its equivalent) and annual,
quarterly or monthly reports that the Borrower shall have filed with
the Securities and Exchange Commission;
(h) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of
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ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the
plan administrator of any Plan has given or is required to give notice
of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability under Title IV of ERISA, a
copy of such notice; or (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice;
(i) promptly upon the receipt thereof, a copy of any
management letter or management report prepared by the Borrower's
independent certified public accountants in conjunction with the
financial statements described in Section 5.01(a);
(j) within five Business Days after the chief executive
officer, chief financial officer, chief accounting officer, controller
or chief legal officer of the Borrower (or any other individual having
similar duties and responsibilities as any of the foregoing although
not having the same title) becomes aware of any pending or overtly
threatened litigation or other legal proceedings, or any cancellation
or termination of any material agreement or receipt or sending of
written notice of default or intended cancellation or termination in
respect thereof, or the occurrence of any other event or condition
that, in any such case, could reasonably be expected to have a
Material Adverse Effect; and
(k) from time to time such additional information
regarding the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Lender, may
reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower will (i) keep, and cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
and activities; and (ii) permit, and cause each Subsidiary to permit,
representatives of any Lender, after notice to an officer of the Borrower or
any Subsidiary, at such Lender's expense during any period in which a Default
or Event of Default is not in existence and at the Borrower's expense during
any period in which a Default or Event of Default is in existence, to visit
(which date of visit shall be two (2) Business Days after the date such request
is made or any earlier date as may be mutually agreed by the Borrower and such
Lender) and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective officers,
employees and independent public accountants. The Borrower agrees to cooperate
and assist in such visits and inspections, in each case at such reasonable
times and as often as may reasonably be desired. Notwithstanding the
foregoing, during any period in which a Default or Event of Default is not in
existence, no Lender may engage in (i) more than two inspections per Fiscal
Year or (ii) discussions with the Borrower's independent public accountants,
unless the Borrower shall have otherwise consented to same.
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SECTION 5.03. Future Subsidiaries. The Borrower shall cause all of
its Operating Subsidiaries not existing as of the date hereof to execute and
deliver Subsidiary Guaranties and a counterpart Contribution Agreement in
substantially the same form as set forth, respectively, in Exhibits "I" and
"J", and other Loan Documents related thereto, as requested by the Agent,
within 25 Business Days of the creation or acquisition of any such Operating
Subsidiary by the Borrower. The delivery of such documents and instruments
shall be accompanied by such other documents as the Agent may reasonably
request (e.g., certificates of incorporation, articles of incorporation and
bylaws, membership operating agreements, opinion letters, and appropriate
resolutions of the Board of Directors of any such Subsidiary Guarantor).
SECTION 5.04. Maintenance of Existence. At all times prior to the
LLC Conversion Date, the Borrower shall maintain its existence as a limited
liability company not subject to federal income tax, and at all times
thereafter as a corporation in the jurisdiction of its incorporation. The
Borrower shall cause each Operating Subsidiary to maintain its legal existence,
and carry on its business in substantially the same industry as such business
shall be carried on the date of the first Borrowing hereunder; provided, that
(i) the Borrower may dissolve Subsidiaries from time to time if (x) the Board
of Directors of the Borrower has determined that such dissolution is desirable,
and (y) the Borrower has provided the Lenders with evidence satisfactory to the
Required Lenders, in their reasonable judgment, that such dissolution could not
reasonably be expected to have or cause a Material Adverse Effect, (ii) the
Borrower or any Subsidiary may eliminate or discontinue a business line
pursuant to Section 6.12, and (iii) the Borrower or any Subsidiary may carry on
additional lines of business of an immaterial nature in an industry different
from the industry in which their respective business shall be carried on the
date of the first Borrowing hereunder.
SECTION 5.05. Use of Proceeds. The proceeds of the Loans may be
used to repay intercompany debt to National Data Corporation (excluding debt
evidenced by Subordinated Distribution Notes, except to the extent such Notes
exceed the Subordinated Distribution Threshold) and for working capital and
other general corporate purposes, in each case to the extent not otherwise
prohibited herein (including, without limitation, pursuant to Section 6.08).
No portion of the proceeds of the Loans will be used by the Borrower (i) in
connection with any hostile tender offer for, or other hostile acquisition of,
stock (or in the case of a limited liability company, the members' equivalent
equity interest) of any corporation with a view towards obtaining control of
such other corporation, (ii) directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any Margin Stock,
or (iii) for any purpose in violation of any applicable law or regulation.
SECTION 5.06. Compliance with Laws; Payment of Taxes. The Borrower
will, and will cause each of its Subsidiaries and each member of the Controlled
Group to, comply in all material respects with applicable laws (including but
not limited to ERISA), regulations and similar requirements of governmental
authorities (including but not limited to PBGC), except where the necessity of
such compliance is being contested in good faith through appropriate
proceedings. The Borrower will, and will cause each of its Subsidiaries to,
pay, prior to the
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accrual of any penalty in respect thereof, all taxes, assessments, governmental
charges, claims for labor, supplies, rent and other obligations which, if
unpaid, might become a Lien against the property of the Borrower or any
Subsidiary, except liabilities being contested in good faith and against which,
if reasonably requested by the Agent, the Borrower will set up reserves in
accordance with GAAP.
SECTION 5.07. Insurance. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain (either in the name of the Borrower
or in such Subsidiary's own name), with financially sound and reputable
insurance companies, insurance on all its property in at least such amounts and
against at least such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or similar
business.
SECTION 5.08. Maintenance of Property. The Borrower shall, and
shall cause each Subsidiary to, maintain all of its properties and assets in
good condition, repair and working order, ordinary wear and tear excepted.
SECTION 5.09. Environmental Notices. Upon obtaining knowledge
thereof, the Borrower shall furnish to the Lenders and the Agent prompt written
notice of all Environmental Liabilities, pending, threatened or anticipated
Environmental Proceedings, Environmental Notices, Environmental Judgments and
Orders, and Environmental Releases at, on, in, under or in any way affecting
the Properties or any adjacent property, and all facts, events, or conditions
that could lead to any of the foregoing if any of the foregoing could
reasonably be expected to have or cause a Material Adverse Effect; provided,
that should the Borrower or any Subsidiary receive any written notice with
respect to any of the foregoing, then the Borrower shall provide the Lenders
and the Agent with a copy of same, regardless of whether the facts, events or
conditions described therein might have or cause a Material Adverse Effect.
SECTION 5.10. Environmental Release. The Borrower agrees that upon
the occurrence of an Environmental Release it will act promptly to investigate
the extent of, and to take appropriate remedial action to remedy, such
Environmental Release, to the extent required by any applicable Environmental
Requirement or any Environmental Judgment and Order.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower agrees that, from and after the date of this Agreement
and for so long as any Lender has any Commitment hereunder or any amount
payable hereunder or under any Note remains unpaid:
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SECTION 6.01. Ratio of Consolidated Funded Debt to Consolidated
Cash Flow. Commencing with the Fiscal Quarter ending August 31, 1996, the
Funded Debt to Cash Flow Ratio shall as at the end of each Fiscal Quarter be
less than 4.0 to 1.0; provided, however, that for purposes of calculating the
foregoing ratio for each of the Fiscal Quarters ending August 31, 1996,
November 30, 1996, and February 28, 1997, Consolidated Cash Flow shall be
determined on an annualized Fiscal Year-to-date basis using actual Consolidated
Cash Flow of the Borrower for the period from June 1, 1996 through the end of
each such Fiscal Quarter.
SECTION 6.02. Minimum Consolidated Net Worth.
(a) Prior to the LLC Conversion Date, Consolidated Net
Worth will at no time be less than an amount equal to the sum of (A) the
product of (x) $82,000,000 less the amount, if any, by which any Excluded
Organizational Charges have reduced the Borrower's Consolidated Net Worth,
multiplied by (y) 0.90, plus (B) 100% of the cumulative Net Proceeds of Capital
Stock of the Borrower or any of its Subsidiaries received or deemed received
during any period after the Closing Date.
(b) On and after the LLC Conversion Date, Consolidated
Net Worth will not be less than the sum of (A) an amount equal to the greater
of (x) 90% of Consolidated Net Worth as at the last day of the calendar month
immediately preceding the LLC Conversion Date (the "Measurement Date") or (y)
the minimum Consolidated Net Worth required to be maintained on such date
pursuant to Section 6.02(a), (B) 50% of cumulative Consolidated Net Income
after the Measurement Date, calculated at the end of each Fiscal Quarter but
excluding from such calculations any Fiscal Quarter in which Consolidated Net
Income is less than $1.00, and (C) 100% of the cumulative Net Proceeds of
Capital Stock received or deemed received after the Measurement Date,
calculated at the end of each Fiscal Quarter.
SECTION 6.03. Fixed Charge Coverage. Tested as at the end of each
Fiscal Quarter, commencing with the Fiscal Quarter ending August 31, 1996, for
the Fiscal Quarter just ended and the immediately preceding 3 Fiscal Quarters,
the ratio of (A) Income Available for Fixed Charges to (B) Consolidated Fixed
Charges, shall be greater than or equal to 3.0 to 1.0 as at the end of such
Fiscal Quarter; provided, however, that for purposes of calculating the
foregoing ratio for each of the Fiscal Quarters ending August 31, 1996,
November 30, 1996 and February 28, 1997, Income Available for Fixed Charges and
Consolidated Fixed Charges shall each be determined on an annualized Fiscal
Year-to-date basis using actual Income Available for Fixed Charges and
Consolidated Fixed Charges of the Borrower for the period from June 1, 1996
through the end of each such Fiscal Quarter.
SECTION 6.04. Restricted Payments.
(a) Prior to the LLC Conversion Date, the Borrower will
not declare or make any Restricted Payment during any Fiscal Year, other than
(1) the following distributions of cash or other Property of the Borrower made
at such times as the Borrower is a limited liability
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company not subject to federal income tax at the entity level and pursuant to
the requirements of Section 10.1 of the LLC Operating Agreement:
(x) Distributions to members in a total amount
with respect to such Fiscal Year not greater than the total
federal, state and local income taxes that the Borrower would
have paid if it had been a corporation subject to federal
income tax at the entity level; and
(y) Distributions to members in excess of the
amount described in clause (x) above (such distributions being
referred to herein as "Non-Tax Distributions"); provided,
however, that until such time as the aggregate principal
amount of Subordinated Distribution Notes issued by the
Borrower as provided in this Section 6.04(b) equals or exceeds
the Subordinated Distribution Threshold, not less than 90% of
such Non-Tax Distributions shall be made by issuance and
delivery by the Borrower of Subordinated Distribution Notes to
the members of the Borrower;
(2) in connection with the purchase by the Borrower of the membership interest
of Mastercard International Incorporated ("MII") pursuant to MII's exercise of
its "Put Right" (as provided in Article 20 of the LLC Operating Agreement); and
(3) in connection with the purchase by the Borrower of the membership interest
of another member of the Borrower admitted after the Closing Date pursuant to a
repurchase arrangement entered into in connection with such other member's
initial purchase of its membership interest, provided the amount of any such
Restricted Payment does not exceed the fair market value of such membership
interest; provided, however, no such distributions or purchase price payments
shall be made by the Borrower pursuant to clauses (1), (2) or (3) of this
Section 6.04 if there exists an Event of Default at the time such distribution
or payment is to be made or after giving effect thereto.
(b) On and after the LLC Conversion Date, the Borrower
will not declare or make any Restricted Payment during any Fiscal Year unless,
after giving effect thereto, the aggregate of all Restricted Payments declared
or made during such Fiscal Year does not exceed $5,000,000 and no Default or
Event of Default shall be in existence (which has not been specifically waived
in writing pursuant to Section 9.06) either immediately preceding or following
the making or declaration of any Restricted Payment.
SECTION 6.05. Loans or Advances. Neither the Borrower nor any of
its Subsidiaries shall make loans or advances to any Person except: (i) loans
or advances (other than travel advances) to employees pursuant to the
Borrower's business policies not exceeding $500,000 in the aggregate principal
amount outstanding at any time for the Borrower and its Subsidiaries, (ii)
deposits required by government agencies or public utilities, (iii) loans or
advances to Subsidiary Guarantors or to the Borrower, and (iv) travel advances
pursuant to the Borrower's business policies to employees not exceeding
$500,000 in the aggregate principal amount outstanding at any time for the
Borrower and its Subsidiaries; provided that in
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connection with loans or advances to be made pursuant to the foregoing clauses
(i) or (iii), after giving effect to the making of any loans, advances or
deposits permitted by this Section 6.05, no Default or Event of Default shall
be in existence (which has not been specifically waived in writing pursuant to
Section 9.06).
SECTION 6.06. Investments; Acquisitions.
(a) Neither the Borrower nor any of its Subsidiaries
shall make Investments in any Person except as permitted by Section 6.05 and,
except the following Investments (provided such Investments do not violate
Section 6.06(b)): (i) in Subsidiary Guarantors, (ii) in Subsidiaries which are
formed for the sole purpose of (1) merging into Persons that will become
Subsidiary Guarantors in accordance with Section 6.10, or (2) acquiring the
assets or stock (or in the case of a limited liability company, the members'
equivalent equity interest) of Persons and thereafter becoming Subsidiary
Guarantors in accordance with Section 6.10, or (3) existing as non-Operating
Subsidiaries, provided all such Investments in non-Operating Subsidiaries shall
not exceed $50,000 in the aggregate, (iii) provided such Investment does not
violate Section 6.06(b), and further provided no Event of Default exists at the
time of the making thereof, in Investments made in accordance with the
applicable Approved Investment Policy, and (iv) whether or not an Event of
Default exists at the time of the making thereof, in Restricted Investments.
(b) Without the prior written consent of the Required
Lenders, the Borrower will not, and it will not permit any Subsidiary to,
acquire, whether directly or through the purchase of stock (or in the case of a
limited liability company, the members' equivalent equity interest),
convertible notes or otherwise, any assets other than fixed assets (which fixed
assets do not constitute all or substantially all of the assets of the Person
from whom such assets are acquired) unless (x) such acquisition is of a
business which is similar (as to product sold or service rendered) to the
Borrower's, or any relevant Subsidiary's, business, (y) such acquisition is to
be made upon a negotiated basis with the approval of the board of directors of
the Person to be acquired, or of the percentage of ownership interests required
by the charter documents of such Person to approve any such acquisition, and
(z) no Default or Event of Default shall be in existence or be caused thereby
(which has not been specifically waived in writing pursuant to Section 9.06).
SECTION 6.07. Indebtedness. The Borrower will not, nor will it
permit any Subsidiary to, create, incur or suffer to exist any Debt, other than:
(a) the Loans;
(b) Debt existing on the date hereof in the principal
amount of $50,000,000 evidenced by a certain Promissory Note dated April 1,
1996 made by the Borrower to National Data Corporation;
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(c) Debt evidenced by the Subordinated Distribution
Notes;
(d) Debt secured by Liens permitted pursuant to Section
6.08;
(e) Debt owing to the Borrower by any Subsidiary of the
Borrower and payable on demand on a non-subordinated basis;
(f) Debt arising from the renewal or extension of any
Debt described in clauses (b) and (d) above, provided that the amount of such
Debt is not increased;
(g) Debt owing by the Borrower to any Person as a portion
of the consideration payable to the seller(s) in an Acquisition permitted by
Section 6.06;
(h) Debt owing by a Subsidiary of the Borrower that was
in existence at the time such Person became a Subsidiary of the Borrower and
not created or incurred in contemplation of such event, and that cannot be
prepaid without penalty or premium or assumed by the Borrower, in an aggregate
principal amount not to exceed $5,000,000;
(i) Debt owing by the Borrower to National Data
Corporation representing working capital revolving loans in an amount not to
exceed (A) $5,000,000 from the Closing Date to the Commitment Reduction Date,
and (B) $15,000,000 on and after the Commitment Reduction Date; and
(j) Debt not described in clauses (a) through (i) above
in an aggregate principal amount outstanding at any time not to exceed
$10,000,000.
SECTION 6.08. Negative Pledge. Neither the Borrower nor any
Subsidiary will create, assume or suffer to exist any Lien on any asset now
owned or hereafter acquired by it, except for the following.
(a) Liens existing on the date of this Agreement and
described on Schedule 6.08 securing Debt outstanding on the date of
this Agreement in an aggregate principal amount not exceeding
$6,500,000;
(b) any Lien existing on any asset of any Person at the
time such Person becomes a Subsidiary and not created in contemplation
of such event;
(c) any Lien on any asset securing Debt (including,
without limitation, a Capitalized Lease) incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such
asset concurrently with or within 18 months after the acquisition or
completion of construction thereof;
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(d) any Lien on any asset of any Person existing at the
time such Person is merged or consolidated with or into the Borrower
or a Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary and not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any (i) Subsidiary to
the Borrower or (ii) Subsidiary Guarantor to another Subsidiary
Guarantor;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing clauses (a) through (f) of this Section, provided
that (i) such Debt is not secured by any additional assets, and (ii)
the amount of such Debt secured by any such Lien is not increased;
(h) Liens incidental to the conduct of its business or
the ownership of its assets, including, without limitation, Liens of
materialmen and landlords, which (i) do not secure Debt and (ii) do
not in the aggregate materially detract from the value of its assets
or materially impair the use thereof in the operation of its business;
(i) any Lien in respect of any taxes which are either (x)
not, as at any date of determination, due and payable or (y) being
contested in good faith as permitted by Section 5.06;
(j) Liens in respect of judgments or awards for which
appeals or proceedings for review are being prosecuted and in respect
of which a stay of execution upon any such appeal or proceeding for
review shall have been secured, provided that such Person shall have
established reserves which are adequate under GAAP for such judgments
or awards; and
(k) Liens not otherwise permitted by the foregoing
paragraphs of this Section securing Debt (other than indebtedness
represented by the Notes) in an aggregate principal amount at any time
outstanding not to exceed $5,000,000;
Provided Liens permitted by the foregoing paragraphs (b), (c), (d), (e) and (f)
shall at no time secure Debt in an aggregate amount greater than $40,000,000.
SECTION 6.09. Subordinated Debt. The Borrower will not (i)
directly or indirectly voluntarily defease or in substance defease, prepay,
purchase, redeem, retire or otherwise acquire (any such action being referred
to herein as a "Reduction"), any Subordinated Distribution Notes, other than
any such Subordinated Distribution Notes in excess of the Subordinated
Distribution Threshold, or (ii) amend or modify the terms of the Subordinated
Distribution Notes, other than any such Subordinated Distribution Notes in
excess of the Subordinated Distribution Threshold;
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provided, however, that subsequent to the LLC Conversion Date and so long as no
Default or Event of Default then exists or would exist as a result thereof, the
Borrower may effect a Reduction of Subordinated Distribution Notes in a total
cumulative amount not to exceed on the date of any such Reduction an amount
equal to (x) 50% of Consolidated Net Income for the period (taken as one
accounting period) from June 1, 1996, through the end of the Fiscal Quarter
immediately preceding such action, plus (y) the aggregate amount of all Net
Proceeds of Capital Stock received or deemed received after the Closing Date
and prior to the date of such Reduction, less (z) the aggregate amount of all
Restricted Payments (other than those Restricted Payments described in clause
(x) of Section 6.04(a)(1) and Restricted Payments made through issuance of
Subordinated Distribution Notes) made or declared after the Closing Date and
prior to the date of such Reduction.
SECTION 6.10. Consolidations, Mergers and Sales of Assets;
Permitted LLC Conversion.
(a) The Borrower will not, nor will it permit any
Subsidiary to, consolidate or merge with or into, or sell, lease or otherwise
transfer all or any substantial part of its assets to, any other Person, or
discontinue or eliminate any business segment, provided that (a) the Borrower
may merge with another Person if (i) such Person was organized under the laws
of the United States of America or one of its states, (ii) the Borrower is the
Person surviving such merger and (iii) immediately after giving effect to such
merger, no Default or Event of Default shall have occurred and be continuing,
(b) Subsidiary Guarantors may merge with and sell assets to, one another and
the Borrower, (c) the Borrower and the Subsidiaries may eliminate or
discontinue business lines and segments from time to time if such action (i)
has been approved by the Board of Directors of the Borrower, and (ii) the
Borrower or any such Subsidiary provides all of the Lenders with evidence
satisfactory to all of the Lenders, in their reasonable judgment, that such
elimination or discontinuance will not jeopardize the Borrower's or any
Subsidiary Guarantor's ability to perform under any of the Loan Documents, (d)
so long as no Default or Event of Default shall be in existence either
immediately prior to or following any asset disposition, the Borrower may sell
or otherwise dispose of any of its assets in an amount of up to $10,000,000 in
fair market value during each consecutive 12 month period, (e) Subsidiaries
which are formed for the sole purpose of (1) merging into Persons that will
become Subsidiary Guarantors in accordance with Section 5.03, or (2) acquiring
the assets or stock (or in the case of a limited liability company, the
members' equivalent equity interest) of Persons and thereafter becoming
Subsidiary Guarantors in accordance with Section 5.03, may merge with such
Persons or consolidate those Persons' assets with the assets of those
Subsidiaries, and (f) the Borrower may effect a Permitted LLC Conversion as set
forth in Section 6.10(b).
(b) The Borrower will not effect an LLC Conversion except
upon compliance with and satisfaction of the following requirements and
conditions:
(1) The Borrower will give the Lenders not less
than 30 days' prior written notice of its intent to effect an
LLC Conversion, such notice to include
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the earliest date of the LLC Conversion and a description in
reasonable detail of the transactions that will be consummated
in order to effect the LLC Conversion;
(2) The Borrower will submit to the Lenders not
less than 15 days prior to the LLC Conversion Date the
proposed forms of transaction documents (e.g., merger
agreement, asset contribution or transfer agreements,
assignments, and assumption agreements) to be used by the
Borrower to effect the LLC Conversion (collectively, the "LLC
Conversion Documents");
(3) There will be executed and delivered to the
Agent, at or before the LLC Conversion the following
documents, all in form and substance satisfactory to the
Required Lenders:
(A) an assumption agreement pursuant to
which the corporation succeeding to
all the assets and businesses of the
Borrower in the LLC Conversion
("Newco") expressly assumes and
agrees to pay and perform all
obligations of the Borrower under
the Loan Documents, together with
any amendments thereto as may be
appropriate to give effect to such
assumption;
(B) agreements from the Subsidiary
Guarantors confirming the continuing
effectiveness of the Subsidiary
Guarantees and Contribution
Agreements after giving effect to
the LLC Conversion;
(C) a tax sharing agreement between
Newco and National Data Corporation
(or other entity with whom Newco's
tax returns may be consolidated for
federal and state income tax
purposes);
(D) a certificate, dated as of the LLC
Conversion Date, signed on behalf of
each of the Borrower and Newco by a
principal financial officer of each
of the Borrower and Newco, to the
effect that (i) no Default or Event
of Default has occurred and is
continuing on such date, and (ii)
the representations and warranties
contained in Article IV are true on
and as of such date;
(E) a certified copy of the LLC
Conversion Documents as the same are
being executed and delivered in
connection with the LLC Conversion;
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(F) all documents which the Agent or any
Lender may reasonably request
relating to the existence of Newco,
the authority for and the validity
of the LLC Conversion Documents and
the documents to be delivered
pursuant to this Section 6.10(b)(3)
(collectively, the "Newco Loan
Documents"), and any other matters
relevant thereto, including without
limitation, a certificate of Newco
signed by the Secretary or an
Assistant Secretary of Newco,
certifying as to the names, true
signatures and incumbency of the
officer or officers of Newco
authorized to execute and deliver
the LLC Conversion Documents and the
Newco Loan Documents, and certified
copies of the certificate or
articles of incorporation and
by-laws of Newco, the action taken
by the Board of Directors of Newco
authorizing the execution, delivery
and performance of the LLC
Conversion Documents and the Newco
Loan Documents, and a certificate of
the Secretary of State of Georgia
(and, if different, the Secretary of
State of the state of incorporation
of Newco) as to the good standing of
Newco; and
(G) an opinion (together with any
opinions of local counsel relied on
therein) of counsel to each of the
Borrower and Newco with respect to
the LLC Conversion Documents and the
Newco Loan Documents, covering
matters with respect to such parties
and documents comparable to those
covered by the opinions described in
Section 3.01(c), and covering such
additional matters relating to the
LLC Conversion as the Agent or any
Lender may reasonably request.
SECTION 6.11. Limitation on Payment Restrictions Affecting
Subsidiaries. The Borrower will not, nor will it permit any Subsidiary to,
create or otherwise cause or suffer to exist or become effective, any
consensual encumbrance or restriction on the ability of any Subsidiary to (i)
pay dividends or make any other distributions on any of its Capital Stock, or
(ii) pay any indebtedness owed to the Borrower or any of its Subsidiaries, or
(iii) transfer any of its property or assets to the Borrower or any of its
Subsidiaries, except any consensual encumbrance or restriction existing under
the Loan Documents.
SECTION 6.12. Change in Fiscal Year. The Borrower will not change
its Fiscal Year without the consent of the Required Lenders, which consent
shall not be unreasonably withheld.
SECTION 6.13. Environmental Matters. The Borrower will not, and
will not permit any Third Party to, use, produce, manufacture, process, treat,
recycle, generate, store,
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dispose of, manage at, or otherwise handle, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials used,
produced, manufactured, processed, treated, recycled, generated, stored,
disposed, managed, or otherwise handled in the ordinary course of business in
compliance in all material respects with all applicable Environmental
Requirements.
SECTION 6.14. Transactions with Affiliates. Neither the Borrower
nor any of its Subsidiaries shall enter into, or be a party to, any transaction
with any Affiliate of the Borrower or such Subsidiary, except as permitted by
law and in the ordinary course of business and pursuant to reasonable terms
which are no less favorable to Borrower or such Subsidiary than would be
obtained in a comparable arm's length transaction with a Person which is not an
Affiliate.
ARTICLE VII
DEFAULTS
SECTION 7.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing at any time:
(a) the Borrower shall fail to pay when due any principal
of any Loan or shall fail to pay any interest on any Loan within 3
Business Days after such interest shall become due, or shall fail to
pay any fee or other amount payable hereunder within 5 Business Days
after such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Section 5.01(e), Section 5.02(ii), or Sections
6.01 through 6.10 inclusive;
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in this
Agreement (other than those covered by paragraph (a) or (b) above) and
such failure shall not have been cured within 30 days after the
earlier to occur of (i) written notice thereof has been given to the
Borrower by the Agent at the request of any Lender or (ii) the
Borrower otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or
statement made or incorporated by reference in Article IV or in any
certificate, financial statement or other document delivered pursuant
to this Agreement shall prove to have been incorrect or misleading in
any material respect when made (or deemed made); or
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(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of Debt outstanding in the aggregate principal
amount of $5,000,000 or greater (other than (i) the Notes and (ii)
Debt held by the Borrower owed by a Consolidated Subsidiary or Debt
held by a Consolidated Subsidiary owed by the Borrower) when due or
within any applicable grace period; or
(f) an "Event of Default" shall occur under any of the
other Loan Documents; provided, that, should any such "Event of
Default" be waived by the Required Lenders (of, if required by Section
9.06(a) or the terms of such other Loan Document, all Lenders), then,
such waiver shall operate as a waiver of an Event of Default arising
under this Section 7.01(f) as a result of same; or
(g) any event or condition shall occur which results in
the acceleration of the maturity of Debt outstanding of the Borrower
or any Subsidiary (other than (i) the Notes and (ii) Debt held by the
Borrower owed by a Consolidated Subsidiary or Debt held by a
Consolidated Subsidiary owed by the Borrower) in the aggregate
principal amount of $5,000,000 or greater (including, without
limitation, any "put" of such Debt to the Borrower or any Subsidiary)
or enables (or, with the giving of notice or lapse of time or both,
would enable) the holders of such Debt or any Person acting on such
holders' behalf to accelerate the maturity thereof (including, without
limitation, any "put" of such Debt to the Borrower or any Subsidiary);
or
(h) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
action to authorize any of the foregoing; or
(i) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order
for relief shall be entered against the Borrower or any Subsidiary
under the federal bankruptcy laws as now or hereafter in effect; or
(j) the Borrower or any member of the Controlled Group
shall fail to pay when due any material amount which it shall have
become liable to pay to the PBGC or
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to a Plan under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans shall be filed under Title IV of ERISA by the Borrower,
any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be
appointed to administer any such Plan or Plans or a proceeding shall
be instituted by a fiduciary of any such Plan or Plans to enforce
Section 515 or 4219(c) (5) of ERISA and such proceeding shall not have
been dismissed within 30 days thereafter; or a condition shall exist
by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated; or the
Borrower or any other member of the Controlled Group shall enter into,
contribute or be obligated to contribute to, terminate or incur any
withdrawal liability with respect to, a Multiemployer Plan; provided,
that no Default or Event of Default shall arise under this paragraph
(j) so long as the maximum potential liability to the Borrower or any
member of the Controlled Group shall be not greater than $500,000; or
(k) one or more judgments or orders for the payment of
money in an aggregate amount in excess of $5,000,000, shall be
rendered against the Borrower or any Subsidiary and such judgment or
order shall continue unsatisfied and unstayed for a period of 30 days;
or
(l) a federal tax lien shall be filed against the
Borrower under Section 6323 of the Code or a lien of the PBGC shall be
filed against the Borrower under Section 4068 of ERISA and in either
case such lien shall (i) secure an obligation, or asserted obligation,
in excess of $500,000 and (ii) remain undischarged or unstayed for a
period of 30 days after the date of filing; or
(m) (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 30% or more of the outstanding
shares of the voting stock of National Data Corporation; or (ii) as of
any date a majority of the Board of Directors of National Data
Corporation consists of individuals who were not either (A) directors
of National Data Corporation as of the corresponding date of the
previous year, (B) selected or nominated to become directors by the
Board of Directors of National Data Corporation of which a majority
consisted of individuals described in clause (A), or (C) selected or
nominated to become directors by the Board of Directors of National
Data Corporation of which a majority consisted of individuals
described in clause (A) and individuals described in clause (B); or
(n) (i) prior to the LLC Conversion Date, National Data
Corporation and its Subsidiaries shall cease to be the "Majority in
Interest" (as defined in the LLC Operating Agreement on the Closing
Date) of the Borrower or its successor, or shall cease to have the
right under the LLC Operating Agreement to designate a majority of the
Board of Directors of the Borrower; or (ii) as of any date on or after
the LLC Conversion Date, (A)
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any Person or two or more Persons acting in concert (other than
National Data Corporation and its Subsidiaries) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act
of 1934) of 20% or more of the outstanding shares of the voting stock
of the Borrower; or (B) a majority of the Board of Directors of the
Borrower consists of individuals who were not either (x) directors of
the Borrower as of the corresponding date of the previous year, (y)
selected or nominated to become directors by the Board of Directors of
the Borrower of which a majority consisted of individuals described in
clause (x), or (z) selected or nominated to become directors by the
Board of Directors of the Borrower of which a majority consisted of
individuals described in clause (x) and individuals described in
clause (y); or
(o) the dissolution or liquidation of the Borrower under
the LLC Operating Agreement or under applicable law, or the
consummation of any LLC Conversion, other than a Permitted LLC
conversion; or
(p) the occurrence of any event, act, occurrence, or
condition which all of the Lenders determine either does or has a
reasonable probability of causing a Material Adverse Effect; provided,
however, that (i) this Section 7.01(p) shall cease to have any force
or effect subsequent to the date that the Borrower delivers to the
Lenders the audited financial statements for the Fiscal Year ending
May 31, 1997, as required by Section 5.01(a), unless on or before such
date the Agent has commenced the exercise of the remedies provided in
this Section 7.01 as a result of an Event of Default having been
declared pursuant to this Section 7.01(p), and (ii) solely for
purposes of this Section 7.01(p), no Material Adverse Effect shall be
deemed to exist unless the conditions set forth in clause (b) or
clause (c) of the definition of "Material Adverse Effect" shall be
satisfied; or
(q) (i) any of the Subsidiary Guarantees shall cease to
be enforceable or (ii) the Borrower or any Subsidiary Guarantor shall
assert that any Loan Document is not enforceable;
then, and in every such event, (i) the Agent shall, if requested by the
Required Lenders (or, solely in the case of Section 7.01(p), all of the
Lenders), by notice to the Borrower terminate the Commitments and they shall
thereupon terminate, (ii) any Lender may terminate its obligation to fund a
Competitive Bid Loan; and (iii) the Agent shall, if requested by the Required
Lenders (or, solely in the case of Section 7.01(p), all of the Lenders), by
notice to the Borrower declare the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower together with interest at the rate
specified in Section 2.05(e) accruing on the principal amount thereof from and
after the date of such Event of Default; provided that if any Event of Default
specified in paragraph (h) or (i) above occurs with respect to the Borrower,
without any notice to the Borrower or any other act by the Agent or the
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Lenders, the Commitments shall thereupon terminate and the Notes (together with
accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower together with interest thereon at the rate
specified in Section 2.05(e) accruing on the principal amount thereof from and
after the date of such Event of Default. Notwithstanding the foregoing, the
Agent shall have available to it all other remedies at law or equity, and shall
exercise any one or all of them at the request of the Required Lenders.
SECTION 7.02. Notice of Default. The Agent shall give notice to
the Borrower of any Default under Section 7.01(c) promptly upon being requested
to do so by any Lender and shall thereupon notify all the Lenders thereof.
ARTICLE VIII
THE AGENT
SECTION 8.01. Appointment; Powers and Immunities. Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto. The Agent: (a)
shall have no duties or responsibilities except as expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee for any Lender; (b) shall not
be responsible to the Lenders for any recitals, statements, representations or
warranties contained in this Agreement or any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by
any Lender under, this Agreement or any other Loan Document, or for the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by the Borrower to perform
any of its obligations hereunder or thereunder; (c) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder or under
any other Loan Document except to the extent requested by the Required Lenders,
and then only on terms and conditions satisfactory to the Agent, and (d) shall
not be responsible for any action taken or omitted to be taken by it hereunder
or under any other Loan Document or any other document or instrument referred
to or provided for herein or therein or in connection herewith or therewith,
except for its own gross negligence or wilful misconduct. The Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. The provisions of this Article VIII are solely for the
benefit of the Agent and the Lenders, and the Borrower shall not have any
rights as a third party beneficiary of any of the provisions hereof, other than
the right of the Borrower to consent to the appointment of a successor Agent as
set forth in the second sentence of Section 8.09. In performing its functions
and duties under this Agreement and under the other Loan Documents, the Agent
shall act solely as agent of the Lenders and does not assume and shall not be
deemed
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to have assumed any obligation towards or relationship of agency or trust with
or for the Borrower. The duties of the Agent shall be ministerial and
administrative in nature, and the Agent shall not have by reason of this
Agreement or any other Loan Document a fiduciary relationship in respect of any
Lender.
SECTION 8.02. Reliance by Agent. The Agent shall be entitled to
rely upon any certification, notice or other communication (including any
thereof by telephone, telefax, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel, independent
accountants or other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Lenders, and such instructions of the Required Lenders in any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
SECTION 8.03. Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than the
nonpayment of principal of or interest on the Loans) unless the Agent has
received notice from a Lender or the Borrower specifying 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 of the occurrence of a Default or an
Event of Default, the Agent shall give prompt notice thereof to the Lenders.
The Agent shall give each Lender prompt notice of each nonpayment of principal
of or interest on the Loans whether or not it has received any notice of the
occurrence of such nonpayment. The Agent shall (subject to Section 8.08 and
Section 9.06) take such action hereunder with respect to such Default or Event
of Default as shall be directed by the Required Lenders, 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.
SECTION 8.04. Rights of Agent as a Lender. With respect to the
Loans made by it, First Chicago in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include First Chicago
a in its individual capacity. The Agent may (without having to account
therefor to any Lender) accept deposits from, lend money to and generally
engage in any kind of banking, trust or other business with the Borrower and
any of its Affiliates) as if it were not acting as the Agent, and the Agent may
accept fees and other consideration from the Borrower (in addition to any
agency fees and arrangement fees heretofore agreed to between the Borrower and
the Agent) for services in connection with this Agreement or any other Loan
Document or otherwise without having to account for the same to the Lenders.
SECTION 8.05. Indemnification. Each Lender severally agrees to
indemnify the Agent, to the extent the Agent shall not have been reimbursed by
the Borrower, ratably in
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accordance with its Commitment, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (excluding, unless an Event of Default has
occurred and is continuing, the normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or the enforcement
of any of the terms hereof or thereof or any such other documents; provided,
however that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or wilful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished.
SECTION 8.06. Payee of Note Treated as Owner. The Agent may deem
and treat the payee of any Note as the owner thereof for all purposes hereof
unless and until a written notice of the assignment or transfer thereof shall
have been filed with the Agent and the provisions of Section 9.08(c) have been
satisfied. Any requests, authority or consent of any Person who at the time of
making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of that Note or of any Note or Notes issued in exchange therefor or
replacement thereof.
SECTION 8.07. Nonreliance on Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and decision to enter
into this Agreement and 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 analysis and
decisions in taking or not taking action under this Agreement or any of the
other Loan Documents. The Agent shall not be required to keep itself informed
as to the performance or observance by the Borrower of this Agreement or any of
the other Loan Documents or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Borrower or any
other Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Agent hereunder or
under the other Loan Documents, 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
other Person (or any of their Affiliates) which may come into the possession of
the Agent.
SECTION 8.08. Failure to Act. Except for action expressly required
of the Agent hereunder or under the other Loan Documents, the Agent shall in
all cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction by
the Lenders of their indemnification obligations under Section 8.05 against any
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and all liability and expense which may be incurred by the Agent by reason of
taking, continuing to take, or failing to take any such action.
SECTION 8.09. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Lenders and the Borrower
and the Agent may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent, provided that so long as no Event of
Default shall have occurred and be continuing, such appointment shall be
subject to the prior written consent of the Borrower, which consent shall not
be unreasonably withheld or delayed. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent's notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent. Any successor Agent shall be a bank
which has a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article VIII shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent
hereunder.
SECTION 8.10. LIMITATION OF DAMAGES. THE AGENT SHALL NOT BE
RESPONSIBLE OR LIABLE TO ANY PERSON OR ENTITY FOR ANY PUNITIVE OR EXEMPLARY
DAMAGES WHICH MAY BE ALLEGED AGAINST THE AGENT IN ITS AGENCY CAPACITY AS A
RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, telecopier or similar writing) and shall be given to such party at its
address or telecopier or telex number set forth on the signature pages hereof
or such other address or telecopier or telex number as such party may hereafter
specify for the purpose by notice to each other party. Each such notice,
request or other communication shall be effective (i) if given by telecopier or
telex, when such telecopier or telex is transmitted to the telecopier or telex
number specified in this Section and the appropriate confirmation or answerback
is received, (ii) if given by certified mail return-receipt requested, on the
date set forth on the receipt (provided, that any refusal to accept any such
notice shall be
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deemed to be notice thereof as of the time of any such refusal), addressed as
aforesaid or (iii) if given by any other means, when delivered at the address
specified in this Section; provided that notices to the Agent under Article II
shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent, any
Lender or the Borrower in exercising any right, power or privilege hereunder or
under any Note shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Documentary Taxes. The Borrower shall pay
(i) all reasonable out-of-pocket costs and expenses of the Agent, including the
fees and disbursements of Agent's counsel (including King & Spalding and the
allocated costs of any employees of the Agent acting as such counsel), in
connection with the preparation of this Agreement and the other Loan Documents,
any waiver or consent hereunder or thereunder or any amendment and (ii) if a
Default occurs, all reasonable out-of-pocket expenses incurred by the Agent and
any Lender, including reasonable fees and disbursements of counsel, in
connection with such Default and collection and other enforcement proceedings
resulting therefrom, including reasonable out-of-pocket expenses incurred in
enforcing this Agreement and the other Loan Documents. The Borrower shall
indemnify the Agent and each Lender against any transfer taxes, documentary
taxes, assessments or charges made by any Authority by reason of the execution
and delivery of this Agreement or the other Loan Documents.
SECTION 9.04. Indemnification.
(a) The Borrower shall indemnify the Agent, the Lenders
and each affiliate thereof and their respective directors, officers, employees
and agents (each an "Indemnified Party") from, and hold each of them harmless
against, any and all losses, liabilities, claims or damages to which any of
them may become subject, insofar as such losses, liabilities, claims or damages
arise out of or result from any actual or proposed use by the Borrower of the
proceeds of any extension of credit by any Lender hereunder or breach by the
Borrower of this Agreement or any other Loan Document or from any
investigation, litigation or other proceeding (including any threatened
investigation or proceeding) relating to the foregoing (an "Indemnity
Proceeding"), and the Borrower shall reimburse each Indemnified Party, upon
demand (but no more frequently than every Fiscal Quarter) for any reasonable
expenses (including, without limitation, reasonable legal fees) incurred in
connection with any such investigation or proceeding ("Claims and Expenses");
but excluding any such losses, liabilities, claims, damages or expenses
incurred by reason of the gross negligence or wilful misconduct of the
Indemnified Party; provided, that should the Borrower pay any amounts to the
Agent or the Lenders due to this Section, and it shall be determined that the
harm being indemnified against resulted from the Agent's or any Lender's gross
negligence or wilful misconduct, then such party receiving such payment shall
rebate such payment to the Borrower, together with interest thereon accruing at
the Federal Funds Rate from the date such payment was made until the date such
rebate is received
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by the Borrower (calculated for the actual number of days elapsed on the basis
of a 365 day year).
(b) If the Borrower is required to indemnify an
Indemnified Party pursuant hereto and has provided evidence reasonably
satisfactory to such Indemnified Party that the Borrower has the financial
wherewithal to reimburse such Indemnified Party for any amount paid by such
Indemnified Party with respect to such Indemnity Proceeding, such Indemnified
Party shall not settle or compromise any such Indemnity Proceeding without the
prior written consent of the Borrower (which consent shall not be unreasonably
withheld or delayed).
(c) If a claim is to be made by an Indemnified Party
under this Section, the Indemnified Party shall give written notice to the
Borrower promptly after the Indemnified Party receives actual notice of any
Claims and Expenses incurred or instituted for which the indemnification is
sought; provided, that, the failure to give such prompt notice shall not
decrease the Claims and Expenses payable by the Borrower, except to the extent
that such failure has caused the Borrower to forfeit any substantive right of a
material nature. If requested by the Borrower in writing, and so long as (i)
no Event of Default shall have occurred and be continuing and (ii) the Borrower
has acknowledged in writing to the Indemnified Party that the Borrower shall be
obligated under the terms of its indemnity hereunder in connection with such
Indemnity Proceeding (subject to the exclusion of any losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Indemnified Party), the Borrower may, at its
election, conduct the defense of any such Indemnified Proceeding to the extent
such contest may be conducted in good faith on legally supported grounds. If
any lawsuit or enforcement action is filed against any Indemnified Party
entitled to the benefit of indemnity under this Section, written notice thereof
shall be given to the Borrower as soon as practicable (and in any event within
15 days after the service of the citation or summons). Notwithstanding the
foregoing, the failure so to notify the Borrower as provided in this Section
will not relieve the Borrower from liability hereunder. After such notice, the
Borrower shall be entitled, if it so elects, to take control of the defense and
investigation of such lawsuit or action and to employ and engage counsel of its
own choice reasonably acceptable to the Indemnified Party to handle and defend
the same, at the Borrower's cost, risk and expense; provided however, that the
Borrower and its counsel shall proceed with diligence and in good faith with
respect thereto. If (i) the engagement of such counsel by the Borrower would
present a conflict of interest which would prevent such counsel from
effectively defending such action on behalf of the Indemnified Party, (ii) the
defendants in, or targets of, any such lawsuit or action include both the
Indemnified Party and Borrower, and the Indemnified Party reasonably concludes
that there may be legal defenses available to it that are different from or in
addition to those available to the Borrower, (iii) the Borrower fails to assume
the defense of the lawsuit or action or to employ counsel reasonably
satisfactory to such Indemnified Party, in either case in a timely manner, or
(iv) an Event of Default shall occur and be continuing, then such Indemnified
Party may employ separate counsel to represent or defend it in any such action
or proceeding and the Borrower will pay the fees and disbursements of such
counsel; provided, however that each Indemnified Party shall, in connection
with any matter covered by this Section which also involves other
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Indemnified Parties, use reasonable efforts to avoid unnecessary duplication
of efforts by counsel for all indemnities. Should the Borrower be entitled to
conduct the defense of any Indemnity Proceeding pursuant to the terms of this
Section, the Indemnified Party shall cooperate (with all Claims and Expenses
associated therewith to be paid by the Borrower) in all reasonable respects
with the Borrower and such attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom; provided, however that
the Indemnified Party may, at its own cost (except as set forth in, and in
accordance with, the foregoing sentence), participate in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom.
(d) The Agent and each Lender agree that in the event
that any Indemnity Proceeding is asserted or threatened in writing or
instituted against it or any other party entitled to indemnification hereunder,
the Agent or such Lender shall promptly notify the Borrower thereof in writing
and agree, to the extent appropriate, to consult with the Borrower with a view
to minimizing the cost to the Borrower of its obligations under this Section;
provided, that, the failure to so notify the Borrower will not relieve the
Borrower from liability hereunder except to the extent such failure has caused
the Borrower to forfeit any substantive right of a material nature.
SECTION 9.05. Sharing of Setoffs. Each Lender agrees that if it
shall, by exercising any right of setoff or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest owing
with respect to the Note held by it which is greater than the proportion
received by any other Lender in respect of the aggregate amount of all
principal and interest owing with respect to the Note held by such other
Lender, the Lender receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other Lenders owing to
such other Lenders, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to
the Notes held by the Lenders owing to such other Lenders shall be shared by
the Lenders pro rata; provided that (i) nothing in this Section shall impair
the right of any Lender to exercise any right of setoff or counterclaim it may
have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Notes, and
(ii) if all or any portion of such payment received by the purchasing Lender is
thereafter recovered from such purchasing Lender, such purchase from each other
Lender shall be rescinded and such other Lender shall repay to the purchasing
Lender the purchase price of such participation to the extent of such recovery
together with an amount equal to such other Lender's ratable share (according
to the proportion of (x) the amount of such other Lender's required repayment
to (y) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered. The Borrower agrees, to the fullest extent it
may effectively do so under applicable law, that any holder of a participation
in a Note, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of setoff or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
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SECTION 9.06. Amendments and Waivers.
(a) Except as otherwise specifically provided herein, any
provision of this Agreement, the Notes or any other Loan Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Borrower and the Required Lenders (and, if the rights or
duties of the Agent are affected thereby, by the Agent); provided that, except
as provided in the next succeeding proviso, no such amendment or waiver shall,
unless signed by all Lenders, (i) change the Commitment of any Lender or
subject any Lender to any additional obligation, (ii) change the principal of
or rate of interest on any Loan or any fees hereunder (other than fees payable
under the Agent's Letter Agreement), (iii) change the date fixed for any
payment of principal of or interest on any Loan or any fees (other than fees
payable under the Agent's Letter Agreement) hereunder (including, without
limitation, any payments required to be made pursuant to Section 2.05(a)(iii)),
(iv) change the amount of principal, interest or fees due on any date fixed for
the payment thereof, (v) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Lenders, which
shall be required for the Lenders or any of them to take any action under this
Section or any other provision of this Agreement, (vi) change the manner of
application of any payments made under this Agreement or the Notes, or (vii)
reduce any obligation owed under or release any Guarantee (except as permitted
under Section 5.04 or 6.10 in connection with the dissolution, sale or other
disposition of a Subsidiary Guarantor) given to support payment of the Loans.
(b) The Borrower will not solicit, request or negotiate
for or with respect to any proposed waiver or amendment of any of the
provisions of this Agreement unless each Lender shall be informed thereof by
the Borrower and shall be afforded an opportunity of considering the same and
shall be supplied by the Borrower with both (i) reasonably sufficient
information to enable it to make an informed decision with respect thereto, and
(ii) substantially the same information as supplied by the Borrower to any
other Lender. Executed or true and correct copies of any waiver or consent
effected pursuant to the provisions of this Agreement shall be delivered by the
Borrower to each Lender within two Business Days following the date on which
the same shall have been executed and delivered by the requisite percentage of
Lenders. The Borrower will not, directly or indirectly, pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, to any Lender (in its capacity as such) as consideration for
or as an inducement to the entering into by such Lender of any waiver or
amendment of any of the terms and provisions of this Agreement unless such
remuneration is concurrently paid, on the same terms, ratably to all such
Lenders.
SECTION 9.07. No Margin Stock Collateral. Each of the Lenders
represents to the Agent, each of the other Lenders and the Borrower that it in
good faith is not, directly or indirectly (by negative pledge or otherwise),
relying upon any Margin Stock as collateral in the extension or maintenance of
the credit provided for in this Agreement.
SECTION 9.08. Successors and Assigns.
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(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement without the prior written
consent of the Agent and the Lenders.
(b) Any Lender may at any time sell to one or more
Persons (each a "Participant") participating interests in any Loan owing to
such Lender, any Note held by such Lender, any Commitment hereunder or any
other interest of such Lender hereunder. In the event of any such sale by a
Lender of a participating interest to a Participant, such Lender's obligations
under this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note for all purposes under this Agreement, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement. In no event
shall a Lender that sells a participation be obligated to the Participant to
take or refrain from taking any action hereunder except that such Lender may
agree that it will not (except as provided below), without the consent of the
Participant, agree to (i) the change of any date fixed for the payment of
principal of or interest on the related loan or loans, (ii) the change of the
amount of any principal, interest or fees due on any date fixed for the payment
thereof with respect to the related loan or loans, (iii) the change of the
principal of the related loan or loans, (iv) any change in the rate at which
either interest is payable thereon or (if the Participant is entitled to any
part thereof) facility fee is payable hereunder from the rate at which the
Participant is entitled to receive interest or facility fee (as the case may
be) in respect of such participation, or (v) reduction of any obligation owing
under or the release of any Guarantee (except as permitted under Section 5.04
or 6.12 in connection with the dissolution, sale or other disposition of a
Subsidiary Guarantor) given to support payment of the Loans. Each Lender
selling a participating interest in any Loan, Note, Commitment or other
interest under this Agreement, other than a Competitive Bid Loan or Competitive
Bid Note, shall, within 10 Business Days of such sale, provide the Borrower and
the Agent with written notification stating that such sale has occurred and
identifying the Participant and the interest purchased by such Participant. The
Borrower acknowledges and agrees that the benefits of Sections 2.06 through
2.09 shall continue in effect with respect to the full amount of each Lender's
Loans and Commitment, notwithstanding its sale of participating interests
therein as contemplated hereby.
(c) Any Lender may at any time assign to one or more
banks or financial institutions (each an "Assignee") all, or a proportionate
part of all, of its rights and obligations under this Agreement, the Notes, and
any other Loan Documents, and such Assignee shall assume all such rights and
obligations, pursuant to an Assignment Agreement in the form attached hereto as
Exhibit "F", executed by such Assignee, such transferor Lender and the Agent
(and, in the case of an Assignee that is not then a Lender, by the Borrower);
provided that (i) no interest may be sold by a Lender pursuant to this
paragraph (c) unless the Assignee shall agree to assume ratably equivalent
portions of the transferor Lender's Commitment, (ii) the amount of the
Commitment of the assigning Lender subject to such assignment (determined as of
the effective
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date of the assignment) shall be equal to $5,000,000 (or any larger multiple of
$1,000,000), and (iii) no interest may be sold by a Lender pursuant to this
paragraph (c) to any Assignee that is not then a Lender, or an Affiliate of a
Lender, without the prior written consent of the Borrower and the Agent, which
consent of the Borrower and the Agent shall not be unreasonably withheld or
delayed. Upon (A) execution of the Assignment Agreement by such transferor
Lender, such Assignee, the Agent and (if applicable) the Borrower, (B) delivery
of a Notice of Assignment and an executed copy of the Assignment Agreement to
the Borrower and the Agent, (C) payment by such Assignee to such transferor
Lender of an amount equal to the purchase price agreed between such transferor
Lender and such Assignee, and (D) payment of a processing and recordation fee
of $2,500 to the Agent, such Assignee shall, on the "Effective Date" as
provided in the Assignment Agreement, for all purposes be a Lender party to
this Agreement and shall have all the rights and obligations of a Lender under
this Agreement to the same extent as if it were an original party hereto with a
Commitment as set forth in such instrument of assumption, and the transferor
Lender shall be released from its obligations hereunder to a corresponding
extent, and no further consent or action by the Borrower, the Lenders or the
Agent shall be required. Upon the consummation of any transfer to an Assignee
pursuant to this paragraph (c), the transferor Lender, the Agent and the
Borrower shall make appropriate arrangements so that, if required, a new Note
is issued to such Assignee and, if necessary, a new Note shall be issued to the
transferor Lender.
(d) Subject to the provisions of Section 9.09, the
Borrower authorizes each Lender to disclose to any Participant, Assignee or
other transferee (each a "Transferee") and any prospective Transferee any and
all financial information in such Lender's possession concerning the Borrower
which has been delivered to such Lender by the Borrower pursuant to this
Agreement or which has been delivered to such Lender by the Borrower in
connection with such Lender's credit evaluation prior to entering into this
Agreement.
(e) Transferees shall be entitled to receive a greater
payment under Section 2.06 or 2.07 than the transferor Lender would have been
entitled to receive with respect to the rights transferred, only if such
transfer is made with the Borrower's prior written consent or by reason of the
provisions of Section 2.10 requiring such Lender to designate a different
Lending Installation under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
(f) Anything in this Section 9.08 to the contrary
notwithstanding, any Lender may assign and pledge all or any portion of the
Loans and/or obligations owing to it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect of such
assigned Loans and/or obligations made by the Borrower to the assigning and/or
pledging Lender in accordance with the terms of this Agreement shall satisfy
the Borrower's obligations hereunder in respect of such assigned Loans and/or
obligations to the extent of such payment. No such assignment shall release
the assigning and/or pledging Lender from its obligations hereunder.
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SECTION 9.09. Confidentiality. Each Lender agrees to exercise its
reasonable efforts and in any event not less than the same degree of care as it
uses to maintain its own confidential information in maintaining the
confidentiality of any information delivered or made available by the Borrower
to it which is clearly indicated to be confidential information from any one
other than persons employed or retained by such Lender who are or are expected
to become engaged in evaluating, approving, structuring or administering the
Loans; provided, however that nothing herein shall prevent any Lender from
disclosing such information (i) to any other Lender or an affiliate of any
Lender, (ii) upon the order of any court or administrative agency, (iii) upon
the request or demand of any regulatory agency or authority having jurisdiction
over such Lender, (iv) which has been publicly disclosed by means which are not
violative of this Section 9.09, (v) to the extent reasonably required in
connection with any litigation to which the Agent, any Lender or their
respective Affiliates may be a party, (vi) to the extent reasonably required in
connection with the exercise of any right, power of remedy hereunder or under
any of the other Loan Documents, (vii) to such Lender's legal counsel and
independent auditors and (viii) to any actual or proposed Participant, Assignee
or other Transferee of all or part of its rights hereunder which has agreed in
writing (aa) to be bound by the provisions of this Section 9.09 and (bb) that
the Borrower is a third party beneficiary of such agreement, and (cc) to return
all copies of the confidential information to the Agent if the proposed
assignment or participation is not consummated.
SECTION 9.10. Representation by Lenders. Each Lender hereby
represents that it is a commercial lender or financial institution which makes
Loans in the ordinary course of its business and that it will make its Loans
hereunder for its own account in the ordinary course of such business;
provided, however that, subject to Section 9.08, the disposition of the Note or
Notes held by that Lender shall at all times be within its exclusive control.
SECTION 9.11. Obligations Several. The obligations of each Lender
hereunder are several, and no Lender shall be responsible for the obligations
or commitment of any other Lender hereunder. Nothing contained in this
Agreement and no action taken by Lenders pursuant hereto shall be deemed to
constitute the Lenders to be a partnership, an, association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement or any
other Loan Document and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
SECTION 9.12. Georgia Law. This Agreement and each Note shall be
construed in accordance with and governed by the law of the State of Georgia
without regard to the effect of conflicts of laws.
SECTION 9.13. Interpretation. No provision of this Agreement or
any of the other Loan Documents shall be construed against or interpreted to
the disadvantage of any party hereto
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by any court or other governmental or judicial authority by reason of such
party having or being deemed to have structured or dictated such provision.
SECTION 9.14. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION. THE
BORROWER (A) AND EACH OF THE LENDERS AND THE AGENT IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, (B) SUBMITS TO THE NONEXCLUSIVE PERSONAL
JURISDICTION IN THE STATE OF GEORGIA, THE COURTS THEREOF AND THE UNITED STATES
DISTRICT COURTS SITTING THEREIN, FOR THE ENFORCEMENT OF THIS AGREEMENT, THE
NOTES AND THE OTHER LOAN DOCUMENTS, AND (C) WAIVES ANY AND ALL PERSONAL RIGHTS
UNDER THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING, WITHOUT
LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE WITHIN THE STATE
OF GEORGIA FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS AGREEMENT, THE NOTES
OR THE OTHER LOAN DOCUMENTS. NOTHING HEREIN CONTAINED, HOWEVER, SHALL PREVENT
THE AGENT OR THE BANKS FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS
AGAINST THE BORROWER PERSONALLY, AND AGAINST ANY ASSETS OF THE BORROWER, WITHIN
ANY OTHER STATE OR JURISDICTION.
SECTION 9.15. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 9.16. Severability. In case any one or more of the
provisions contained in this Agreement, the Notes or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 9.17. Interest. In no event shall the amount of interest,
and all charges, amounts or fees contracted for, charged or collected pursuant
to this Agreement, the Notes or the other Loan Documents and deemed to be
interest under applicable law (collectively, "Interest") exceed the highest
rate of interest allowed by applicable law (the "Maximum Rate"), and in the
event any such payment is inadvertently received by any Lender, then the excess
sum (the "Excess") shall be credited as a payment of principal, unless the
Borrower shall notify such Lender in writing that it elects to have the Excess
returned forthwith. It is the express intent hereof that the Borrower not pay
and the Lenders not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by the Borrower under
applicable law. The right to accelerate maturity of any of the Loans does not
include the right to accelerate any interest that has not otherwise accrued on
the date of such acceleration, and the
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Agent and the Lenders do not intend to collect any unearned interest in the
event of any such acceleration. All monies paid to the Agent or the Lenders
hereunder or under any of the Notes or the other Loan Documents, whether at
maturity or by prepayment, shall be subject to rebate of unearned interest as
and to the extent required by applicable law. By the execution of this
Agreement, the Borrower covenants, to the fullest extent permitted by law, that
(i) the credit or return of any Excess shall constitute the acceptance by the
Borrower of such Excess, and (ii) the Borrower shall not seek or pursue any
other remedy, legal or equitable, against the Agent or any Bank, based in whole
or in part upon contracting for charging or receiving any Interest in excess of
the Maximum Rate. For the purpose of determining whether or not any Excess has
been contracted for, charged or received by the Agent or any Lender, all
interest at any time contracted for, charged or received from the Borrower in
connection with this Agreement, the Notes or any of the other Loan Documents
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of the
Commitments. The Borrower, the Agent and each Lender shall, to the maximum
extent permitted under applicable law, (i) characterize any non-principal
payment as an expense, fee or premium rather than as Interest and (ii) exclude
voluntary prepayments and the effects thereof. The provisions of this Section
shall be deemed to be incorporated into each Note and each of the other Loan
Documents (whether or not any provision of this Section is referred to
therein). All such Loan Documents and communications relating to any Interest
owed by the Borrower and all figures set forth therein shall, for the sole
purpose of computing the extent of obligations hereunder and under the Notes
and the other Loan Documents be automatically recomputed by the Borrower, and
by any court considering the same, to give effect to the adjustments or credits
required by this Section.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers or member, as the case
may be, as of the day and year first above written.
GLOBAL PAYMENT SYSTEMS LLC
Address for Notices: By:
- -------------------- ---------------------------------
Name: M.P. Stevenson
4 Corporate Square Title: Treasurer
Atlanta, Georgia 30329-2010
Attention: Office of Corporate Secretary Attest:
Telecopier No.: 404/728-2990 -----------------------------
Name: E. Michael Ingram
Title: Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent and as a Lender
Address for Notices By:
- ------------------- ---------------------------------
Name:
One First National Plaza --------------------------
Mail Suite 0167, Tenth Floor Title:
Chicago, Illinois 60670 --------------------------
Attention: Edwin A. Adams, Jr.
Telecopier No.: 312/732-5435
INITIAL COMMITMENT: Lending Installation:
- ------------------ --------------------
$24,000,000
One First National Plaza
Chicago, Illinois
COMMITMENT ON AND AFTER
COMMITMENT REDUCTION
DATE:
- -----------------------
$20,000,000
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SUNTRUST BANK, ATLANTA
Address for Notices By:
- ------------------- ---------------------------------
Name:
25 Park Place, N.E. --------------------------
23rd Floor Title:
Atlanta, Georgia 30303 --------------------------
Attention: Dennis James
Telecopier No.:404/588-8833 By:
---------------------------------
Name:
--------------------------
Title:
--------------------------
INITIAL COMMITMENT: Lending Installation:
- ------------------ --------------------
$16,000,000
25 Park Place, N.E.
Atlanta, Georgia
COMMITMENT ON AND AFTER
COMMITMENT REDUCTION
DATE:
- -----------------------
$13,333,333
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WACHOVIA BANK OF GEORGIA, N.A.
Address for Notices By:
- ------------------- ---------------------------------
Name:
191 Peachtree Street --------------------------
29th Floor Title:
Atlanta, Georgia 30303 --------------------------
Attention: William B. Nixon
Telecopier No.: 404/332-5016
INITIAL COMMITMENT: Lending Installation:
- ------------------ --------------------
$20,000,000
191 Peachtree Street
Atlanta, Georgia
COMMITMENT ON AND AFTER
COMMITMENT REDUCTION
DATE:
- -----------------------
$16,666,667
INITIAL AGGREGATE COMMITMENT:
- ----------------------------
$60,000,000
AGGREGATE COMMITMENT ON AND
AFTER COMMITMENT REDUCTION DATE:
- --------------------------------
$50,000,000
-71-
<PAGE> 1
EXHIBIT 10(iv)
$50,000,000
CREDIT AGREEMENT
dated as of
May 31, 1996
among
NATIONAL DATA CORPORATION
The Banks a Party Hereto
and
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
<PAGE> 2
TABLE OF CONTENTS
CREDIT AGREEMENT
<TABLE>
<CAPTION> Page
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ARTICLE I
<S> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 1.03. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.04. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 1.05. Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.01.A Commitments to Lend Syndicated Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.01.B Method of Borrowing Syndicated Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.02. Money Market Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.03. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.04. Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.05. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.06. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.07. Optional Termination or Reduction of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.08. Mandatory Reduction and Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.09. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.10. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.11. General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12. Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
i
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<TABLE>
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ARTICLE III
<S> <C>
CONDITIONS TO BORROWINGS . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.01. Conditions to First Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.02. Conditions to All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.02. Corporate and Governmental Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.04. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.05. No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.06. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.07. Compliance with Laws; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.08. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.09. Not an Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.10. Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.11. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.12. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.13. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.14. Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.15. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.16. Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
ii
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<TABLE>
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ARTICLE V
<S> <C>
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.02. Inspection of Property, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.03. Ratio of Consolidated Funded Debt to Consolidated Cash Flow . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.04. Minimum Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.05. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.06. Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.07. Loans or Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.08. Investments; Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.09. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.10. Future Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.11. Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.12. Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.13. Consolidations, Mergers and Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.14. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.15. Compliance with Laws; Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.17. Change in Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.18. Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.19. Environmental Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.20. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.21. Environmental Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
iii
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<TABLE>
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<S> <C>
SECTION 5.22. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI
DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.01. Appointment; Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.02. Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.03. Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.04. Rights of Agent as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.05. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.06. Payee of Note Treated as Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.07. Nonreliance on Agent and Other Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.08. Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.09. Resignation or Removal of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 7.10. Limitation of Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION . . . . . . . . . . . . . . . . . . 54
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
iv
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<TABLE>
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----
<S> <C>
SECTION 8.04. Base Rate Loans Substituted for Affected Euro-Dollar Loans . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 8.05. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.03. Expenses; Documentary Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.04. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.05. Sharing of Setoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.06. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.07. No Margin Stock Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.08. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.09. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.10. Representation by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.11. Obligations Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.12. Georgia Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.13. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.14. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.16. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.17. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(SECTION 5.07) Loans or Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 5.08) Investments; Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
</TABLE>
v
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<TABLE>
<S> <C>
EXHIBIT A-1 Form of Syndicated Loan Note
EXHIBIT A-2 Form of Money Market Loan Note
EXHIBIT B Form of Opinions of Counsel for the Borrower and
the Subsidiary Guarantors
EXHIBIT C Form of Opinion of Special Counsel for the Banks
and the Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Subsidiary Guaranty
EXHIBIT H Form of Money Market Quote Request
EXHIBIT I Form of Money Market Quote
EXHIBIT J Form of Contribution Agreement
SCHEDULE 4.01 List of Jurisdictions in which the Borrower is
Qualified to Transact Business
SCHEDULE 4.08 List of Subsidiaries/Jurisdictions where Qualified
to Transact Business
</TABLE>
vi
<PAGE> 8
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of May 31, 1996 among NATIONAL DATA
CORPORATION, the BANKS listed on the signature pages hereof and WACHOVIA BANK
OF GEORGIA, N.A., as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this Section
1.01 shall, for all purposes of this Agreement and any amendment hereto (except
as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.05(c).
"Affiliate" means (i) any Person that directly, or indirectly
through one or more intermediaries, controls the Borrower (a "Controlling
Person"), (ii) any Person (other than the Borrower or a Subsidiary) which is
controlled by or is under common control with a Controlling Person, or (iii) any
Person (other than a Subsidiary) of which the Borrower owns, directly or
indirectly, 20% or more of the common stock or equivalent equity interests. As
used herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agent" means Wachovia Bank of Georgia, N.A., a national
banking association organized under the laws of the United States of America, in
its capacity as agent for the Banks hereunder, its successors and permitted
assigns in such capacity, and any other Person appointed as Agent in accordance
with Section 7.09.
"Agent's Letter Agreement" means that certain letter
agreement, dated as of May 9, 1996, between the Borrower and the Agent relating
to the structure of the Loans, and certain fees from time to time payable by
the Borrower to the Agent, together with all amendments and supplements
thereto.
<PAGE> 9
"Agreement" means this Credit Agreement, together with all
amendments and supplements hereto.
"Applicable Margin" has the meaning set forth in Section
2.05(a).
"Asset Impairment Charges" has the meaning set forth in Section
4.04(b).
"Assignee" has the meaning set forth in Section 9.08(c).
"Assignment and Acceptance" means an Assignment and Acceptance
executed in accordance with Section 9.08(c) in the form attached hereto as
Exhibit D.
"ATT" means collectively, both (i) AT&T Capital Leasing
Services, Inc., a Massachusetts corporation, and (ii) Eaton Financial
Corporation, a Massachusetts corporation, a subsidiary of AT&T Capital
Corporation.
"ATT Agreements" means both (i) that certain lease program
agreement dated as of March 7, 1994 with Eaton Financial Corporation, and (ii)
that certain purchase agreement dated as of December 30, 1994 with AT&T Capital
Leasing Services, Inc., together with all amendments and supplements thereto.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages hereof as
having a Commitment, and its successors and permitted assigns.
"Base Rate" means for any Base Rate Loan for any day, the rate
per annum equal to the higher as of such day of (i) the Prime Rate, and (ii)
one-half of one percent above the Federal Funds Rate. For purposes of
determining the Base Rate for any day, changes in the Prime Rate or the Federal
Funds Rate shall be determined as at the end of any day and shall be effective
on the date of each such change.
"Base Rate Loan" means a Loan to be made as a Base Rate Loan
pursuant to the applicable Notice of Borrowing, Section 2.01.B(f), or Article
VIII, as applicable.
"Borrower" means National Data Corporation, a Delaware
corporation, and its successors and permitted assigns.
2
<PAGE> 10
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower (i) at the same time by all of the Banks, in the case of a
Syndicated Borrowing, or (ii) separately by one or more Banks, in the case of a
Money Market Borrowing, in each case pursuant to Article II. A Borrowing is a
"Money Market Borrowing" if such Loans are made pursuant to Section 2.02 or a
"Syndicated Borrowing" if such Loans are made pursuant to Section 2.01.A. A
Borrowing is a "Base Rate Borrowing" if such Loans are Base Rate Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans.
"Capital Stock" means any nonredeemable capital stock of the
Borrower or any Consolidated Subsidiary (to the extent issued to a Person other
than the Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Section 9601 et. seq. and its
implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in Section
8.02.
"Claims and Expenses" has the meaning set forth in Section
9.04(a).
"Closing Date" means May 31, 1996.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor Federal tax code.
"Comerica" means, collectively, (i) NDPS Comerica Alliance,
LLC, a Georgia limited liability company, (ii) the subsidiaries of such company,
and (iii) the successors of the Persons described in the foregoing clauses (i)
and (ii) resulting from a conversion of such Person to a corporation or a
limited liability company.
"Commitment" means, as to any Bank, the obligation of such Bank
to make Loans in an aggregate principal amount at any time outstanding up to but
not exceeding the amount set forth opposite such Bank's name on the signature
pages hereof (as the same may be reduced from time to time pursuant to the
provisions of this Agreement).
3
<PAGE> 11
"Compliance Certificate" has the meaning set forth in Section
5.01(c).
"Consolidated Cash Flow" means, as at any date of determination
for any period, with respect to the Borrower and its Consolidated Subsidiaries
on a consolidated basis for such period and in accordance with GAAP, the sum of
(i) Consolidated Net Income, plus (ii) depreciation and amortization, plus (iii)
all other non-cash charges (less non-cash gains). Consolidated Cash Flow shall
be calculated with respect to (a) the Fiscal Quarter ending May 31, 1996, for
the Fiscal Quarter just ended and the immediately preceding three Fiscal
Quarters (provided that "Consolidated Subsidiaries" as used in the calculation
of this definition solely with respect to this clause (a) shall include GPS and
Comerica), (b) the Fiscal Quarter ending August 31, 1996, the Consolidated Cash
Flow for such Fiscal Quarter multiplied by 4, (c) the Fiscal Quarter ending
November 30, 1996, the cumulative Consolidated Cash Flow for such Fiscal Year
multiplied by 2, (d) the Fiscal Quarter ending February 28, 1997, the cumulative
Consolidated Cash Flow for such Fiscal Year divided by 0.75, and (e) for all
other Fiscal Quarters thereafter, for the Fiscal Quarter just ended and the
immediately preceding three Fiscal Quarters.
"Consolidated Debt" means at any date the Debt of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis as of
such date.
"Consolidated Fixed Charges" means, without duplication, as at
any date of determination, the sum of (i) Consolidated Interest Expense, and
(ii) all payment obligations of the Borrower and its Consolidated Subsidiaries
under all operating leases and rental agreements. Consolidated Fixed Charges
shall be calculated with respect to (a) the Fiscal Quarter ending May 31, 1996,
for the Fiscal Quarter just ended and the immediately preceding three Fiscal
Quarters (provided that "Consolidated Subsidiaries" as used in the calculation
of this definition solely with respect to this clause (a) shall include GPS and
Comerica), (b) the Fiscal Quarter ending August 31, 1996, the Consolidated
Fixed Charges for such Fiscal Quarter multiplied by 4, (c) the Fiscal Quarter
ending November 30, 1996, the cumulative Consolidated Fixed Charges for such
Fiscal Year multiplied by 2, (d) the Fiscal Quarter ending February 28, 1997,
the cumulative Consolidated Fixed Charges for such Fiscal Year divided by 0.75,
and (e) for all other Fiscal Quarters thereafter, for the Fiscal Quarter just
ended and the immediately preceding three Fiscal Quarters.
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<PAGE> 12
"Consolidated Funded Debt" means at any date, with respect to
the Borrower and its Consolidated Subsidiaries on a consolidated basis for such
period and in accordance with GAAP, Consolidated Debt (excluding therefrom,
however, Guarantees of Debt of the Borrower or any Subsidiary, respectively, by
the Borrower or any Subsidiary).
"Consolidated Interest Expense" for any period means, without
duplication, interest, whether expensed or capitalized, in respect of
outstanding Consolidated Debt of the Borrower and its Consolidated Subsidiaries
during such period; provided, that, in determining Consolidated Interest
Expense, interest on Debt referred to in clauses (viii) and (ix) of the
definition of Debt shall only be included to the extent that the Borrower's or
any Consolidated Subsidiary's obligation to pay such Debt is not contingent in
nature, as of any date of determination.
"Consolidated Net Income" means, for any period, the Net
Income of the Borrower and its Consolidated Subsidiaries determined on a
consolidated basis, but excluding (i) extraordinary items, (ii) any equity
interests of the Borrower or any Subsidiary in the unremitted earnings of any
Person that is not a Subsidiary, (iii) the issuance of the GPS Subordinated
Notes, and (iv) the effect of the Asset Impairment Charges.
"Consolidated Net Worth" means, at the date of any
determination, the shareholders' equity of the Borrower and its Consolidated
Subsidiaries, as set forth or reflected on the most recent consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries prepared in accordance
with GAAP, but excluding any Redeemable Preferred Stock of the Borrower or any
of its Consolidated Subsidiaries. Shareholders' equity generally would include,
but not be limited to (i) the par or stated value of all outstanding Capital
Stock, (ii) capital surplus, (iii) retained earnings, and (iv) various
deductions such as (A) purchases of treasury stock, (B) valuation allowances,
(C) receivables due from an employee stock ownership plan, (D) employee stock
ownership plan debt guarantees, and (E) translation adjustments for foreign
currency transactions.
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<PAGE> 13
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity (excluding therefrom GPS and Comerica) the accounts of which, in
accordance with GAAP, would be consolidated with those of the Borrower in its
consolidated financial statements as of such date.
"Contribution Agreement" means the Contribution Agreement along
with each counterpart thereto, substantially in the form of Exhibit "J" (with
such revisions as are necessary in order to reflect the date on which such are
being executed, the parties thereto and hereto, and any other necessary changes
which relate to matters of appropriate references therein), executed and
delivered by the Subsidiary Guarantors from time to time in favor of the Agent,
for the ratable benefit of the Banks, together with all amendments and
supplements thereto.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under capital
leases, (v) all obligations of such Person to reimburse any bank or other Person
in respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations (regardless of whether contingent or absolute) of such
Person to reimburse any bank or other Person in respect of amounts paid under a
letter of credit or similar instrument, (viii) all Debt of others secured by a
Lien on any asset of such Person, whether or not such Debt is assumed by such
Person, (ix) all Debt of others Guaranteed by such Person, and (x) the present
value of estimated future payments payable in connection with earn-out
agreements executed in connection with acquisitions by such Person, all as
determined in accordance with GAAP. Provided, however, "Debt" shall not include
any non-recourse obligations under any Equipment Lease Agreements.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of
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<PAGE> 14
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
"Default Rate" means, with respect to any Loan, on any day,
the sum of 2.0% plus the then highest interest rate (including the Applicable
Margin) which may be applicable to any Loans hereunder (irrespective of whether
any such class of Loans are actually outstanding hereunder).
"Dividends" means for any period the sum of all dividends paid
or declared during such period in respect of any Capital Stock and Redeemable
Preferred Stock (other than dividends paid or payable in the form of additional
Capital Stock).
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Georgia are authorized by law
to close.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower required by any Environmental
Requirement.
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way associated with
any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or alleged noncompliance
with or liability under any Environmental Requirement, including without
limitation any complaints, citations, demands or requests from any Environmental
Authority or from any other person or entity for correction of
7
<PAGE> 15
any, violation of any Environmental Requirement or any investigations concerning
any violation of any Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated with any
Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to the Borrower,
any Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or similar state legislation and all federal, state
and local laws, ordinances, regulations, orders, writs, decrees and common law.
"Equipment Lease Agreements" means the ATT Agreement, the
Sanwa Agreement and any other similar agreements (whether relating to software
and/or hardware) entered into by the Borrower, or any Subsidiary Guarantor from
time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Euro-Dollar Loan" means a Loan to be made as a Euro-Dollar
Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Excess" has the meaning set forth in Section 9.17.
"Existing Credit Agreement" means that certain Interim Credit
Agreement, dated as of March 18, 1996, among the Borrower, the banks party
thereto, and Wachovia Bank of Georgia, N.A., as the agent thereunder, together
with all amendments and supplements thereto.
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<PAGE> 16
"Extension Date" has the meaning set forth in Section 2.04.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (ii) if such rate is not
so published for any day, the Federal Funds Rate for such day shall be the
average rate charged to the Agent on such day on such transactions, as
determined by the Agent.
"Financial Institution" has the meaning ascribed thereto in
O.C.G.A. Section 7-1-4(21) as of the date hereof.
"Financial Statements (Annual)" means the balance sheet of
such Person as of the end of such Fiscal Year and the related consolidated
statements of income, shareholders' equity and cash flows for such Fiscal Year,
setting forth in each case in comparative form the figures for the previous
Fiscal Year.
"Financial Statements (Quarterly)" means the balance sheet of
such Person as of the end of such quarter and the related statement of income
and statement of cash flows for such quarter and for the portion of the Fiscal
Year ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the
corresponding portion of the previous Fiscal Year.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Fixed Rate Borrowing" means a Euro-Dollar Borrowing or a
Money Market Borrowing as the context may require.
"Fixed Rate Loans" means Euro-Dollar Loans or Money Market
Loans, as the context may require.
"GAAP" means generally accepted accounting principles applied
on a basis consistent with those which, in accordance
9
<PAGE> 17
with Section 1.02, are to be used in making the calculations for purposes of
determining compliance with the terms of this Agreement.
"GPS" means, collectively, (i) Global Payment Systems LLC,
formerly known as POS Acquisition Company, LLC, a Georgia limited liability
company, (ii) the subsidiaries of such company, and (iii) the successors of the
Persons described in the foregoing clauses (i) and (ii) resulting from a
conversion of such Person to a corporation or a limited liability company.
"GPS Subordinated Notes" means the subordinated notes issued
by GPS to the Borrower evidencing accrued distributions and interest thereon.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" includes, without limitation, (a) solid
or hazardous waste, as defined in the Resource Conservation and Recovery Act of
1980, 42 U.S.C. Section 6901 et. seq. and its implementing regulations and
amendments, or in any applicable state or local law or regulation, (b)
"hazardous substance", "pollutant", or "contaminant" as defined in CERCLA, or
in any applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including, crude oil or any fraction thereof
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976,
or in any applicable state or local law or regulation or (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
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<PAGE> 18
"Income Available for Fixed Charges" for any period means the
sum of (i) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
all payment obligations of the Borrower and its Consolidated Subsidiaries for
such period under all operating leases and rental agreements, and (iv) taxes on
income, all determined with respect to the Borrower and its Consolidated
Subsidiaries on a consolidated basis for such period and in accordance with
GAAP. Income Available for Fixed Charges shall be calculated with respect to (a)
the Fiscal Quarter ending May 31, 1996, for the Fiscal Quarter just ended and
the immediately preceding three Fiscal Quarters (provided that "Consolidated
Subsidiaries" as used in the calculation of this definition solely with respect
to this clause (a) shall include GPS and Comerica), (b) the Fiscal Quarter
ending August 31, 1996, the Income Available for Fixed Charges for such Fiscal
Quarter multiplied by 4, (c) the Fiscal Quarter ending November 30, 1996, the
cumulative Income Available for Fixed Charges for such Fiscal Year multiplied by
2, (d) the Fiscal Quarter ending February 28, 1997, the cumulative Income
Available for Fixed Charges for such Fiscal Year divided by 0.75, and (e) for
all other Fiscal Quarters thereafter, for the Fiscal Quarter just ended and the
immediately preceding three Fiscal Quarters.
"Interest" has the meaning set forth in Section 9.17.
"Indemnified Party" has the meaning set forth in Section
9.04(a).
"Indemnity Proceeding" has the meaning set forth in Section
9.04(a).
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day in the first, second, third or sixth month
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to paragraph (c) below) which would otherwise end
on a day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the
11
<PAGE> 19
appropriate subsequent calendar month) shall, subject to paragraph (c)
below, end on the last Euro-Dollar Business Day of the appropriate
subsequent calendar month; and
(c) any Interest Period which begins before the Termination
Date and would otherwise end after the Termination Date shall end on
the Termination Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the
date of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to paragraph (b) below) which would otherwise end
on a day which is not a Domestic Business Day shall be extended to the
next succeeding Domestic Business Day; and
(b) any Interest Period which begins before the
Termination Date and would otherwise end after the Termination Date
shall end on the Termination Date.
(3) with respect to each Money Market Borrowing, the period commencing on the
date of such Borrowing and ending on the Stated Maturity Date or such other
date or dates as may be specified in the applicable Money Market Quote;
provided that:
(a) any Interest Period (subject to clause (b) below) which
would otherwise end on a day which is not a Domestic Business Day
shall be extended to the next succeeding Domestic Business Day; and
(b) no Interest Period may be selected which begins before the
Termination Date and would otherwise end after the Termination Date.
"Investment" means any investment in any Person, whether by
means of purchase or acquisition of obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person, making of
a time deposit with such Person, Guarantee or assumption of any obligation of
such Person or otherwise.
"Lending Office" means, as to each Bank, its office located at
its address set forth on the signature pages hereof (or identified on the
signature pages hereof as its Lending Office) or such other office as such Bank
may hereafter designate as its Lending Office by notice to the Borrower and the
Agent.
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<PAGE> 20
"Lien" means, with respect to any asset, any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement, which has the practical effect of constituting
a security interest or encumbrance, or encumbrance or servitude of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law. For
the purposes of this Agreement, the Borrower or any Subsidiary shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Loan" means, as to any Bank, a Base Rate Loan, Euro-Dollar
Loan, Syndicated Loan, or Money Market Loan, and "Loans" means Base Rate Loans,
Euro-Dollar Loans, Syndicated Loans, or Money Market Loans, as the context may
require.
"Loan Documents" means this Agreement, the Notes, the
Subsidiary Guaranties, the Contribution Agreement, any other document
evidencing, relating to or securing the Loans, and any other document or
instrument delivered in connection with this Agreement, the Notes, the Loans or
the Subsidiary Guaranties, as such documents and instruments may be amended or
supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Long-Term Debt" means at any date any Consolidated Debt which
matures (or the maturity of which may at the option of the Borrower or any
Consolidated Subsidiary be extended such that it matures) more than one year
after such date.
"Margin Stock" means "margin stock" as defined in Regulations
G, T, U or X.
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any
of (a) the financial condition, operations, business, properties or prospects
of Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights
and remedies of the Agent or the Banks under the Loan Documents, or
13
<PAGE> 21
the ability of the Borrower or any Subsidiary Guarantor to perform its
obligations under the Loan Documents to which it is a party, as applicable, or
(c) the legality, validity or enforceability of any Loan Document.
"Maximum Rate" has the meaning set forth in Section 9.17.
"Money Market Borrowing Date" has the meaning specified in
Section 2.02.
"Money Market Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-2, evidencing the obligation
of the Borrower to repay the Money Market Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
"Money Market Loans" means Loans made pursuant to the terms
and conditions set forth in Section 2.02.
"Money Market Quote" has the meaning specified in Section 2.02.
"Money Market Quote Request" has the meaning specified in
Section 2.02(b).
"Money Market Rate" has the meaning specified in Section
2.02(c)(ii)(C).
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"NDPS" means National Data Payment Systems, Inc., a New York
corporation, and its successors and permitted assigns.
"Net Proceeds of Capital Stock" means any proceeds received or
deemed received by the Borrower or a Consolidated Subsidiary in respect of the
issuance of Capital Stock or conversion of any Debt to Capital Stock, after
deducting therefrom all reasonable and customary costs and expenses incurred by
the Borrower or such Consolidated Subsidiary directly in connection with the
issuance of such Capital Stock or conversion of such Debt.
"Net Income" means, as applied to any Person for any period,
the aggregate amount of net income of such Person, after taxes, for such
period, as determined in accordance with GAAP.
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<PAGE> 22
"Notes" means each of the Syndicated Loan Notes or Money
Market Loan Notes, as the context may require.
"Notice of Borrowing" has the meaning set forth in Section
2.01.B.
"Obligations" means any and all Debt, liabilities and
obligations of Borrower to the Agent or any of the Banks pursuant to this
Agreement or any of the other Loan Documents.
"Operating Subsidiary" means any Subsidiary which owns or
acquires assets.
"Participant" has the meaning set forth in Section 9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Performance Pricing Determination Date" has the meaning set
forth in Section 2.05(a).
"Person" means an individual, a corporation, a limited
liability company, a partnership, an unincorporated association, a trust or any
other entity or organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by a
member of the Controlled Group for employees of any member of the Controlled
Group or (ii) maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes contributions and to
which a member of the Controlled Group is then making or accruing an obligation
to make contributions or has within the preceding five plan years made
contributions.
"Prime Rate" refers to that interest rate so denominated and
set by Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia. Wachovia
lends at interest rates above and below the Prime Rate.
"Properties" means, as of the date of any determination, all
real property then owned, leased or otherwise
15
<PAGE> 23
used or occupied by the Borrower or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any preferred
stock issued by such Person which is at any time prior to the Termination Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Refunding Loan" means a new Loan made on the day on which an
outstanding Loan is maturing or a Base Rate Borrowing is being converted to a
Fixed Rate Borrowing, if and to the extent that the proceeds thereof are used
entirely for the purpose of paying such maturing Loan or Loan being converted,
excluding any difference between the amount of such maturing Loan or Loan being
converted and any greater amount being borrowed on such day and actually either
being made available to the Borrower pursuant to Section 2.01.B(c) or remitted
to the Agent as provided herein, in each case as contemplated in Section
2.01.B(d).
"Regulation G" means Regulation G of the Board of Governors of
the Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation T" means Regulation T of the Board of Governors of
the Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Regulation X" means Regulation X of the Board of Governors of
the Federal Reserve System, as in effect from time to time, together with all
official rulings and interpretations issued thereunder.
"Required Banks" means at any time Banks having at least 51%
of the aggregate amount of the Commitments or, if the Commitments are no longer
in effect, Banks holding at least 51% of the aggregate outstanding principal
amount of the sum of the (i) Syndicated Loans and (ii) Money Market Loans.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital stock (except dividends
payable solely in shares of its capital stock)
16
<PAGE> 24
or (ii) any payment on account of the purchase, redemption, retirement or
acquisition of (a) any shares of the Borrower's capital stock (except shares
acquired upon the conversion thereof into other shares of its capital stock) or
(b) any option, warrant or other right to acquire shares of the Borrower's
capital stock.
"Sanwa" means Sanwa Business Credit Corporation.
"Sanwa Letter Agreement" means that certain Letter Agreement,
dated October 30, 1992, between Technology Sales and Leasing Co., Inc. and
Sanwa, together with all amendments and supplements thereto.
"Stated Maturity Date" means, with respect to any Money Market
Loan, the Stated Maturity Date therefor specified by the Bank in the applicable
Money Market Quote.
"Subsidiary" means, excluding, however, GPS and Comerica
therefrom, any corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by the Borrower.
"Subsidiary Guaranties" means any one or more or all, as the
context shall require or permit, of that certain Subsidiary Guaranty Agreement,
substantially in the form of Exhibit "G" (with such revisions as are necessary
in order to reflect the date on which such are being executed, the parties
thereto and hereto, and any other necessary changes which relate to matters of
appropriate references therein) along with each counterpart thereto, executed
and delivered by the Subsidiary Guarantors from time to time in favor of the
Agent, for the ratable benefit of the Banks.
"Subsidiary Guarantor" means an Operating Subsidiary which has
executed a Subsidiary Guaranty in connection herewith or will execute a
Subsidiary Guaranty pursuant to Section 5.10.
"Syndicated Loans" means Base Rate Loans or Euro-Dollar Loans
made pursuant to the terms and conditions set forth in Section 2.01.A.
"Syndicated Loan Notes" means the promissory notes of the
Borrower, substantially in the form of Exhibit A-1, evidencing the obligation
of the Borrower to repay Syndicated Loans, together with all amendments,
consolidations, modifications, renewals and supplements thereto.
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<PAGE> 25
"Termination Date" means whichever is applicable of (i) May
31, 1999, (ii) such later date to which it is extended by the Banks pursuant to
Section 2.04(b), in their sole and absolute discretion, (iii) the date the
Commitments are terminated pursuant to Section 6.01 following the occurrence of
an Event of Default, or (iv) the date the Borrower terminates the Commitments
entirely pursuant to Section 2.07.
"Third Parties" means all lessees, sublessees, licensees and
other users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business and on a temporary basis.
"Transferee" has the meaning set forth in Section 9.08(d).
"Unfunded Vested Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value of all vested
nonforfeitable benefits under such Plan exceeds (ii) the fair market value of
all Plan assets allocable to such benefits, all determined as of the then most
recent valuation date for such Plan, but only to the extent that such excess
represents a potential liability of a member of the Controlled Group to the
PBGC or the Plan under Title IV of ERISA.
"Unused Commitment" means at any date, with respect to any
Bank, an amount equal to its Commitment less the aggregate outstanding
principal amount of its Syndicated Loans.
"Wachovia" means Wachovia Bank of Georgia, N.A., a national
banking association and its successors and permitted assigns.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock or other ownership interests of which (except
directors' qualifying shares) are at the time directly or indirectly owned by
the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all terms of an accounting character used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared in accordance with GAAP, applied on a basis consistent (except for
changes concurred in by the Borrower's independent public accountants or
otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Banks
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<PAGE> 26
unless with respect to any such change concurred in by the Borrower's
independent public accountants or required by GAAP, in determining compliance
with any of the provisions of any of the Loan Documents: (i) the Borrower shall
have objected to determining such compliance on such basis at the time of
delivery of such financial statements, or (ii) the Required Banks shall so
object in writing within 30 days after the delivery of such financial
statements, in either of which events such calculations shall be made on a
basis consistent with those used in the preparation of the latest financial
statements as to which such objection shall not have been made (which, if
objection is made in respect of the first financial statements delivered under
Section 5.01, shall mean the financial statements referred to in Section 4.04).
SECTION 1.03. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits", "Schedules", "Sections"
and other Subdivisions are references to Articles, exhibits, schedules,
sections and other subdivisions hereof. All references to the corporate nature,
the capital stock, stockholders, directors, articles of incorporation and
by-laws, or such similar terms, of any Person shall, if such Person is a
limited liability company, refer respectively to the limited liability company
nature, the equity interests, members, managing members, articles of
organization and operating agreement of such Person.
SECTION 1.04. Use of Defined Terms. All terms defined in this
Agreement shall have the same defined meanings when used in any of the other
Loan Documents, unless otherwise defined therein or unless the context shall
require otherwise.
SECTION 1.05. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders; the singular shall include the plural, and the plural
shall include the singular. Titles of Articles and Sections in this Agreement
are for convenience only, and neither limit nor amplify the provisions of this
Agreement.
ARTICLE II
THE CREDITS
SECTION 2.01.A Commitments to Lend Syndicated Loans. Each Bank
severally agrees, on the terms and conditions set forth herein, to make
Syndicated Loans as follows:
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<PAGE> 27
From time to time prior to the Termination Date, each Bank
shall make Syndicated Loans to the Borrower provided that, (i) immediately after
each such Syndicated Loan is made, the aggregate principal amount of Syndicated
Loans at any one time outstanding shall not exceed its Commitment and (ii) the
aggregate outstanding amount of all Syndicated Loans and Money Market Loans
shall not exceed the aggregate amount of the Commitments. Each Borrowing under
this Section 2.01.A consisting of Base Rate Loans shall be in an aggregate
principal amount of $500,000 or any larger multiple of $100,000 (except that any
such Borrowing may be in any lesser amount equal to the aggregate amount of the
Unused Commitments) and shall be made from the several Banks ratably in
accordance with their respective Commitments. Each Borrowing under this Section
2.01.A consisting of Euro-Dollar Loans shall be in an aggregate principal amount
of $1,000,000 or any larger multiple of $500,000 (except that any such Borrowing
may be in any lesser amount equal to the aggregate amount of the Unused
Commitments) and shall be made from the several Banks ratably in accordance with
their respective Commitments. Within the foregoing limits, the Borrower may
borrow under this Section 2.01.A, repay or, to the extent permitted by Section
2.09, prepay Syndicated Loans and reborrow under this Section 2.01.A at any time
before the Termination Date.
SECTION 2.01.B Method of Borrowing Syndicated Loans. (a) The
Borrower shall give the Agent notice (a "Notice of Borrowing"), which shall be
substantially in the form of Exhibit E, on the same day (before 11:00 A.M.,
Atlanta, Georgia time) for each Base Rate Borrowing, and at least 3 Euro-Dollar
Business Days before each Euro-Dollar Borrowing, specifying:
(i) the date of such Syndicated Borrowing, which shall be
a Domestic Business Day in the case of a Base Rate Borrowing or a
Euro-Dollar Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Syndicated Borrowing,
(iii) whether the Syndicated Loans comprising such Borrowing
are to be Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the duration of
the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing the Agent shall
promptly notify each Bank of the contents thereof and of
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<PAGE> 28
such Bank's ratable share of such Syndicated Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 1:00 P.M. (Atlanta, Georgia time) on the
date of each Syndicated Borrowing, each Bank shall (except as provided in
paragraph (d) of this Section) make available its ratable share of such
Syndicated Borrowing, in Federal or other funds immediately available in
Atlanta, Georgia, to the Agent at its address referred to in Section 9.01.
Unless the Agent determines that any applicable condition specified in Article
III has not been satisfied, the Agent will make the funds so received from the
Banks available to the Borrower by 4:00 P.M. (Atlanta, Georgia time) on the
date of a Syndicated Borrowing at the Agent's aforesaid address. Unless the
Agent receives notice from a Bank, at the Agent's address referred to in or
specified pursuant to Section 9.01, no later than 12:00 P.M. (local time at
such address) on the date of a Syndicated Borrowing stating that such Bank will
not make a Loan in connection with such Syndicated Borrowing, the Agent shall
be entitled to assume that such Bank will make a Loan in connection with such
Syndicated Borrowing and, in reliance on such assumption, the Agent may (but
shall not be obligated to) make available such Bank's ratable share of such
Syndicated Borrowing to the Borrower for the account of such Bank. If the
Agent makes such Bank's ratable share available to the Borrower and such Bank
does not in fact make its ratable share of such Syndicated Borrowing available
on such date, the Agent shall be entitled to recover such Bank's ratable share
from such Bank or the Borrower (and for such purpose shall be entitled to
charge such amount to any account of the Borrower maintained with the Agent),
together with interest thereon for each day during the period from the date of
such Syndicated Borrowing until such sum shall be paid in full at a rate per
annum equal to the Federal Funds Rate for each such day during such period,
provided that (i) any such payment by the Borrower of such Bank's ratable share
and interest thereon shall be without prejudice to any rights that the Borrower
may have against such Bank and (ii) until such Bank has paid its ratable share
of such interest thereon pursuant to the foregoing, it will have no interest in
or rights with respect to such Syndicated Borrowing for any purpose hereunder.
If the Agent does not exercise its option to advance funds for the account of
such Bank, it shall forthwith notify the Borrower of such decision.
(d) If any Bank makes a new Syndicated Loan hereunder on a day
on which the Borrower is to repay all or any part of an outstanding Syndicated
Loan from such Bank, such Bank shall apply the proceeds of its new Syndicated
Loan to make such repayment as a Refunding Loan and only an amount equal to the
difference (if
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<PAGE> 29
any) between the amount being borrowed and the amount of such Refunding Loan
shall be made available by such Bank to the Agent as provided in paragraph (c)
of this Section, or remitted by the Borrower to the Agent as provided in
Section 2.11, as the case may be.
(e) Notwithstanding anything to the contrary contained in
this Agreement, no Euro-Dollar Borrowing may be made if there shall have
occurred a Default or an Event of Default, which Default or Event of Default
shall not have been cured or waived and all Refunding Loans shall be made as
Base Rate Loans.
(f) In the event that a Notice of Borrowing fails to
specify whether the Syndicated Loans comprising such Syndicated Borrowing are
to be Base Rate Loans or Euro-Dollar Loans, such Syndicated Loans shall be made
as Base Rate Loans. If the Borrower is otherwise entitled under this Agreement
to repay any Syndicated Loans maturing at the end of an Interest Period
applicable thereto with the proceeds of a new Syndicated Borrowing, and the
Borrower fails to repay such Syndicated Loans using its own moneys and fails to
give a Notice of Borrowing in connection with such new Syndicated Borrowing, a
new Syndicated Borrowing shall be deemed to be made on the date such Syndicated
Loans mature (in accordance with Section 2.04) in an amount equal to the
principal amount of the Syndicated Loans so maturing, and the Syndicated Loans
comprising such new Syndicated Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained
herein, with respect to the total aggregate number of all Loans under this
Agreement, the number of Euro-Dollar Loans plus Money Market Loans outstanding
under this Agreement at any given time shall not exceed 8.
SECTION 2.02. Money Market Loans. (a) In addition to making
Syndicated Borrowings, the Borrower may, as set forth in this Section 2.02,
request the Banks to make offers to make Money Market Borrowings available to
the Borrower. The Banks may, but shall have no obligation to, make such offers
and the Borrower may, but shall have no obligation to, accept any such offers
in the manner set forth in this Section 2.02, provided that:
(i) the aggregate principal amount of all Money Market
Loans, together with the aggregate principal amount of all Syndicated
Loans, at any one time outstanding shall not exceed the aggregate
amount of the Commitments of all of the Banks at such time; and
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<PAGE> 30
(ii) the Money Market Loans of any Bank will be deemed to be
usage of the Commitments for the purpose of calculating availability
pursuant to Section 2.01.A(ii) and 2.02(a)(i), but will not reduce
such Bank's obligation to lend Syndicated Loans consisting of its pro
rata share of the remaining Unused Commitment.
(b) When the Borrower wishes to request offers to make
Money Market Loans, it shall give the Agent (which shall promptly notify the
Banks) written notice substantially in the form of Exhibit H hereto (a "Money
Market Quote Request") so as to be received no later than 10:00 A.M. (Atlanta,
Georgia time) at least 2 Domestic Business Days prior to the date of the Money
Market Borrowing proposed therein (or such other time and date as the Borrower
and the Agent, with the consent of the Required Banks, may agree), specifying:
(i) the proposed date of such Money Market Borrowing,
which shall be a Domestic Business Day (the "Money Market Borrowing
Date");
(ii) the maturity date (or dates) (each a "Stated
Maturity Date") for repayment of each Money Market Loan to be made as
part of such Money Market Borrowing (which Stated Maturity Date shall
be that date occurring not less than 7 days but not greater than 180
days from the date of such Money Market Borrowing); provided that the
Stated Maturity Date for any Money Market Loan may not extend beyond
the Termination Date (as in effect on the date of such Money Market
Quote Request); and
(iii) the aggregate amount of principal to be received
by the Borrower as a result of such Money Market Borrowing, which
shall be at least $5,000,000 (and in larger integral multiples of
$1,000,000 and any lesser amounts up to the limits of Money Market
Loans permitted under Section 2.02(a)) but shall not cause the limits
specified in Section 2.02(a) to be violated.
The Borrower may request offers to make Money Market Loans having up to 5
different Stated Maturity Dates in a single Money Market Quote Request; provided
that the request for each separate Stated Maturity Date shall be deemed to be a
separate Money Market Quote Request for a separate Money Market Borrowing and
shall be subject to the limitations set forth in Section 2.01.B(g). Except as
otherwise provided in the immediately preceding sentence, after the first Money
Market Quote Request has been given hereunder, no Money Market Quote Request
shall be given until at least 5 Domestic Business Days after the date on which
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<PAGE> 31
all prior Money Market Quote Requests have been fully processed by the Agent
("fully processed" as used in this sentence shall mean the later to occur of
(i) the failure of all Banks to offer a Money Market Quote, (ii) the failure of
the Borrower to accept any Money Market Quote, or (iii) the acceptance of any
Money Market Quotes), the Banks and the Borrower pursuant to this Section 2.02.
(c) (i) Each Bank may, but shall have no obligation
to, submit a written response containing an offer to make a Money
Market Loan substantially in the form of Exhibit I hereto (a "Money
Market Quote") in response to any Money Market Quote Request; provided
that, if the Borrower's request under Section 2.02(b) specified more
than 1 Stated Maturity Date, such Bank may, but shall have no
obligation to, make a single submission containing a separate offer for
each such Stated Maturity Date and each such separate offer shall be
deemed to be a separate Money Market Quote. Each Money Market Quote
must be submitted to the Agent not later than 10:00 A.M. (Atlanta,
Georgia time) on the Money Market Borrowing Date; provided that any
Money Market Quote submitted by Wachovia may be submitted, and may only
be submitted, if Wachovia notifies the Borrower of the terms of the
offer contained therein not later than 9:45 A.M. (Atlanta, Georgia
time) on the Money Market Borrowing Date (or 15 minutes prior to the
time that the other Banks must have submitted their respective Money
Market Quotes). Subject to Section 6.01, any Money Market Quote so made
shall be irrevocable except with the written consent of the Agent given
on the instructions of the Borrower.
(ii) Each Money Market Quote shall specify:
(A) the proposed Money Market Borrowing
Date and the Stated Maturity Date therefor;
(B) the principal amounts of the Money
Market Loan which the quoting Bank is willing to make
for the applicable Money Market Quote, which principal
amounts (x) may be greater than or less than the
Commitment of the quoting Bank, (y) shall be at least
$2,500,000 or a larger integral multiple of $500,000,
and (z) may not exceed the principal amount of the
Money Market Borrowing for which offers were
requested;
(C) the rate of interest per annum
(rounded upwards, to the nearest 1/10,000th of 1%)
offered for each such Money Market Loan (such amounts
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<PAGE> 32
being hereinafter referred to as the "Money Market
Rate"); and
(D) the identity of the quoting Bank.
Unless otherwise agreed by the Agent and the Borrower, no Money Market
Quote shall contain qualifying, conditional or similar language or
propose terms other than or in addition to those set forth in the
applicable Money Market Quote Request (other than setting forth the
maximum principal amounts of the Money Market Loan which the quoting
Bank is willing to make for the applicable Interest Period) and, in
particular, no Money Market Quote may be conditioned upon acceptance
by the Borrower of all (or some specified minimum) of the principal
amount of the Money Market Loan for which such Money Market Quote is
being made.
(d) The Agent shall as promptly as practicable after the
Money Market Quote is submitted (but in any event not later than 10:30 A.M.
(Atlanta, Georgia time)) on the Money Market Borrowing Date, notify the Borrower
of the terms (i) of any Money Market Quote submitted by a Bank that is in
accordance with Section 2.02(c) and (ii) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's written notice to the Borrower shall
specify (A) the principal amounts and maturity dates of the Money Market
Borrowing for which offers have been received and (B) the respective principal
amounts, maturity dates and Money Market Rates so offered by each Bank
(identifying the Bank that made each Money Market Quote).
(e) The failure of the Borrower to notify the Agent of
its acceptance on or before 12:00 P.M. (Atlanta, Georgia time) on the Money
Market Borrowing Date of the offers so notified to it pursuant to Section
2.02(d) shall constitute a rejection of such offers. The Agent shall promptly
notify each affected Bank of any acceptance or rejection of any offers. In the
case of acceptance, such written notice shall specify the aggregate principal
amount of offers (for each Stated Maturity Date) that are accepted. The
Borrower may accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money
Market Borrowing may not exceed the applicable amount set forth in the
related Money Market Quote Request;
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<PAGE> 33
(ii) the aggregate principal amount of each Money Market
Loan comprising a Money Market Borrowing shall be at least $2,500,000
(and in larger multiples of $500,000 and any lesser amounts up to the
limits of Money Market Loans permitted under Section 2.02(a)) but shall
not cause the limits specified in Section 2.02(a) to be violated;
(iii) acceptance of offers may only be made in ascending
order of Money Market Rates; and
(iv) the Borrower may not accept any offer where the
Agent has advised the Borrower that such offer fails to comply with
Section 2.02(c)(ii) or otherwise fails to comply with the requirements
of this Agreement (including without limitation, Section 2.02(a)).
If offers are made by 2 or more Banks with the same Money Market Rates for a
greater aggregate principal amount than the amount in respect of which offers
are accepted for the related Stated Maturity Date, the principal amount of
Money Market Loans in respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as possible in proportion to
the aggregate principal amount of such offers. Determinations by the Agent of
the amounts of Money Market Loans shall be conclusive in the absence of
manifest error.
(f) Any Bank whose offer to make any Money Market Loan
has been accepted shall, not later than 1:00 P.M. (Atlanta, Georgia time) on
the Money Market Borrowing Date, make the appropriate amount of such Money
Market Loan available to the Agent at its address referred to in Section 9.01
in immediately available funds. The amount so received by the Agent shall,
subject to the terms and conditions of this Agreement, be made available to the
Borrower on such date by depositing the same, in immediately available funds,
not later than 3:00 P.M. (Atlanta, Georgia time), in an account of such
Borrower maintained with Wachovia.
SECTION 2.03. Notes. (a) The Syndicated Loans of each Bank
shall be evidenced by a single Syndicated Note payable to the order of such
Bank for the account of its Lending Office in an amount equal to the original
principal amount of such Bank's Commitment.
(b) The Money Market Loans made by any Bank to the
Borrower shall be evidenced by a single Money Market Loan Note payable to the
order of such Bank for the account of its Lending
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<PAGE> 34
Office in an amount equal to the original principal amount of the aggregate
Commitments.
(c) Upon receipt of each Bank's Note pursuant to Section
3.01, the Agent shall mail such Note to such Bank. Each Bank shall record, and
prior to any transfer of each of its Notes shall endorse on the schedule
forming a part thereof appropriate notations to evidence, the date, amount and
maturity of each Loan made by it, the date and amount of each payment of
principal made by the Borrower with respect thereto and, with respect to
Syndicated Loan Notes, whether such Loan is a Base Rate Loan or Euro-Dollar
Loan, and such schedule shall constitute rebuttable presumptive evidence of the
principal amount owing and unpaid on such Bank's Notes; provided that the
failure of any Bank to make any such recordation or endorsement shall not
affect the obligation of the Borrower hereunder or under the Notes. Each Bank
is hereby irrevocably authorized by the Borrower so to endorse its Notes and to
attach to and make a part of any Note a continuation of any such schedule as
and when required.
SECTION 2.04. Maturity of Loans. (a) Each Loan included in any
Borrowing shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable to such Borrowing.
(b) Notwithstanding the foregoing, the outstanding
principal amount of the Loans, if any, together with all accrued but unpaid
interest thereon, if any, shall be due and payable on May 31, 1999, unless such
original Termination Date is otherwise extended by each of the Banks, in its
sole and absolute discretion. Upon the written request of the Borrower, which
request shall be delivered to the Agent at least 90 days prior to May 31, 1997
or May 31, 1998 (each, an "Extension Date"), the Banks shall have the option
(without any obligation whatsoever so to do) of extending the Termination Date
for additional one-year periods. In the event that a Bank fails to give the
Borrower and the Agent notice expressly agreeing to such extension of the
Termination Date at least 60 days prior to the relevant Extension Date, then
such failure shall be deemed to be a refusal of such Bank to so extend;
provided, that the Termination Date shall not be extended with respect to any
of the Banks unless the Required Banks are willing to extend the Termination
Date and (x) the remaining Banks shall purchase ratable assignments (without
any obligation so to do) from such terminating Bank (in the form of an
Assignment and Acceptance) in accordance with their respective percentage of
the remaining aggregate Commitments; provided, that, such Banks shall be
provided such opportunity (which opportunity shall allow such Banks at least 5
Domestic Business Days in which to make a decision) prior to the Borrower
finding
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<PAGE> 35
another bank pursuant to the immediately succeeding clause (y); and, provided,
further, that, should any of the remaining Banks elect not to purchase such an
assignment, then, such other remaining Banks shall be entitled to purchase an
assignment from any Terminating Bank which includes the ratable interest that
was otherwise available to such non-purchasing remaining Bank or Banks, as the
case may be, (y) the Borrower shall find another bank, reasonably acceptable to
the Agent, willing to accept an assignment from such terminating Bank (in the
form of an Assignment and Acceptance) or (z) the Borrower shall reduce the
aggregate Commitments in an amount equal to the Commitment of any such
terminating Bank.
SECTION 2.05. Interest Rates. (a) "Applicable Margin" means:
(i) for any Base Rate Loan, 0%; and
(ii) for any Euro-Dollar Loan for the period commencing on the Closing
Date to and including the first Performance Pricing Determination Date, 0.275%;
and from and after the first Performance Pricing Determination Date, for any
Euro-Dollar Loan, the percentage determined on each Performance Pricing
Determination Date by reference to the table set forth below as to such Loan
and the ratio of Consolidated Funded Debt to Consolidated Cash Flow for the
Fiscal Quarter ending immediately prior to such Performance Pricing
Determination Date.
<TABLE>
<CAPTION>
Ratio of Consolidated Funded Debt Applicable Margin
- --------------------------------- -----------------
to Consolidated Cash Flow
- ------------------------
<S> <C>
greater than/equal to 3.0 0.50%
greater than/equal to 2.0% but
less than 3.0% 0.35%
less than 2.0% 0.275%
</TABLE>
In determining interest for purposes of this Section 2.05 and fees for
purposes of Section 2.06, the Borrower and the Banks shall refer to the
Borrower's most recent consolidated quarterly and annual (as the case may be)
financial statements delivered pursuant to Section 5.01(a) or (b), as the case
may be. If such financial statements require a change in interest pursuant to
this Section 2.05 or fees pursuant to Section 2.06, the Borrower shall deliver
to the Agent, along with such financial statements, a notice to that effect,
which notice shall set forth in
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<PAGE> 36
reasonable detail the calculations supporting the required change. The
"Performance Pricing Determination Date" is the date which is the last date on
which such financial statements are permitted to be delivered pursuant to
Section 5.01(a) or (b), as applicable. Any such required change in interest and
fees shall become effective on such Performance Pricing Determination Date, and
shall be in effect until the next Performance Pricing Determination Date,
provided that: (i) for Fixed Rate Loans, changes in interest shall only be
effective for Interest Periods commencing on or after the Performance Pricing
Determination Date; and (ii) no fees or interest shall be decreased pursuant to
this Section 2.05 or Section 2.06 if a Default is in existence on the
Performance Pricing Determination Date unless such Default is cured or waived by
the Required Banks, provided that such decrease shall be effective solely from
the date of such cure or waiver through the next Performance Pricing
Determination Date.
(b) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Loan is
made until it becomes due, at a rate per annum equal to the Base Rate for such
day plus the Applicable Margin. Such interest shall be payable for each
Interest Period on the last day thereof. Any overdue principal of and, to the
extent permitted by applicable law, overdue interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period;
provided that if any Euro-Dollar Loan shall, as a result of paragraph (1)(c) of
the definition of Interest Period, have an Interest Period of less than 1
month, such Euro-Dollar Loan shall bear interest during such Interest Period at
the rate applicable to Base Rate Loans during such period. Any overdue
principal of and, to the extent permitted by law, overdue interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the next higher 1/16th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
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<PAGE> 37
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan, the
rate per annum determined on the basis of the offered rate for deposits in
Dollars of amounts equal or comparable to the principal amount of such
Euro-Dollar Loan offered for a term comparable to such Interest Period, which
rates appear on the Telerate Page 3750 effective as of 11:00 A.M., London time,
2 Euro-Dollar Business Days prior to the first day of such Interest Period,
provided that if no such offered rates appear on such page, the "London
Interbank Offered Rate" for such Interest Period will be the arithmetic average
(rounded upward, if necessary, to the next higher 1/100th of 1%) of rates
quoted by not less than 2 major banks in New York City, selected by the Agent,
at approximately 10:00 A.M., New York City time, 2 Euro-Dollar Business Days
prior to the first day of such Interest Period, for deposits in Dollars offered
by leading European banks for a period comparable to such Interest Period in an
amount comparable to the principal amount of such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents).
(d) Each Money Market Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such Money
Market Loan is made until it becomes due, at a rate per annum equal to the
applicable Money Market Rate set forth in the relevant Money Market Quote. Such
interest shall be payable on the Stated Maturity Date thereof, and, if the
Stated Maturity Date occurs more than 90 days after the date of the relevant
Money Market Loan, at intervals of 90 days after the first day thereof. Any
overdue principal of and, to the extent permitted by law, overdue interest on
any Money Market Loan shall bear interest, payable on demand, for each day
until paid at a rate per annum equal to the Default Rate.
(e) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt notice to the
Borrower and the Banks by telecopier, telex or cable of each rate of interest
so determined, and its
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<PAGE> 38
determination thereof shall be conclusive in the absence of manifest error.
SECTION 2.06. Fees. The Borrower shall pay to the Agent, for
the ratable account of each Bank, a facility fee, calculated in the manner
provided in the last paragraph of Section 2.05(a)(ii), on the aggregate amount
of such Bank's Commitment (without taking into account the amount of the
outstanding Loans made by such Bank), at a rate per annum equal to: (i) for the
period commencing on the Closing Date to and including the first Performance
Pricing Determination Date, 0.15%; and (ii) from and after the first Performance
Pricing Determination Date, the percentage determined on each Performance
Pricing Determination Date by reference to the table set forth below and the
ratio of Consolidated Funded Debt to Consolidated Cash Flow for the Fiscal
Quarter ending immediately prior to such Performance Pricing Determination Date:
<TABLE>
<CAPTION>
Ratio of Consolidated Funded Debt Facility Fee
to Consolidated Cash Flow ------------
<S> <C>
greater than/equal to 3.0 0.25%
greather than/equal to 2.0% but
less than 3.0% 0.20%
less than 2.0% 0.15%
</TABLE>
Such facility fees shall accrue from and including the Closing Date to but
excluding the Termination Date and shall be payable on each March 31, June 30,
September 30 and December 31 and on the Termination Date.
(b) The Borrower shall pay to the Agent, for the account
and sole benefit of the Agent, such fees and other amounts at such times as set
forth in the Agent's Letter Agreement.
SECTION 2.07. Optional Termination or Reduction of the
Commitments. The Borrower may, upon at least 3 Domestic Business Days' notice
to the Agent, terminate at any time, or proportionately reduce from time to
time by an aggregate amount of at least $1,000,000 or any larger multiple of
$500,000, the Commitments. If the Commitments are terminated in their entirety,
all accrued fees (as provided under Section 2.06) shall be due and payable on
the effective date of such termination and shall not thereafter accrue.
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SECTION 2.08. Mandatory Reduction and Termination of
Commitments. The Commitments shall terminate on the Termination Date and any
Loans then outstanding (together with accrued interest thereon) shall be due
and payable on such date.
SECTION 2.09. Optional Prepayments. (a) The Borrower may, on
any Domestic Business Day, by notice to the Agent prior to 10:30 A.M. (Atlanta,
Georgia time) on such date, prepay any Base Rate Borrowing in whole at any
time, or from time to time in part in amounts aggregating at least $500,000, or
any larger multiple of $100,000 by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay ratably the Base Rate Loans of
the several Banks included in such Base Rate Borrowing.
(b) Subject to Section 8.05, the Borrower may, on any
Euro-Dollar Business Day, by notice to the Agent prior to 10:30 A.M. (Atlanta,
Georgia time) on such date, prepay any Fixed Rate Loan in whole at any time, or
from time to time in part, prior to the maturity thereof, in amounts aggregating
at least $1,000,000 (except that any such prepayment may be in any lesser amount
equal to the entire outstanding balance of any relevant Fixed Rate Loan), by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of the prepayment.
(c) Upon receipt of a notice of prepayment pursuant to
this Section, the Agent shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.10. Mandatory Prepayments. On each date on which the
Commitments are reduced pursuant to Section 2.07 or Section 2.08, the Borrower
shall repay or prepay such principal amount of the outstanding Loans, if any
(together with interest accrued thereon), as may be necessary so that after
such payment the aggregate unpaid principal amount of the Loans does not exceed
the aggregate amount of the Commitments as then reduced. Each such payment or
prepayment shall be applied ratably to the Loans of the Banks outstanding on
the date of payment or prepayment in the following order of priority:(i) first,
to Base Rate Loans; (ii) secondly, to Euro-Dollar Loans; and (iii) lastly, to
Money Market Loans.
SECTION 2.11. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans
and of facility fees hereunder, not later
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than 10:30 A.M. (Atlanta, Georgia time) on the date when due, in Federal or
other funds immediately available in Atlanta, Georgia, to the Agent at its
address referred to in Section 9.01. The Agent will promptly distribute to each
Bank its ratable share of each such payment received by the Agent for the
account of the Banks.
(b) Whenever any payment of principal of, or interest on,
the Base Rate Loans, Money Market Loans, or of facility fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of or interest on, the Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
date for payment thereof shall be the next preceding Euro-Dollar Business Day.
SECTION 2.12. Computation of Interest and Fees. Interest on
Base Rate Loans (i) based on the Prime Rate shall be computed on the basis of a
year of 365 days, and (ii) based on the Federal Funds Rate shall be computed on
the basis of a year of 360 days, and (iii) all Base Rate Loans shall be paid
for the actual number of days elapsed (including the first day but excluding
the last day). Interest on Euro-Dollar Loans shall be computed on the basis of
a year of 360 days and paid for the actual number of days elapsed, calculated
as to each Interest Period from and including the first day thereof to but
excluding the last day thereof. Facility fees and any other fees payable
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The obligation of
each Bank to make a Loan on the occasion of the first Borrowing is subject to
the satisfaction of the conditions set forth in Section 3.02 and receipt by the
Agent of the following (in sufficient number of counterparts (except as to the
Notes) for delivery of a counterpart to each Bank and retention of one
counterpart by the Agent):
(a) from each of the parties to the Loan Documents of
either (i) a duly executed counterpart of each of the Loan
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Documents signed by such party or (ii) a telex or facsimile
transmission stating that such party has duly executed a counterpart
of each of the Loan Documents and sent such counterparts to the Agent;
(b) a duly executed Syndicated Loan Note and Money Market
Loan Note for the account of each Bank complying with the provisions
of Section 2.03;
(c) a duly executed Subsidiary Guaranty and Contribution
Agreement from each Subsidiary Guarantor, both dated as of the Closing
Date, substantially in the form of Exhibit G and Exhibit J,
respectively;
(d) an opinion (together with any opinions of local
counsel relied on therein) of (i) E. Michael Ingram, general counsel
to the Borrower and its Subsidiaries, and (ii) Alston & Bird, special
counsel for the Borrower and the Subsidiary Guarantors, in each case
dated as of the Closing Date, substantially in the form of Exhibit B
and covering such additional matters relating to the transactions
contemplated hereby as the Agent or any Bank may reasonably request;
(e) an opinion of Jones, Day, Reavis & Pogue special
counsel for the Banks and the Agent, dated the date of the Closing
Date, substantially in the form of Exhibit C and covering such
additional matters relating to the transactions contemplated hereby as
the Agent or any Bank may reasonably request;
(f) a certificate, dated as of the Closing Date, signed
on behalf of the Borrower by a principal financial officer of the
Borrower, along with the financial statements and worksheets prepared
by the Borrower used in connection with the preparation thereof,
certifying that (i) no Default has occurred and is continuing on the
Closing Date, and (ii) the representations and warranties of the
Borrower contained in Article IV are true on and as of the Closing
Date;
(g) all documents which the Agent or any Bank may reasonably
request relating to the existence of the Borrower, the corporate
authority for and the validity of this Agreement, the Notes, the
Contribution Agreement, and the Subsidiary Guaranties, and any other
matters relevant hereto, all in form and substance satisfactory to the
Agent, including, without limitation, a certificate of the Borrower
signed by the Secretary or an Assistant Secretary of the Borrower,
certifying as to the names, true signatures and
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incumbency of the officer or officers of the Borrower and each
Subsidiary Guarantor authorized to execute and deliver the Loan
Documents, and certified copies of the following items: (i)
Certificates of Incorporation, (ii) Bylaws, (iii) a certificate of the
Secretary of State as to the good standing of the Borrower and each
Subsidiary Guarantor, and (iv) the action taken by the Board of
Directors of the Borrower and each Subsidiary Guarantor authorizing
the execution, delivery and performance of this Agreement, the Notes
and the other Loan Documents to which each is a party;
(h) a Notice of Borrowing or notification of acceptance
pursuant to Section 2.02 of one or more Money Market Quotes, as
applicable; and
(i) a letter agreement whereby the Existing Credit
Agreement is terminated.
SECTION 3.02. Conditions to All Borrowings. The obligation of
each Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing or
notification pursuant to Section 2.02(e) of acceptance of one or more
Money Market Quotes, as applicable;
(b) the fact that, immediately after such Borrowing, no
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of
the Borrower contained in Article IV of this Agreement shall be true
on and as of the date of such Borrowing except for changes permitted
herein and except to the extent that such representations and
warranties relate solely to an earlier date; and
(d) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans of each Bank will
not exceed the amount of its Commitment.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in
paragraphs (b), (c) and (d) of this Section; provided that such Borrowing shall
not be deemed to be such a representation and warranty to the effect set forth
in Section 4.04(b) as to any event, act or condition having a Material Adverse
Effect which has theretofore been disclosed in writing by the Borrower to the
Banks if the aggregate outstanding principal amount of the Loans immediately
after such Borrowing will not exceed the aggregate outstanding
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<PAGE> 43
principal amount thereof immediately before such Borrowing. Provided, however,
notwithstanding the immediately preceding proviso, the Borrower may make Money
Market Requests irrespective of any Material Adverse Effect which has
theretofore been disclosed in writing by the Borrower to the Banks.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
On the Closing Date, and at such other times as specified in
Section 3.02, the Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, is duly qualified to transact
business in every jurisdiction set forth on Schedule 4.01 and the failure of
the Borrower to be so qualified in any other jurisdiction could not reasonably
be expected to have or cause a Material Adverse Effect, and has all corporate
powers and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except where the failure to
have any such licenses, authorizations, consents and approvals could not
reasonably be expected to have or cause a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement, the Notes and the other Loan Documents (i) are within the Borrower's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of or filing with, any
governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any material
agreement, judgment, injunction, order, decree or other instrument binding upon
the Borrower or any of its Subsidiaries, and (v) do not result in the creation
or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower enforceable in accordance with its
terms, and the Notes and the
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other Loan Documents to which the Borrower is a party, when executed and
delivered in accordance with this Agreement, will constitute valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms, provided that the enforceability hereof and thereof is subject in each
case to general principles of equity and to bankruptcy, insolvency, fraudulent
transfer, and similar laws affecting the enforcement of creditors' rights
generally.
SECTION 4.04. Financial Information. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of May 31,
1995, and the related consolidated statements of income, shareholders' equity
and cash flows for the Fiscal Year then ended, reported on by Arthur Andersen
LLP, copies of which have been delivered to each of the Banks, fairly presents
in all material respects, in conformity with GAAP (subject to normal, recurring,
year-end audit adjustments), the consolidated financial position of the Borrower
and its Consolidated Subsidiaries as of such dates and their consolidated
results of operations and cash flows for such periods stated.
(b) Since February 29, 1996, there has been no event,
act, condition or occurrence having a Material Adverse Effect. The Agent and
the Banks acknowledge and agree that those certain restructuring and asset
impairment charges against the assets of the Borrower and its Subsidiaries to
be reflected in the financial statements for the Fiscal Quarter ending not
later than August 31, 1996 in an amount not to exceed (i) $30,000,000 with
respect to the Borrower and its Subsidiaries, and (ii) $48,000,000 with respect
to the Borrower and its Subsidiaries, and GPS and Comerica on a combined basis
(the "Asset Impairment Charges") shall not constitute a Material Adverse
Effect.
SECTION 4.05. No Litigation. There is no action, suit or
proceeding pending, or to the knowledge of the Borrower threatened, against or
affecting the Borrower or any of its Subsidiaries before any court or arbitrator
or any governmental body, agency or official which could reasonably be expected
to have or cause a Material Adverse Effect.
SECTION 4.06. Compliance with ERISA. (a) The Borrower and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC under Title IV of ERISA.
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(b) Neither the Borrower nor any member of the Controlled
Group is or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Compliance with Laws; Taxes. The Borrower and
its Subsidiaries are in compliance with all applicable laws, regulations and
similar requirements of governmental authorities, except where such compliance
is being contested in good faith through appropriate proceedings. There have
been filed on behalf of the Borrower and its Subsidiaries all Federal, state
and local income, excise, property and other tax returns which are required to
be filed by them and all taxes due pursuant to such returns or pursuant to any
assessment received by or on behalf of the Borrower or any Subsidiary have been
paid or contested as permitted by Section 5.15. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
or other governmental charges are, in the opinion of the Borrower, adequate.
United States income tax returns of the Borrower and its Subsidiaries' have
been examined and closed through the Fiscal Year ended May 31, 1992.
SECTION 4.08. Subsidiaries. Each of the Subsidiary Guarantors
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, is qualified to transact
business in every jurisdiction set forth in Schedule 4.08 and the failure of
any such Subsidiary Guarantor to be so qualified in any other jurisdictions
could not reasonably be expected to have or cause a Material Adverse Effect,
and has all corporate powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
except where the failure to have any such licenses, authorizations, consents
and approvals could not reasonably be expected to have or cause a Material
Adverse Effect. The Borrower has no Subsidiaries except for those Subsidiaries
listed on Schedule 4.08, which accurately sets forth their respective
jurisdictions of incorporation.
SECTION 4.09. Not an Investment Company. The Borrower is not
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
SECTION 4.10. Ownership of Property; Liens. Each of the
Borrower and its Consolidated Subsidiaries has title to its properties
sufficient for the conduct of its business, and none of such property is subject
to any Lien except as permitted in Section 5.09.
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SECTION 4.11. No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which it is a party (including, without limitation,
the Subsidiary Guaranties) or by which it or any of its property is bound which
could reasonably be expected to have or cause a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
SECTION 4.12. Full Disclosure. All (i) information, whether
written or oral, heretofore furnished by either the chief executive officer,
chief financial officer, chief accounting officer, controller or chief legal
officer of the Borrower, and (ii) written information heretofore furnished by
any of the other employees of the Borrower, to the Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
hereby is, and all such information hereafter furnished by such representatives
of the Borrower to the Agent or any Bank will be, true, accurate and complete in
every material respect or based on reasonable estimates on the date as of which
such information is stated or certified. The Borrower has disclosed to the Banks
in writing any and all facts known to the Borrower, after due inquiry, which
could reasonably be expected to have or cause a Material Adverse Effect.
SECTION 4.13. Environmental Matters. (a) Neither the Borrower
nor any Subsidiary is subject to any Environmental Liability which could
reasonably be expected to have or cause a Material Adverse Effect and, to the
best of the Borrower's knowledge, neither the Borrower nor any Subsidiary has
been designated as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA. To the best of the Borrower's knowledge, none
of the Properties has been identified on any current or proposed (i) National
Priorities List under 40 C.F.R. Section 300, (ii) CERCLIS list or (iii) any
list arising from a state statute similar to CERCLA.
(b) No Hazardous Materials are being, and, to the best of
the Borrower's knowledge, have been, used, produced, manufactured, processed,
treated, recycled, generated, stored, disposed of, managed or otherwise handled
at, or shipped or transported to or from the Properties or are otherwise present
at, on, in or under the Properties, or, to the best of the knowledge of the
Borrower, without independent inquiry, at or from any adjacent site or facility,
except for Hazardous Materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed, or otherwise handled in
minimal amounts in the ordinary course of business in
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compliance in all material respects with all applicable Environmental
Requirements.
(c) Borrower and each of its Subsidiaries is in
compliance in all material respects with all Environmental Requirements in
connection with the operation of the Properties and Borrower's and each of its
Subsidiary's respective businesses.
SECTION 4.14. Capital Stock. All Capital Stock, debentures,
bonds, notes and all other securities of the Borrower and its Subsidiaries
presently issued and outstanding are validly and properly issued in accordance
with all applicable laws, including but not limited to, the "Blue Sky" laws of
all applicable states and the federal securities laws. The issued shares of
Capital Stock of the Borrower's Wholly Owned Subsidiaries is owned by the
Borrower free and clear of any Lien or adverse claim. At least a majority of
the issued shares of Capital Stock of each of the Borrower's other Subsidiaries
(other than Wholly Owned Subsidiaries) is owned by the Borrower free and clear
of any Lien or adverse claim.
SECTION 4.15. Margin Stock. Neither the Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent
with, the provisions of Regulation X.
SECTION 4.16. Insolvency. After giving effect to the execution
and delivery of the Loan Documents and the making of the Loans under this
Agreement, the Borrower will not be "insolvent," within the meaning of such
term as used in O.C.G.A. Section 18-2-22 or as defined in Section 101 of Title
11 of the United States Code, as amended from time to time, or be unable to pay
its debts generally as such debts become due, or have an unreasonably small
capital to engage in any business or transaction, whether current or
contemplated.
ARTICLE V
COVENANTS
The Borrower agrees that, from and after the Closing Date and
for so long as any Bank has any Commitment hereunder or any amount payable
hereunder or under any Note remains unpaid:
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SECTION 5.01. Information. The Borrower will deliver to each
of the Banks:
(a) as soon as available and in any event within 95 days
after the end of each Fiscal Year, Financial Statements (Annual) of
(1) the Borrower on a consolidated basis, all certified by Arthur
Andersen LLP or other independent public accountants of nationally
recognized standing, with such certification to be free of exceptions
and qualifications not acceptable to the Required Banks (provided,
that delivery pursuant to paragraph (i) below of copies of the Annual
Report on Form 10-K of the Borrower for such Fiscal Year filed with
the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 5.01(a)(1)), (2) GPS on a consolidated
basis, all certified by Arthur Andersen LLP or other independent
public accountants of nationally recognized standing, with such
certification to be free of exceptions and qualifications not
acceptable to the Required Banks (provided, that such Financial
Statements (Annual) for GPS solely for the Fiscal Year ending May 31,
1996 may be certified as to fairness of presentation in all material
respects, generally accepted accounting principles and consistency by
the chief financial officer or the chief accounting officer of the
Borrower), (3) the Borrower and its Consolidated Subsidiaries, all
certified as to fairness of presentation in all material respects,
generally accepted accounting principles and consistency by the chief
financial officer or the chief accounting officer of the Borrower, and
(4) Comerica, all certified as to fairness of presentation in all
material respects, generally accepted accounting principles and
consistency by the chief financial officer or the chief accounting
officer of the Borrower;
(b) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each Fiscal Year,
Financial Statements (Quarterly) of (1) the Borrower on a consolidated
basis, all certified as to fairness of presentation in all material
respects, generally accepted accounting principles and consistency by
the chief financial officer or the chief accounting officer of the
Borrower, (provided, that delivery pursuant to clause (g) below of
copies of the Quarterly Report on Form 10-Q of the Borrower for such
Fiscal Quarter filed with the Securities and Exchange Commission shall
be deemed to satisfy the requirements of this Section 5.01(b)), (2)
GPS on a consolidated basis, all certified as to fairness of
presentation in all material respects, generally accepted
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accounting principles and consistency by the chief financial officer
or the chief accounting officer of the Borrower, (3) the Borrower and
its Consolidated Subsidiaries, all certified as to fairness of
presentation in all material respects, generally accepted accounting
principles and consistency by the chief financial officer or the chief
accounting officer of the Borrower, and (4) Comerica, all certified as
to fairness of presentation in all material respects, generally
accepted accounting principles and consistency by the chief financial
officer or the chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in Sections 5.01(a) and (b) above, a
certificate, substantially in the form of Exhibit F (a "Compliance
Certificate"), of the chief financial officer or the chief accounting
officer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 5.03 through 5.09,
inclusive, on the date of such financial statements and (ii) stating
whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto;
(d) within 5 Domestic Business Days after the delivery of
each set of annual financial statements referred to in paragraph (a)
above, a statement of the firm of independent public accountants which
reported on such statements to the effect that nothing has come to
their attention in the course of their audit to cause them to believe
that any Default existed on the date of such financial statements;
(e) within 5 Domestic Business Days after the chief
executive officer, chief financial officer, chief accounting officer,
controller or chief legal officer of the Borrower (or any other
individual having similar duties and responsibilities as any of the
foregoing although not having the same title) becomes aware of the
occurrence of any Default, a certificate of the chief financial
officer or the chief accounting officer or such other Person of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders
of the Borrower generally, copies of all
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financial statements, reports and proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports which the Borrower shall have filed with
the Securities and Exchange Commission;
(h) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan
which might reasonably be expected to constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the
plan administrator of any Plan has given or is required to give notice
of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability under Title IV of ERISA, a
copy of such notice; or (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice;
(i) from time to time such additional information
regarding the financial position or business of the Borrower and its
Subsidiaries as the Agent, at the request of any Bank, may reasonably
request;
(j) copies of the Borrower's and each Operating
Subsidiary's investment policy formally approved by its respective
Board of Directors on the Closing Date and within 14 Domestic Business
Days of any subsequent change therein; and
(k) on the first Domestic Business Day which is 95 days
after the Closing Date, a certificate, dated as of such date, signed
on behalf of the Borrower by a principal financial officer of the
Borrower, along with the financial statements and worksheets prepared
by the Borrower used in connection with the preparation thereof,
certifying that (i) no Default has occurred and is continuing on the
Closing Date, and (ii) the representations and warranties of the
Borrower contained in Article IV are true on and as of such date.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower will (i) keep, and cause each Subsidiary
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to keep, proper books of record and account in which full, true and correct
entries in conformity with GAAP shall be made of all dealings and transactions
in relation to its business and activities; and (ii) permit, and cause each
Subsidiary to permit, representatives of any Bank, after notice to an officer
of the Borrower or any Subsidiary, at such Bank's expense during any period in
which a Default is not in existence and at the Borrower's expense after the
occurrence and during the continuation of a Default to visit (which date of
visit shall be mutually agreed upon but shall not be later than 2 Domestic
Business Days after the date requested by such Bank) and inspect any of their
respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, employees and independent public
accountants. The Borrower agrees to cooperate and assist in such visits and
inspections, in each case at such reasonable times and as often as may
reasonably be desired. Notwithstanding the foregoing, during any period in
which a Default is not in existence, no Bank may engage in (i) more than 2
inspections per Fiscal Year or (ii) discussions with the Borrower's independent
public accountants, unless the Borrower shall have otherwise consented to same.
SECTION 5.03. Ratio of Consolidated Funded Debt to Consolidated
Cash Flow. Commencing with the Fiscal Quarter ending May 31, 1996, the ratio of
Consolidated Funded Debt to Consolidated Cash Flow, shall as at the end of each
Fiscal Quarter be less than 4.0 to 1.0.
SECTION 5.04. Minimum Consolidated Net Worth. Commencing with
the Fiscal Quarter ending May 31, 1996, Consolidated Net Worth, as at the end of
each Fiscal Quarter, will not be less than 90% of the Consolidated Net Worth as
at the Closing Date, plus (i) 50% of cumulative Consolidated Net Income after
the Closing Date (taken as one accounting period), calculated quarterly at the
end of each Fiscal Quarter, but excluding from such calculations of Consolidated
Net Income for purposes of this clause (i), any Fiscal Quarter in which the
Consolidated Net Income of the Borrower and its Consolidated Subsidiaries is
negative, plus (ii) 100% of the cumulative Net Proceeds of Capital Stock
received or deemed received during any period after the Closing Date, calculated
quarterly at the end of each Fiscal Quarter, minus (iii) the Asset Impairment
Charges.
SECTION 5.05. Restricted Payments. The Borrower will not
declare or make any Restricted Payment during any Fiscal Year unless, after
giving effect thereto, the aggregate of all Restricted Payments declared or
made during such Fiscal Year does
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not exceed $10,000,000 and no Default shall be in existence (which has not been
specifically waived in writing pursuant to Section 9.06) either immediately
preceding or succeeding the making or declaration of any such Restricted
Payment.
SECTION 5.06. Fixed Charge Coverage. Tested as at the end of
each Fiscal Quarter, commencing with the Fiscal Quarter ending May 31, 1996,
the ratio of (x) Income Available for Fixed Charges to (y) Consolidated Fixed
Charges, shall be greater than or equal to (i) 2.875 to 1.0 for the four Fiscal
Quarters ending respectively May 31, 1996, August 31, 1996, November 30, 1996,
and February 28, 1997, and (ii) 3.0 to 1.0 for all other Fiscal Quarters
thereafter.
SECTION 5.07. Loans or Advances. Neither the Borrower nor any
of its Subsidiaries shall make loans or advances to any Person except: (i) loans
or advances to employees not exceeding $1,000,000 in the aggregate principal
amount outstanding at any time for the Borrower and its Subsidiaries, in each
case made in the ordinary course of business and consistent with practices
existing on the Closing Date, (ii) deposits required by government agencies or
public utilities, (iii) loans or advances to Subsidiary Guarantors or to the
Borrower, (iv) travel advances to employees not exceeding $500,000 in the
aggregate principal amount outstanding at any time for the Borrower and its
Subsidiaries, in each case made in the ordinary course of business and
consistent with practices existing on the Closing Date, (v) loans or advances by
the Borrower to GPS not exceeding the aggregate outstanding sum of (x)
$125,000,000 minus (y) Investments made under Section 5.08(iv), and (vi) loans
or advances by the Borrower to Comerica not exceeding the aggregate outstanding
sum of (x) $18,000,000 minus (y) Investments made under Section 5.08(v), and
(vii) loans or advances by the Borrower to GPS evidenced by the GPS Subordinated
Notes; provided that after giving effect to the making of any loans, advances or
deposits permitted by clause (i), (ii), (iii), (iv), (v) and (vi) of this
Section, no Default shall be in existence (which has not been specifically
waived in writing pursuant to Section 9.06).
SECTION 5.08. Investments; Acquisitions. (a) Neither the
Borrower nor any of its Subsidiaries shall make Investments in any Person
except as permitted by Section 5.07 and except the following Investments
(provided such Investments do not violate Section 5.08(b)) (i) absent the
existence of an Event of Default, made in accordance with Borrower's or
Subsidiary's investment policy formally approved by its respective Board of
Directors from time to time, (ii) in Subsidiary Guarantors, and/or (iii) in
Subsidiaries which are formed for the sole purpose of (1) merging into Persons
that will become Subsidiary Guarantors in accordance
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with Section 5.10, or (2) acquiring the assets or stock of Persons and
thereafter becoming Subsidiary Guarantors in accordance with Section 5.10 or (3)
existing as non-Operating Subsidiaries, provided all such Investments in
non-Operating Subsidiaries shall not exceed $50,000 in the aggregate, (iv) an
Investment by the Borrower or any Subsidiary Guarantor in GPS not exceeding the
aggregate sum of (x) $125,000,000 minus (y) loans or advances made under Section
5.07(v), (v) an Investment by the Borrower or any Subsidiary Guarantor in
Comerica not exceeding the aggregate sum of (x) $18,000,000 minus (y) loans or
advances made under Section 5.07(vi), and/or (vi) capital contributions of
assets as permitted by Section 5.13; provided, that this Section shall not
prohibit (1) the Borrower's Guarantee of certain obligations of Technology Sales
and Leasing Co., Inc., or any other Subsidiary Guarantor in connection with the
Equipment Lease Agreements, but solely to the extent that such Guarantees and
the Debt Guaranteed pursuant thereto are not prohibited by any other terms of
this Agreement, or (2) Guarantees permitted by the proviso set forth in Section
5.22.
(b) Without the prior written consent of the Required
Banks, the Borrower will not, and it will not permit any Subsidiary to,
acquire, whether directly or through the purchase of stock, convertible notes
or otherwise, any assets other than the acquisition of the loans, advances and
investments permitted by Section 5.07 and 5.08(a), the assets of a Subsidiary
Guarantor, or of fixed assets (which fixed assets do not constitute all or
substantially all of the assets of the Person from whom such assets are
acquired) unless (x) such acquisition is of a business which is similar (as to
product sold or service rendered) to the Borrower's, any relevant Subsidiary's,
or, as the same exists as of the Closing Date, GPS's or Comerica's business,
(y) such acquisition is to be made upon a negotiated basis with the approval of
the board of directors of the Person to be acquired, or of the percentage of
ownership interests required by the charter documents of such Person to approve
any such acquisition, and (z) no Default shall be in existence or be caused
thereby (which has not been specifically waived in writing pursuant to Section
9.06).
SECTION 5.09. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired by it, except for the following:
(a) Liens existing on the date of this Agreement securing
Debt outstanding on the date of this Agreement in an aggregate
principal amount not exceeding $28,000,000;
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(b) any Lien existing on any asset of any corporation at
the time such corporation becomes a Consolidated Subsidiary and not
created in contemplation of such event;
(c) any Lien on any asset securing Debt (including,
without limitation, a capital lease) incurred or assumed for the
purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such
asset concurrently with or within 18 months after the acquisition or
completion of construction thereof;
(d) any Lien on any asset of any corporation existing at
the time such corporation is merged or consolidated with or into the
Borrower or a Consolidated Subsidiary and not created in contemplation
of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Consolidated Subsidiary and
not created in contemplation of such acquisition;
(f) Liens securing Debt owing by any (i) Subsidiary to
the Borrower or (ii) Subsidiary Guarantor to another Subsidiary
Guarantor;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any
of the foregoing paragraphs of this Section, provided that (i) such
Debt is not secured by any additional assets, and (ii) the amount of
such Debt secured by any such Lien is not increased;
(h) Liens incidental to the conduct of its business or
the ownership of its assets, including, without limitation, Liens of
materialmen and landlords, which (i) do not secure Debt and (ii) do
not in the aggregate materially detract from the value of its assets
or materially impair the use thereof in the operation of its business;
(i) any Lien in respect of any taxes which are either (x)
not, as at any date of determination, due and payable or (y) being
contested in good faith as permitted by Section 5.15;
(j) Liens in respect of judgments or awards for which
appeals or proceedings for review are being prosecuted and in respect
of which a stay of execution upon any such appeal or proceeding for
review shall have been secured, provided
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that such Person shall have established reserves which are adequate
under GAAP for such judgments or awards;
(k) Liens existing on the date of this Agreement created
by NDPS on certain of its assets, and securing certain indemnity
obligations of NDPS to the sellers of the merchant credit card
processing contracts;
(l) Liens securing the Borrower's or any Subsidiary
Guarantor's recourse obligations under any Equipment Lease Agreements
as the same may be Guaranteed by the Borrower from time to time;
provided, that such Liens shall only attach to property which has been
sold to the respective Equipment Lease Party; and
(m) Liens not otherwise permitted by the foregoing
paragraphs of this Section securing Debt (other than indebtedness
represented by the Notes) in an aggregate principal amount at any time
outstanding not to exceed $5,000,000.
Provided Liens permitted by the foregoing paragraphs (a) through (m) inclusive
(excluding (l) therefrom) shall at no time secure Debt in an aggregate amount
greater than $55,000,000.
SECTION 5.10. Future Subsidiaries. The Borrower shall cause
all of its Operating Subsidiaries not existing as of the date hereof to execute
and deliver counterparts of the Subsidiary Guaranty and Contribution Agreement
in substantially the same form as set forth therefor, respectively, in Exhibits
G and J, and other Loan Documents related thereto, as requested by the Agent,
within 25 Business Days of the creation or acquisition of any such Operating
Subsidiary by the Borrower. The delivery of such documents and instruments
shall be accompanied by such other documents as the Agent may reasonably
request (e.g., certificates of incorporation, articles of incorporation and
bylaws, opinion letters, and appropriate resolutions of the Board of Directors
of any such Subsidiary Guarantor).
SECTION 5.11. Maintenance of Existence. The Borrower shall,
and shall cause each Subsidiary to, maintain its legal existence and carry on
its business in substantially the same industry as such business shall be
carried on on the date of the first Borrowing hereunder; provided, that (i) the
Borrower may dissolve Subsidiaries pursuant to Section 5.12, (ii) the Borrower
or any Subsidiary may discontinue a business line pursuant to Section 5.13, and
(iii) the Borrower or any Subsidiary may carry on additional lines of business
of an immaterial nature in an industry different from the industry in which
their respective
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business shall be carried on on the date of the first Borrowing hereunder.
SECTION 5.12. Dissolution. Neither the Borrower nor any of its
Operating Subsidiaries shall suffer or permit dissolution ("dissolution" shall
not include the conversion of a limited liability company to a corporation or
vice versa) or liquidation either in whole or in part or redeem or retire
(other than in connection with (i) a put of the membership interests of GPS
owned by Mastercard International Incorporated to GPS as may be required by
that certain Asset Purchase and Contribution Agreement dated as of February 22,
1996, or (ii) the Borrower's stock repurchase program, including any successor
programs substantially similar thereto, in existence on the Closing Date) any
shares of its own stock (or in the case of a limited liability company, the
members' equivalent equity interest) or that of any Operating Subsidiary,
except through reorganization to the extent permitted by Section 5.13;
provided, that the Borrower may dissolve Subsidiaries from time to time if (i)
the Board of Directors of the Borrower has determined that such dissolution is
desirable, and (ii) the Borrower has provided the Banks with evidence
satisfactory to the Required Banks, in their reasonable judgment, that such
dissolution could not reasonably be expected to have or cause a Material
Adverse Effect.
SECTION 5.13. Consolidations, Mergers and Sales of Assets. The
Borrower will not, nor will it permit any Subsidiary to, consolidate or merge
with or into, or sell, lease or otherwise transfer all or any substantial part
of its assets (excluding therefrom the Borrower's membership interests in GPS)
to, any other Person, or discontinue or eliminate any Operating Subsidiary or
business segment, provided that (a) the Borrower may merge with another Person
if (i) such Person was organized under the laws of the United States of America
or one of its states, (ii) the Borrower is the corporation surviving such
merger and (iii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing, (b) Subsidiary Guarantors may merge with
and sell assets to, one another and the Borrower, (c) the Borrower and the
Subsidiaries may eliminate or discontinue business lines and segments from time
to time if such action (i) has been approved by the Board of Directors of the
Borrower, and (ii) the Borrower or any such Subsidiary provides all of the
Banks with evidence satisfactory to the Required Banks, in their reasonable
judgment, that such elimination or discontinuance will not jeopardize the
Borrower's or any Subsidiary Guarantor's ability to perform under any of the
Loan Documents, (d) so long as no Default shall be in existence either
immediately prior to or following any asset disposition, the Borrower may sell
or otherwise dispose of (x) assets of the
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Borrower and other Subsidiaries to GPS not exceeding an aggregate book value
equal to $17,300,000, (y) any of its Equipment Lease Agreements and (z) any of
its other assets in an amount of up to $10,000,000 in fair market value during
each consecutive 12 month period, (e) during the existence of a Default which
does not constitute an Event of Default, the Borrower may continue to enter
into Equipment Leases Agreements on the same terms on which such sales
customarily were consummated prior to such Default, and (f) Subsidiaries which
are formed for the sole purpose of (1) merging into Persons that will become
Subsidiary Guarantors in accordance with Section 5.10, or (2) acquiring the
assets or stock of Persons and thereafter becoming Subsidiary Guarantors in
accordance with Section 5.10, may merge with such Persons or consolidate those
Persons' assets with the assets of those Subsidiaries.
SECTION 5.14. Use of Proceeds. The proceeds of the Loans may be
used for the Borrower's general corporate purposes not otherwise prohibited
herein (including, without limitation, pursuant to Section 5.08(b)). No portion
of the proceeds of the Loans will be used by the Borrower (i) in connection with
any hostile tender offer for, or other hostile acquisition of, stock of any
corporation with a view towards obtaining control of such other corporation,
(ii) directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, or (iii) for any purpose
in violation of any applicable law or regulation.
SECTION 5.15. Compliance with Laws; Payment of Taxes. The
Borrower will, and will cause each of its Subsidiaries and each member of the
Controlled Group to, comply in all material respects with applicable laws
(including but not limited to ERISA), regulations and similar requirements of
governmental authorities (including but not limited to PBGC), except where the
necessity of such compliance is being contested in good faith through
appropriate proceedings. The Borrower will, and will cause each of its
Subsidiaries to, pay, prior to the accrual of any penalty in respect thereof,
all taxes, assessments, governmental charges, claims for labor, supplies, rent
and other obligations which, if unpaid, might become a Lien against the property
of the Borrower or any Subsidiary, except liabilities being contested in good
faith and against which, if reasonably requested by the Agent, the Borrower will
set up reserves in accordance with GAAP.
SECTION 5.16. Insurance. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain (either in the name of the Borrower
or in such Subsidiary's own name), with financially sound and reputable
insurance companies, insurance on
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all its property in at least such amounts and against at least such risks as
are usually insured against in the same general area by companies of
established repute engaged in the same or similar business.
SECTION 5.17. Change in Fiscal Year. The Borrower will not
change its Fiscal Year without the consent of the Required Banks, which consent
shall not be unreasonably withheld.
SECTION 5.18. Maintenance of Property. The Borrower shall, and
shall cause each Subsidiary to, maintain all of its properties and assets in
good condition, repair and working order, ordinary wear and tear excepted.
SECTION 5.19. Environmental Notices. Upon obtaining knowledge
thereof, the Borrower shall furnish to the Banks prompt written notice of all
Environmental Liabilities, pending, threatened or anticipated Environmental
Proceedings, Environmental Notices, Environmental Judgments and Orders, and
Environmental Releases at, on, in, under or in any way affecting the Properties
or any adjacent property, and all facts, events, or conditions that could lead
to any of the foregoing if any of the foregoing could reasonably be expected to
have or cause a Material Adverse Effect; provided, that should the Borrower or
any Subsidiary receive any written notice with respect to any of the foregoing,
then the Borrower shall provide the Banks and the Agent with a copy of same,
regardless of whether the facts, events or conditions described therein might
have or cause a Material Adverse Effect.
SECTION 5.20. Environmental Matters. The Borrower will not,
and will not permit any Third Party to, use, produce, manufacture, process,
treat, recycle, generate, store, dispose of, manage at, or otherwise handle, or
ship or transport to or from the Properties any Hazardous Materials except for
Hazardous Materials used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed, managed, or otherwise handled in the ordinary
course of business in compliance in all material respects with all applicable
Environmental Requirements.
SECTION 5.21. Environmental Release. The Borrower agrees that
upon the occurrence of an Environmental Release it will act promptly to
investigate the extent of, and to take appropriate remedial action to remedy,
such Environmental Release, to the extent required by any applicable
Environmental Requirement or any Environmental Judgment and Order.
SECTION 5.22. Transactions with Affiliates. Neither the
Borrower nor any of its Subsidiaries shall enter into, or be
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a party to, any transaction with any Affiliate of the Borrower or such
Subsidiary (which Affiliate is not the Borrower or a Wholly Owned Subsidiary),
except (i) as permitted by law and in the ordinary course of business and
pursuant to reasonable terms which are no less favorable to Borrower or such
Subsidiary than would be obtained in a comparable arm's length transaction with
a Person which is not an Affiliate, and (ii) the issuance and acceptance of the
GPS Subordinated Notes. Provided, however, neither the Borrower nor any of its
Subsidiaries shall execute a Guarantee for the benefit of GPS or Comerica
without the prior written consent of the Required Banks except for Guarantees
to third parties for the benefit of GPS or Comerica resulting from the
assumption of liabilities of the Borrower or a Subsidiary owed to such third
parties by GPS or Comerica, respectively.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing at
any time:
(a) the Borrower shall fail to pay when due any principal
of any Loan or shall fail to pay any interest on any Loan within 3
Domestic Business Days after such interest shall become due, or shall
fail to pay any fee or other amount payable hereunder within 5
Domestic Business Days after such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Section 5.02(ii), or Sections 5.03 to 5.14,
inclusive; or
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained or incorporated by reference in this
Agreement (other than those covered by paragraph (a) or (b) above) and
such failure shall not have been cured within 30 days after the
earlier to occur of (i) written notice thereof has been given to the
Borrower by the Agent at the request of any Bank or (ii) the Borrower
otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or
statement made or incorporated by reference in Article IV or in any
certificate, financial statement or other document delivered pursuant
to this Agreement shall prove to have
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been incorrect or misleading in any material respect when made (or
deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of Debt outstanding in the aggregate principal
amount of $5,000,000 or greater (other than (i) the Notes and (ii)
Debt held by the Borrower owed by a Consolidated Subsidiary or Debt
held by a Consolidated Subsidiary owed by the Borrower) when due or
within any applicable grace period; or
(f) an "Event of Default" shall occur under any of the
other Loan Documents; provided, that, should any such "Event of
Default" be waived by the Required Banks, then, such waiver shall
operate as a waiver of an Event of Default arising under this Section
6.01(f) as a result of same; or
(g) any event or condition shall occur which results in
the acceleration of the maturity of Debt outstanding of the Borrower or
any Subsidiary (other than (i) the Notes and (ii) Debt held by the
Borrower owed by a Consolidated Subsidiary or Debt held by a
Consolidated Subsidiary owed by the Borrower) in the aggregate
principal amount of $5,000,000 or greater (including, without
limitation, any "put" of such Debt to the Borrower or any Subsidiary)
or enables (or, with the giving of notice or lapse of time or both,
would enable) the holders of such Debt or any Person acting on such
holders' behalf to accelerate the maturity thereof (including, without
limitation, any "put" of such Debt to the Borrower or any Subsidiary);
or
(h) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to
authorize any of the foregoing; or
(i) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary seeking liquidation,
reorganization or other relief with respect to
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it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect; or
(j) the Borrower or any member of the Controlled Group
shall fail to pay when due any material amount which it shall have
become liable to pay to the PBGC or to a Plan under Title IV of ERISA;
or notice of intent to terminate a Plan or Plans shall be filed under
Title IV of ERISA by the Borrower, any member of the Controlled Group,
any plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to terminate
or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such
Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or
a condition shall exist by reason of which the PBGC would be entitled
to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or the Borrower or any other member of the Controlled
Group shall enter into, contribute or be obligated to contribute to,
terminate or incur any withdrawal liability with respect to, a
Multiemployer Plan; provided, that no Default or Event of Default
shall arise under this paragraph (j) so long as the maximum potential
liability to the Borrower or any member of the Controlled Group shall
be not greater than $500,000; or
(k) one or more judgments or orders for the payment of
money in an aggregate amount in excess of $2,000,000, shall be
rendered against the Borrower or any Subsidiary and such judgment or
order shall continue unsatisfied and unstayed for a period of 30 days;
or
(l) a federal tax lien shall be filed against the
Borrower under Section 6323 of the Code or a lien of the PBGC shall be
filed against the Borrower under Section 4068 of ERISA and in either
case such lien shall (i) secure an obligation, or asserted obligation,
in excess of $500,000 and (ii) remain undischarged or unstayed for a
period of 30 days after the date of filing; or
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(m) (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 20% or more of the outstanding
shares of the voting stock of the Borrower; or (ii) as of any date a
majority of the Board of Directors of the Borrower consists of
individuals who were not either (A) directors of the Borrower as of
the corresponding date of the previous year, (B) selected or nominated
to become directors by the Board of Directors of the Borrower of which
a majority consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of Directors of
the Borrower of which a majority consisted of individuals described in
clause (A) and individuals described in clause (B); or
(n) (i) any of the Subsidiary Guaranties shall cease to
be enforceable or (ii) the Borrower or any Subsidiary Guarantor shall
assert that any Loan Document is not enforceable.
then, and in every such event, (i) the Agent shall, if requested by the
Required Banks, by notice to the Borrower terminate the Commitments and they
shall thereupon terminate, (ii) any Bank may terminate its obligation to fund a
Money Market Loan in connection with any relevant Money Market Quote, and (iii)
the Agent shall, if requested by the Required Banks, by notice to the Borrower
declare the Notes (together with accrued interest thereon) to be, and the Notes
shall thereupon become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower together with interest at the Default Rate accruing on the
principal amount thereof from and after the date of such Event of Default;
provided that if any Event of Default specified in paragraph (h) or (i) above
occurs with respect to the Borrower, without any notice to the Borrower or any
other act by the Agent or the Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall become immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower together with interest
thereon at the Default Rate accruing on the principal amount thereof from and
after the date of such Event of Default. Notwithstanding the foregoing, the
Agent shall have available to it all other remedies at law or equity, and shall
exercise any one or all of them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Agent shall give notice
to the Borrower of any Default under Section 6.01(c)
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promptly upon being requested to do so by any Bank and shall thereupon notify
all the Banks thereof.
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ARTICLE VII
THE AGENT
SECTION 7.01. Appointment; Powers and Immunities. Each Bank
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Agent by the terms hereof and thereof, together
with such other powers as are reasonably incidental thereto. The Agent: (a)
shall have no duties or responsibilities except as expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee for any Bank; (b) shall not be
responsible to the Banks for any recitals, statements, representations or
warranties contained in this Agreement or any other Loan Document, or in any
certificate or other document referred to or provided for in, or received by any
Bank under, this Agreement or any other Loan Document, or for the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any other document referred to or provided for herein
or therein or for any failure by the Borrower to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Loan Document
except to the extent requested by the Required Banks, and then only on terms and
conditions satisfactory to the Agent, and (d) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document or any other document or instrument referred to or provided for herein
or therein or in connection herewith or therewith, except for its own gross
negligence or wilful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care.
Other than Section 7.09, the provisions of this Article VII are solely for the
benefit of the Agent and the Banks, and the Borrower shall not have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and under the other Loan Documents,
the Agent shall act solely as agent of the Banks and does not assume and shall
not be deemed to have assumed any obligation towards or relationship of agency
or trust with or for the Borrower. The duties of the Agent shall be ministerial
and administrative in nature, and the Agent shall not have by reason of this
Agreement or any other Loan Document a fiduciary relationship in respect of any
Bank.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled
to rely upon any certification, notice or other
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communication (including any thereof by telephone, telefax, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants or other experts selected by the Agent.
As to any matters not expressly provided for by this Agreement or any other
Loan Document, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and thereunder in accordance with
instructions signed by the Required Banks, and such instructions of the
Required Banks in any action taken or failure to act pursuant thereto shall be
binding on all of the Banks.
SECTION 7.03. Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or an Event of Default (other than the
nonpayment of principal of or interest on the Loans) unless the Agent has
received notice from a Bank or the Borrower specifying 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 of the occurrence of a Default or an
Event of Default, the Agent shall give prompt notice thereof to the Banks. The
Agent shall give each Bank prompt notice of each nonpayment of principal of or
interest on the Loans whether or not it has received any notice of the
occurrence of such nonpayment. The Agent shall (subject to Section 9.06) take
such action hereunder with respect to such Default or Event of Default as shall
be directed by the Required Banks, 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 Banks.
SECTION 7.04. Rights of Agent as a Bank. With respect to the
Loans made by it, Wachovia in its capacity as a Bank hereunder shall have the
same rights and powers hereunder as any other Bank and may exercise the same as
though it were not acting as the Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include Wachovia in its individual
capacity. The Agent may (without having to account therefor to any Bank) accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Borrower (and any of its Affiliates) as if it were
not acting as the Agent, and the Agent may accept fees and other consideration
from the Borrower (in addition to any agency fees and arrangement fees
heretofore agreed to between the Borrower and the Agent) for services in
connection with this Agreement or any other Loan Document or otherwise without
having to account for the same to the Banks.
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SECTION 7.05. Indemnification. Each Bank severally agrees to
indemnify the Agent, to the extent the Agent shall not have been reimbursed by
the Borrower, ratably in accordance with its Commitment, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, counsel fees and disbursements)
or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and is continuing,
the normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or any such other documents; provided, however that no Bank shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or wilful misconduct of the Agent. If any indemnity furnished to the
Agent for any purpose shall, in the opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
SECTION 7.06. Payee of Note Treated as Owner. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Agent and the provisions of Section 9.08(c) have
been satisfied. Any requests, authority or consent of any Person who at the time
of making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee or
assignee of that Note or of any Note or Notes issued in exchange therefor or
replacement thereof.
SECTION 7.07. Nonreliance on Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Loan Documents. The Agent shall not be required to keep itself informed
as to the performance or observance by the Borrower of this Agreement or
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any of the other Loan Documents or any other document referred to or provided
for herein or therein or to inspect the properties or books of the Borrower or
any other Person. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Agent
hereunder or under the other Loan Documents, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower or any
other Person (or any of their Affiliates) which may come into the possession of
the Agent.
SECTION 7.08. Failure to Act. Except for action expressly
required of the Agent hereunder or under the other Loan Documents, the Agent
shall in all cases be fully justified in failing or refusing to act hereunder
and thereunder unless it shall receive further assurances to its satisfaction
by the Banks of their indemnification obligations under Section 7.05 against
any and all liability and expense which may be incurred by the Agent by reason
of taking, continuing to take, or failing to take any such action.
SECTION 7.09. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Banks and the Borrower
and the Agent may be removed at any time with or without cause by the Required
Banks. Upon any such resignation or removal, the Required Banks shall have the
right to appoint a successor Agent; provided that no Event of Default shall
have occurred and be continuing, such appointment of any successor Agent shall
be subject to the prior written consent of the Borrower, which consent shall
not be unreasonably withheld or delayed. If no successor Agent shall have been
so appointed by the Required Banks and shall have accepted such appointment
within 30 days after the retiring Agent's notice of resignation or the Required
Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of
the Banks, appoint a successor Agent. Any successor Agent shall be a bank which
has a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation or removal hereunder as Agent, the provisions of
this Article VII shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent
hereunder.
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SECTION 7.10. Limitation of Damages. THE AGENT SHALL NOT BE
RESPONSIBLE OR LIABLE TO ANY PERSON OR ENTITY FOR ANY PUNITIVE OR EXEMPLARY
DAMAGES WHICH MAY BE ALLEGED AGAINST THE AGENT IN ITS AGENCY CAPACITY AS A
RESULT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period:
(a) the Agent reasonably determines that deposits in
Dollars (in the applicable amounts) are not being offered in the
relevant market for such Interest Period, or
(b) the Required Banks advise the Agent that the London
Interbank Offered Rate, as the case may be, as determined by the Agent
will not adequately and fairly reflect the cost to such Banks of
funding Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the obligations of the Banks to make
Euro-Dollar Loans specified in such notice shall be suspended. Unless the
Borrower notifies the Agent prior to the time of any Borrowing of Euro-Dollar
Loans for which a Notice of Borrowing has previously been given that it elects
not to borrow on such date, such Borrowing shall instead be made as a Base Rate
Borrowing.
SECTION 8.02. Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof (any such agency being referred to as an "Authority" and
any such event being referred to as a "Change of Law"), or compliance by any
Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority shall make it unlawful or impossible
for any Bank (or its Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the
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Agent that the circumstances giving rise to such suspension no longer exist,
the obligation of such Bank to make Euro-Dollar Loans shall be suspended.
Before giving any notice to the Agent pursuant to this Section, such Bank shall
designate a different Lending Office if such designation will avoid the need
for giving such notice and will not, in the reasonable judgment of such Bank,
be otherwise disadvantageous to such Bank. If such Bank shall determine that it
may not lawfully continue to maintain and fund any of its outstanding
Euro-Dollar Loans to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding principal amount of each
Euro-Dollar Loan of such Bank, together with accrued interest thereon. Any such
prepayment of a Euro-Dollar Loan may be prepaid by a Base Rate Loan or Money
Market Loan in an aggregate equal principal amount from any such affected Bank
(on which interest and principal shall be payable contemporaneously with the
related Euro-Dollar Loans of the other unaffected Banks), and such Bank shall
make such a Base Rate Loan, but shall have no obligation to consider any such
Money Market Loan Request in connection therewith.
SECTION 8.03. Increased Cost and Reduced Return. (a) If after
the date hereof, a Change of Law or compliance by any Bank (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any Authority:
(i) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge with respect to its Euro-Dollar Loans, its
Notes or its obligation to make Euro-Dollar Loans, or shall change the
basis of taxation of payments to any Bank (or its Lending Office) of
the principal of or interest on its Euro-Dollar Loans or any other
amounts due under this Agreement in respect of its Euro-Dollar Loans
or its obligation to make Euro-Dollar Loans (except for changes in the
tax or rate of tax on the overall net income of such Bank or its
Lending Office, as the case may be, or franchise taxes imposed by the
jurisdiction or any political subdivision or taxing authority in which
such Bank's principal executive office or Lending Office is located);
or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System, but excluding with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve
Percentage) against assets of, deposits with or for the
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account of, or credit extended by, any Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending Office) or on
the United States market for the London interbank market any other
condition affecting its Euro-Dollar Loans, its Notes or its obligation
to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Notes with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such increased
cost or reduction. In determining such amount, such Bank may use any reasonable
averaging and attribution methods generally utilized by such Bank to determine
such amounts on a non-discriminatory portfolio basis. Before giving any notice
pursuant to this Section, such Bank shall designate a different Lending Office
if such designation will avoid the need for giving such notice, and will not,
in the reasonable judgment of such Bank, be otherwise disadvantageous to such
Bank.
(b) If any Bank shall have determined that after the date
hereof the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof, or compliance by any Bank (or its Lending Office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any Authority, has or would have the effect of reducing the
rate of return on such Bank's capital as a consequence of its obligations
hereunder to a level below that which such Bank could have achieved but for
such adoption, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such Bank to
be material, then from time to time, within 15 days after demand by such Bank,
the Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such reduction.
(c) Each Bank will promptly notify the Borrower and the
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section and will
designate a different Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the reasonable
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judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts (together with an explanation, including
calculations, of how such amounts were determined) to be paid to it hereunder
shall constitute rebuttable presumptive evidence of the amount payable to any
relevant Bank. In determining such amount, such Bank may use any reasonable
averaging and attribution methods generally utilized by such Bank to determine
such amounts on a non-discriminatory portfolio basis.
(d) The provisions of this Section 8.03 shall be
applicable with respect to any Assignee, and any calculations required by such
provisions shall be made based upon the circumstances of such Assignee.
SECTION 8.04. Base Rate Loans Substituted for Affected
Euro-Dollar Loans. If (i) the obligation of any Bank to make or maintain
Euro-Dollar Loans has been suspended pursuant to Section 8.02 or (ii) any Bank
has demanded compensation under Section 8.03, and the Borrower shall, by at
least 5 Euro-Dollar Business Days' prior notice to such Bank through the Agent,
have elected that the provisions of this Section shall apply to such Bank,
then, unless and until such Bank notifies the Borrower that the circumstances
giving rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by such Bank
as Euro-Dollar Loans, and shall be made instead as Base Rate Loans,
and
(b) after each of its Euro-Dollar Loans has been repaid,
all payments of principal which would otherwise be applied to repay
such Euro-Dollar Loans shall be applied to repay its Base Rate Loans
instead.
SECTION 8.05. Compensation. Upon the request of any Bank,
delivered to the Borrower and the Agent, the Borrower shall pay to such Bank
such amount or amounts as shall compensate such Bank for any loss, cost or
expense incurred by such Bank as a result of:
(a) any payment or prepayment (pursuant to Section 8.02
or otherwise) of a Fixed Rate Loan on a date other than the last day
of an Interest Period for such Fixed Rate Loan; or
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(b) any failure by the Borrower to prepay a Fixed Rate
Loan on the date for such prepayment specified in the relevant notice
of prepayment hereunder; or
(c) any failure by the Borrower to borrow a Fixed Rate
Loan on the date for the Fixed Rate Borrowing of which such Fixed Rate
Loan is a part specified in the applicable Notice of Borrowing
delivered pursuant to Section 2.01.B or notification of acceptance of
Money Market Quotes pursuant to Section 2.02(e);
such compensation to include, without limitation, an amount equal to the
excess, if any, of (x) the amount of interest which would have accrued on the
amount so paid or prepaid or not prepaid or borrowed for the period from the
date of such payment, prepayment or failure to prepay or borrow to the last day
of the then current Interest Period for such Fixed Rate Loan (or, in the case
of a failure to prepay or borrow, the Interest Period for such Fixed Rate Loan
which would have commenced on the date of such failure to prepay or borrow) at
the applicable rate of interest for such Fixed Rate Loan provided for herein
over (y) the amount of interest (as reasonably determined by such Bank) such
Bank would have paid on a reasonably equivalent investment of equal or
comparable amounts having terms comparable to such period placed with it for
such investment. A certificate of any Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, telecopier or similar writing) and shall be given to such party at its
address or telecopier or telex number set forth on the signature pages hereof
or such other address or telecopier or telex number as such party may hereafter
specify for the purpose by notice to each other party. Each such notice,
request or other communication shall be effective (i) if given by telecopier or
telex, when such telecopier or telex is transmitted to the telecopier or telex
number specified in this Section and the appropriate confirmation or answerback
is received, (ii) if given by certified mail return-receipt requested, on the
date set forth on the receipt (provided, that any refusal to accept any such
notice shall be deemed to be notice thereof as of the time of any such
refusal), addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section; provided that notices to
the Agent under Article II or Article VIII shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by the Agent,
any Bank or the Borrower in exercising any right, power or privilege hereunder
or under any Note shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Documentary Taxes. The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agent, including
reasonable fees and disbursements of Agent's counsel Jones, Day, Reavis &
Pogue, in connection with the preparation of this Agreement and the other Loan
Documents, any waiver or consent hereunder or thereunder or any amendment and
(ii) if a Default occurs, all reasonable out-of-pocket expenses incurred by the
Agent and any Bank, including reasonable fees and disbursements of counsel, in
connection with such Default and collection and other enforcement proceedings
resulting therefrom, including reasonable out-of-pocket expenses incurred in
enforcing this Agreement and the other Loan Documents. The Borrower shall
indemnify the Agent and each Bank against any transfer taxes, documentary
taxes, assessments or charges made by any Authority by reason of the execution
and delivery of this Agreement or the other Loan Documents.
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SECTION 9.04. Indemnification. (a) The Borrower shall
indemnify the Agent, the Banks and each affiliate thereof and their respective
directors, officers, employees and agents (each an "Indemnified Party") from,
and hold each of them harmless against, any and all losses, liabilities, claims
or damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrower of the proceeds of any extension of credit by any
Bank hereunder or breach by the Borrower of this Agreement or any other Loan
Document or from any investigation, litigation or other proceeding (including
any threatened investigation or proceeding) relating to the foregoing (an
"Indemnity Proceeding"), and the Borrower shall reimburse each Indemnified
Party, upon demand (but no more frequently than every Fiscal Quarter) for any
reasonable expenses (including, without limitation, reasonable legal fees)
incurred in connection with any such investigation or proceeding ("Claims and
Expenses"); but excluding any such losses, liabilities, claims, damages or
expenses incurred by reason of the gross negligence or wilful misconduct of the
Indemnified Party; provided, that should the Borrower pay any amounts to the
Agent or the Banks due to this Section, and it shall be determined that the
harm being indemnified against resulted from the Agent's or any Bank's gross
negligence or wilful misconduct, then such party receiving such payment shall
rebate such payment to the Borrower, together with interest thereon accruing at
the Federal Funds Rate from the date such payment was made until the date such
rebate is received by the Borrower (calculated for the actual number of days
elapsed on the basis of a 365 day year).
(b) If the Borrower is required to indemnify an
Indemnified Party pursuant hereto and has provided evidence reasonably
satisfactory to such Indemnified Party that the Borrower has the financial
wherewithal to reimburse such Indemnified Party for any amount paid by such
Indemnified Party with respect to such Indemnity Proceeding, such Indemnified
Party shall not settle or compromise any such Indemnity Proceeding without the
prior written consent of the Borrower (which consent shall not be unreasonably
withheld or delayed).
(c) If a claim is to be made by an Indemnified Party
under this Section, the Indemnified Party shall give written notice to the
Borrower promptly after the Indemnified Party receives actual notice of any
Claims and Expenses incurred or instituted for which the indemnification is
sought; provided, that, the failure to give such prompt notice shall not
decrease the Claims and Expenses payable by the Borrower unless such failure
has caused the Borrower to forfeit any substantive right
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of a material nature. If requested by the Borrower in writing, and so long as
(i) no Event of Default shall have occurred and be continuing and (ii) the
Borrower has acknowledged in writing to the Indemnified Party that the Borrower
shall be obligated under the terms of its indemnity hereunder in connection
with such Indemnity Proceeding (subject to the exclusion of any losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or wilful misconduct of the Indemnified Party), the Borrower may, at
its election, conduct the defense of any such Indemnified Proceeding to the
extent such contest may be conducted in good faith on legally supported
grounds. If any lawsuit or enforcement action is filed against any Indemnified
Party entitled to the benefit of indemnity under this Section, written notice
thereof shall be given to the Borrower as soon as practicable (and in any event
within 15 days after the service of the citation or summons). Notwithstanding
the foregoing, the failure so to notify the Borrower as provided in this
Section will not relieve the Borrower from liability hereunder. After such
notice, the Borrower shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
counsel of its own choice reasonably acceptable to the Indemnified Party to
handle and defend the same, at the Borrower's cost, risk and expense; provided
however, that the Borrower and its counsel shall proceed with diligence and in
good faith with respect thereto. If (i) the engagement of such counsel by the
Borrower would present a conflict of interest which would prevent such counsel
from effectively defending such action on behalf of the Indemnified Party, (ii)
the defendants in, or targets of, any such lawsuit or action include both the
Indemnified Party and Borrower, and the Indemnified Party reasonably concludes
that there may be legal defenses available to it that are different from or in
addition to those available to the Borrower, (iii) the Borrower fails to assume
the defense of the lawsuit or action or to employ counsel reasonably
satisfactory to such Indemnified Party, in either case in a timely manner, or
(iv) an Event of Default shall occur and be continuing, then such Indemnified
Party may employ separate counsel to represent or defend it in any such action
or proceeding and the Borrower will pay the fees and disbursements of such
counsel; provided, however that each Indemnified Party shall in connection with
any matter covered by this Section which also involves other Indemnified
Parties, to use reasonable efforts to avoid unnecessary duplication of efforts
by counsel for all indemnities. Should the Borrower be entitled to conduct the
defense of any Indemnity Proceeding pursuant to the terms of this Section, the
Indemnified Party shall cooperate (with all Claims and Expenses associated
therewith to be paid by the Borrower) in all reasonable respects with the
Borrower and such attorneys in the investigation, trial and defense of such
lawsuit
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or action and any appeal arising therefrom; provided, however that the
Indemnified Party may, at its own cost (except as set forth in, and in
accordance with, the foregoing sentence), participate in the investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom.
(d) The Agent and each Bank agree that in the event that
any Indemnity Proceeding is asserted or threatened in writing or instituted
against it or any other party entitled to indemnification hereunder, the Agent
or such Bank shall promptly notify the Borrower thereof in writing and agree,
to the extent appropriate, to consult with the Borrower with a view to
minimizing the cost to the Borrower of its obligations under this Section;
provided, that, the failure to so notify the Borrower will not relieve the
Borrower from liability hereunder, unless such failure has caused the Borrower
to forfeit any substantive right of a material nature.
SECTION 9.05. Sharing of Setoffs. Each Bank agrees that if it
shall, by exercising any right of setoff or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest owing
with respect to the Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of all principal
and interest owing with respect to the Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks owing to such other Banks,
and such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held by the Banks
owing to such other Banks shall be shared by the Banks pro rata; provided that
(i) nothing in this Section shall impair the right of any Bank to exercise any
right of setoff or counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness of the Borrower other that its
indebtedness under the Notes, and (ii) if all or any portion of such payment
received by the purchasing Bank is thereafter recovered from such purchasing
Bank, such purchase from each other Bank shall be rescinded and such other Bank
shall repay to the purchasing Bank the purchase price of such participation to
the extent of such recovery together with an amount equal to such other Bank's
ratable share (according to the proportion of (x) the amount of such other
Bank's required repayment to (y) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Note, whether or not acquired pursuant
to the
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foregoing arrangements, may exercise rights of setoff or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 9.06. Amendments and Waivers. (a) Except as otherwise
specifically provided herein, any provision of this Agreement, the Notes or any
other Loan Documents may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are materially affected thereby, by
the Agent); provided that, except as provided in the next succeeding proviso,
no such amendment or waiver shall, unless signed by all Banks, (i) change the
Commitment of any Bank or subject any Bank to any additional obligation, (ii)
change the principal of or rate of interest on any Loan or any fees (other than
fees payable under the Agent's Letter Agreement) hereunder, (iii) change the
date fixed for any payment of principal of or interest on any Loan or any fees
hereunder, (iv) change the amount of principal, interest or fees due on any
date fixed for the payment thereof, (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or any of them to take
any action under this Section or any other provision of this Agreement, (vi)
change the manner of application of any payments made under this Agreement or
the Notes, or (vii) reduce any obligation owed under or release any Guarantee
(except as permitted under Sections 5.12 or 5.13 in connection with the
dissolution, sale or other disposition of a Subsidiary Guarantor) given to
support payment of the Loans.
(b) The Borrower will not solicit, request or negotiate
for or with respect to any proposed waiver or amendment of any of the
provisions of this Agreement unless each Bank shall be informed thereof by the
Borrower and shall be afforded an opportunity of considering the same and shall
be supplied by the Borrower with both (i) reasonably sufficient information to
enable it to make an informed decision with respect thereto, and (ii)
substantially the same information as supplied by the Borrower to any other
Bank. Executed or true and correct copies of any waiver or consent effected
pursuant to the provisions of this Agreement shall be delivered by the Borrower
to each Bank within 2 Domestic Business Days following the date on which the
same shall have been executed and delivered by the requisite percentage of
Banks. The Borrower will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any Bank (in its capacity as such) as consideration for or as an
inducement to the entering into by such Bank of any waiver or
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amendment of any of the terms and provisions of this Agreement unless such
remuneration is concurrently paid, on the same terms, ratably to all such
Banks.
SECTION 9.07. No Margin Stock Collateral. Each of the Banks
represents to the Agent, each of the other Banks and the Borrower that it in
good faith is not, directly or indirectly (by negative pledge or otherwise),
relying upon any Margin Stock as collateral in the extension or maintenance of
the credit provided for in this Agreement.
SECTION 9.08. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of the Agent and the Banks.
(b) Any Bank may at any time sell to one or more Persons
(each a "Participant") participating interests in any Loan owing to such Bank,
any Note held by such Bank, any Commitment hereunder or any other interest of
such Bank hereunder. In the event of any such sale by a Bank of a participating
interest to a Participant, such Bank's obligations under this Agreement shall
remain unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and the Borrower and the Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking
any action hereunder except that such Bank may agree that it will not (except
as provided below), without the consent of the Participant, agree to (i) the
change of any date fixed for the payment of principal of or interest on the
related loan or loans, (ii) the change of the amount of any principal, interest
or fees due on any date fixed for the payment thereof with respect to the
related loan or loans, (iii) the change of the principal of the related loan or
loans, (iv) any change in the rate at which either interest is payable thereon
or (if the Participant is entitled to any part thereof) commitment fee is
payable hereunder from the rate at which the Participant is entitled to receive
interest or commitment fee (as the case may be) in respect of such
participation, or (v) the release of any Guarantee given to support payment of
the Loans. Each Bank selling a participating interest in any Loan, Note,
Commitment or other interest under this Agreement, other than a Money Market
Loan or Money Market Note, shall, within 10 Domestic Business Days of such
sale,
71
<PAGE> 79
provide the Borrower and the Agent with written notification stating that such
sale has occurred and identifying the Participant and the interest purchased by
such Participant. Notwithstanding any provision contained herein to the
contrary, no Participant shall be entitled to the benefits of Article VIII with
respect to its participation in Loans outstanding from time to time.
(c) Subject to the prior written consent of the Borrower and
the Agent, which consent shall not be unreasonably withheld or delayed, any
Bank may at any time assign to one or more banks or financial institutions
(each an "Assignee") all, or a proportionate part of all, of its rights and
obligations under this Agreement, the Notes, and the other Loan Documents, and
such Assignee shall assume all such rights and obligations, pursuant to an
Assignment and Acceptance in the form attached hereto as Exhibit D, executed by
such Assignee, such transferor Bank, the Borrower and the Agent; provided that
(i) no interest may be sold by a Bank pursuant to this paragraph (c) unless the
Assignee shall agree to assume ratably equivalent portions of the transferor
Bank's Commitment, and (ii) the amount of the Commitment of the assigning Bank
subject to such assignment (determined as of the effective date of the
assignment) shall be equal to $5,000,000 (or any larger multiple of
$1,000,000). Upon (A) execution of the Assignment and Acceptance by such
transferor Bank, such Assignee, the Agent and the Borrower, (B) delivery of an
executed copy of the Assignment and Acceptance to the Borrower and the Agent,
(C) payment by such Assignee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee, and (D)
payment of a processing and recordation fee of $2,500 to the Agent, such
Assignee shall for all purposes be a Bank party to this Agreement and shall
have all the rights and obligations of a Bank under this Agreement to the same
extent as if it were an original party hereto with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent or
action by the Borrower, the Banks or the Agent shall be required. Upon the
consummation of any transfer to an Assignee pursuant to this paragraph (c), the
transferor Bank, the Agent and the Borrower shall make appropriate arrangements
so that, if required, a new Note is issued to such Assignee and, if necessary,
a new Note shall be issued to the transferor Bank.
(d) Subject to the provisions of Section 9.09, the Borrower
authorizes each Bank to disclose to any Participant, Assignee or other
transferee (each a "Transferee") and any prospective Transferee any and all
financial information in such Bank's possession concerning the Borrower which
has been delivered to such Bank by the Borrower pursuant to this Agreement or
which has been
72
<PAGE> 80
delivered to such Bank by the Borrower in connection with such Bank's credit
evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater
payment under Section 8.03 than the transferor Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is made
with the Borrower's prior written consent or by reason of the provisions of
Section 8.02 or 8.03 requiring such Bank to designate a different Lending
Office under certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
Provided, however, Anything in this Section 9.08 to the contrary
notwithstanding, any Bank may assign and pledge all or any portion of the Loans
and/or obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect of such
assigned Loans and/or obligations made by the Borrower to the assigning and/or
pledging Bank in accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned Loans and/or
obligations to the extent of such payment. No such assignment shall release the
assigning and/or pledging Bank from its obligations hereunder.
SECTION 9.09. Confidentiality. Each Bank agrees to exercise
its reasonable efforts and in any event not less than the same degree of care
as it uses to maintain its own confidential information in maintaining the
confidentiality of any information delivered or made available by the Borrower
to it which is clearly indicated to be confidential information from any one
other than persons employed or retained by such Bank who are or are expected to
become engaged in evaluating, approving, structuring or administering the
Loans; provided, however that nothing herein shall prevent any Bank from
disclosing such information (i) to any other Bank, (ii) upon the order of any
court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Bank, (iv) which
has been publicly disclosed by means which are not violative of this Section
9.09, (v) to the extent reasonably required in connection with any litigation
to which the Agent, any Bank or their respective Affiliates may be a party,
(vi) to the extent reasonably required in connection with the exercise of any
right, power of remedy hereunder or under any of the other Loan Documents,
(vii) to such Bank's legal counsel and independent auditors and (viii) to any
actual or proposed
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<PAGE> 81
Participant, Assignee or other Transferee of all or part of its rights
hereunder which has agreed in writing (aa) to be bound by the provisions of
this Section 9.09 and (bb) that the Borrower is a third party beneficiary of
such agreement, and (cc) to return all copies of the confidential information
to the Agent if the proposed assignment or participation is not consummated.
SECTION 9.10. Representation by Banks. Each Bank hereby
represents that it is a commercial lender or financial institution which makes
Loans in the ordinary course of its business and that it will make its Loans
hereunder for its own account in the ordinary course of such business;
provided, however that, subject to Section 9.08, the disposition of the Note or
Notes held by that Bank shall at all times be within its exclusive control.
SECTION 9.11. Obligations Several. The obligations of each
Bank hereunder are several, and no Bank shall be responsible for the
obligations or commitment of any other Bank hereunder. Nothing contained in
this Agreement and no action taken by Banks pursuant hereto shall be deemed to
constitute the Banks to be a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time hereunder to each
Bank shall be a separate and independent debt, and each Bank shall be entitled
to protect and enforce its rights arising out of this Agreement or any other
Loan Document and it shall not be necessary for any other Bank to be joined as
an additional party in any proceeding for such purpose.
SECTION 9.12. Georgia Law. This Agreement and each Note shall
be construed in accordance with and governed by the law of the State of Georgia
without regard to the effect of conflicts of laws.
SECTION 9.13. Interpretation. No provision of this Agreement
or any of the other Loan Documents shall be construed against or interpreted to
the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party having or being deemed to have
structured or dictated such provision.
SECTION 9.14. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
THE BORROWER (A) AND EACH OF THE BANKS AND THE AGENT IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, (B) SUBMITS TO THE NONEXCLUSIVE PERSONAL
JURISDICTION IN THE STATE OF GEORGIA, THE COURTS THEREOF AND THE
74
<PAGE> 82
UNITED STATES DISTRICT COURTS SITTING THEREIN, FOR THE ENFORCEMENT OF THIS
AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS, AND (C) WAIVES ANY AND ALL
PERSONAL RIGHTS UNDER THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS
(INCLUDING, WITHOUT LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR
VENUE WITHIN THE STATE OF GEORGIA FOR THE PURPOSE OF LITIGATION TO ENFORCE THIS
AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS. NOTHING HEREIN CONTAINED,
HOWEVER, SHALL PREVENT THE AGENT FROM BRINGING ANY ACTION OR EXERCISING ANY
RIGHTS AGAINST THE BORROWER PERSONALLY, AND AGAINST ANY ASSETS OF THE BORROWER,
WITHIN ANY OTHER STATE OR JURISDICTION.
SECTION 9.15. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 9.16. Severability. In case any one or more of the
provisions contained in this Agreement, the Notes or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 9.17. Interest. In no event shall the amount of
interest, and all charges, amounts or fees contracted for, charged or collected
pursuant to this Agreement, the Notes or the other Loan Documents and deemed to
be interest under applicable law (collectively, "Interest") exceed the highest
rate of interest allowed by applicable law (the "Maximum Rate"), and in the
event any such payment is inadvertently received by any Bank, then the excess
sum (the "Excess") shall be credited as a payment of principal, unless the
Borrower shall notify such Bank in writing that it elects to have the Excess
returned forthwith. It is the express intent hereof that the Borrower not pay
and the Banks not receive, directly or indirectly in any manner whatsoever,
interest in excess of that which may legally be paid by the Borrower under
applicable law. The right to accelerate maturity of any of the Loans does not
include the right to accelerate any interest that has not otherwise accrued on
the date of such acceleration, and the Agent and the Banks do not intend to
collect any unearned interest in the event of any such acceleration. All monies
paid to the Agent or the Banks hereunder or under any of the Notes or the other
Loan Documents, whether at maturity or by prepayment, shall be subject to
rebate of unearned interest as and to the extent required by applicable law. By
the execution of this Agreement, the Borrower covenants,
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<PAGE> 83
to the fullest extent permitted by law, that (i) the credit or return of any
Excess shall constitute the acceptance by the Borrower of such Excess, and (ii)
the Borrower shall not seek or pursue any other remedy, legal or equitable ,
against the Agent or any Bank, based in whole or in part upon contracting for
charging or receiving any Interest in excess of the Maximum Rate. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by the Agent or any Bank, all interest at any time
contracted for, charged or received from the Borrower in connection with this
Agreement, the Notes or any of the other Loan Documents shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread in
equal parts throughout the full term of the Commitments. The Borrower, the
Agent and each Bank shall, to the maximum extent permitted under applicable
law, (i) characterize any non-principal payment as an expense, fee or premium
rather than as Interest and (ii) exclude voluntary prepayments and the effects
thereof. The provisions of this Section shall be deemed to be incorporated into
each Note and each of the other Loan Documents (whether or not any provision of
this Section is referred to therein). All such Loan Documents and
communications relating to any Interest owed by the Borrower and all figures
set forth therein shall, for the sole purpose of computing the extent of
obligations hereunder and under the Notes and the other Loan Documents be
automatically recomputed by the Borrower, and by any court considering the
same, to give effect to the adjustments or credits required by this Section.
[Signatures are contained on the following pages]
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<PAGE> 84
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective authorized
officers as of the day and year first above written.
NATIONAL DATA CORPORATION (SEAL)
By:
--------------------------------------------
Title:
National Data Plaza
Atlanta, GA 30329-2010
Attention: E. Michael Ingram, Esq.
Telecopier number: 404-728-2990
Confirmation number: 404-728-2504
77
<PAGE> 85
COMMITMENTS WACHOVIA BANK OF GEORGIA, N.A.,
as Agent and as a Bank (SEAL)
By:
-------------------------------------------
Title:
$21,000,000
Lending Office
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Atlanta Southeast Division
Telex number: 461105
Answerback: WACH INT ATL
Telecopier number: 404-332-5016
Confirmation number: 404-332-5920
78
<PAGE> 86
THE FIRST NATIONAL BANK
OF CHICAGO (SEAL)
By:
------------------------------------------
Title:
$17,000,000
Lending Office
One First National Plaza
Suite 0167, 10th Floor
Chicago, Illinois 60670
Attention: Edwin Adams
Telecopier number: (312) 732-3885
Confirmation number: (312) 732-1601
79
<PAGE> 87
SUNTRUST BANK, ATLANTA (SEAL)
By:
---------------------------------------------
Title:
By:
--------------------------------------------
Title:
$12,000,000
Lending Office
--------------
25 Park Place
23rd Floor
Atlanta, Georgia 30303
Telecopier number 404-588-8833
Confirmation number 404-588-7963
Attention: Dennis H. James
______________________
TOTAL COMMITMENTS:
$50,000,000.00
80
<PAGE> 88
EXHIBIT A-1
SYNDICATED LOAN NOTE
Atlanta, Georgia
May 31, 1996
For value received, NATIONAL DATA CORPORATION, a Delaware
corporation (the "Borrower"), promises to pay to the order of
__________________________________________________, a ____________________ (the
"Bank"), for the account of its Lending Office, the principal sum of
___________________________________ AND NO/100 DOLLARS ($______), or such
lesser amount as shall equal the unpaid principal amount of each Syndicated
Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred
to below, on the dates and in the amounts provided in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of this
Syndicated Loan Note on the dates and at the rate or rates provided for in the
Credit Agreement. Interest on any overdue principal of and, to the extent
permitted by law, overdue interest on the principal amount hereof shall bear
interest at the Default Rate, as provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of
Wachovia Bank of Georgia, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1757, or such other address as may be specified from time to time
pursuant to the Credit Agreement.
All Loans made by the Bank, the respective maturities thereof,
the interest rates from time to time applicable thereto, and all repayments of
the principal thereof shall be recorded by the Bank and, prior to any transfer
hereof, endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof; provided that
the failure of the Bank to make any such recordation or endorsement shall not
affect the obligations of the Borrower hereunder or under the Credit Agreement.
This Syndicated Loan Note is one of the Syndicated Loan Notes
referred to in the Credit Agreement dated as of even date herewith among the
Borrower, the Banks listed on the signature pages thereof and Wachovia Bank of
Georgia, N.A., as Agent (as the same may be amended and modified from time to
time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the optional and mandatory
81
<PAGE> 89
prepayment and the repayment hereof and the acceleration of the maturity
hereof.
IN WITNESS WHEREOF, the Borrower has caused this Syndicated
Loan Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.
NATIONAL DATA CORPORATION (SEAL)
By:
----------------------------------
Title:
82
<PAGE> 90
Syndicated Loan Note (cont'd)
SYNDICATED LOANS AND PAYMENTS OF PRINCIPAL
----------------------------------------------------------------------
83
<PAGE> 91
<TABLE>
<CAPTION>
Base Rate, Amount Amount of
or Euro- of Principal Maturity Notation
Date Dollar Loan Loan Repaid Date Made By
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
84
<PAGE> 92
EXHIBIT A-2
MONEY MARKET LOAN NOTE
As of May 31, 1996
For value received, NATIONAL DATA CORPORATION, a Delaware
corporation (the "Borrower"), promises to pay to the order of
____________________________________________, a _______________ (the "Bank"),
for the account of its Lending Office, the principal sum of FIFTY MILLION AND
NO/100 DOLLARS ($50,000,000.00), or such lesser amount as shall equal the
unpaid principal amount of each Money Market Loan made by the Bank to the
Borrower pursuant to the Credit Agreement referred to below, on the dates and
in the amounts provided in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of this Money Market Loan Note on the
dates and at the rate or rates provided for in the Credit Agreement referred to
below. Interest on any overdue principal of and, to the extent permitted by
law, overdue interest on the principal amount hereof shall bear interest at the
Default Rate, as provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Wachovia Bank of
Georgia, N.A., 191 Peachtree Street, N.E., Atlanta, Georgia 30303-1757, or such
other address as may be specified from time to time pursuant to the Credit
Agreement.
All Money Market Loans made by the Bank, the respective
maturities thereof, the interest rates from time to time applicable thereto,
and all repayments of the principal thereof shall be recorded by the Bank and,
prior to any transfer hereof, endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This Money Market Loan Note is one of the Money Market Loan
Notes referred to in the Credit Agreement dated as of even date herewith among
the Borrower, the Banks listed on the signature pages thereof, Wachovia Bank of
Georgia, N.A., as Agent (as the same may be amended and modified from time to
time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the optional and mandatory
85
<PAGE> 93
prepayment and the repayment hereof and the acceleration of the maturity
hereof.
IN WITNESS WHEREOF, the Borrower has caused this Money Market
Loan Note to be duly executed, under seal, by its duly authorized officer as of
the day and year first above written.
NATIONAL DATA CORPORATION (SEAL)
By:
---------------------------------------------
Title:
86
<PAGE> 94
Money Market Loan Note (cont'd)
<TABLE>
<CAPTION>
MONEY MARKET LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------
Amount Amount of Stated
Interest of Principal Maturity Notation
Date Rate Loan Repaid Date Made By
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
87
<PAGE> 95
EXHIBIT B
OPINIONS OF COUNSEL FOR THE BORROWER
AND THE SUBSIDIARY GUARANTORS
-----------------------------
[To Be Attached]
88
<PAGE> 96
EXHIBIT C
OPINION OF JONES, DAY, REAVIS & POGUE,
SPECIAL COUNSEL FOR THE BANKS AND THE AGENT
-------------------------------------------
[Dated as provided in
Section 3.01 of
the Credit Agreement]
To the Banks and the Agent
Referred to Below
c/o Wachovia Bank of Georgia, N.A.,
as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Atlanta Corporate Group
Dear Sirs:
We have participated in the preparation of the Credit
Agreement (the "Credit Agreement") dated as of May 31, 1996, among National
Data Corporation, a Delaware corporation (the "Borrower"), the banks listed on
the signature pages thereof (the "Banks") and Wachovia Bank of Georgia, N.A.,
as Agent (the "Agent"), and have acted as special counsel for the Banks and the
Agent for the purpose of rendering this opinion pursuant to Section 3.01(g) of
the Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
This opinion letter is limited by, and is in accordance with,
the January 1, 1992 edition of the Interpretive Standards applicable to Legal
Opinions to Third Parties in Corporate Transactions adopted by the Legal
Opinion Committee of the Corporate and Banking Law Section of the State Bar of
Georgia which Interpretive Standards are incorporated herein by this reference.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, and assuming the due
authorization, execution and delivery of the Credit Agreement and each of the
Notes by or on behalf of the Borrower, we are of the opinion that the Credit
Agreement constitutes a valid and binding
89
<PAGE> 97
agreement of the Borrower and each Note constitutes valid and binding
obligations of the Borrower, in each case enforceable in accordance with its
terms.
In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction except the State of Georgia.
We express no opinion as to the effect of the compliance or noncompliance of
the Agent or any of the Banks with any state or federal laws or regulations
applicable to the Agent or any of the Banks by reason of the legal or
regulatory status or the nature of the business of the Agent or any of the
Banks.
This opinion is delivered to you in connection with the
transaction referenced above and may only be relied upon by you and any
Assignee, Participant or other Transferee under the Credit Agreement without
our prior written consent.
Very truly yours,
90
<PAGE> 98
EXHIBIT D
ASSIGNMENT AND ACCEPTANCE
Dated __________ __, 19
Reference is made to the Credit Agreement dated as of
___________________, 1996 (the "Credit Agreement") among National Data
Corporation, a Delaware corporation (the "Borrower"), the Banks (as defined in
the Credit Agreement) and Wachovia Bank of Georgia, N.A., as Agent (the
"Agent"). Terms defined in the Credit Agreement are used herein with the same
meaning.
____________________________________________________ (the "Assignor") and
___________________________________________(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, 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 Credit Agreement as of the Effective Date (as defined below) (including,
without limitation, a _____% interest (which on the Effective Date hereof is
$_______________ in the Assignor's Commitment and a ______ interest (which on
the Effective Date hereof is $_______________ in the Syndicated Loans [and
Money Market Loans] owing to the Assignor and a ____% interest in the Note[s]
held by the Assignor (which on the Effective Date hereof is
$__________________).
2. The Assignor (i) makes no representation or warranty
and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto, other than that it is the legal and beneficial owner of the
interest being assigned by it hereunder, that such interest is free and clear
of any adverse claim and that as of the date hereof its Commitment (without
giving effect to assignments thereof which have not yet become effective) is
$_________________ and the aggregate outstanding principal amount of Syndicated
Loans [and Money Market Loans] owing to it (without giving effect to
assignments thereof which have not yet become effective) is $________________ ;
(ii) 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 Credit Agreement
or any other instrument or document furnished pursuant thereto; and (iii)
attaches the Note[s] referred to in paragraph 1 above and requests that the
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<PAGE> 99
Agent exchange such Note[s] for [a new Syndicated Loan Note dated
________________, ____ in the principal amount of $__________ payable to the
order of the Assignee] [a new Money Market Loan Note dated ________________,
in the principal amount of $__________ payable to the order of the Assignee]
[new Notes as follows: a ___________ Note dated ________________, in the
principal amount of $_____________ payable to the order of the Assignor and a
______________ Note dated ____________, _____ in the principal amount of
$__________ payable to the order of the Assignee].
3. The Assignee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial statements
referred to in Section 4.04(a) thereof (or any more recent financial statements
of the Borrower delivered pursuant to Section 5.01(a) or (b) 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 Bank 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 Credit Agreement; (iii) confirms that
it is a bank or financial institution; (iv) appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under
the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank;
(vi) specifies as its Lending Office (and address for notices) the office set
forth beneath its name on the signature pages hereof, (vii) represents and
warrants that the execution, delivery and performance of this Assignment and
Acceptance are within its corporate powers and have been duly authorized by all
necessary corporate action[, and (viii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the Credit
Agreement and the Notes or such other documents as are necessary to indicate
that all such payments are subject to such taxes at a rate reduced by an
applicable tax treaty].
4. The Effective Date for this Assignment and Acceptance
shall be ___________________ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Agent for execution
and acceptance by the Agent and to the Borrower for execution by the Borrower.
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<PAGE> 100
5. Upon such execution and acceptance by the Agent and
execution by the Borrower, from and after the Effective Date, (i) the Assignee
shall be a party to the Credit Agreement and, to the extent rights and
obligations have been transferred to it by this Assignment and Acceptance, have
the rights and obligations of a Bank thereunder and (ii) the Assignor shall, to
the extent its rights and obligations have been transferred to the Assignee by
this Assignment and Acceptance, relinquish its rights (other than under Section
8.03 of the Credit Agreement) and be released from its obligations under the
Credit Agreement.
6. Upon such execution and acceptance by the Agent and
execution by the Borrower, from and after the Effective Date, the Agent shall
make all payments in respect of the interest assigned hereby to the Assignee.
The Assignor and Assignee shall make all appropriate adjustments in payments
for periods prior to such acceptance by the Agent directly between themselves.
7. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the laws of the State of Georgia.
[NAME OF ASSIGNOR]
By:
-------------------------------------
Title:
[NAME OF ASSIGNEE]
By:
------------------------------------
Title:
Lending Office:
[Address]
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
By:
------------------------------------
Title:
NATIONAL DATA CORPORATION
By:
-----------------------------------
Title:
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<PAGE> 101
EXHIBIT E
NOTICE OF BORROWING
______________, 199__
Wachovia Bank of Georgia, N.A.,
as Agent
191 Peachtree Street, N.W.
Atlanta, Georgia 30303-1757
Attention: Atlanta Corporate Group
Re: Credit Agreement (the "Credit Agreement") dated as of May 31,
1996 by and among NATIONAL DATA CORPORATION, WACHOVIA BANK OF
GEORGIA, N.A., as a Bank and as the Agent, and the other Banks
from time to time party thereto.
Gentlemen:
Unless otherwise defined herein, capitalized terms used herein shall
have the meanings attributable thereto in the Credit Agreement.
This Notice of Borrowing is delivered to you pursuant to Section 2.02
of the Credit Agreement.
The Borrower hereby requests a Borrowing in the aggregate principal
amount of $________ to be made on _________________, 199__, and for interest to
accrue thereon at the rate established by the Credit Agreement for [Base Rate
Loans] [Euro-Dollar Loans]. The duration of the Interest Period with respect
thereto shall be [30 days] [1 month] [2 months] [3 months] [6 months].
The Borrower hereby represents and warrants that on the date the
Borrowing requested hereunder is made (both before and after giving effect to
the making of such and after giving effect to the application, directly or
indirectly, of the proceeds thereof):
(a) no Default has occurred and is continuing; and
(b) the representations and warranties of the Borrower
contained in Article IV of the Credit Agreement are true on and as of
the date hereof except (i) for changes permitted by the Credit
Agreement, (ii) to the extent that such representations and warranties
relate solely to an earlier
94
<PAGE> 102
date and (iii) that the representation set forth in Section 4.04(b) is
made as of the date hereof only to the extent required by Section
3.02.
The Borrower has caused this Notice of Borrowing to be executed and
delivered and the representation and warranty contained herein to be made, by
its duly authorized officer this _____ day of ________________, 199__.
NATIONAL DATA CORPORATION
By:
-----------------------------
Title:
95
<PAGE> 103
EXHIBIT F
COMPLIANCE CERTIFICATE
Reference is made to the Credit Agreement dated as of May 31,
1996 (as modified and supplemented and in effect from time to time, the "Credit
Agreement") among National Data Corporation, the Banks from time to time party
thereto and Wachovia Bank of Georgia, N.A., as a Bank and as Agent. Capitalized
terms used herein shall have the meanings ascribed thereto in the Credit
Agreement.
Pursuant to Section 5.01(c) of the Credit Agreement,
________________, the duly authorized ____________ _______________ of National
Data Corporation hereby certifies, on behalf of National Data Corporation, to
the Agent and the Banks that the information contained in the Compliance Check
List attached hereto is true, accurate and complete as of __________, 199__,
and that no Defaults or Events of Default exist.
By:
----------------------------------
Title:
96
<PAGE> 104
1. (SECTION 5.03) Ratio of Consolidated Funded Debt to Consolidated Cash
Flow. Commencing with the Fiscal Quarter ending May 31, 1996, the
ratio of Consolidated Funded Debt to Consolidated Cash Flow, shall
as at the end of each Fiscal Quarter be less than 4.0 to 1.0.
<TABLE>
<S> <C> <C>
(a) Consolidated Debt $_______________
(b) Consolidated Net Income $_______________
(c) Depreciation and Amortization $_______________
(d) Other non-cash charges (less
non-cash gains) $_______________
(e) Sum of (b), (c), and (d) $_______________
(f) Actual Ratio of (a) to (e) $_______________
Required Ratio less than 4.0 to 1.0
</TABLE>
2. (SECTION 5.04) Minimum Consolidated Net Worth. Commencing with the
Fiscal Quarter ending May 31, 1996, Consolidated Net Worth, as at
the end of each Fiscal Quarter, will not be less than 90% of
Consolidated Net Worth as at the Closing Date, plus (i) 50% of
cumulative Consolidated Net Income after the Closing Date (taken as one
accounting period), calculated quarterly at the end of each Fiscal
Quarter, but excluding from such calculations of Consolidated Net
Income for purposes of this clause (i), any Fiscal Quarter in which the
Consolidated Net Income of the Borrower and its Consolidated
Subsidiaries is negative, plus (ii) 100% of the cumulative Net Proceeds
of Capital Stock received or deemed received during any period after
the Closing Date, calculated quarterly at the end of each Fiscal
Quarter, minus (iii) the Asset Impairment Charges.
<TABLE>
<S> <C>
(a) 90% of Consolidated Net Worth as at
the Closing Date $_____________
(b) 50.0% of positive Consolidated Net
Income after the Closing Date $_____________
(c) 100% of cumulative Net Proceeds of
Capital Stock $_____________
(d) Asset Impairment Charges $_____________
Required Consolidated Net Worth (sum of
(a) plus (b) plus (c) minus (d)) $_____________
Actual Consolidated Net Worth $_____________
</TABLE>
97
<PAGE> 105
3. (SECTION 5.05) Restricted Payments. The Borrower will not declare or
make any Restricted Payment during any Fiscal Year unless, after giving
effect thereto, the aggregate of all Restricted Payments declared or
made during such Fiscal Year does not exceed $10,000,000 and no Default
shall be in existence (which has not been specifically waived in
writing pursuant to Section 9.06) either immediately preceding or
succeeding the making or declaration of any such Restricted Payment.
Dividends-paid or declared in Fiscal Year
19____ $___________
Purchase or redemption of Capital Stock in
Fiscal Year 19____ $___________
Purchase or redemption of stock options or
warrants in Fiscal Year 19____ $___________
Total Restricted Payments $___________
Limitation $ 10,000,000
4. (SECTION 5.06) Fixed Charge Coverage. Tested as at the end of each
Fiscal Quarter, commencing with the Fiscal Quarter ending May 31, 1996,
the ratio of (x) Income Available for Fixed Charges to (y) Consolidated
Fixed Charges, shall be greater than or equal to (i) 2.875 to 1.0 for
the four Fiscal Quarters ending respectively May 31, 1996, August 31,
1996, November 30, 1996, and February 28, 1997, and (ii) 3.0 to 1.0 for
all other Fiscal Quarters thereafter.
(a) Income Available for Fixed Charges
(Schedule - 2) $____________
(b) Consolidated Fixed Charges
(Schedule - 1) $____________
Ratio of (a) to (b) _____________
Requirement for the four
Fiscal Quarters ending respectively May 31,
1996, August 31, 1996, November 30, 1996, and
February 28, 1997 greater than/equal to 2.875 to 1.0
Requirement for all Fiscal Quarters
thereafter greater than/equal to 3.0 to 1.0
98
<PAGE> 106
5. (SECTION 5.07) Loans or Advances. Neither the Borrower nor any of its
Subsidiaries shall make loans or advances to any Person except: (i)
loans or advances to employees not exceeding $1,000,000 in the
aggregate principal amount outstanding at any time for the Borrower
and its Subsidiaries, in each case made in the ordinary course of
business and consistent with practices existing on the Closing Date,
(ii) deposits required by government agencies or public utilities,
(iii) loans or advances to Subsidiary Guarantors or to the Borrower,
(iv) travel advances to employees not exceeding $500,000 in the
aggregate principal amount outstanding at any time for the Borrower
and its Subsidiaries, in each case made in the ordinary course of
business and consistent with practices existing on the Closing Date,
(v) loans or advances by the Borrower to GPS not exceeding the
aggregate outstanding sum of (x) $125,000,000 minus (y) Investments
made under Section 5.08(iv), and (vi) loans or advances by the
Borrower to Comerica not exceeding the aggregate outstanding sum of
(x) $18,000,000 minus (y) Investments made under Section 5.08(v), and
(vii) loans or advances by the Borrower to GPS evidenced by the GPS
Subordinated Notes; provided that after giving effect to the making of
any loans, advances or deposits permitted by clause (i), (ii), (iii),
(iv), (v) and (vi) of this Section, no Default shall be in existence
(which has not been specifically waived in writing pursuant to Section
9.06).
<TABLE>
<S> <C> <C>
(a) To Employees $
---------------
Limitation $1,000,000
(b) Travel advances to Employees $
---------------
Limitation $500,000
(e) To GPS $
----------------
Limitation (x) $125,000,000 minus
(y) $
(Investments made
under Section
5.08(iv))
$
=======================
(f) To Comerica $
--------------
Limitation (x) $18,000,000 minus
(y) $
----------------
</TABLE>
99
<PAGE> 107
(Investments made
under Section 5.08(v))
$
======================
6. (SECTION 5.08) Investments; Acquisitions. Neither the Borrower nor any
of its Subsidiaries shall make Investments in any Person except as
permitted by Section 5.07 and except the following Investments
(provided such Investments do not violate Section 5.08(b)) (i) absent
the existence of an Event of Default, made in accordance with
Borrower's or Subsidiary's investment policy formally approved by its
respective Board of Directors from time to time, (ii) in Subsidiary
Guarantors, and/or (iii) in Subsidiaries which are formed for the sole
purpose of (1) merging into Persons that will become Subsidiary
Guarantors in accordance with Section 5.10, or (2) acquiring the
assets or stock of Persons and thereafter becoming Subsidiary
Guarantors in accordance with Section 5.10 or (3) existing as
non-Operating Subsidiaries, provided all such Investments in
non-Operating Subsidiaries shall not exceed $50,000 in the aggregate,
(iv) an Investment by the Borrower or any Subsidiary Guarantor in GPS
not exceeding the aggregate sum of (x) $125,000,000 minus (y) loans or
advances made under Section 5.07(v), (v) an Investment by the Borrower
or any Subsidiary Guarantor in Comerica not exceeding the aggregate
sum of (x) $18,000,000 minus (y) loans or advances made under Section
5.07(vi), and/or (vi) capital contributions of assets as permitted by
Section 5.13; provided, that this Section shall not prohibit (1) the
Borrower's Guarantee of certain obligations of Technology Sales and
Leasing Co., Inc., or any other Subsidiary Guarantor in connection
with the Equipment Lease Agreements, but solely to the extent that
such Guarantees and the Debt Guaranteed pursuant thereto are not
prohibited by any other terms of this Agreement, or (2) Guarantees
permitted by the proviso set forth in Section 5.22.
<TABLE>
<S> <C>
(a) Investments in non-Operating
Subsidiaries $
----------------
(b) Limitation $50,000
(c) Investments in GPS $
----------------
(d) Limitation (x) $125,000,000 minus
(y) $
-------------------
_ (loans or advances
made under Section
5.07(v))
</TABLE>
100
<PAGE> 108
<TABLE>
<S> <C>
$
===================
(e) Investments in Comerica $
(f) Limitation (x) $18,000,000 minus
(y) $
----------------
_ (loans or advances
made under Section
5.07(vi))
$
===================
</TABLE>
7. (SECTION 5.09) Negative Pledge.
Total amount of Debt secured by Liens $
---------------
Limitation $55,000,000
101
<PAGE> 109
Schedule - 1
CONSOLIDATED FIXED CHARGES
Calculation of Consolidated Fixed Charges for period ending May 31, 1996
(including GPS and Comerica)
Consolidated operating lease and rental expenses for:
1st quarter ending August 31, 1995 $
-----------
2nd quarter ending November 30, 1995 $
-----------
3rd quarter February 29, 1996 $
-----------
4th quarter May 31, 1996 $
-----------
Total $
===========
Consolidated Interest Expense for:
1st quarter ending August 31, 1995 $
-----------
2nd quarter ending November 30, 1995 $
-----------
3rd quarter February 29, 1996 $
-----------
4th quarter May 31, 1996 $
-----------
Total $
===========
Total Consolidated Fixed Charges $
===========
Calculation of Consolidated Fixed Charges for period ending August 31, 1996
(excluding GPS and Comerica)
Consolidated operating lease and rental
expenses $
------------
Consolidated Interest Expense: $
------------
Total Consolidated Fixed Charges
(multiplied by 4) $
============
Calculation of Consolidated Fixed Charges for period ending November 30, 1996
(excluding GPS and Comerica)
Consolidated operating lease and rental
expenses: $
------------
Consolidated Interest Expense: $
------------
Total Consolidated Fixed Charges $
(multiplied by 2) ============
102
<PAGE> 110
Calculation of Consolidated Fixed Charges for period ending February 28, 1997
(excluding GPS and Comerica)
Consolidated operating lease and rental
expenses: $
-----------
Consolidated Interest Expense: $
-----------
Total Consolidated Fixed Charges $
(divided by 0.75) ===========
Calculation of Consolidated Fixed Charges for each period thereafter (excluding
GPS and Comerica)
Consolidated operating lease and rental expenses for:
quarter 199__ $
----------
quarter 199__ $
----------
quarter 199__ $
----------
quarter 199__ $
----------
Total $
==========
Consolidated Interest Expense for:
quarter 199__ $
----------
quarter 199__ $
----------
quarter 199__ $
----------
quarter 199__ $
----------
Total $
==========
Total Consolidated Fixed Charges $
==========
103
<PAGE> 111
Schedule - 2
INCOME AVAILABLE FOR FIXED CHARGES
Calculation of Income Available For Fixed Charges for period ending May 31,
1996 (including GPS and Comerica)
<TABLE>
<S> <C>
1st quarter ending August 31, 1995
Consolidated Net Income $
-----------
Taxes on income $
-----------
Consolidated Interest Expense $
-----------
Operating lease and rental payments $
-----------
2nd quarter ending November 30, 1995
Consolidated Net Income $
-----------
Taxes on income $
-----------
Consolidated Interest Expense $
-----------
Operating lease and rental payments $
-----------
3rd quarter ending February 29, 1996
Consolidated Net Income $
-----------
Taxes on income $
-----------
Consolidated Interest Expense $
-----------
Operating lease and rental payments $
-----------
4th quarter May 31, 1996
Consolidated Net Income $
-----------
Taxes on income $
-----------
Consolidated Interest Expense $
-----------
Operating lease and rental payments $
-----------
Income Available for Fixed Charges $
===========
</TABLE>
Calculation of Income Available For Fixed Charges for period ending August 31,
1996 (excluding GPS and Comerica)
<TABLE>
<S> <C>
Consolidated Net Income $
-----------
Taxes on income $
-----------
Consolidated Interest Expense $
-----------
Operating lease and rental payments $
-----------
Income Available for Fixed Charges
(multiplied by 4) $
===========
</TABLE>
104
<PAGE> 112
Calculation of Income Available For Fixed Charges for period ending November
30, 1996 (excluding GPS and Comerica)
<TABLE>
<S> <C>
Consolidated Net Income $
----------
Taxes on income $
----------
Consolidated Interest Expense $
----------
----------
Income Available for Fixed Charges
(multiplied by 2) $
==========
</TABLE>
Calculation of Income Available For Fixed Charges for period ending February
28, 1997 (excluding GPS and Comerica)
<TABLE>
<S> <C>
Consolidated Net Income $
----------
Taxes on income $
----------
Consolidated Interest Expense $
----------
Operating lease and rental payments $
----------
Income Available for Fixed Charges
(divided by 0.75) $
============
</TABLE>
Calculation of Income Available For Fixed Charges for each period thereafter
(excluding GPS and Comerica)
<TABLE>
<S> <C> <C>
__ quarter 199
Consolidated Net Income $
----------
Taxes on income $
----------
Consolidated Interest Expense $
----------
Operating lease and rental payments $
----------
__ quarter 199
Consolidated Net Income $
----------
Taxes on income $
----------
Consolidated Interest Expense $
----------
Operating lease and rental payments $
----------
__ quarter 199
Consolidated Net Income $
----------
Taxes on income $
----------
Consolidated Interest Expense $
----------
Operating lease and rental payments $
----------
__ quarter 199
Consolidated Net Income $
----------
Taxes on income $
----------
Consolidated Interest Expense $
----------
</TABLE>
105
<PAGE> 113
Operating lease and rental payments $
----------
Income Available for Fixed Charges $
==========
106
<PAGE> 114
Schedule - 3
CONSOLIDATED CASH FLOW
Calculation of Consolidated Cash Flow for period ending May 31, 1996 (including
GPS and Comerica)
<TABLE>
<S> <C>
1st quarter ending August 31, 1995
Consolidated Net Income $
------------
Depreciation and amortization $
------------
Non-cash Charges
(less non-cash gains) $
------------
2nd quarter ending November 30, 1995
Consolidated Net Income $
------------
Depreciation and amortization $
------------
Non-cash Charges
(less non-cash gains) $
------------
3rd quarter February 29, 1996
Consolidated Net Income $
------------
Depreciation and amortization $
------------
Non-cash Charges
(less non-cash gains) $------------
4th quarter May 31, 1996
Consolidated Net Income $
------------
Depreciation and amortization $
Non-cash Charges ------------
(less non-cash gains) $
------------
Consolidated Cash Flow $
============
</TABLE>
Calculation of Consolidated Cash Flow for period ending August 31, 1996
(excluding GPS and Comerica)
<TABLE>
<S> <C>
Consolidated Net Income $
------------
Depreciation and amortization $
Non-cash Charges ------------
(less non-cash gains) $
------------
Consolidated Cash Flow
(multiplied by 4) $
============
</TABLE>
107
<PAGE> 115
Calculation of Consolidated Cash Flow for period ending November 30, 1996
(excluding GPS and Comerica)
<TABLE>
<S> <C>
Consolidated Net Income $
------------
Depreciation and amortization $
Non-cash Charges ------------
(less non-cash gains) $
------------
Consolidated Cash Flow
(multiplied by 2) $
------------
</TABLE>
Calculation of Consolidated Cash Flow for period ending February 28, 1997
(excluding GPS and Comerica)
<TABLE>
<S> <C>
Consolidated Net Income $
------------
Depreciation and amortization $
Non-cash Charges ------------
(less non-cash gains) $
------------
Consolidated Cash Flow
(divided by 0.75) $
============
</TABLE>
Calculation of Consolidated Cash Flow for each period thereafter (excluding GPS
and Comerica)
<TABLE>
<S> <C>
__ quarter 199
Consolidated Net Income $
------------
Depreciation and amortization $
Non-cash Charges ------------
(less non-cash gains) $
------------
__ quarter 199
Consolidated Net Income $
------------
Depreciation and amortization $
Non-cash Charges ------------
(less non-cash gains) $
------------
__ quarter 199
Consolidated Net Income $
------------
Depreciation and amortization $
Non-cash Charges ------------
(less non-cash gains) $
------------
__ quarter 199
Consolidated Net Income $
------------
Depreciation and amortization $
Non-cash Charges ------------
</TABLE>
108
<PAGE> 116
(less non-cash gains) $
----------
Consolidated Cash Flow $
==========
109
<PAGE> 117
EXHIBIT G
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this "Guaranty") is made as of the
_____ day of ______________, 199___, by [________________] (collectively, the
"Subsidiary Guarantors") in favor of the Agent, for the ratable benefit of the
Banks, under the Credit Agreement referred to below;
W I T N E S S E T H
WHEREAS, NATIONAL DATA CORPORATION, a Delaware corporation
(the "Principal") and WACHOVIA BANK OF GEORGIA, N.A., as Agent (the "Agent"),
and the other Banks from time to time party thereto have entered into that
certain Credit Agreement dated as of even date herewith (as same may be amended
or supplemented from time to time, the "Credit Agreement") providing, subject
to the terms and conditions thereof, for extensions of credit to be made by the
Banks to the Principal;
WHEREAS, it is a requirement of Section 5.10 of the Credit
Agreement that each of the Subsidiary Guarantors execute and deliver this
Guaranty whereby each of the Subsidiary Guarantors shall guarantee the payment
when due, of all principal, interest and other amounts that shall be at any
time payable by the Principal under the Credit Agreement, the Notes and the
other Loan Documents; and
WHEREAS, in consideration of the financial and other support
that the Principal has provided, and such financial and other support as the
Principal may in the future provide, to the Subsidiary Guarantors, each of the
Subsidiary Guarantors is willing to guarantee the obligations of the principal
under the Credit Agreement, the Notes, and the other Loan Documents;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Terms defined in the Credit Agreement
and not otherwise defined herein have, as used herein, the respective meanings
provided for therein.
110
<PAGE> 118
SECTION 2. Representations and Warranties. Each of the
Subsidiary Guarantors represents and warrants (which representations and
warranties shall be deemed to have been renewed upon each Borrowing under the
Credit Agreement) that:
(a) it (i) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation; (ii) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (iii) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary
and where failure so to qualify would have a Material Adverse Effect.
(b) it has all necessary corporate power and authority
to execute, deliver and perform its obligations under this Guaranty; the
execution, delivery and performance of this Guaranty have been duly authorized
by all necessary corporate action; and this Guaranty has been duly and validly
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
or moratorium or other similar laws relating to the enforcement of creditors'
rights generally and by general equitable principles.
(c) neither the execution and delivery by it of this
Guaranty nor compliance with the terms and provisions hereof will conflict with
or result in a breach of, or require any consent under, its certificate of
incorporation or by-laws or any material applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any material agreement or instrument to which it is a party or by
which it is bound or to which it is subject, or constitute a default under any
such material agreement or instrument, or result in the creation or imposition
of any Lien upon any of its revenues or assets pursuant to the terms of any
such material agreement or instrument.
SECTION 3. Covenants. Each of the Subsidiary Guarantors
covenants that, so long as any Bank has any Commitment outstanding under the
Credit Agreement or any amount payable under the Credit Agreement or any Note
shall remain unpaid, that it will, and, if necessary, will enable the Principal
to fully comply with those covenants and agreements set forth in the Credit
Agreement (including, without limitation, Section 2.10 and Article V thereof).
111
<PAGE> 119
SECTION 4. The Guaranty. Each of the Subsidiary Guarantors
hereby unconditionally guarantees the full and punctual payment (whether at
stated maturity, upon acceleration or otherwise) of the principal of and
interest on each Note issued by the Principal pursuant to the Credit Agreement,
and the full and punctual payment of all other amounts payable by the Principal
under the Credit Agreement and the other Loan Documents including, without
limitation, the Obligations (all of the foregoing, being referred to
collectively as the "Guaranteed Obligations"). Upon failure by the Principal to
pay punctually any such amount, each of the Subsidiary Guarantors agrees that
it shall forthwith on demand pay the amount not so paid at the place and in the
manner specified in the Credit Agreement, the Note or the relevant Loan
Document, as the case may be.
SECTION 5. Guaranty Unconditional. The obligations of each of
the Subsidiary Guarantors hereunder shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Principal under
the Credit Agreement, any Note, or any other Loan Document, by
operation of law or otherwise or any obligation of any other guarantor
of any of the Obligations;
(ii) any modification or amendment of or supplement
to the Credit Agreement, any Note, or any other Loan Document;
(iii) any release, nonperfection or invalidity of any
direct or indirect security for any obligation of the Principal under
the Credit Agreement, any Note, any Loan Document, or any obligations
of any other guarantor of any of the Obligations;
(iv) any change in the corporate existence, structure
or ownership of the Principal or any other guarantor of any of the
Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Principal, or any other guarantor of
the Obligations, or its assets or any resulting release or discharge
of any obligation of the Principal, or any other guarantor of any of
the Obligations;
112
<PAGE> 120
(v) the existence of any claim, setoff or other
rights which the Subsidiary Guarantors may have at any time against
the Principal, any other guarantor of any of the Obligations, the
Agent, any Bank or any other Person, whether in connection herewith or
any unrelated transactions, provided that nothing herein shall prevent
the assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to
or against the Principal, or any other guarantor of any of the
Obligations, for any reason related to the Credit Agreement, any other
Loan Document, or any provision of applicable law or regulation
purporting to prohibit the payment by the Principal, or any other
guarantor of the Obligations, of the principal of or interest on any
Note or any other amount payable by the Principal under the Credit
Agreement, the Notes, or any other Loan Document; or
(vii) any other act or omission to act or delay of
any kind by the Principal, any other guarantor of the Obligations, the
Agent, any Bank or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of any Subsidiary
Guarantor's obligations hereunder.
SECTION 5. Discharge Only Upon Payment In Full; Reinstatement
In Certain Circumstances. Each of the Subsidiary Guarantor's obligations
hereunder shall remain in full force and effect until all Guaranteed
Obligations shall have been paid in full and the Commitments under the Credit
Agreement shall have terminated or expired. If at any time any payment of the
principal of or interest on any Note or any other amount payable by the
Principal or any other party under the Credit Agreement or any other Loan
Document is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Principal or otherwise, each of
the Subsidiary Guarantor's obligations hereunder with respect to such payment
shall be reinstated as though such payment had been due but not made at such
time.
SECTION 6. Waiver of Notice. Each of the Subsidiary Guarantors
irrevocably waives acceptance hereof, presentment, demand, protest and, to the
fullest extent permitted by law, any notice not provided for herein, as well as
any requirement that at any time any action be taken by any Person against the
Principal, any other guarantor of the Obligations, or any other Person.
113
<PAGE> 121
SECTION 7. [Reserved].
SECTION 8. Stay of Acceleration. If acceleration of the time
for payment of any amount payable by the Principal under the Credit Agreement,
any Note or any other Loan Document is stayed upon the insolvency, bankruptcy
or reorganization of the Principal, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, any Note or any other
Loan Document shall nonetheless be payable by each of the Subsidiary Guarantors
hereunder forthwith on demand by the Agent made at the request of the Required
Banks.
SECTION 9. [Reserved].
SECTION 10. Notices. All notices, requests and other
communications to any party hereunder shall be given or made by telecopier or
other writing and telecopied, or mailed or delivered to the intended recipient
at its address or telecopier number set forth on the signature pages hereof or
such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the Agent in accordance with the provisions of
Section 9.01 of the Credit Agreement. Except as otherwise provided in this
Guaranty, all such communications shall be deemed to have been duly given when
transmitted by telecopier, or personally delivered or, in the case of a mailed
notice sent by certified mail return-receipt requested, on the date set forth
on the receipt (provided, that any refusal to accept any such notice shall be
deemed to be notice thereof as of the time of any such refusal), in each case
given or addressed as aforesaid.
SECTION 11. No Waivers. No failure or delay by the Agent or
any Banks in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided in this Guaranty, the Credit
Agreement, the Notes, and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 12. Successors and Assigns. This Guaranty is for the
benefit of the Agent and the Banks and their respective successors and
permitted assigns and in the event of an assignment of any amounts payable
under the Credit Agreement, the Notes, or the other Loan Documents, the rights
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty shall be
114
<PAGE> 122
binding upon each of the Subsidiary Guarantors and their respective successors
and permitted assigns.
SECTION 13. Changes in Writing. Neither this Guaranty nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by each of the Subsidiary Guarantors and the Agent with
the consent of the Required Banks.
SECTION 14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER
OF JURY TRIAL. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF GEORGIA. EACH OF THE SUBSIDIARY GUARANTORS HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA AND OF ANY GEORGIA STATE COURT SITTING IN
ATLANTA, GEORGIA AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY OF THE OTHER LOAN
DOCUMENTS) OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE SUBSIDIARY
GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE SUBSIDIARY GUARANTORS, AND THE AGENT AND THE BANKS ACCEPTING
THIS GUARANTY, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 15. Taxes, etc. All payments required to be made by any of the
Subsidiary Guarantors hereunder shall be made without setoff or counterclaim
and free and clear of and without deduction or withholding for or on account
of, any present or future taxes, levies, imposts, duties or other charges of
whatsoever nature imposed by any government or any political or taxing
authority thereof, provided, however, that if any of the Subsidiary Guarantors
is required by law to make such deduction or withholding, such Subsidiary
Guarantor shall forthwith pay to the Agent or any Bank, as applicable, such
additional amount as results in the net amount received by the Agent or any
Bank, as applicable, equaling the full amount which would have been received by
the Agent or any Bank, as applicable, had no such deduction or withholding been
made.
115
<PAGE> 123
IN WITNESS WHEREOF, each of the Subsidiary Guarantors has
caused this Guaranty to be duly executed, under seal, by its authorized officer
as of the day and year first above written.
[____________________________]
By:
--------------------------------------
Title:
National Data Plaza
Atlanta, Ga 30329-2010
Attention: E. Michael Ingram, Esq.
Telecopier number: 404-728-2990
Confirmation number: 404-728-2504
116
<PAGE> 124
EXHIBIT H
MONEY MARKET QUOTE REQUEST
Wachovia Bank of Georgia, N.A.,
as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: _________________________
Re: Money Market Quote Request
This Money Market Quote Request is given in accordance with
Section 2.03 of the Credit Agreement (as amended or modified from time to time,
the "Credit Agreement") dated as of __________, 1996, among _______________, the
Banks from time to time parties thereto, and WACHOVIA BANK OF GEORGIA, N.A., as
Agent. Terms defined in the Credit Agreement are used herein as defined therein.
The Borrower hereby requests that the Agent obtain quotes for a Money
Market Borrowing based upon the following:
1. The proposed date of the Money Market Borrowing shall be
______________, 19_____ (the "Money Market Borrowing Date").
(1*)
2. The aggregate amount of the Money Market Borrowing shall be
$_______.(2)
3. The Stated Maturity Date(s) applicable to the Money Market
Borrowing shall be ______ days.(3)
* All numbered footnotes appear on the last page of this Exhibit H.
117
<PAGE> 125
Very truly yours,
NATIONAL DATA CORPORATION
By:
--------------------------------
Title:
- -----------------------------
(1) The date must be a Euro-Dollar Business Day.
(2) The amount and number of Money Market Borrowings is subject to Section
2.02(a) and (b).
(3) The Stated Maturity Dates are subject to Section 2.02(b)(iii). The
Borrower may request that up to 5 different Stated Maturity Dates be
applicable to any Money Market Borrowing, provided that (i) each such
Stated Maturity Date shall be deemed to be a separate Money Market
Quote Request and shall be subject to the limitations set forth in
Section 2.01.B(g), and (ii) the Borrower shall specify the amounts of
such Money Market Borrowing to be subject to each such different
Stated Maturity Date.
118
<PAGE> 126
EXHIBIT I
MONEY MARKET QUOTE
Wachovia Bank of Georgia, N.A.,
as Agent
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: ______________________
Re: Money Market Quote to __________________________
This Money Market Quote is given in accordance with Section
2.02(c)(ii) of the Credit Agreement (as amended or modified from time to time,
the "Credit Agreement") dated as of ____________, 1996, among __________________
(the "Borrower"), the Banks from time to time parties thereto, and WACHOVIA BANK
OF GEORGIA, N.A., as Agent. Terms defined in the Credit Agreement are used
herein as defined therein.
In response to the Borrower's Money Market Quote Request dated
_____, 19 , we hereby make the following Money Market Quote on the following
terms:
1. Quoting Bank:
2. Person to contact
at Quoting Bank:
3. Date of Money Market Borrowing:(1*)
4. We hereby offer to make Money Market Loan(s) in the following
maximum principal amounts for the following Interest Periods and at the
following rates:
<TABLE>
<CAPTION>
Maximum Stated
Principal Maturity
Amount (2) Date (3) Rate Per Annum(4)
- ------------ -------- ---- --- -----
<S> <C> <C>
</TABLE>
- ---------------------------
119
<PAGE> 127
* All numbered footnotes appear on the last page of this Exhibit I.
120
<PAGE> 128
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the
Credit Agreement, irrevocably obligate(s) us to make the Money Market Loan(s)
for which any offer(s) [is] [are] accepted, in whole or in part (subject to the
last sentence of Section 2.03(c)(i) of the Credit Agreement).
121
<PAGE> 129
Very truly yours,
[Name of Bank]
Dated: By:
- --------------- ------------------------------
Authorized Officer
122
<PAGE> 130
- ----------------------------
(1) As specified in the related Money Market Quote Request.
(2) The principal amount bid for each Stated Maturity Date may not exceed
the principal amount requested. Money Market Quotes must be made for at
least $1,000,000 or a larger multiple of $500,000.
(3) The Stated Maturity Dates are subject to Section 2.03(b)(iii).
(4) Subject to Section 2.03(c)(ii)(C).
123
<PAGE> 131
EXHIBIT J
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is entered into
as of _____________, 19__ by and among NATIONAL DATA CORPORATION (the
"Principal"), and each of the undersigned corporations (other than the
Principal) respectively organized under the laws of the states set forth on the
signature pages below their names (each a "Subsidiary", and collectively, the
"Subsidiaries"). The Principal and each of the Subsidiaries are sometimes
hereinafter referred to individually as a "Contributing Party" and collectively
as the "Contributing Parties").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement of even date
herewith, among the Principal and Wachovia Bank of Georgia, N.A., as Agent, for
itself and the other Banks which are parties thereto (such Credit Agreement, as
the same may from time to time be amended, modified, restated or extended,
being hereinafter referred to as the "Credit Agreement"), the Banks have agreed
to extend financial accommodations to the Principal;
WHEREAS, as a condition, among others, to the Banks' willingness
to enter into the Credit Agreement, the Banks have required that each Operating
Subsidiary execute and deliver that certain Subsidiary Guaranty, dated as of
even date herewith (such agreement, as the same may from time to time be
amended, modified, restated or extended, being hereinafter referred to as the
"Guaranty"), pursuant to which, among other things, the Subsidiaries have
jointly and severally agreed to guarantee the Principal's Loans and other
amounts owing to the Banks under and as defined in the Agreement, including,
without limitation, the Principal's obligations to repay the "Loans" (as
defined in the Credit Agreement) it owes to the Banks; and
WHEREAS, each Subsidiary is a wholly-owned direct or indirect
subsidiary of the Principal and is engaged in businesses related to those of
the Principal and each other Subsidiary, and each of the Subsidiaries will
derive direct or indirect economic benefit from the effectiveness and existence
of the Credit Agreement;
124
<PAGE> 132
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, and to induce each Subsidiary to enter into
the Guaranty, it is agreed as follows:
To the extent that any Subsidiary shall, under the Guaranty,
make a payment (a "Subsidiary Payment") of a portion of the "Guaranteed
Obligations" (as defined in the Guaranty), then such Subsidiary shall be
entitled to contribution and indemnification from, and be reimbursed by, each
of the other Contributing Parties in an amount, for each such Contributing
Party, equal to a fraction of such Subsidiary Payment, the numerator of which
fraction is such Contributing Party's Allocable Amount and the denominator of
which is the sum of the Allocable Amounts of all of the Contributing Parties.
As of any date of determination, the "Allocable Amount" of each
Contributing Party shall be equal to the maximum amount of liability which
could be asserted against such Contributing Party hereunder with respect to the
applicable Subsidiary Payment without (i) rendering such Contributing Party
"insolvent" within the meaning of Section 101(31) of the Federal Bankruptcy
Code (the "Bankruptcy Code") or Section 2 of either the Uniform Fraudulent
Transfer Act (the "UFTA") or the Uniform Fraudulent Conveyance Act (the
"UFCA"), (ii) leaving such Contributing Party with unreasonably small capital,
within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the
UFTA or Section 5 of the UFCA, or (iii) leaving such Contributing Party unable
to pay its debts as they become due within the meaning of Section 548 of the
Bankruptcy Code or Section 4 of the UFTA or Section 6 of the UFCA.
This Agreement is intended only to define the relative rights of
the Contributing Parties, and nothing set forth in this Agreement is intended
to or shall impair the obligations of the Subsidiaries, jointly and severally,
to pay any amounts, as and when the same shall become due and payable in
accordance with the terms of the Guaranty.
The parties hereto acknowledge that the rights of contribution
and indemnification hereunder shall constitute assets in favor of each
Subsidiary to which such contribution and indemnification is owing.
This Agreement shall become effective upon its execution by each
of the Contributing Parties and shall continue in full force and effect and may
not be terminated or otherwise revoked by any Contributing Party until all of
the Obligations under and as defined in the Agreement shall have been
indefeasibly paid in full (in lawful money of the United States of America) and
125
<PAGE> 133
discharged and the Agreement and financing arrangements evidenced and governed
by the Credit Agreement shall have been terminated. Each Contributing Party
agrees that if, notwithstanding the foregoing, such Contributing Party shall
have any right under applicable law to terminate or revoke this Agreement, and
such Contributing Party shall attempt to exercise such right, then such
termination or revocation shall not be effective until a written notice of such
revocation or termination, specifically referring hereto and signed by such
Contributing Party, is actually received by each of the other Contributing
Parties and by the Agent at its notice address set forth in the Credit
Agreement. Such notice shall not affect the right or power of any Contributing
Party to enforce rights arising prior to receipt of such written notice by each
of the other Contributing Parties and the Agent. If any Bank grants additional
loans to the Principal or takes other action giving rise to additional
Obligations after any Contributing Party has exercised any right to terminate
or revoke this Agreement but before the Agent receives such written notice, the
rights of each other Contributing Party to contribution and indemnification
hereunder in connection with any Subsidiary Payments made with respect to such
loans or Obligations shall be the same as if such termination or revocation had
not occurred.
IN WITNESS WHEREOF, each Contributing Party has executed and
delivered this Agreement, under seal, as of the date first above written.
NATIONAL DATA CORPORATION (SEAL)
By:
---------------------------------
Title:
Address:
-------------------------------------
-------------------------------------
-------------------------------------
Attention:___________________________
Telecopier No._______________________
Confirmation No. ____________________
[OPERATING SUBSIDIARY], a
____________ corporation (SEAL)
By:
---------------------------------
126
<PAGE> 134
Title:
Address:
-------------------------------------
-------------------------------------
-------------------------------------
Attention:___________________________
Telecopier No._______________________
Confirmation No. ____________________
127
<PAGE> 135
Schedule 4.01
List of Jurisdictions Where the Borrower
is Qualified to Transact Business
128
<PAGE> 136
Schedule 4.08
LIST OF SUBSIDIARIES
Name Jurisdiction of Incorporation
129
<PAGE> 1
EXHIBIT 10(vii)
NATIONAL DATA CORPORATION
1995 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN
1. Purpose. The purpose of the National Data Corporation 1995
Non-Employee Director Compensation Plan (the "Plan") is to advance the
interests of National Data Corporation (the "Company") by encouraging ownership
of the Company's $.125 par value common stock (the "Common Stock") by
non-employee directors of the Company, thereby giving such directors an
increased incentive to devote their efforts to the success of the Company.
2. Administration. The Plan shall be administered, construed and
interpreted by the Board of Directors of the Company. Pursuant to such
authorization, the Board of Directors shall have the responsibility for
carrying out the terms of the Plan; however, the Board of Directors shall have
no authority or discretion either to determine which non-employee directors
shall receive awards of shares under the Plan or to set the number of shares
subject to or the other terms of such awards.
3. Eligibility. Shares granted under the Plan shall be granted in
accordance with paragraph 5 to each member of the Company's Board of Directors
who is not an employee of the Company, provided that shares of the Company's
Common Stock remain available for grant hereunder in accordance with paragraph
4. A person to whom shares are granted under the Plan shall be referred to
hereinafter as a "Grantee".
4. Shares Subject to Plan. The shares subject to the Plan shall be
authorized but unissued or reacquired shares of the Company's Common Stock.
Subject to adjustment in accordance with the provisions of paragraph 6 of the
Plan, the maximum number of shares of Common Stock which may be granted under
the Plan shall be 25,000, and the adoption of the Plan by the Board of
Directors of the Company shall constitute a reservation of 25,000 authorized
but unissued, or reacquired, shares of Common Stock for issuance under the
Plan.
<PAGE> 2
5. Terms and Conditions of Awards. Subject to the further provisions set
forth immediately below, on the first day of each fiscal year each non-employee
director of the Company shall be granted an award of that number of shares of
Common Stock having an aggregate Fair Market Value (as defined below) equal to
fifty percent (50%) of the non-employee director's Annual Fixed Director
Compensation (as defined below), rounded up to the next whole share of Common
Stock. A non-employee director assuming office following the first day of the
Company's fiscal year shall receive an award of that number of shares of Common
Stock having a Fair Market Value equal to fifty percent (50%) of the Annual
Fixed Director Compensation payable to such non-employee director for the
remainder of the fiscal year in which he first became a director, rounded up to
the next whole share of Common Stock.
(a) Fair Market Value. For purposes of the Plan, the "Fair Market
Value" of the shares of Common Stock shall mean the closing price of the Common
Stock on the national securities exchange on which it is registered on the day
on which such value is to be determined or, if no shares are traded on such day,
on the next day on which shares are traded, as reported in The Wall Street
Journal or other authoritative source.
(b) Annual Fixed Director Compensation. For purposes of the Plan,
"Annual Fixed Director Compensation" shall mean the total annual retainer
payable by the Company to non-employee directors for service on the Board of
Directors ($24,000 as of June 1, 1995, subject to subsequent adjustment), but
shall not include any fees paid for attendance at meetings of the Board of
Directors, or any committee thereof, or any reimbursements made by the Company
to non-employee directors for expenses related to their service on the Board of
Directors.
(c) Delivery of Shares. The Company shall make delivery of certificates
representing the shares for which award has been granted within a reasonable
period of time; provided, however, that if any law, regulation or agreement
requires the Company to take any action with respect to the shares before the
issuance thereof, then
- 2 -
<PAGE> 3
the date of delivery of such shares shall be extended for the period
necessary to take such action. Certificates representing shares for which
awards have been granted under the Plan may bear such restrictive legends as
may be necessary or desirable in order to comply with applicable federal and
state securities laws.
(d) Effect of Termination of Directorship.
(i) Termination of Directorship Generally. Except as provided in
subparagraph (ii) below, in the event that a Grantee's service as a director is
terminated for any reason after the first day of the Company's fiscal year but
prior to the last day of the Company's fiscal year, such Grantee shall be
obligated to pay to the Company, in cash or shares of Common Stock the Fair
Market Value is equal to, an amount (the "Termination Amount") equal to the sum
of (x) the number of days remaining in the Company's fiscal year following the
date of such Grantee's termination divided by 365 and multiplied by the Fair
Market Value of the shares of Common Stock granted under the Plan to such
terminated Grantee as of the first day of the fiscal year in which such Grantee
was terminated and (y) all Annual Fixed Director Compensation paid in advance
in currency other than shares of Common Stock and representing compensation for
whole or partial months following termination of such Grantee's service as a
director.
(ii) Retirement, Disability or Death. In the event of (A) the
termination of a Grantee's service as a director at which time the Grantee is
entitled to the payment of Retirement Income pursuant to the Retirement Plan for
Non-Employee Directors of the Company, (B) the termination of the Grantee's
service as a director by reason of the Grantee's Disability (as defined in
subparagraph (iii) below) or (C) the death of a Grantee, no obligation of
repayment or reimbursement of any kind for the shares granted to such Grantee
under the Plan shall arise and the Grantee or the Grantee's personal
representatives, heirs or legatees shall take full rights, powers and
privileges with regard to any and all shares awarded to such Grantee under the
Plan.
- 3 -
<PAGE> 4
(iii) Disability Defined. A Grantee shall be deemed to be disabled if by
reason of any physical or mental incapacity he has been unable, or it is
reasonably expected that he will be unable, for a period of at least one
hundred eighty (180) substantially continuous calendar days to perform his
duties and responsibilities as a director of the Company. In the event of any
disagreement between a director, or his legal representative, and the Company
as to whether a director is unable to perform his duties and responsibilities
as a director of the Company, the question of such inability shall be submitted
to an impartial and reputable physician for determination, selected by mutual
agreement of the director, or his legal representative, and the Company or,
failing such agreement, selected by two physicians (one of which shall be
selected by the Company and the other by the director, or his legal
representative), and such determination of the question of such incapacity by
such physician shall be final and binding on the director and the Company. The
Company shall pay the reasonable fees and expenses of such physician.
6. Adjustments. In the event that, after the effective date of the Plan,
the outstanding shares of Common Stock are increased or decreased or changed
into or exchanged for a different number or kind of shares or other securities
of the Company by reason of a recapitalization, reclassification, stock
split-up, combination of shares or dividend payable in stock, appropriate
adjustments shall be made by the Company's Board of Directors in the number and
kind of shares or other securities that may be granted under the Plan. All
adjustments made by the Board of Directors under this paragraph 6 shall be
final and conclusive.
7. Effective Date and Termination of Plan.
(a) Effective Date. The effective date of the Plan shall be June 1,
1995 provided that the stockholders of the Company (acting at a duly called
meeting of the stockholders), shall approve the Plan on or before December 1,
1995.
(b) Termination. The Plan shall terminate ten years after its effective
date, but the Board of Directors may terminate the Plan at any time prior to
such date.
- 4 -
<PAGE> 5
Termination of the Plan shall not alter or impair any of the rights
or obligations under any award theretofore made under the Plan unless the
Grantee shall so consent.
8. Amendment. The Board of Directors of the Company by majority vote may
at any time and from time to time amend the Plan; provided, however, that
without the approval of the stockholders of the Company, no such amendment
shall change:
(a) The maximum number of shares of Common Stock as to which awards
may be granted under the Plan; or
(b) The date on which the Plan will terminate as provided by paragraph
7(b) of the Plan; or
(c) The number of shares of Common Stock subject to each award; or
(d) The provisions of paragraph 3 of the Plan relating to the
determination of non-employee directors to whom awards may be granted; or
(e) The provisions of the Plan in such a manner so as to increase
materially (within the meaning of Rule 16b-3 under the Securities Exchange Act
of 1934, as amended) the benefits accruing under the Plan.
The 1995 Non-Employee Director Compensation Plan was duly adopted by the
Board of Directors of National Data Corporation effective June 1, 1995, subject
to stockholder approval as provided in Paragraph 7.
NATIONAL DATA CORPORATION
By: /s/ R. A. Yellowlees
------------------------
Chairman of the Board
- 5 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF NATIONAL DATA CORPORATION FOR THE TWELVE MONTHS ENDED
MAY 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> MAY-31-1995
<PERIOD-END> MAY-31-1996
<CASH> 9,768
<SECURITIES> 0
<RECEIVABLES> 61,618
<ALLOWANCES> 2,433
<INVENTORY> 1,869
<CURRENT-ASSETS> 81,407
<PP&E> 99,103
<DEPRECIATION> 57,353
<TOTAL-ASSETS> 368,039
<CURRENT-LIABILITIES> 101,689
<BONDS> 0
0
0
<COMMON> 3,246
<OTHER-SE> 230,053
<TOTAL-LIABILITY-AND-EQUITY> 368,039
<SALES> 325,803
<TOTAL-REVENUES> 325,803
<CGS> 163,323
<TOTAL-COSTS> 337,637
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,750
<INCOME-PRETAX> (11,736)
<INCOME-TAX> (3,278)
<INCOME-CONTINUING> (8,458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,458)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> (.31)
</TABLE>
