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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 For the fiscal year ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from _______ to _______
Commission file number 1-5517
SCIENTIFIC-ATLANTA, INC.
(Exact name of Registrant as specified in its charter)
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<S> <C>
GEORGIA 58-0612397
(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
ONE TECHNOLOGY PARKWAY, SOUTH 30092-2967
NORCROSS, GEORGIA (Zip Code)
(Address of principal executive offices)
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770-903-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class Name of each exchange
------------------- on which registered
Common Stock, par value -------------------
New York Stock Exchange
$0.50 per share
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
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 [ ]
Indicated by check mark if disclosure of delinquent filers 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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant at September 8, 1995, was approximately $1,232,761,207.
As of September 8, 1995, the registrant had outstanding 77,030,331 shares of
common stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Specified portions of the Proxy Statement for the registrant's 1995 Annual
Meeting of Shareholders are incorporated by reference to the extent indicated
in Part III of this Form 10-K.
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PART I
ITEM 1. BUSINESS
GENERAL
Scientific-Atlanta, Inc. (the "Company") designs, manufactures
and markets a variety of standard and proprietary commercial electronic signal
generating and receiving equipment. The Company's products connect information
generators with information users via broadband terrestrial and satellite
networks, and include applications for the converging cable, telephone, and
data networks.
The Company operates primarily in one business segment,
Communications, providing satellite and terrestrial based networks to a range
of customers and applications, and providing network management and systems
integration to add value to those networks. This segment represents over 90
percent of consolidated sales, operating profit and identifiable assets.
The Company has evolved from a manufacturer of electronic test
equipment for antennas and electronics for the cable industry to a producer of
a wide variety of products for terrestrial and satellite communications
networks, including digital video, voice and data communications products. The
Company's products include receivers, transmitters, distribution amplifiers,
modulators, demodulators, signal encoders and decoders, controllers, signal
processors, set-top (home communications) terminals, digital audio terminals,
fiber optic distribution equipment, and satellite earth station antennas. These
products, and integrated systems and networks using these and other products,
are sold to CATV system operators, telephone companies, communications
carriers, communications network operators, and multi-facility business
organizations which use communications satellites for intracompany
communications. Sales are also made to independent system integrators,
distributors and dealers who resell the products to some of the above types of
customers.
The Company sells modulators, demodulators and signal processors
for video and audio receiving stations (often referred to as "headend"
systems), products for distributing communications signals by coaxial cable and
fiber optics from headend systems to subscribers, set-top terminals that enable
television sets to receive all channels transmitted by system operators, and
interdiction equipment which enables connections, disconnections and changes in
service to be made from the headend. The Company's set-top terminals include
units which are addressable from the headend system so as to permit control of
channel authorizations, including authorizations for pay-per-view events,
impulse ordering and automatic recording of billing information at the cable
operator's central facility, and menu-driven volume controllable units. The
Company manufactures equipment for transmitting compact-disc quality music
programming via satellite and cable media.
Sales of set-top terminals constituted approximately 25% of the
Company's total sales for fiscal year 1995, and approximately 21% and 18% of
such sales in each of the fiscal years 1994 and 1993, respectively. Proprietary
software used in the terminals, as well as system manager software at the
headend system, was developed by the Company and is updated from time to time.
The Company's new digital home communications terminals will enable subscribers
to access new services such as advanced pay-per-view ordering of special events
and movies, fully interactive home shopping services, electronic program guides
and more.
The Company's products, both analog and digital, are being
utilized by the Company's traditional cable operator customers to upgrade their
networks to provide new services and by the Regional Bell Operating Companies
to build new video, voice and data networks. They are also utilized by electric
utilities in load management systems which monitor and control power usage and
monitor power outages.
The Company's satellite earth stations receive and transmit
signals for video, voice and data and are utilized in satellite-band telephone,
data and television distribution networks. Some of these earth stations are
part of national and international communications systems which communicate by
means of a satellite with earth stations in other countries or with other earth
stations in the same national network. Earth stations in these systems may be
connected with local telephone, teletype, television or other terrestrial
communications networks. The Company's earth stations, signal
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encoders and decoders, packet switches and controllers are also used in private
business networks for the exchange of audio, video and data via satellite among
various office, manufacturing and sales facilities and for the delivery of
television programming to hotels, motels and apartment complexes. The Company's
data communications product offerings include private interactive data systems
using VSAT (very small aperture terminal) technology.
The Company designs, manufactures and sells digital video
compression communications products for direct satellite broadcast and cable
television systems and digital storage and retrieval products for applications
such as ad insertion for television broadcasters and cable operators. The
Company's compression products utilize the open architecture MPEG-2 technology
developed by an international standards group. MPEG-2 digital equipment allows
cable, telephone, computer and consumer electronics products and systems to
operate together across networks and in the home.
The Company's satellite products and systems include tracking
and telemetry equipment, earth observation satellite ground stations, shipboard
and command telephony and facsimile communications products and intercept
systems. The Company produces telemetry instruments, radar platforms, special
receivers, special measurement devices and other equipment used to track
aircraft, missiles, satellites and other moving objects and to communicate with
and receive and record various measurements and other data from the object.
The Company develops services and applications which can be
utilized by its customers on their terrestrial and satellite-based networks.
Applications recently introduced include a system which enables power companies
to detect power failures automatically, telephony capability over cable
networks, interactive systems for video conferencing, retail banking and
distance learning and interactive video games.
OTHER PRODUCTS AND SERVICES
The Company produces advanced products and systems that measure,
analyze or control processes associated with acoustics, signal analysis and
machinery diagnostics. Their applications range from sonars and anti-submarine
warfare analysis tools to vibration and acoustic analyzers used to measure jet
engine vibration, helicopter rotor wing trim and balance and non-intrusive
medical testing. Products include acoustic systems, machinery diagnostic
systems, signal processors and trainers and are used in engineering design,
structural evolution, acoustic and electronic testing and turbine engine
balancing.
The Company's microwave instrumentation systems are used to
design and manufacture antennas for communication and radar systems. Products
include pattern recorders, receivers, positioners and various display units,
which measure, record and display various characteristics of antennas such as
signal pattern, gain, phase, amplitude and frequency.
STATUS OF THE 8600X HOME COMMUNICATIONS TERMINAL
The Company's rollout of the 8600x home communications terminal
was delayed in fiscal 1995 as a result of the continued development of headend
software requested by a customer to maximize the functionality of the 8600x
terminals. Such software has been fully developed, and the Company does not
anticipate any further delays in this rollout.
MARKETING AND SALES
The Company's products are sold primarily through its own sales
personnel who work out of offices in Atlanta and other metropolitan areas in
the United States. Certain products are also marketed in the United States
through independent sales representatives and distributors. Sales in foreign
countries are made through wholly-owned subsidiaries and branch offices, as
well as through independent distributors and sales representatives. The
Company's management personnel are also actively involved in marketing and
sales activities.
The Company's sales to various units of the United States
Government constituted 11% of the Company's sales for fiscal year 1993. Such
sales were less than 10% during fiscal years 1995 and 1994.
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The Company's sales to customers in foreign countries constituted
33% of the Company's total sales for fiscal years 1995 and 1994 and 26% of
total sales in fiscal year 1993. Substantially all of these sales were export
sales. Foreign subsidiary sales were not material for any of these fiscal
years. Sales to no one geographic area constituted 10% or more of the Company's
total sales during those years.
Approximately 12% of the Company's total sales for fiscal year
1995 were made to Time Warner, Inc. and its affiliates, with such sales being
comprised of products to be used in the cable industry.
BACKLOG
The Company's backlog consists of unfilled customer orders
believed to be firm and long-term contracts which have not been completed. The
Company's backlog as of June 30, 1995, and July 1, 1994, was $457,455,000 and
$405,860,000, respectively.
The Company believes that approximately 90% of the backlog
existing at June 30, 1995 will be shipped within the succeeding fiscal year.
The Company includes in its backlog with respect to long-term contracts only
amounts representing orders currently released for production. The amount
contained in backlog for any contract or order may not be the total amount of
the contract or order. The amount of the Company's backlog at any time does not
reflect expected revenues for any fiscal period.
PRODUCT RESEARCH AND DEVELOPMENT AND PATENTS
The Company conducts an active research and development program
to strengthen and broaden its existing products and systems and to develop new
products and systems. The Company's development strategy is to identify
products and systems which are, or are expected to be, needed by substantial
numbers of customers in the Company's markets and to allocate a greater share
of its research and development resources to areas with the highest potential
for future benefits to the Company. In addition, the Company develops specific
applications related to its present technology. Expenditures in fiscal 1995,
1994 and 1993 were principally for development of commercial cable and
telephone digital products, satellite network products and interactive data
communications products. In fiscal 1995, 1994 and 1993, the Company's research
and development expenses were approximately $83,316,000, $60,417,000 and
$60,161,000, respectively.
The Company holds patents with respect to certain of its products
and actively seeks to obtain patent protection for significant inventions and
developments.
MANUFACTURING
The Company develops, designs, fabricates, manufactures,
assembles or acquires its products. Manufacturing operations range from
complete assembly of a particular product by one individual or small group of
individuals to semi-automated assembly lines for volume production. Because
many of the Company's products include precision electronic components
requiring close tolerances, the Company maintains rigorous and exacting test
and inspection procedures designed to prevent production errors, and also
constantly reviews its overall production techniques to enhance productivity
and reliability. The Company's set-top terminals and certain pole-line hardware
for the CATV industry are manufactured by contract vendors with high-quality,
high-volume production facilities. In addition to such manufacturing by
contract vendors, the Company commenced its own manufacturing of set-top
terminals in fiscal year 1995 in its new Juarez, Mexico facility.
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MATERIALS AND SUPPLIES
The materials and supplies purchased by the Company are standard
electronic components, such as custom integrated circuits, wire, circuit
boards, transistors, capacitors and resistors, all of which are produced by a
number of manufacturers. The principal supplier of the Company's set-top
terminals is Matsushita Electronic Components Co., Ltd. The Company also
purchases aluminum and steel, including castings and semi-fabricated items
produced by a variety of sources. The Company considers its sources of supply
to be adequate and is not dependent upon any single supplier, except for
Matsushita Electronic Components Co., Ltd., for any significant portion of the
materials used in the products it manufactures.
EMPLOYEES
The Company had approximately 4,700 employees (approximately 700
of which were employed through temporary employment agencies) on June 30, 1995.
The Company believes its employee relations are satisfactory.
COMPETITION
The businesses in which the Company is engaged are highly
competitive. The Company competes with companies which have substantially
greater resources and a larger number of products, as well as with smaller
specialized companies. Some of the Company's customers are in businesses
closely related to the production of such products and are, therefore,
potential competitors of the Company. The Company believes that its ability to
compete successfully results from its marketing strategy, engineering skills,
ability to provide quality products at competitive prices and broad coverage by
its sales personnel.
INDUSTRY REGULATORY UNCERTAINTY AND RESTRUCTURING
Federal, state and local regulatory uncertainty was a dominant
feature of the communications industry during fiscal 1995, and such uncertainty
is expected to continue for all or a portion of fiscal 1996. During 1995, the
House and the Senate passed differing telecommunications reform bills aimed at
deregulating and removing barriers to competition in the telecommunications
industry. It is not known when (or whether) the Senate and House bills will be
reconciled and passed by both houses of Congress and signed by President
Clinton.
Several states passed legislation designed to deregulate their
telecommunications industries and several regional telephone companies
challenged in court existing laws and regulations that prohibit or limit their
entry into cable service.
Most of the regional Bell operating companies filed applications
under Section 214 of the Federal Communications Act for the construction and
operation of video delivery systems called "video dialtone networks." Some of
these applications were granted, some delayed or denied and some withdrawn. In
at least one case, a regional telephone company chose to proceed with a cable
television franchise without filing an application under Section 214 in
apparent contradiction of FCC regulations.
As the regional telephone companies sought entry into the video
delivery industry during fiscal 1995, the cable industry itself was changing
through consolidation, merger, acquisition and exchanges of local cable
systems. Regional telephone companies also acquired cable companies outside of
their regions. At the same time that telephone companies were attempting to
develop or acquire video networks, some of the traditional cable operators
began efforts to provide telephony on their networks.
Uncertainty and change were also prevalent with respect to
sources for content for video entertainment networks. Some content providers
formed alliances or joint ventures with other content and network providers,
including cable companies and telephone companies. Proposed acquisitions of two
of the major broadcast networks (ABC and CBS) were announced.
Overall, the telecommunications industry was characterized during
fiscal 1995 by a changing yet uncertain regulatory climate, the beginning of
competition between cable companies and telephone companies, consolidation of
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cable franchise territories, and uncertainty in the source of program content.
These factors caused a degree of uncertainty in the demand for the Company's
products. It is not possible to predict the impact of these factors on future
orders and sales volumes.
ITEM 2. PROPERTIES
The Company owns office and manufacturing facilities in
metropolitan Atlanta, Georgia, San Diego, California, and Juarez, Mexico, which
comprise five sites containing a total of approximately 561,800 square feet.
The Company also owns approximately 130 acres of land in Gwinnett
County, Georgia, where antenna test ranges and a hub station used in providing
interactive data communications services are located, and 219 acres of land in
Walton County, Georgia, held for future antenna test range expansion. The
Company presently owns one building and leases two buildings in San Diego
County, California, all of which are not required for present operations and
are under lease or sublease to other tenants.
Additional major manufacturing facilities containing an aggregate
of approximately 437,200 square feet are leased by the Company at the following
locations under leases expiring (including renewal options) from 1996 to 2015:
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LOCATION APPROXIMATE FOOTAGE
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Doraville (Atlanta), Georgia 63,500
Toronto, Ontario 16,000
Norcross (Atlanta), Georgia 332,700
Vancouver, British Columbia 25,000
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The Company also leases office and warehouse space in several
buildings in the Atlanta, Georgia, San Jose, California, and Tempe, Arizona
areas and leases sales and service offices in 24 U.S. and foreign cities.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings which may or
could have a material adverse impact on the Company or its operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders
during the last quarter of its fiscal year ended June 30, 1995.
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EXECUTIVE OFFICERS OF THE COMPANY
The following persons are the executive officers of the Company:
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Executive
Name Age Officer Since Present Office
---- --- ------------- --------------
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James F. McDonald 55 1993 President and
Chief Executive Officer
John E. Breyer 60 1989 Senior Vice President
and Group President
William E. Eason, Jr. 52 1993 Senior Vice President,
General Counsel and
Corporate Secretary
H. Allen Ecker 59 1979 Senior Vice President,
Technical Operations
Brian C. Koenig 48 1988 Senior Vice President,
Human Resources
John H. Levergood 61 1992 Senior Vice President
and Group President
Raymond D. Lucas 57 1989 Senior Vice President,
Strategic Operations
Jack W. Simpson 53 1993 Senior Vice President
and Group President
Harvey A. Wagner 54 1994 Senior Vice President,
Chief Financial Officer
and Treasurer
Julian W. Eidson 56 1978 Vice President
and Controller
Larry L. Enterline 42 1995 Vice President
Robert C. McIntyre 44 1995 Vice President
Conrad Wredberg, Jr. 54 1995 Vice President
</TABLE>
Each executive officer is elected annually and serves at the pleasure
of the Board of Directors.
Mr. McDonald was elected President and Chief Executive Officer of the
Company effective July 15, 1993. He was a general partner of J. H. Whitney &
Company, a private investment firm, from 1991 until his employment by the
Company. From 1989 to 1991 he was President and Chief Executive Officer of
Prime Computer, Inc., a supplier of CAD/CAM software and computer systems.
Prior to that time he was President and Chief Operating Officer of Gould, Inc.,
a computer and electronics company (1984 to 1989) and held a variety of
positions with IBM Corporation (1963 to 1984).
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Mr. Eason has been a partner at Paul, Hastings, Janofsky & Walker
since 1989. He has been Secretary of the Company since August, 1993, and became
Senior Vice President and General Counsel in February, 1994. Paul, Hastings,
Janofsky & Walker performs legal services for the Company. Mr. Eason receives a
fixed salary from the Firm for work which he performs for clients of the Firm
other than the Company, but has no interest in the Firm's earnings and profits.
Mr. Koenig was elected Senior Vice President, Human Resources in 1995.
Prior to that time he served as Vice President, Human Resources for more than
five years.
Mr. Levergood re-joined the Company in December 1992. He had
previously been employed by the Company in various managerial positions (most
recently as Chief Operating Officer) until December 1989. From January through
June, 1990, he was President and Chief Operating Officer of Dowden
Communications, an operator of cable television systems. He was an independent
communications consultant from June, 1990 until he re-joined the Company in
1992.
Mr. Simpson was President and Chief Executive Officer of Mead Data
Central, Inc., an electronic publisher, from June, 1982 through November, 1992.
From December, 1992 until joining the Company in October, 1993, he was
President of Infobyte, Inc., a consulting firm.
Mr. Wagner was Vice President-Finance and Chief Financial Officer of
Computervision Corporation, a supplier of CAD/CAM/CAE software and services
from September, 1989 until he joined the Company in June, 1994.
Mr. Enterline has been employed by the Company in a variety of
positions since 1989. He was elected Vice President in February, 1995.
Mr. McIntyre was elected Vice President in February, 1995. He has been
employed by the Company since 1991. Prior to his employment with the Company,
Mr. McIntyre was employed by Augat, Inc., a computer components supplier, as
Vice President and General Manager of its Interconnection Products Division,
from 1988 to 1991.
Mr. Wredberg joined the Company in 1995 and was elected to the
position of Vice President in May, 1995. Mr. Wredberg served as President of
American Microsystem, Inc., a supplier of semiconductors, from 1985 until 1995.
All other executive officers have been employed by the Company in the
same or similar capacities for more than five years. There are no family
relationships among the executive officers.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED MATTERS
The Common Stock of the Company is traded on the New York Stock
Exchange (symbol SFA). The approximate number of holders of record of the
Company's Common Stock at September 8, 1995, was 6,256.
It has been the policy of the Company to retain a substantial
portion of its earnings to finance the expansion of its business. In 1976 the
Company commenced payment of quarterly cash dividends and intends to consider
the continued payment of dividends on a regular basis; however, the declaration
of dividends is discretionary with the Board of Directors, and there is no
assurance regarding the payment of future dividends by the Company.
Information as to the high and low stock prices and dividends
paid for each quarter of fiscal years 1995 and 1994 is included in Note 5 of
the Notes to Financial Statements included in this Report.
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ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data is set forth on page 20 of this Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Management's Discussion of Consolidated Statement of Financial
Position, Consolidated Statement of Earnings, and Consolidated Statement of
Cash Flows are set forth on pages 12, 14, 15 and 18 of this Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and notes
thereto, the schedule containing certain supporting information and the report
of independent public accountants are set forth on pages 11 through 29 of this
Report. See Part IV, Item 14 for an index of the statements, notes and
schedule.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
PART III
Pursuant to Instruction G(3) to Form 10-K, the information
required in Items 10-13 (except for the information set forth at the end of
Part I with respect to Executive Officers of the Company) is incorporated by
reference from the Company's definitive proxy statement for the Company's 1995
Annual Meeting of shareholders, which is expected to be filed pursuant to
Regulation 14A within 120 days after the end of the Company's 1995 fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report:
(1) The consolidated financial statements listed below are included
on pages 11 through 28 of this Report.
Report of Independent Public Accountants
Consolidated Statement of Financial Position
as of June 30, 1995 and July 1, 1994
Consolidated Statement of Earnings for each of the
three years in the period ended June 30, 1995
Consolidated Statement of Cash Flows for each of the
three years in the period ended June 30, 1995
Notes to Consolidated Financial Statements
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(2) Financial Statement Schedule:
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Page
----
Schedule II Valuation and Qualifying Accounts for Each of 29
the Three Years in the Period ended June 30,
1995
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All other Schedules called for under Regulation
S-X are not submitted because they are not
applicable or not required or because the required
information is not material or is included in the
financial statements or notes thereto.
(3) Exhibits:
(3) (a) The following is incorporated by reference to
the registrant's report on Form 10-K for its
fiscal year ended June 29, 1990:
(i) Amended and Restated Articles of
Incorporation, as amended.
(b) The following is incorporated by reference to the
registrant's report on form 10-K for its fiscal
year ended July 1, 1994:
(i) By-laws of registrant, as amended.
(10) MATERIAL CONTRACTS -
(a) The following material contract is incorporated by
reference to the registrant's report on Form 10-Q
for its fiscal quarter ended March 31, 1987:
(i) Agreement pertaining to the compensation
of Sidney Topol.*
(b) The following material contract is incorporated by
reference to the registrant's report on Form 10-Q
for its fiscal quarter ended December 29, 1989:
(i) Scientific-Atlanta, Inc. Non-Employee
Directors Stock Option Plan. *
(c) The following material contracts are incorporated
by reference to the registrant's report on Form
10-K for the fiscal year ended June 26, 1992:
(i) Scientific-Atlanta, Inc. 1981 Incentive
Stock Option Plan, as amended.*
(ii) 1985 Executive Deferred Compensation Plan of
Scientific-Atlanta, Inc., as amended.*
(iii) Scientific-Atlanta, Inc. Annual Incentive
Plan for Key Executives, as amended.*
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(iv) Scientific-Atlanta, Inc. Long Term Incentive
Compensation Plan, as amended.*
(v) Scientific-Atlanta, Inc. 1978 Non-Qualified
Stock Option Plan for Key Employees, as
amended.*
(d) The following material contract is incorporated by
reference to the registrant's report on Form 10-K
for the fiscal year ended July 2, 1993:
(i) Scientific-Atlanta, Inc. 1992 Employee Stock
Option Plan.*
(e) The following material contracts are incorporated
by reference to the registrant's report on Form
10-K for the fiscal year ended July 1, 1994:
(i) Scientific-Atlanta, Inc. Supplemental
Executive Retirement Plan. *
(ii) 1994 Scientific-Atlanta, Inc. Executive
Deferred Compensation Plan.*
(iii) Form of Severance Protection Agreement
between the Registrant and Certain Officers
and Key Employees.*
(iv) Scientific-Atlanta, Inc. Retirement Plan for
Non-Employee Directors, as amended.*
(f) The following material contract is incorporated by
reference to the exhibit filed with the
registrant's proxy statement filed on October 3,
1994, as amended by the revised cover page thereto
incorporated by reference to the registrant's
report on Form 10-Q for the fiscal quarter ended
December 31, 1994:
(i) Scientific-Atlanta, Inc. Long-Term Incentive
Plan, adopted by the shareholders on
November 11, 1994.*
(g) Credit Agreement, dated May 11, 1995, by and
between the Company and NationsBank of Georgia,
National Association, for itself and as agent for
other banks participating in the credit facility.
(11) Computation of Earnings Per Share of Common Stock
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule
___________________
* Indicates management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the period covered
by this report.
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of Scientific-Atlanta, Inc.:
We have audited the accompanying consolidated statement of financial position
of Scientific-Atlanta, Inc. (a Georgia corporation) and subsidiaries as of June
30, 1995 and July 1, 1994 and the related consolidated statements of earnings
and cash flows for each of the three years in the period ended June 30, 1995
appearing on pages 13, 17 and 19, respectively. These financial statements and
the schedule referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule 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 financial statements referred to above present fairly, in
all material respects, the financial position of Scientific-Atlanta, Inc. and
subsidiaries as of June 30, 1995 and July 1, 1994 and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 1995 in conformity with generally accepted accounting principles.
As explained in Notes 9 and 10 to the financial statements, effective June 27,
1992, the Company changed its method of accounting for income taxes,
postretirement and postemployment benefits.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule listed in Item
14(a)(2) of this Form 10-K 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 audits 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 ARTHUR ANDERSEN LLP
August 4, 1995
REPORT OF MANAGEMENT
The management of Scientific-Atlanta, Inc. (the Company) has the responsibility
for preparing the accompanying financial statements and for their integrity and
objectivity. The statements, which include amounts that are based on
management's best estimates and judgments, have been prepared in conformity
with generally accepted accounting principles and are free of material
misstatement. Management also prepared the other information in the Form 10-K
and is responsible for its accuracy and consistency with the financial
statements.
The Company maintains a system of internal control over the preparation of its
published annual and interim financial statements. It should be recognized that
even an effective internal control system, no matter how well designed, can
provide only reasonable assurance with respect to the preparation of reliable
financial statements; further, because of changes in conditions, internal
control system effectiveness may vary over time.
Management assessed the Company's system of internal control in relation to
criteria for effective internal control over the preparation of its published
annual and interim financial statements. Based on its assessment, it is
management's opinion that its system of internal control as of June 30, 1995 is
effective in providing reasonable assurance that its published annual and
interim financial statements are free of material misstatement.
As part of their audit of our financial statements, Arthur Andersen LLP
considered certain elements of our system of internal controls in determining
their audit procedures for the purpose of expressing an opinion on the
financial statements.
The audit committee of the board of directors is composed solely of outside
directors and is responsible for recommending to the board the independent
public accountants to be retained for the year, subject to stockholder
approval. The audit committee meets three times each year to review with
management the Company's system of internal accounting controls, audit plans
and results, accounting principles and practices, and the annual financial
statements.
/s/ James F. McDonald /s/ Harvey A. Wagner
------------------------------------- -------------------------------------
James F. McDonald Harvey A. Wagner
President and Chief Executive Officer Senior Vice President
Chief Financial Officer and Treasurer
-11-
<PAGE> 13
MANAGEMENT'S DISCUSSION OF CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Scientific-Atlanta had stockholders' equity of $474.2 million and cash on hand
of $80.3 million at June 30, 1995. The current ratio of 2.2:1 at June 30,
1995 compared to 2.5:1 at July 1, 1994. Cash on hand and cash generated from
earnings was used to fund working capital requirements and for capital
expenditures.
CASH AND CASH EQUIVALENTS at the end of 1995 were $80.3 million, down from
$123.4 million last year. Cash decreased as expenditures for inventories,
equipment and expansion of manufacturing capacity exceeded cash generated
from earnings. Ending working capital, excluding cash, was $259.4 million,
or 22.6 percent of sales, as compared to 22.1 percent in the prior year.
RECEIVABLES were $243.4 million at year-end, compared to $206.1 million at the
prior fiscal year-end. The increase reflects the sales growth in 1995.
Average days sales outstanding decreased to 71 for 1995 from 74 for 1994.
The allowance for doubtful accounts as a percent of gross receivables
declined in 1995 due to a lower level of delinquent balances and write-offs.
INVENTORY TURNOVER was 4.2 times in 1995, compared to 4.4 in the prior year.
Inventories of $257.4 million at year-end were $120.6 million higher than
at the end of the prior year, reflecting the higher production and sales
levels in 1995 and delays in the shipments of certain home communications
terminals.
CURRENT DEFERRED INCOME TAXES increased $0.4 million due to increases in
nondeductible reserves.
OTHER CURRENT ASSETS, which include prepaid insurance, deposits, royalties,
license fees and other miscellaneous prepaid expenses, decreased $4.8 million
due primarily to lower deposits and royalties.
NET PROPERTY, PLANT AND EQUIPMENT increased by $38.8 million in 1995 as capital
spending exceeded depreciation and disposals. Capital additions of $64.8
million included expenditures for equipment and expansion of manufacturing
capacity including the construction of a manufacturing facility in Juarez,
Mexico.
COST IN EXCESS OF NET ASSETS ACQUIRED decreased in 1995, reflecting
amortization of goodwill.
OTHER ASSETS, which include license fees, investments, noncurrent deferred tax
charges, intellectual property, various prepaid expenses and cash surrender
value of company-owned life insurance, decreased $3.4 million in 1995 due
primarily to lower prepaid license fees. See Note 2.
TOTAL BORROWINGS at year-end amounted to $2.2 million, down $5.4 million from
the prior year. The borrowings include industrial development bonds and
working capital loans for foreign subsidiaries. Working capital borrowings
by foreign subsidiaries were reduced $5.1 million during 1995. Details of
borrowings are shown in Note 6.
In May 1995 the Company established a $300 million senior credit facility
consisting of a $150 million one-year facility and a $150 million five-year
facility to be available for general corporate purposes. There were no
borrowings under this facility at June 30, 1995. The facility will be used to
supplement funds generated internally to support the growth of the Company.
ACCOUNTS PAYABLE were $148.3 million at year-end, up from $82.3 million last
year. The increase reflects higher production and inventory levels and an
increase to 43 days in accounts payable from 33 in 1994.
ACCRUED LIABILITIES of $113.9 million include accruals for compensation,
warranty and service, customer down-payments and taxes, excluding income
taxes. Higher accruals for compensation and retirement benefits and other
miscellaneous accruals were the principal factors in the year-to-year
increase. See Note 7 for details.
OTHER LIABILITIES of $34.6 million are comprised of deferred compensation,
postretirement benefit plans, postemployment benefits and other miscellaneous
accruals. See Note 8 for details.
STOCKHOLDERS' EQUITY was $474.2 million at the end of 1995, up $78.5 million
from the prior year. Net earnings of $63.5 million and the issuance of stock
grants and stock pursuant to stock option plans of $19.7 million were
partially offset by dividends of $4.6 million and a decrease in accumulated
translation adjustments. See Note 15 for details of changes in
stockholders' equity.
RETURN ON AVERAGE STOCKHOLDERS' EQUITY for 1995 was 14.7 percent, up from 9.5
percent the prior year, reflecting improved earnings performance.
-12-
<PAGE> 14
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
In Thousands
-------------------
1995 1994
===================================================================================================
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 80,311 $123,387
Receivables, less allowance for doubtful accounts of
$3,823,000 in 1995 and $3,839,000 in 1994 243,420 206,145
Inventories 257,427 136,813
Deferred income taxes 28,271 27,918
Other current assets 5,950 10,774
-------- --------
TOTAL CURRENT ASSETS 615,379 505,037
-------- --------
PROPERTY, PLANT, AND EQUIPMENT, at cost
Land and improvements 7,005 3,823
Buildings and improvements 36,847 28,890
Machinery and equipment 145,301 108,585
-------- --------
189,153 141,298
Less-Accumulated depreciation and amortization 64,539 55,510
-------- --------
124,614 85,788
-------- --------
COST IN EXCESS OF NET ASSETS ACQUIRED 6,940 7,689
-------- --------
OTHER ASSETS 38,331 41,705
-------- --------
TOTAL ASSETS $785,264 $640,219
======== ========
===================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current maturities of long-term debt $ 1,386 $ 6,487
Accounts payable 148,260 82,285
Accrued liabilities 113,947 95,505
Income taxes currently payable 12,121 17,989
-------- --------
TOTAL CURRENT LIABILITIES 275,714 202,266
-------- --------
LONG-TERM DEBT, less current maturities 773 1,088
-------- --------
OTHER LIABILITIES 34,588 41,219
-------- --------
COMMITMENTS AND CONTINGENCIES (NOTE 13)
STOCKHOLDERS' EQUITY
Preferred stock, authorized 50,000,000 shares; no shares issued -- --
Common stock, $0.50 par value, authorized 350,000,000 shares,
issued 76,950,029 shares in 1995 and 75,494,670 shares in 1994 38,475 37,747
Additional paid-in capital 160,206 141,179
Retained earnings 274,840 215,926
Accumulated translation adjustments 668 794
-------- --------
474,189 395,646
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $785,264 $640,219
-------- --------
---------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes
-13-
<PAGE> 15
MANAGEMENT'S DISCUSSION OF CONSOLIDATED STATEMENT OF EARNINGS
The Consolidated Statement of Earnings summarizes Scientific-Atlanta's
operating performance over the last three years, during which time the
company has accelerated development of new products and expanded into
international markets.
EARNINGS IN 1995 WERE UP $28.5 MILLION OVER 1994.
Higher sales volume was the primary factor in the year-to-year increase.
Earnings in 1994 were up $15.0 million over 1993. Higher sales volume and
improved margins were the primary factors in the increase.
The Company's fiscal year is comprised of fifty-two or fifty-three weeks,
ending on the Friday nearest to June 30 each year. Fiscal years 1995 and
1994 included fifty-two weeks while fiscal year 1993 included fifty-three
weeks. The effect on the results of operations of the inclusion of
fifty-two weeks in 1995 and 1994 versus fifty-three weeks in 1993 was not
material.
SALES INCREASED 41 PERCENT OVER 1994. Strong growth in sales volume of
transmission and addressable converter products and Sega game adapters and
deliveries of equipment to Orbit Communications Company for its direct to
home satellite services contributed to the year-to-year increase in sales.
Sales of instrumentation products continue to be adversely affected by
spending reductions in the defense industry. International sales were 33
percent of total sales in 1995.
Sales in 1994 increased 11 percent over 1993. Continued strong sales
volume growth in cable television distribution equipment and addressable
home communications terminals (converters) and significant improvement in
sales of network systems were offset partially by reduced sales due to
completion of the PrimeStar television contract, lower digital audio sales
and sales of defense related products. International sales increased to 33
percent of total sales in 1994, up from 26 percent in the prior year.
Higher sales of cable equipment and network systems contributed to the
growth in international sales.
COST OF SALES AS A PERCENT OF SALES INCREASED 2.2 PERCENTAGE POINTS OVER 1994.
Gains from cost improvements in satellite networks and increased volumes
in transmission and addressable converter products were offset by
unfavorable exchange rate changes in Japanese yen, production startup
costs, product mix and cost overuns on defense contracts. The Company
believes that gross margins may be negatively impacted in future periods
by planned expansion of manufacturing capacity and the continued increase
in sales of addressable converter products and Sega adapters which have
lower margins than some of the Company's other products. Continued
strength of the yen would also adversely affect gross margins.
Certain material purchases are denominated in Japanese yen and,
accordingly, the purchase price in U.S. dollars is subject to change based
on exchange rate fluctuations. Currently, the Company has forward exchange
contracts to purchase yen to hedge its exposure on purchase commitments
for a period of twelve months.
Cost of sales as a percent of sales decreased 2.2 percentage points in
1994. Favorable mix change was the primary factor in the year-to-year
improvement. Manufacturing efficiencies, higher margins on addressable
converter products and improved program management also contributed to the
improved margins.
SALES AND ADMINISTRATIVE EXPENSE INCREASED 26 PERCENT OVER THE PRIOR YEAR.
Increased expenses reflect costs associated with ongoing investments to
support expansion into international markets, the introduction of new
products and a build-up in the infrastructure of the Company to handle the
growth the Company is experiencing. Sales and administrative expenses as a
percent of sales declined to 13 percent in 1995 from 14 percent in 1994.
Sales and administrative expense increased 3 percent in 1994. Increases in
sales and marketing costs associated with expansion into international
markets and the introduction of new products were offset slightly by
administrative costs which declined 2 percent, primarily due to lower
professional fees.
RESEARCH AND DEVELOPMENT EXPENSES INCREASED $22.9 MILLION OVER THE PRIOR YEAR.
Increased research and development activity, particularly development of
digital products, was the primary factor in the year-to-year increase.
Product development activity is expected to continue near current levels.
Research and development expenses of $60.4 million in 1994 were up
slightly over the prior year. Accelerated research and development
activity, particularly development of digital products, was offset by
declines in defense related products and the
-14-
<PAGE> 16
reallocation of engineering resources from research and development efforts
to specific customer orders. The revenue from these orders was recognized
in 1995, and, accordingly the related costs were inventoried at July 1,
1994.
INTEREST EXPENSE WAS $0.8 MILLION IN 1995 AND $1.1 MILLION IN 1994. The
decrease reflects lower average working capital borrowings by foreign
subsidiaries.
INTEREST INCOME WAS $2.8 MILLION IN 1995 AND $3.2 MILLION IN 1994. The
decrease in interest income reflects lower average cash balances.
OTHER INCOME WAS $1.5 MILLION IN 1995. Other income included rental income,
royalty income, net gains from partnership activities and other
miscellaneous items. There were no significant items in other income and
other expense during 1995.
Other expense of $17.4 million in 1994 included a $17.5 million charge to
settle securities class action litigation, losses of $1.0 million from
partnership activities and net gains from other miscellaneous items of
$1.1 million.
The securities class action suit, which was filed in 1988, related to
events which occurred during the early 1980's principally as a result of
the difficulties experienced by the Company in the production and delivery
of a new product. The Company firmly believes it fully complied with the
law in this matter and that the suit was without merit. The litigation was
settled in 1994 in the best interest of the Company's shareholders to
avoid protracted and costly legal proceedings and eliminate the
uncertainty of a jury trial.
THE PROVISION FOR INCOME TAXES WAS 32 PERCENT OF PRE-TAX EARNINGS IN 1995,
UNCHANGED FROM THE PRIOR YEAR. The provision for income taxes was 25
percent of pre-tax earnings in 1993. The lower provision in 1993 reflects
interest income on tax-exempt investments and benefits from international
tax planning. Details of the provision for income taxes are discussed in
Note 9.
ACCOUNTING CHANGES RESULTED IN A CHARGE OF $4.7 MILLION TO EARNINGS IN 1993.
Effective as of the first quarter of fiscal 1993, the Company adopted the
provisions of SFAS No. 106 "Postretirement Benefits", SFAS No. 112
"Postemployment Benefits" and SFAS No. 109 "Accounting for Income Taxes".
The adoption of these standards did not have a significant impact on income
from operations and is not expected to significantly impact earnings in
subsequent years. See Notes 9 and 10.
EARNINGS PER SHARE OF $0.83 IN 1995 INCREASED $0.37 AFTER AN INCREASE OF $0.19
IN 1994. Shares outstanding and share equivalents decreased slightly to
76.2 million in 1995 from 76.6 million in 1994.
-15-
<PAGE> 17
(THIS PAGE INTENTIONALLY LEFT BLANK.)
-16-
<PAGE> 18
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Data) 1995 1994 1993
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SALES $1,146,502 $811,583 $730,632
---------- -------- --------
COSTS AND EXPENSES
Cost of sales 825,254 566,729 526,227
Sales and administrative 148,077 117,604 114,040
Research and development 83,316 60,417 60,161
Interest expense 775 1,066 933
Interest income (2,837) (3,151) (2,933)
Other (income) expense, net (1,524) 17,416 (694)
---------- -------- --------
1,053,061 760,081 697,734
---------- -------- --------
EARNINGS BEFORE INCOME TAXES AND
ACCOUNTING CHANGES 93,441 51,502 32,898
PROVISION FOR INCOME TAXES 29,901 16,480 8,224
---------- -------- --------
EARNINGS BEFORE ACCOUNTING CHANGES 63,540 35,022 24,674
Cumulative effect of changes in accounting
for postretirement benefits, postemployment
benefits and income taxes -- -- (4,700)
NET EARNINGS $ 63,540 $ 35,022 $ 19,974
======== ======== ========
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE
Primary
Before accounting changes $ 0.83 $ 0.46 $ 0.33
Accounting changes -- -- (0.06)
---------- -------- --------
Net earnings $ 0.83 $ 0.46 $ 0.27
========== ======== ========
Fully diluted $ 0.83 $ 0.46 $ 0.27
========== ======== ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON EQUIVALENT SHARES OUTSTANDING
Primary 76,194 76,638 75,082
========== ======== ========
Fully diluted 76,194 77,105 75,257
========== ======== ========
</TABLE>
See accompanying notes.
-17-
<PAGE> 19
MANAGEMENT'S DISCUSSION OF CONSOLIDATED STATEMENT OF CASH FLOWS
The Statement of Cash Flows summarizes the main sources of Scientific-Atlanta's
cash and its uses. These flows of cash provided or used are summarized by
the Company's operating activities, investing activities and financing
activities.
Cash on hand at the end of 1995 was $80.3 million. Cash on hand and cash
generated from earnings were used for capital expenditures and to fund
working capital requirements.
In May 1995 the Company established a $300 million senior credit facility
consisting of a $150 million one-year facility and a $150 million
five-year facility to be available for general corporate purposes. There
were no borrowings under this facility at June 30, 1995. The facility will
be used to supplement funds generated internally to support the growth of
the Company.
CASH PROVIDED BY OPERATING ACTIVITIES was $24.0 million for 1995, compared to
$48.5 million for 1994. In 1995 and 1994 cash provided by improved
earnings and increases in payables was partially offset by increases in
inventories and accounts receivable. See Management's Discussion of the
Statement of Financial Position for details of this performance.
CASH USED BY INVESTING ACTIVITIES of $65.3 million during 1995 included
expenditures of $64.8 million for equipment and expansion of manufacturing
capacity, including the construction of a manufacturing facility in
Juarez, Mexico. In 1994, cash used by investing activities included $34.9
million for purchases of plant and equipment and $5.2 million for
investments in partnerships. Expenditures focused on increased capacity
and productivity improvements. Cash provided by investing activities
included $11.2 million from the sale of ICT shares.
CASH USED BY FINANCING ACTIVITIES WAS $1.8 MILLION IN 1995. The issuance of
stock pursuant to stock option and employee benefit plans generated $8.2
million. Cash used by financing activities included a $5.1 million
reduction of working capital borrowings by foreign subsidiaries and
dividend payments of $4.6 million.
Cash provided by financing activities was $0.8 million in 1994. The
issuance of stock pursuant to stock option and employee benefit plans and
increases in short-term borrowings generated $5.0 million and $0.5 million,
respectively, of cash during the year.
-18-
<PAGE> 20
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(In Thousands) 1995 1994 1993
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
NET EARNINGS $ 63,540 $ 35,022 $ 19,974
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 29,790 20,938 19,068
Cumulative effect of accounting changes -- -- 4,700
Compensation related to stock benefit plans 6,051 4,787 2,056
Provision for losses on accounts receivable 343 73 145
Loss on sale of property, plant and equipment 625 824 517
Losses of partnerships 386 475 --
Changes in operating assets and liabilities:
Receivables (37,618) (55,367) (23,212)
Inventories (120,614) (12,063) (21,998)
Deferred income taxes (353) (2,582) 7,416
Accounts payable and accrued liabilities 80,067 57,736 15,062
Other assets 3,025 (22,881) (5,939)
Other liabilities (1,021) 21,735 1,903
Net effect of exchange rate fluctuations (208) (163) (374)
--------- --------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 24,013 48,534 19,318
--------- --------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (64,787) (34,904) (23,998)
Payment for businesses purchased (1,634) (1,060) (6,701)
Proceeds from the sale of property, plant
and equipment 510 596 2,292
Proceeds from the sale of investments 4,214 11,174 --
Investment in and advances to partnerships (3,560) (5,240) --
--------- --------- --------
NET CASH USED BY INVESTING ACTIVITIES (65,257) (29,434) (28,407)
--------- --------- --------
FINANCING ACTIVITIES:
Net short-term borrowings (payments) (5,101) 520 1,875
Principal payments on long-term debt (315) (305) (300)
Dividends paid (4,578) (4,497) (4,248)
Issuance of stock 8,162 5,033 24,410
--------- --------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,832) 751 21,737
--------- --------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (43,076) 19,851 12,648
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 123,387 103,536 90,888
--------- --------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 80,311 $ 123,387 $103,536
========= ========= ========
</TABLE>
See accompanying notes.
-19-
<PAGE> 21
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
(Dollars in Thousands, Except Per Share Data) 1995 1994 1993 1992 1991
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SALES $ 1,146,502 $ 811,583 $ 730,632 $ 580,831 $493,653
==========================================================================================================================
Cost of Sales 825,254 566,729 526,227 408,845 353,190
Sales and Administrative Expense 148,077 117,604 114,040 102,144 97,050
Research and Development Expense 83,316 60,417 60,161 52,267 49,175
Interest Expense 775 1,066 933 568 1,106
Interest Income (2,837) (3,151) (2,933) (4,424) (6,221)
Other (Income) Expense, Net (1,524) 17,416 (694) (271) (2,179)
==========================================================================================================================
EARNINGS BEFORE INCOME TAXES AND
ACCOUNTING CHANGES 93,441 51,502 32,898 21,702 1,532
--------------------------------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES 29,901 16,480 8,224 5,425 475
--------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE ACCOUNTING CHANGES 63,540 35,022 24,674 16,277 1,057
--------------------------------------------------------------------------------------------------------------------------
CUMULATIVE EFFECT OF ACCOUNTING CHANGES -- -- (4,700) -- --
--------------------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 63,540 $ 35,022 $ 19,974 $ 16,277 $ 1,057
--------------------------------------------------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE BEFORE
ACCOUNTING CHANGES $ 0.83 $ 0.46 $ 0.33 $ 0.23 $ 0.02
--------------------------------------------------------------------------------------------------------------------------
PRIMARY EARNINGS PER SHARE $ 0.83 $ 0.46 $ 0.27 $ 0.23 $ 0.02
--------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS PAID PER SHARE $ 0.06 $ 0.06 $0.05 5/6 $0.05 1/3 $0.05 1/3
--------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
WORKING CAPITAL $ 339,665 $ 302,771 $ 280,616 $ 233,691 $226,190
--------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 785,264 $ 640,219 $ 524,210 $ 440,913 $394,211
--------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
Short-Term Debt and Current Maturities $ 1,386 $ 6,487 $ 5,962 $ 4,081 $ 608
Long-Term Debt 773 1,088 1,398 1,704 2,004
Stockholders' Equity 474,189 395,646 352,890 299,725 281,636
==========================================================================================================================
TOTAL CAPITAL INVESTED $ 476,348 $ 403,221 $ 360,250 $ 305,510 $ 284,248
--------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
SALES PER EMPLOYEE $ 253 $ 220 $ 213 $ 190 $ 165
--------------------------------------------------------------------------------------------------------------------------
==========================================================================================================================
GROSS MARGIN % TO SALES 28.0% 30.2% 28.0% 29.6% 28.5%
==========================================================================================================================
NET RETURN ON SALES 5.5% 4.3% 2.7% 2.8% 0.2%
==========================================================================================================================
RETURN ON AVERAGE STOCKHOLDERS' EQUITY 14.7% 9.5% 6.1% 5.7% 0.4%
==========================================================================================================================
</TABLE>
-20-
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR-END
The Company's fiscal year ends on the Friday closest to June 30 of each year.
Fiscal year ends are as follows:
1995: June 30, 1995
1994: July 1, 1994
1993: July 2, 1993
Fiscal 1993 includes fifty-three weeks.
CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the
Company and all subsidiaries after elimination of all material intercompany
accounts and transactions.
FOREIGN CURRENCY TRANSLATION
The financial statements of certain foreign operations are translated into U.S.
dollars at current exchange rates. Resulting translation adjustments are
accumulated as a component of stockholders' equity and excluded from net
earnings. Foreign currency transaction gains and losses are included in cost of
sales and other income. Such gains and losses were not material during the
periods being reported.
METHOD OF RECORDING CONTRACT PROFITS
Revenues from progress-billed contracts are primarily recorded using the
percentage-of-completion method based on contract costs incurred to date.
Losses, if any, are recorded when determinable. Costs incurred and accrued
profits not billed on these contracts are included in receivables. These
receivables from commercial customers and government agencies were $32,738 at
June 30, 1995, and $17,628 at July 1, 1994. It is anticipated that
substantially all such amounts will be collected within one year.
DEPRECIATION, MAINTENANCE AND REPAIRS
Depreciation is provided using principally the straight-line method over the
estimated useful lives of the assets. Maintenance and repairs are charged to
expense as incurred. Renewals and betterments are capitalized. The cost and
accumulated depreciation of property retired or otherwise disposed of are
removed from the respective accounts, and the gains or losses thereon are
included in the consolidated statement of earnings.
WARRANTY COSTS
The Company accrues warranty costs at the time of sale. Expenses related to
unusual product warranty problems and product defects are recorded in the
period the problem is identified.
EARNINGS PER SHARE
Earnings per share in 1995 was computed based on the weighted average number of
shares of common stock outstanding. Earnings per share in 1994 and 1993 were
computed based on the weighted average number of shares of common stock
outstanding and equivalent shares derived from dilutive stock options.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market.
Cost includes materials, direct labor, and manufacturing overhead. Market is
defined principally as net realizable value. Inventories include purchased and
manufactured components in various stages of assembly as presented in the
following table:
1995 1994
-------- --------
Raw Materials and
Work-In-Process $142,418 $ 94,890
Finished Goods 115,009 41,923
-------- --------
Total Inventory $257,427 $136,813
======== ========
COST IN EXCESS OF NET ASSETS ACQUIRED
Cost in excess of net assets of businesses acquired is amortized on a
straight-line basis over seventeen years.
FINANCIAL PRESENTATION
Certain prior year amounts have been reclassified to conform with the current
year presentation. All per share amounts have been restated to reflect the
2-for-1 stock split effected as a dividend issued in October 1994 and the
3-for-2 stock split effected as a dividend issued in December 1992.
2. INVESTMENTS AND ACQUISITION
During 1994 the Company entered into partnership agreements in connection with
the formation of two joint ventures, Comunicaciones Broadband and
Scientific-Atlanta of Shanghai, Ltd., and invested a total of $5,240 in the
partnerships. During 1995 the Company invested an additional $2,410 in these
partnerships and disposed of its investment in Comunicaciones Broadband for a
loss of $0.2 which was included in other (income) expense. The Company's equity
in the losses of these partnerships was $296 and $345 in 1995 and 1994,
respectively.
-21-
<PAGE> 23
In February 1993 the Company acquired certain net assets of Nexus Engineering
Corp. for $6,314 cash and obligations of $4,398 in a purchase transaction. The
pro forma effect on operations for prior periods and the effect on 1993 were
immaterial.
During 1994, the Company disposed of its investment in International
Cablecasting Technologies, Inc., for a loss of $549 which was included in other
(income) expense.
3. SALES AND BUSINESS SEGMENT INFORMATION
Sales to Time Warner, Inc. and affiliates were 12 percent of total sales in
1995. Sales were not material to any one customer in 1994. Sales to the United
States government were 12 percent of total sales in 1993. Export sales
accounted for 33 percent of total sales in 1995 and 1994 and 26 percent of
total sales in 1993. Foreign subsidiary sales were not material for any of the
three fiscal years presented, nor were they material to any one geographic
location.
The Company operates primarily in one business segment, Communications,
providing satellite and terrestial based networks to a range of customers and
applications and network management and systems integration to add value to
those networks.
4. OTHER (INCOME) EXPENSE
Other income of $1,524 in 1995 included rental income, royalty income, net
gains from partnership activities and other miscellaneous items. There were no
significant items in other income and other expense during 1995.
Other expense of $17,416 in 1994 included a $17,500 charge to settle securities
class action litigation, losses of $992 from partnership activities and net
gains from other miscellaneous items of $1,076.
The securities class action suit, which was filed in 1988, related to events
which occurred during the early 1980's principally as a result of the
difficulties experienced by the Company in the production and delivery of a new
product. The Company firmly believes it fully complied with the law in this
matter and that the suit was without merit. The litigation was settled in 1994
in the best interest of the Company's shareholders to avoid protracted and
costly legal proceedings and eliminate the uncertainty of a jury trial.
Other income of $694 in 1993 included royalty income, rental income and other
miscellaneous items of $1,656 and losses from foreign currency transactions of
$962.
5. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FISCAL QUARTERS
-----------------------------------------
First Second Third Fourth
----- ------ ----- ------
1995
------------
<S> <C> <C> <C> <C>
Sales $232,301 $277,393 $313,510 $323,298
Gross margin 69,865 75,335 83,021 93,027
Gross margin % 30.1% 27.2% 26.5% 28.8%
Net earnings 12,109 15,013 15,671 20,747
Earnings
per share 0.16 0.19 0.21 0.27
Stock prices:
High 22.438 22.875 24.875 24.500
Low 16.375 19.125 18.125 18.375
Dividends paid
per share 0.015 0.015 0.015 0.015
</TABLE>
<TABLE>
<CAPTION>
FISCAL QUARTERS
-------------------------------------------
First Second Third Fourth
----- ------ ----- ------
1994
------------
<S> <C> <C> <C> <C>
Sales $170,292 $178,033 $204,047 $259,211
Gross margin 49,592 53,238 63,387 78,637
Gross margin % 29.1% 29.9% 31.1% 30.3%
Net earnings
(loss) 7,150 (4,581)(1) 11,907 20,546
Earnings (loss)
per share 0.09 (0.06)(1) 0.16 0.27
Stock prices:
High 18.813 19.063 18.250 18.938
Low 14.500 14.938 12.938 12.875
Dividends paid
per share 0.015 0.015 0.015 0.015
</TABLE>
(1) Includes charge of $11,900 ($0.15 per share) to settle securities class
action litigation.
-22-
<PAGE> 24
6. INDEBTEDNESS
Credit Facility:
At June 30, 1995, the Company had a $300,000 senior credit facility that
provides for unsecured borrowings up to $150,000 which expire May 10, 1996 and
$150,000 which expire May 10, 2000. There were no borrowings under this
facility at June 30, 1995. Interest on borrowings under this facility are at
varying rates and fluctuate based on market rates. Facility fees based on the
average daily aggregate amount of the facility commitments are payable
quarterly.
Long-term debt consisted of:
<TABLE>
<CAPTION>
1995 1994
--------- -------
<S> <C> <C>
6 1/4%-10% capitalized leases,
payable in varying installments
ranging from $200 to $250
through 1999 $ 900 $ 1,150
8 1/4% mortgage 188 248
--------- -------
1,088 1,398
Less-Current maturities 315 310
--------- -------
$ 773 $ 1,088
========= =======
</TABLE>
Long-term debt at June 30, 1995 had scheduled maturities as follows:
1996--$315; 1997--$321; 1998--$252; 1999--$200.
At June 30, 1995, property, plant and equipment costing approximately $5,925
were pledged as collateral on long-term debt.
Foreign short-term debt was $ 1,071 and $6,177 at the end of 1995 and 1994,
respectively. The average interest rates for foreign short-term debt at June
30, 1995 and July 1, 1994 were 9.2 percent and 8.3 percent, respectively.
Total interest paid was $811, $1,071, and $831 in 1995, 1994, and 1993,
respectively.
7. ACCRUED LIABILITIES
Accrued liabilities consisted of:
<TABLE>
<CAPTION>
1995 1994
---------- --------
<S> <C> <C>
Compensation $ 34,747 $ 26,939
Warranty and service 13,818 11,597
Customer down payments 7,976 17,506
Taxes other than income taxes 5,613 5,941
Other 51,793 33,522
---------- --------
$ 113,947 $ 95,505
========== ========
</TABLE>
8. OTHER LIABILITIES
Other liabilities consisted of:
<TABLE>
<CAPTION>
1995 1994
---------- --------
<S> <C> <C>
Retirement $ 22,751 $ 28,595
Compensation 6,285 5,177
Other 5,552 7,447
---------- --------
$ 34,588 $ 41,219
========== ========
</TABLE>
9. INCOME TAXES
The Company adopted the provisions of SFAS No. 109, "Accounting for Income
Taxes", effective the first quarter of fiscal 1993. The statement requires that
deferred income taxes reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts. The cumulative effect of this change increased net income by
$3,856.
The tax provision differs from the amount resulting from multiplying earnings
before income taxes by the statutory federal income tax rate as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory federal
tax rate 35.0% 35.0% 34.0%
State income taxes, net
of federal tax benefit 3.5 4.6 5.6
Tax reserves 0.3 0.5 (8.1)
Research and develop-
ment tax credit (3.1) (3.4) --
Export incentives (1.5) (2.1) (4.7)
Exempt interest income (0.7) (1.9) (3.1)
Other, net (1.5) (0.7) 1.3
---- ---- ----
32.0% 32.0% 25.0%
==== ==== ====
</TABLE>
-23-
<PAGE> 25
Income tax provision (benefit) includes the following:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Current tax provision
Federal $ 21,661 $ 14,602 $ 8,131
State 5,222 3,879 3,456
Foreign 1,138 581 467
--------- --------- --------
28,021 19,062 12,054
--------- --------- --------
Deferred tax provision (benefit)
Federal (389) (1,911) (1,938)
State (195) (263) (684)
Foreign 2,464 (408) (1,208)
--------- --------- --------
1,880 (2,582) (3,830)
--------- --------- --------
Total provision
for income
taxes $ 29,901 $ 16,480 $ 8,224
========= ========= ========
</TABLE>
Total income taxes paid include settlement payments for federal, state and
foreign audit adjustments. The total income taxes paid were $28,937, $1,551,
and $3,464 in 1995, 1994, and 1993, respectively.
The tax effect of significant temporary differences representing deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Current deferred tax assets
Liabilities not currently
deductible $13,582 $15,809
Inventory valuation 9,876 7,993
Warranty reserves 3,077 2,158
Bad debt reserves 1,432 1,635
Other 304 323
------- -------
Current deferred tax assets $28,271 $27,918
======= =======
Noncurrent deferred tax assets
Postretirement and
postemployment benefits $12,235 $12,482
Tax credit/loss carryforwards 633 3,297
Liabilities not currently deductible 1,748 155
------- -------
Noncurrent deferred tax assets 14,616 15,934
======= =======
Noncurrent deferred tax liabilities
Depreciation (7,461) (6,499)
Other -- (48)
------- -------
Noncurrent deferred tax liabilities (7,461) (6,547)
------- -------
Net noncurrent deferred tax asset $ 7,155 $ 9,387
======= =======
</TABLE>
Valuation allowances for current deferred tax assets and noncurrent deferred
tax assets were not required in 1995 or 1994.
The net noncurrent deferred tax asset is included in Other Assets at June 30,
1995 and July 1, 1994.
In 1995, 1994, and 1993, earnings before income taxes included $8,571, $2,641,
and $83, respectively, of earnings generated by the Company's foreign
operations.
10. RETIREMENT AND BENEFIT PLANS
The Company has a defined benefit pension plan covering substantially all of
its domestic employees. The benefits are based upon the employees' years of
service and compensation.
The Company's funding policy is to contribute annually the amount expensed each
year consistent with the requirements of federal law to the extent that such
costs are currently deductible.
The following table sets forth the plan's funded status, amounts recognized in
the Company's Consolidated Statement of Financial Position at year-end, using
March 31 as a measurement date for all actuarial calculations of asset and
liability values and significant actuarial assumptions:
<TABLE>
<CAPTION>
1995 1994
------- --------
<S> <C> <C>
Accumulated benefit obligation
Vested portion $49,723 $ 51,699
Nonvested portion 2,234 1,577
------- --------
51,957 53,276
Effect of projected future
compensation levels 15,144 10,070
------- --------
Projected benefit obligation 67,101 63,346
Plan assets at fair value (60,381) (56,755)
------- --------
Projected benefit obligation in
excess of plan assets 6,720 6,591
Unrecognized prior service costs 384 419
Unrecognized loss (2,855) (1,035)
Unrecognized net asset from
initial application of SFAS 87 7,681 8,336
Fourth quarter contribution (999) (608)
------- --------
Accrued pension cost $10,931 $ 13,703
======= ========
Discount rate 8.0% 8.0%
Rate of increase in future
compensation 4.5% 4.5%
Expected long-term rate of
return on assets 10.0% 10.0%
</TABLE>
Plan assets are invested in listed stocks, bonds and short-term monetary
investments.
The Company's net pension expense was $2,483 in 1995, $2,709 in 1994, and
$2,686 in 1993.
-24-
<PAGE> 26
The components of pension expense are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost of
benefits earned $ 4,059 $ 4,522 $ 3,459
Interest cost 4,826 4,295 3,895
Actual return on
plan assets (4,821) (2,694) (6,479)
Net amortization and
deferral (1,581) (3,414) 1,811
-------- -------- --------
Net periodic pension
cost $ 2,483 $ 2,709 $ 2,686
======== ======== ========
</TABLE>
The Company has unfunded defined benefit retirement plans for certain key
officers and non-employee directors. Accrued pension cost for these plans was
$5,521 at June 30, 1995 and $4,338 at July 1, 1994. Retirement expense for
these plans was $1,223, $906, and $156 in 1995, 1994, and 1993, respectively.
In addition to providing pension benefits, the Company has contributory plans
that provide certain health care and life insurance benefits to eligible
retired employees.
The Company adopted SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," effective the first quarter of fiscal 1993. This
statement requires the accrual of the cost of providing postretirement
benefits, including medical and life insurance coverage, during the active
service period of the employee. The Company elected to immediately recognize
the accumulated liability, measured as of April 1, 1992. This resulted in a
one-time charge of $6,696, net of a deferred tax benefit of $4,104.
The following table sets forth the plan's funded status and amounts recognized
in the Company's Consolidated Statement of Financial Position at year-end,
using March 31 as a measurement date for all actuarial calculations of
liability values:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accumulated postretirement
benefit obligation
Retirees $ 8,876 $ 8,135
Fully eligible active
participants 177 1,271
Other active participants 287 274
------- -------
9,340 9,680
Unrecognized net gain 1,200 1,060
Fourth quarter claims
payments (167) (370)
------- -------
Accrued postretirement
benefit cost $10,373 $10,370
======= =======
</TABLE>
The components of postretirement benefit expense are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Service cost of benefits earned $ 30 $ 25
Interest cost 740 808
Net amortization and deferral (11) --
----- -----
Postretirement benefit expense $ 759 $ 833
===== =====
</TABLE>
Significant actuarial assumptions are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Annual rate of increase in per capita cost
Pre-Medicare 11.25% 11.25%
Annual decline 0.75% 0.75%
Final rate of increase 6.00% 6.00%
Post-Medicare 9.50% 9.50%
Annual decline 0.50% 0.50%
Final rate of increase 6.00% 6.00%
Impact of one percentage point
in health care cost trend rate
on
Accumulated post
retirement benefit
obligation 8.6% 7.6%
Interest cost component
of benefits 9.0% 8.2%
Discount rate used to measure
accumulated post-retirement
benefit obligation 8.0% 8.0%
</TABLE>
The Company also adopted SFAS No. 112, "Employers Accounting for
Postemployment Benefits" effective the first quarter of 1993. This statement
requires the accrual method of accounting for benefits to former or inactive
employees after employment but before retirement. Postemployment benefits
include disability benefits, severence benefits, and continuation of health
care benefits. A one-time charge of $1,860, net of a deferred tax benefit of
$1,140, related to the adoption of SFAS No. 112 was recognized effective June
27, 1992. The effect of this change on 1993 operating results, after recording
the one time charge, was not material.
-25-
<PAGE> 27
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents approximates fair value
because of the short maturity of those instruments. The fair value of foreign
currency contracts is based on quoted market prices.
<TABLE>
<CAPTION>
1995 1994
----------------- ----------------
CARRYING/ Carrying/
CONTRACT FAIR Contract Fair
AMOUNT VALUE Amount Value
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Cash and cash
equivalents $ 80,311 $ 80,311 $123,387 $123,387
Foreign
currency
contracts
Sell $ 7,185 $ 7,605 $ 5,132 $ 5,149
Buy $ 129,570 $ 127,749 $62,218 $ 66,695
</TABLE>
The Company enters into foreign exchange forward contracts to hedge certain
firm commitments and assets denominated in currencies other than the U.S.
dollar, primarily Japanese yen. These contracts are for periods consistent with
the exposure being hedged and generally have maturities of one year or less.
Gains and losses on foreign exchange forward contracts are deferred and
recognized in income in the same period as the hedged transactions. The
Company's foreign exchange forward contracts do not subject the Company's
results of operations to risk due to exchange rate fluctuations because gains
and losses on these contracts generally offset losses and gains on the exposure
being hedged. The Company does not enter into any foreign exchange forward
contracts for speculative trading purposes.
12. RELATED PARTY TRANSACTIONS
During 1995 the Company had sales of $3,384 to Scientific-Atlanta of Shanghai,
Ltd. and a net receivable of $420 at June 30, 1995.
During 1994 the Company had sales of $12,127 to Comunicaciones Broadband and
Scientific-Atlanta of Shanghai, Ltd. and had a net receivable of $4,774 from
these partnerships at July 1, 1994.
13. COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS
Rental expense under operating lease agreements for facilities and equipment
for 1995, 1994 and 1993 was $10,696, $9,303, and $7,983, respectively. The
Company pays taxes, insurance, and maintenance costs with respect to most
leased items. Remaining operating lease terms, including renewals, range up to
twenty years. Future minimum payments at June 30, 1995, under operating leases
were $38,796. Payments under these leases for the next five years are as
follows: 1996-- $11,144; 1997-- $7,639; 1998-- $4,952; 1999-- $3,367; 2000--
$3,066.
The Company has agreements with certain officers which include certain benefits
in the event of termination of the officers' employment as a result of a change
in control of the Company.
The Company is also committed under certain purchase agreements which are
intended to benefit future periods.
The Company is a party to various legal proceedings arising in the ordinary
course of business. In management's opinion, the outcome of these proceedings
will not have a material adverse effect on the Company's financial position or
results of operations.
14. COMMON STOCK AND RELATED MATTERS
In October 1994, the Company issued a 2-for-1 stock split effected in the form
of a 100 percent stock dividend. This stock split was accounted for as of July
1, 1994, by a transfer from retained earnings to common stock in the amount of
the par value of stock outstanding at July 1, 1994. In December 1992, the
Company issued a 3-for-2 stock split effected in the form of a 50 percent stock
dividend. The stock split has been accounted for by a transfer from retained
earnings to common stock in the amount of the par value of the additional stock
issued. All per share amounts and options have been restated to reflect the
stock splits.
The following information pertains to options on the Company's common stock for
the years ended June 30, 1995, July 1, 1994 and July 2, 1993:
<TABLE>
<CAPTION>
Number Option
of Shares Price
--------- -----
<S> <C> <C> <C> <C>
1995
Outstanding, beginning of year 4,482,052 $ 2.875 - $ 17.375
Granted 1,624,189 $ 16.563 - $ 22.150
Cancelled (202,979) $ 3.250 - $ 22.150
Exercised (957,063) $ 2.875 - $ 21.938
Outstanding, end of year 4,946,199 $ 2.875 - $ 22.125
Exercisable, end of year 2,306,769 $ 2.875 - $ 22.125
1994
Outstanding, beginning of year 4,171,528 $ 2.875 - $ 15.688
Granted 1,214,700 $ 13.500 - $ 17.375
Cancelled (247,804) $ 3.250 - $ 15.938
Exercised (656,372) $ 2.875 - $ 16.937
Outstanding, end of year 4,482,052 $ 2.875 - $ 17.375
Exercisable, end of year 1,647,078 $ 2.875 - $ 17.125
1993
Outstanding, beginning of year 7,702,482 $ 2.875 - $ 6.875
Granted 1,541,700 $ 9.083 - $ 15.688
Cancelled (367,598) $ 3.250 - $ 6.625
Exercised (4,705,056) $ 2.875 - $ 6.625
Outstanding, end of year 4,171,528 $ 2.875 - $ 15.688
Exercisable, end of year 808,812 $ 2.875 - $ 11.375
</TABLE>
-26-
<PAGE> 28
At June 30, 1995, an additional 2,285,212 shares were reserved under employee
and director stock option plans.
The Company has an employee stock purchase plan whereby the Company provides
certain purchase benefits for participating employees. At June 30, 1995,
628,171 shares were reserved for issuance to employees under the plan.
The Company has a 401(k) plan whereby the Company matches eligible employee
contributions in Company stock, subject to certain limitations. The Company's
expense to match contributions was $4,940, $3,373 and $1,487 in 1995, 1994 and
1993, respectively. At June 30, 1995, 1,012,994 shares were reserved for
issuance to employees under the plan.
The Company issues restricted stock awards to certain officers and key
employees. Compensation expense for restricted stock awards was $1,102 in 1995
and $1,232 in 1994.
In April 1987 the Company adopted a Shareholder Rights Plan (which was amended
in August 1988 and May 1994) and pursuant thereto declared a dividend of one
Common Stock Purchase Right ("Right") for each outstanding share of common
stock. For shares issued after such dividend, a right attaches to each share of
common stock issued. The Rights will become exercisable if a person or group
(an "Acquiring Shareholder") (i) holds 10 percent or more of the Company's
common stock and is determined by the Board of Directors to be an "adverse
person" as defined by the Plan, or (ii) acquires or makes a tender offer to
acquire 15 percent of the Company's common stock. Either such event is referred
to as the "Distribution Date". If a person acquires 15 percent of the Company's
common stock or is determined by the Board of Directors to be an "adverse
person" or, after the "Distribution Date" the Company is merged with any
entity, each Right will entitle the holder thereof, other than the Acquiring
Shareholder, to purchase $33 worth of the Company's or the surviving
corporation's common stock, as the case may be, based on the Company's market
price at the time, for $16.67.
The Rights may be redeemed by the Company at a price of $.0167 per Right until
the expiration of the rights or 10 days after any party acquires 15 percent of
more of the Company's common stock. Rights are exercisable until the Company's
right of redemption discussed above has expired. The Rights have no voting
power and, until exercised, no dilutive effect on earnings per share. If not
previously redeemed, the Rights will expire on April 13, 1997. At June 30,
1995, 127,583,148 shares were reserved for Common Stock Purchase Rights. At
June 30, 1995, a total of 131,509,525 shares of authorized stock were reserved
for the above purposes.
-27-
<PAGE> 29
15. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(In Thousands) 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
PREFERRED STOCK
Shares authorized 50,000 50,000 50,000
Shares issued -- -- --
COMMON STOCK ($0.50 PAR VALUE)
Shares authorized 350,000 350,000 350,000
Shares issued at
beginning of year 75,495 37,196 24,086
Issuance of a 2-for-1 stock
split effected in the form of
a stock dividend (See Note 14) 97 37,748 --
Issuance of a 3-for-2 stock
split effected in the form of
a stock dividend (See Note 14) -- -- 12,042
Issuance of shares under
employee benefit plans 1,179 481 1,068
Issuance of restricted shares 179 70 --
----------- -------- ------------
Shares outstanding 76,950 75,495 37,196
=========== ======== ============
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year $ 141,179 $129,072 $ 115,022
Issuance of shares under
employee benefit plans 13,048 8,347 3,180
Tax benefit from employees'
stock option plan 4,966 2,563 10,870
Issuance of restricted shares to
employees 3,825 2,174 --
Unearned compensation -
restricted shares (2,812) (977) --
----------- -------- ------------
Balance at end of year $ 160,206 $141,179 $ 129,072
=========== ======== ============
RETAINED EARNINGS
Balance at beginning of year $ 215,926 $204,274 $ 194,569
Net earnings 63,540 35,022 19,974
Issuance of a 2-for-1 stock
split effected in the form of
a stock dividend (See Note 14) (48) (18,873) --
Issuance of a 3-for-2 stock
split effected in the form of
a stock dividend (See Note 14) -- -- (6,021)
Cash dividends(1) (4,578) (4,497) (4,248)
----------- -------- ------------
Balance at end of year $ 274,840 $215,926 $ 204,274
=========== ======== ============
(1) $0.06 per share in 1995 and 1994
and $0.05 5/6 per share in 1993
ACCUMULATED TRANSLATION ADJUSTMENTS
Balance at beginning of year $ 794 $ 946 $ 1,351
Foreign currency translation
adjustments (126) (152) (405)
----------- -------- ------------
Balance at end of year $ 668 $ 794 $ 946
=========== ======== ============
TREASURY STOCK
Balance at beginning of year $ -- $ -- $ (23,260)
Issuance of shares under
employee benefit plans -- -- 23,260
----------- -------- ------------
Balance at end of year $ -- $ -- $ --
=========== ======== ============
</TABLE>
-28-
<PAGE> 30
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at ------------------------------------- Balance at
beginning Charged to Charged to end of
Description of period costs and expenses other accounts(1) Deductions(2) period
----------- ---------- ------------------ -------------- ---------- ------
<S> <C> <C> <C> <C> <C>
Deducted on the balance sheet
from asset to which it applies:
June 30, 1995 --
Allowance for doubtful accounts $ 3,839 $ 343 $ 69 $ (428) $ 3,823
======== ======== ======== ======= ==========
July 1, 1994 --
Allowance for doubtful accounts $ 4,224 $ 73 $ 115 $ (573) $ 3,839
======== ======== ======== ======= ==========
July 2, 1993 --
Allowance for doubtful accounts $ 4,160 $ 145 $ 420 $ (501) $ 4,224
======== ======== ======== ======= ==========
</TABLE>
Notes:
(1) Represents recoveries on accounts previously written off, and in fiscal
1993, the $167 acquired with purchase of Nexus Engineering Corp.
(2) Amounts represent uncollectible accounts written off.
-29-
<PAGE> 31
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Scientific-Atlanta, Inc.
(Registrant)
<TABLE>
<S> <C>
/s/ James F. McDonald September 6, 1995
----------------------- -----------------
James F. McDonald Date
President and
Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ James F. McDonald September 6, 1995
------------------------------ -----------------
James F. McDonald Date
President and
Chief Executive Officer
and Director
(Principal Executive Officer)
/s/ Harvey A. Wagner September 12, 1995
------------------------------ ------------------
Harvey A. Wagner Date
Senior Vice President,
Chief Financial Officer and
Treasurer
(Principal Financial Officer)
/s/ Julian W. Eidson September 11, 1995
------------------------------ ------------------
Julian W. Eidson Date
Vice President and Controller
(Principal Accounting Officer)
/s/ Marion H. Antonini September 6, 1995
------------------------------ -----------------
Marion H. Antonini, Director Date
</TABLE>
-30-
<PAGE> 32
<TABLE>
<S> <C>
/s/ William E. Kassling September 12, 1995
----------------------------- ------------------
William E. Kassling, Director Date
/s/ Wilbur Branch King September 10, 1995
----------------------------- ------------------
Wilbur Branch King, Director Date
/s/ Mylle Bell Mangum September 13, 1995
----------------------------- ------------------
Mylle Bell Mangum, Director Date
/s/ Alonzo L. McDonald September 12, 1995
----------------------------- ------------------
Alonzo L. McDonald, Director Date
/s/ David J. McLaughlin September 9, 1995
----------------------------- ------------------
David J. McLaughlin, Director Date
/s/ James V. Napier September 12, 1995
----------------------------- ------------------
James V. Napier, Director Date
/s/ Sidney Topol September 11, 1995
----------------------------- ------------------
Sidney Topol, Director Date
</TABLE>
-31-
<PAGE> 1
EXHIBIT 10(g)
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
Dated as of May 11, 1995
by and among
SCIENTIFIC-ATLANTA, INC.,
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 12.6.(d),
as Lenders,
THE BANK OF NEW YORK
and
ABN AMRO BANK N.V., acting through its Atlanta Agency,
as Co-Agents,
and
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
as Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS*
<TABLE>
<S> <C>
Article I. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE II. CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.1. SYNDICATED LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.2. BID RATE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.4. RATES AND PAYMENT OF INTEREST ON LOANS . . . . . . . . . . . . . . . 25
SECTION 2.5. NUMBER OF INTEREST PERIODS . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.6. REPAYMENT OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.7. PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.8. CONTINUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.9. CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.10. NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.11. VOLUNTARY REDUCTIONS OF THE COMMITMENT . . . . . . . . . . . . . . . 28
SECTION 2.12. EXTENSION OF FACILITY B TERMINATION DATE . . . . . . . . . . . . . . 28
SECTION 2.13. COMMERCIAL PAPER PROGRAM . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.14. AMOUNT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 30
SECTION 3.1. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.2. PRO RATA TREATMENT . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.3. SHARING OF PAYMENTS, ETC . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.4. SEVERAL OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.5. MINIMUM AMOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.6. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.7. COMPUTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.8. USURY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.9. AGREEMENT REGARDING INTEREST AND CHARGES . . . . . . . . . . . . . . 34
SECTION 3.10. STATEMENTS OF ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.11. DEFAULTING LENDERS . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.12. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.13. FOREIGN SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IV. YIELD PROTECTION, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.1. ADDITIONAL COSTS; CAPITAL ADEQUACY . . . . . . . . . . . . . . . . . 37
SECTION 4.2. SUSPENSION OF LIBOR LOANS. . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.3. ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.4. COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.5. AFFECTED LENDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.6. TREATMENT OF AFFECTED LOANS. . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
__________________________________
* This Table of Contents is not part of the Credit Agreement and is
provided as a convenience only.
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<TABLE>
<S> <C>
SECTION 4.7. CHANGE OF LENDING OFFICE . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.1. INITIAL CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.2. CONDITIONS PRECEDENT TO ISSUANCE OF COMMERCIAL PAPER . . . . . . . . 43
SECTION 5.3. CONDITIONS PRECEDENT TO ALL LOANS, LETTERS OF CREDIT AND ISSUANCE OF
COMMERCIAL PAPER. . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.1. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 44
SECTION 6.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. . . . . . . . . . . 49
ARTICLE VII. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.1. PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. . . . . . . . . . . . 50
SECTION 7.2. COMPLIANCE WITH APPLICABLE LAW . . . . . . . . . . . . . . . . . . . 50
SECTION 7.3. MAINTENANCE OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.4. CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.5. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.6. PAYMENT OF TAXES AND CLAIMS. . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.7. VISITS AND INSPECTIONS . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.8. USE OF PROCEEDS; LETTERS OF CREDIT . . . . . . . . . . . . . . . . . 51
SECTION 7.9. ADDITIONAL MATERIAL SUBSIDIARIES . . . . . . . . . . . . . . . . . . 51
SECTION 7.10. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VIII. INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.1. QUARTERLY FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . 52
SECTION 8.2. YEAR-END STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.3. COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.4. NOTICE OF LITIGATION AND OTHER MATTERS . . . . . . . . . . . . . . . 53
SECTION 8.5. ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.6. COPIES OF OTHER REPORTS. . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.7. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE IX. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.1. FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.2. INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.3. INVESTMENTS; ACQUISITIONS. . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.4. LIENS; AGREEMENTS REGARDING LIENS; OTHER MATTERS . . . . . . . . . . 59
SECTION 9.5. DIVIDENDS AND OTHER RESTRICTED PAYMENTS. . . . . . . . . . . . . . . 59
SECTION 9.6. MERGER, CONSOLIDATION, SALES OF ASSETS AND OTHER ARRANGEMENTS. . . . 59
SECTION 9.7. TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.8. HEDGING OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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<TABLE>
<S> <C>
ARTICLE X. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.1. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.2. REMEDIES UPON EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . 64
SECTION 10.3. REMEDIES UPON DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.4. PERFORMANCE BY AGENT . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.5. RIGHTS CUMULATIVE. . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.6. APPLICATION OF PROCEEDS AFTER DEFAULT. . . . . . . . . . . . . . . . 65
ARTICLE XI. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 11.1. AUTHORIZATION AND ACTION . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 11.2. AGENT'S RELIANCE, ETC. . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 11.3. NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.4. NATIONSBANK AS LENDER. . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 11.5. LENDER CREDIT DECISION, ETC. . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.6. INDEMNIFICATION OF AGENT . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 11.7. COLLATERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 11.8. SUCCESSOR AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XII. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 12.1. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 12.2. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.3. STAMP, INTANGIBLE AND RECORDING TAXES. . . . . . . . . . . . . . . . 72
SECTION 12.4. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.5. LITIGATION AND CERTAIN WAIVERS . . . . . . . . . . . . . . . . . . . 73
SECTION 12.6. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.7. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.8. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.9. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 12.10. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.11. TITLES AND CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.12. SEVERABILITY OF PROVISIONS . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.13. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.14. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12.15. OBLIGATIONS WITH RESPECT TO LOAN PARTIES . . . . . . . . . . . . . . 80
SECTION 12.16. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . . . . 80
ANNEX I LIST OF LENDERS, COMMITMENTS AND LENDING OFFICES
SCHEDULE 6.1.(b) OWNERSHIP STRUCTURE
SCHEDULE 6.1.(f) EXISTING LIENS
SCHEDULE 6.1.(g) INDEBTEDNESS
SCHEDULE 6.1.(i) LITIGATION
SCHEDULE 6.1.(j) TAXES
SCHEDULE 6.1.(s) INTELLECTUAL PROPERTY
</TABLE>
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<TABLE>
<S> <C>
EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT B FORM OF GUARANTY
EXHIBIT C FORM OF NOTICE OF BORROWING
EXHIBIT D FORM OF NOTICE OF CONTINUATION
EXHIBIT E FORM OF NOTICE OF CONVERSION
EXHIBIT F FORM OF BID RATE QUOTE REQUEST
EXHIBIT G FORM OF BID RATE QUOTE
EXHIBIT H FORM OF BID RATE QUOTE ACCEPTANCE
EXHIBIT I-1 FORM OF SYNDICATED NOTE
EXHIBIT I-2 FORM OF BID RATE NOTE
EXHIBIT J-1 FORM OF OPINION OF COUNSEL
EXHIBIT J-2 FORM OF OPINION OF GENERAL COUNSEL
EXHIBIT K FORM OF PLEDGE AGREEMENT
EXHIBIT L FORM OF NONDISCLOSURE AGREEMENT
EXHIBIT M BORROWER'S CASH INVESTMENT POLICY
</TABLE>
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<PAGE> 6
THIS CREDIT AGREEMENT dated as of May 11, 1995 by and among
SCIENTIFIC-ATLANTA, INC., a corporation organized under the laws of the State
of Georgia (the "Borrower"), each of the financial institutions initially a
signatory hereto together with their assignees pursuant to Section 12.6.(d),
THE BANK OF NEW YORK and ABN AMRO BANK N.V., acting through its Atlanta Agency,
as Co-Agents, and NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION, as Agent.
WHEREAS, the parties hereto desire to make available to the Borrower
certain financial accommodations on the terms and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto agree as follows:
ARTICLE I. DEFINITIONS
Section 1.1. Definitions.
In addition to terms defined elsewhere herein, the following terms
shall have the following meanings for the purposes of this Agreement:
"ABN" means ABN AMRO Bank N.V., acting through its Atlanta Agency.
"Adjusted LIBO Rate" means, with respect to each Interest Period for
any LIBOR Loan, the rate obtained by dividing (a) LIBOR for such Interest
Period by (b) a percentage equal to 1 minus the stated maximum rate (stated as
a decimal) of all reserves, if any, required to be maintained against
"Eurocurrency liabilities" as specified in Regulation D of the Board of
Governors of the Federal Reserve System (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by an office of any Lender outside of the United
States of America to residents of the United States of America).
"Additional Costs" has the meaning given that term in Section 4.1.
"Affected Lender" has the meaning given that term in Section 4.5.
"Affiliate" means any Person: (a) directly or indirectly controlling,
controlled by, or under common control with, the Borrower; (b) directly or
indirectly owning or holding 10.0% or more of any equity interest in the
Borrower; or (c) 10.0% or more of whose voting stock or other equity interest
is directly or indirectly owned or held by the Borrower. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or by contract or otherwise.
"Agent" means NationsBank of Georgia, National Association, as agent
for the Lenders under the terms of this Agreement, and any successor agent.
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"Agreement" means this Credit Agreement.
"Agreement Date" means the date as of which this Agreement is dated.
"Applicable Facility Fee" means at the time of determination thereof,
the percentage rate set forth below for the Facility A Commitments or Facility
B Commitments, as the case may be, corresponding to the Consolidated Funded
Debt/EBITDA Ratio of the Borrower in effect at such time:
<TABLE>
<CAPTION>
CONSOLIDATED FUNDED APPLICABLE FACILITY FEE APPLICABLE FACILITY FEE
DEBT/EBITDA RATIO FOR FACILITY A COMMITMENTS FOR FACILITY B COMMITMENTS
------------------- -------------------------- --------------------------
<S> <C> <C>
Less than 0.50 to 1.00 0.085% 0.0625%
Greater than or equal to 0.50 to 1.00 but
less than 1.00 to 1.00 0.100% 0.075%
Greater than or equal to 1.00 to 1.00 but
less than 1.50 to 1.00 0.150% 0.100%
Greater than or equal to 1.50 to 1.00 but
less than 2.25 to 1.00 0.175% 0.125%
Greater than or equal to 2.25 to 1.00 but
less than 3.00 to 1.00 0.200% 0.150%
</TABLE>
The Applicable Facility Fee shall be determined by the Agent on a quarterly
basis commencing with the fiscal quarter ending on June 30, 1995 based on the
Consolidated Funded Debt/EBITDA Ratio as set forth in the compliance
certificate required to be delivered by the Borrower pursuant to Section 8.3.
Any adjustment to the Applicable Facility Fee shall be effective as of the date
of determination thereof by the Agent. Notwithstanding the foregoing, for the
period from the Effective Date through but excluding the date on which the
Agent first determines the Applicable Facility Fee as set forth above, the
Applicable Facility Fee with respect to the Facility A Commitments shall equal
0.085% and the Applicable Facility Fee with respect to the Facility B
Commitments shall equal 0.0625%. Thereafter, the Applicable Facility Fee shall
be adjusted from time to time as set forth above.
"Applicable Law" means all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"Applicable Margin" means at the time of determination thereof, the
percentage rate set forth below corresponding to the Consolidated Funded
Debt/EBITDA Ratio in effect at such time:
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<PAGE> 8
<TABLE>
<CAPTION>
CONSOLIDATED FUNDED APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR
DEBT/EBITDA RATIO FACILITY A LOANS FACILITY B LOANS
------------------- -------------------------- --------------------------
<S> <C> <C>
Less than 0.50 to 1.00 0.140% 0.1625%
Greater than or equal to 0.50 to 1.00 but
less than 1.00 to 1.00 0.150% 0.175%
Greater than or equal to 1.00 to 1.00 but
less than 1.50 to 1.00 0.200% 0.250%
Greater than or equal to 1.50 to 1.00 but
less than 2.25 to 1.00 0.275% 0.325%
Greater than or equal to 2.25 to 1.00 but
less than 3.00 to 1.00 0.425% 0.475%
</TABLE>
The Applicable Margin shall be determined by the Agent on a quarterly basis
commencing with the fiscal quarter ending on June 30, 1995 based on the
Consolidated Funded Debt/EBITDA Ratio as set forth in the compliance
certificate required to be delivered by the Borrower pursuant to Section 8.3.
Any adjustment to the Applicable Margin shall be effective (a) as of the first
day of any Interest Period beginning on or after the determination thereof for
purposes of the calculation of interest under Section 2.4.(a)(ii) with respect
to any LIBOR Loan and (b) as of the date of determination thereof for purposes
of calculation of the letter of credit fee under Section 3.6.(b)(i).
Notwithstanding the foregoing, for the period from the Effective Date through
but excluding the date on which the Agent first determines the Applicable
Margin as set forth above, the Applicable Margin for Facility A Loans shall
equal 0.140% and the Applicable Margin for Facility B Loans shall equal
0.1625%. Thereafter, the Applicable Margin shall be adjusted from time to time
as set forth above.
"Assignee" has the meaning given that term in Section 12.6.(d).
"Assignment and Acceptance Agreement" means an Assignment and
Acceptance Agreement between a Lender and an Assignee, substantially in the
form of Exhibit A.
"Base Rate" means the greater of: (a) the per annum rate of interest
publicly announced by NationsBank from time to time as its prime lending rate
and (b) the Federal Funds Rate plus one-half of one percent (0.5%) per annum.
The prime lending rate of NationsBank is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
NationsBank may make commercial loans or other loans at rates of interest at,
above, or below such prime lending rate. Any change in the Base Rate hereunder
shall be effective for purposes of this Agreement as of the date of such change
in the rates described in the immediately preceding clauses (a) and (b).
"Base Rate Loan" means a Syndicated Loan bearing interest at a rate
based on the Base Rate.
"Bid Rate" has the meaning given that term in Section 2.2.(c)(ii)(C).
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<PAGE> 9
"Bid Rate Borrowing" has the meaning given that term in Section
2.2.(b).
"Bid Rate Loan" means a Loan made pursuant to Section 2.2.
"Bid Rate Notes" has the meaning given that term in Section 2.10.(b).
"Bid Rate Quote" means an offer in accordance with Section 2.2.(c) by
a Lender to make a Bid Rate Loan with one single specified interest rate.
"Bid Rate Quote Request" has the meaning given that term in Section
2.2.(b).
"BONY" means The Bank of New York.
"Borrower" has the meaning set forth in the introductory paragraph
hereof and shall include the Borrower's successors and assigns.
"Business Day" means (a) any day other than a Saturday, Sunday or
other day on which banks in Atlanta, Georgia or Charlotte, North Carolina are
authorized or required to close and (b) with reference to a LIBOR Loan, any
such day that is also a day on which dealings in Dollar deposits are carried
out in the London interbank market.
"Capital Expenditures" means, with respect to the Borrower and its
Subsidiaries for any period of computation thereof, the aggregate amount of
capital expenditures made by the Borrower and its consolidated Subsidiaries
during such period as determined in accordance with GAAP.
"Capitalized Lease Obligations" means all obligations under a lease
that is required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of Capitalized Lease Obligations shall be
the capitalized amount of such obligations determined in accordance with such
principles.
"Co-Agent" means each of BONY and ABN, in its capacity as co-agent
under and as provided in Article XI.
"Collateral" means any collateral security pledged by any Loan Party
to secure the Obligations or any portion thereof, including without limitation,
"Pledged Collateral" as defined in any Pledge Agreement.
"Commercial Paper" means any negotiable draft having a maturity at the
time of issuance not exceeding 270 days and which is exempt from the
registration requirements of the Securities Act under Section 3(a)(3) thereof.
"Commercial Paper Documents" means, with respect to a Commercial Paper
Program, all documents, instruments and agreements executed by the Borrower,
the Paying Agent or the
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<PAGE> 10
Placement Agent in connection therewith, including without limitation, all
Commercial Paper issued thereunder and any agreement delivered under Section
5.2.(b).
"Commercial Paper Limit" means $100,000,000.
"Commercial Paper Program" means any one arrangement among the
Borrower, a Placement Agent and a Paying Agent regarding the issuance by the
Borrower of Commercial Paper.
"Commitment" means, as to each Lender, such Lender's obligations in
respect of its Facility A Commitment and its Facility B Commitment.
"Commitment Percentage" means, as to each Lender, the ratio, expressed
as a percentage, of (a) the amount of such Lender's Commitments to (b) the sum
of (i) the aggregate amount of the Commitments of all Lenders hereunder;
provided, however, that if at the time of determination the Commitments have
terminated or been reduced to zero, the "Commitment Percentage" of each Lender
shall be the Commitment Percentage of such Lender in effect immediately prior
to such termination or reduction.
"Consolidated Current Maturities" means, with respect to the Borrower
and its Subsidiaries for any period of computation thereof, the aggregate
amount of all regularly scheduled payments of principal to be made during such
period with respect to the long-term portion of Consolidated Funded Debt of the
Borrower and its Subsidiaries.
"Consolidated EBITDA" means, with respect to the Borrower and its
Subsidiaries for any period of computation thereof, the sum of, without
duplication, (i) Consolidated Net Income plus (ii) Consolidated Interest
Expense for such period plus (iii) taxes on income accrued during such period
plus (iv) amortization for such period plus (v) depreciation for such period.
"Consolidated Funded Debt" means, at the time of computation thereof,
all of the following of the Borrower and its Subsidiaries as determined on a
consolidated basis (without duplication): all Indebtedness less (a) all
reimbursement obligations under Standby letters of credit and acceptances
(whether or not the same have been presented for payment) and less (b)
obligations arising under Guarantees.
"Consolidated Funded Debt/EBITDA Ratio" means, with respect to the
Borrower and its Subsidiaries at the time of computation thereof, the ratio of
(i) the Consolidated Funded Debt outstanding at such time to (ii) Consolidated
EBITDA for the Four-Quarter Period ending on the date of the computation
thereof.
"Consolidated Interest Expense" means, with respect to the Borrower
and its Subsidiaries for any period of computation thereof, the total interest
expense (including, without limitation, interest expense attributable to
Capitalized Lease Obligations in accordance with GAAP) of the Borrower and its
Subsidiaries on a consolidated basis and in any event shall include (i) the
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amortization of debt discounts and (ii) amortization of all fees payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense.
"Consolidated Net Income" means, with respect to the Borrower and its
Subsidiaries for any period of computation thereof, the net income (or loss) of
the Borrower and its Subsidiaries on a consolidated basis for such period;
provided, however, that the following shall be excluded when determining
Consolidated Net Income: (i) any item of gain or loss resulting from sale,
conversion or other disposition of assets other than in the ordinary course of
business; (ii) net gains or losses on the acquisition, retirement, sale or
other disposition of capital stock and other securities of the Borrower and its
Subsidiaries; (iii) net gains or losses on the collection of proceeds of life
insurance policies; (iv) any write-up of any asset; and (v) any other net gains
or losses of an extraordinary nature as determined in accordance with GAAP.
"Consolidated Operating Lease Expense" means for any period of
computation thereof, the aggregate of all amounts paid or accrued (whether or
not constituting rental expense) during such period by the Borrower and its
Subsidiaries under all leases (other than leases giving rise to Capitalized
Lease Obligations), as determined on a consolidated basis.
"Consolidated Tangible Net Worth" means, as at any date, (a) the total
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings, after deducting treasury stock) of the Borrower and its
Subsidiaries determined on a consolidated basis (without duplication) which
would appear as such on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with GAAP minus (b) all intangible items
reflected therein, including all intangible plant expansion costs, all
unamortized debt discount and expense, unamortized research and development
expense, unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, unamortized excess cost of investment in
Subsidiaries over equity at dates of acquisition, and all similar items which
should properly be treated as intangibles in accordance with GAAP.
"Continue", "Continuation" and "Continued" each refers to the
continuation of a LIBOR Loan from one Interest Period to another Interest
Period pursuant to Section 2.8.
"Convert", "Conversion" and "Converted" each refers to the conversion
of a Loan of one Type into a Loan of another Type pursuant to Section 2.9.
"Credit Event" means any of the following: (a) the making (or deemed
making) of any Loan; (b) the Conversion or Continuation of a Loan; (c) the
issuance of a Letter of Credit and (d) the issuance by the Borrower of any
Commercial Paper.
"Default" means any of the events specified in Section 10.1., whether
or not there has been satisfied any requirement for the giving of notice, the
lapse of time or the happening of any other condition.
"Defaulting Lender" has the meaning set forth in Section 3.11.
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"Documentary" as applied to a Letter of Credit issued hereunder, any
other letter of credit or any other similar instrument, means such letter of
credit or instrument is being, or is to be, used by the Borrower to support
payment obligations incurred by the Borrower in connection with the sale of
goods and payment under which is conditioned upon presentation of invoices,
shipping documents, or other similar papers.
"Dollars" or "$" means the lawful currency of the United States of
America.
"Effective Date" means the later of: (a) the Agreement Date or (b) the
date on which all of the conditions precedent set forth in Section 5.1. shall
have been fulfilled or waived in writing by the Requisite Lenders.
"Environmental Laws" means any Applicable Law relating to
environmental protection or the manufacture, storage, disposal or clean-up of
Hazardous Materials including, without limitation, the following: Clean Air
Act, 42 U.S.C. Section 7401 et seq.; Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq.; Solid Waste Disposal Act, 42 U.S.C. Section 6901
et seq.; Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601 et seq.; National Environmental Policy Act, 42 U.S.C.
Section 4321 et seq.; regulations of the Environmental Protection Agency and
any applicable rule of common law and any judicial interpretation thereof
relating primarily to the environment or Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
in effect from time to time.
"ERISA Affiliate" means any entity required at any relevant time to be
aggregated with the Borrower or any Subsidiary under Sections 414(b) or (c) of
the Internal Revenue Code. In addition, for purposes of any provision of this
Agreement that relates to Section 412(n) of the Internal Revenue Code, the term
ERISA Affiliate shall mean any entity aggregated with the Borrower or any
Subsidiary under Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.
"Event of Default" means any of the events specified in Section 10.1.,
provided that any requirement for notice or lapse of time or any other
condition has been satisfied.
"Extension Request" has the meaning given that term in Section
2.12.(a).
"Facility A Commitment" means, as to each Lender, such Lender's
obligation to make Facility A Loans pursuant to Section 2.1.(a) and to issue
(in the case of the Agent) or participate in (in the case of the other Lenders)
Letters of Credit pursuant to Section 2.3.(a) and 2.3.(f), respectively, in an
amount up to, but not exceeding, (but in the case of the Agent excluding the
aggregate amount of participations in the Letters of Credit held by other
Lenders) the amount set forth for such Lender on Annex I as such Lender's
"Initial Facility A Commitment Amount", as the same may be reduced from time to
time pursuant to Section 2.11.
"Facility A Commitment Amount" means $150,000,000, as the same may be
reduced from time to time pursuant to the terms of this Agreement.
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"Facility A Loan" means a Loan made to the Borrower under Section
2.1.(a).
"Facility B Commitment" means, as to each Lender, such Lender's
obligation to make Facility B Loans pursuant to Section 2.1.(b) in an amount up
to, but not exceeding, the amount set forth for such Lender on Annex I as such
Lender's "Initial Facility B Commitment Amount", as the same may be reduced
from time to time pursuant to Section 2.11.
"Facility B Commitment Amount" means $150,000,000, as the same may be
reduced from time to time pursuant to the terms of this Agreement.
"Facility B Loan" means a Loan made to the Borrower under Section
2.1.(b).
"Facility B Termination Date" means May 10, 1996, or such later date
to which such date may be extended under Section 2.12.
"Federal Funds Rate" means, at any time, a fluctuating interest rate
per annum equal to the weighted average (rounded upward to the nearest 1/100 of
1%) of the rates on overnight Federal Funds transactions with members of the
Federal Reserve System arranged by Federal Funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
such day on such transactions received by the Agent from three Federal Funds
brokers of recognized standing selected by the Agent.
"Fee Letter" means the letter agreement dated as of the date hereof
between the Agent and the Borrower.
"Fees" means the fees and commissions provided for or referred to in
Section 3.6. and any other fees payable by the Borrower hereunder or under any
other Loan Document.
"Fiscal Year" means, with respect to the Borrower, the 52 or 53 week
period, as the case may be, ending on the Friday closest to June 30 of each
year.
"Foreign Subsidiary" means, with respect to a Person, any Subsidiary
of such Person that is a "controlled foreign corporation" as defined in 26
U.S.C.A. Section 957(a).
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower, taken together as one accounting period, and unless
set forth herein to the contrary, shall mean the four full consecutive fiscal
quarters of the Borrower most recently ending before the day of any computation
of any given financial ratio or covenant contained herein.
"GAAP" means generally accepted accounting principles as set forth in
statements from Auditing Standards No. 69 entitled "The Meaning of 'Present
Fairly in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the
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Auditing Standards Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board that are applicable to the circumstances, in each case as such
principles are from time to time supplemented and amended.
"Governmental Approvals" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all Governmental Authorities.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity (including, without
limitation, the Federal Deposit Insurance Corporation, the Comptroller of the
Currency or the Federal Reserve Board, any central bank or any comparable
authority) or any arbitrator with authority to bind a party at law.
"Guaranty", "Guaranteed" or to "Guarantee" with respect to a Person
and as applied to any obligation of a third Person means and includes: (a) a
guaranty (other than by endorsement of negotiable instruments for collection in
the ordinary course of business), directly or indirectly, in any manner, of any
part or all of such obligation, or (b) an agreement by such Person, direct or
indirect, contingent or otherwise, and whether or not constituting a guaranty,
the practical effect of which is to assure the payment or performance (or
payment of damages in the event of nonperformance) by such third Person of any
part or all of such obligation whether by: (i) the purchase of securities or
obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property
or the purchase or sale of services primarily for the purpose of enabling the
obligor with respect to such obligation to make any payment or performance (or
payment of damages in the event of nonperformance) of or on account of any part
or all of such obligation, or to assure the owner of such obligation against
loss, (iii) the supplying of funds to or in any other manner investing in the
obligor with respect to such obligation, (iv) repayment of amounts drawn down
by beneficiaries of letters of credit (including Letters of Credit), or (v) the
supplying of funds to or investing in a Person on account of all or any part of
such Person's obligation under a Guaranty of any obligation or indemnifying or
holding harmless, in any way, such Person against any part or all of such
obligation. As the context requires, "Guaranty" shall also mean each guaranty
executed and delivered by each Loan Party pursuant to Section 5.1. or
otherwise, and in the form of Exhibit B.
"Hazardous Materials" means all or any of the following: (a)
substances that are defined or listed in, or otherwise classified pursuant to,
any applicable Environmental Laws as "hazardous substances", "hazardous
materials", "hazardous wastes", "toxic substances" or any other substances
exhibiting carcinogenicity or reproductive toxicity; (b) crude oil, petroleum
or petroleum derived substances, natural gas, natural gas liquids or synthetic
gas and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; (d) asbestos in any form; and (e) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million.
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"Hedging Obligations" means, with respect to a Person, any and all
obligations and liabilities, whether absolute or contingent and whether now
owed or hereafter arising, of such Person under or with respect to (a) Interest
Rate Agreements and (b) agreements or other arrangements intended to protect
such Person or any other Person a party thereto from fluctuations of currency
exchange rates or forward rates applicable to a Person's assets, liabilities or
exchange transactions. The term "Hedging Obligations" shall in no event include
any obligations or liabilities in respect of any reasonable and customary
provision in any agreement regarding the sale or purchase of goods which
provision provides for adjustments in the sale or purchase price to reflect
changes in currency exchange rates.
"Indebtedness" means, with respect to a Person, at the time of
computation thereof, all of the following (without duplication): (a)
obligations of such Persons in respect of money borrowed; (b) obligations of
such Person (other than trade debt incurred in the ordinary course of
business), whether or not for money borrowed (i) represented by notes payable,
or drafts accepted, in each case representing extensions of credit, (ii)
evidenced by bonds, debentures, notes or similar instruments, or (iii)
constituting purchase money indebtedness, conditional sales contracts, title
retention debt instruments or other similar instruments, upon which interest
charges are customarily paid or that are issued or assumed as full or partial
payment for property; (c) Capitalized Lease Obligations of such Person; (d) all
reimbursement obligations of such Person under any Standby letters of credit or
acceptances (whether or not the same have been presented for payment); and (e)
all Indebtedness of other Persons which (i) such Person has Guaranteed or (ii)
are secured by a Lien on any property of such Person.
"Intellectual Property" has the meaning given that term in Section
6.1.(s).
"Interest Period" means:
(a) with respect to any LIBOR Loan, each period commencing on the
date such LIBOR Loan is made or the last day of the next preceding Interest
Period for such Loan and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the Borrower may
select in a Notice of Borrowing, Notice of Continuation or Notice of
Conversion, as the case may be, except that each Interest Period that commences
on the last Business Day of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar
month; and
(b) With respect to any Bid Rate Loan, the period commencing on
the date such Bid Rate Loan is made and ending on any Business Day no earlier
than 7 days and no later than 120 days thereafter, as the Borrower may select
as provided in Section 2.2.(b).
Notwithstanding the foregoing: (i) if any Interest Period for a Facility B Loan
would otherwise end after the Facility B Termination Date, such Interest Period
shall end on the Facility B Termination Date; (ii) if any Interest Period would
otherwise end after the Termination Date, such Interest Period shall end on the
Termination Date; (iii) each Interest Period that would otherwise end on a day
which is not a Business Day shall end on the next succeeding Business Day (or,
if
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such next succeeding Business Day falls in the next succeeding calendar month,
on the next preceding Business Day); and (iv) notwithstanding the immediately
preceding clause (i) or (ii), no Interest Period for any LIBOR Loan shall have
a duration of less than one month and, if the Interest Period for any LIBOR
Loan would otherwise be a shorter period, such Loan shall not be available
hereunder for such period.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement intended to protect a Person against fluctuations in
interest rates.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and all rules and regulations issued pursuant thereto.
"Investment" means, with respect to any Person and whether or not such
investment constitutes a controlling interest in such Person: (a) the purchase
or other acquisition of any share of capital stock, evidence of Indebtedness or
other security issued or equity interest by or in any corporation, limited
partnership, joint venture or any other Person; (b) any loan, advance or
extension of credit to, or contribution (in the form of money or goods) to the
capital of, any other Person; and (c) any commitment or option to make any of
the foregoing in any other Person.
"Issuing Bank Fees" means the Fees payable to the Agent pursuant to
clause (iii) and the last sentence of Section 3.6.(b).
"L/C Commitment Amount" equals $100,000,000.
"Lender" means each financial institution from time to time identified
as a Lender on, for such Lender and for each Type of Loan, the then current
Annex I, together with its respective successors and assigns.
"Lending Office" means, for each Lender and for each Type of Loan, the
office of each Lender specified for such Lender on Annex I.
"Letter of Credit" has the meaning set forth in Section 2.3.(a).
"Letter of Credit Documents" means, with respect to any Letter of
Credit, collectively, any application therefor, any certificate or other
document presented in connection with a drawing under such Letter of Credit and
any other agreement, instrument or other document governing or providing for
(a) the rights and obligations of the parties concerned or at risk with respect
to such Letter of Credit or (b) any collateral security for any of such
obligations.
"Letter of Credit Liabilities" means, without duplication, at any time
and in respect of any Letter of Credit, the sum of (a) the Stated Amount of
such Letter of Credit plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of the Borrower at such time due and payable in
respect of all drawings made under such Letter of Credit. For purposes of this
Agreement, a Lender (other than the Agent in its capacity as such) shall be
deemed to hold a
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Letter of Credit Liability in an amount equal to its participation interest in
the related Letter of Credit under Section 2.3.(f), and the Agent shall be
deemed to hold a Letter of Credit Liability in an amount equal to its retained
interest in the related Letter of Credit after giving effect to the acquisition
by the Lenders other than the Agent of their participation interests under such
Section.
"LIBOR" means, with respect to any Interest Period for LIBOR Loans,
the offered rate per annum in the London interbank market for deposits in
Dollars of amounts equal or comparable to the principal amount of such LIBOR
Loan offered for a term comparable to such Interest Period, as currently shown
on the Reuters Screen LIBOR page as of 11:00 a.m., Greenwich Mean Time, two
Business Days prior to the first day of such Interest Period; provided,
however, that (a) if more than one offered rate as described above appears on
the Reuters Screen LIBOR page, the rate used to determine LIBOR will be the
arithmetic average (rounded upward, if necessary, to the next higher 1/16 of
1%) of such offered rates, or (b) if no such offered rates appear, the rate
used for such Interest Period will be the arithmetic average (rounded upward,
if necessary, to the next higher 1/16 of 1%) of rates quoted by the Agent at
approximately 10:00 a.m., New York time, two Business Days prior to the first
day of such Interest Period for deposits in Dollars offered to leading European
banks for a period comparable to such Interest Period in an amount comparable
to the principal amount of such LIBOR Loans. If the Agent ceases to use the
Reuters Screen LIBOR page for determining interest rates based on eurodollar
deposit rates, a comparable internationally recognized interest rate reporting
service acceptable to both the Borrower and the Agent shall be used to
determine such offered rates.
"LIBOR Loan" means a Syndicated Loan bearing interest at a rate based
on LIBOR.
"Lien" as applied to the property of any Person means: (a) any
security interest, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, lien, charge or lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security title or
encumbrance of any kind in respect of any property of such Person, or upon the
income or profits therefrom; (b) any arrangement, express or implied, under
which any property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to the payment
of the general, unsecured creditors of such Person; and (c) the filing of, or
any agreement to give, any financing statement under the Uniform Commercial
Code or its equivalent in any jurisdiction.
"Loan" means a Syndicated Loan or a Bid Rate Loan.
"Loan Document" means this Agreement, each Note, each Guaranty, each
Pledge Agreement, each Letter of Credit Document, each Commercial Paper
Document and each other document or instrument now or hereafter executed and
delivered by a Loan Party in connection with, pursuant to or relating to this
Agreement.
"Loan Party" means each of the Borrower, each Material Subsidiary and
each other Person who Guarantees all or a portion of the Obligations and/or who
pledges any Collateral to secure all or a portion of the Obligations.
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"Material Adverse Effect" means a materially adverse effect on (a) the
business, assets, liabilities, financial condition, results of operations or
business prospects of (i) the Borrower or (ii) the Borrower and its
Subsidiaries, taken as a whole, or (b) the rights and remedies of the Lenders,
the Co-Agents and the Agent under the Loan Documents, or the ability of the
Borrower, or the Borrower and its Material Subsidiaries taken as a whole, to
perform its or their obligations under the Loan Documents to which any is a
party, as applicable.
"Material Contract" means any contract or other arrangement (other
than Loan Documents), whether written or oral, to which the Borrower, any
Subsidiary or any other Loan Party is a party which accounted for 5% or more of
the gross revenues of the Borrower and its Subsidiaries on a consolidated basis
for the Four-Quarter Period most recently ending.
"Material Subsidiary" means a Subsidiary that, as of the date of any
determination thereof, accounts for 5% or more of the Consolidated Tangible Net
Worth of the Borrower and its Subsidiaries.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower or
any ERISA Affiliate and which is covered by Title IV of ERISA.
"NationsBank" means NationsBank of Georgia, National Association.
"Note" means a Syndicated Note or a Bid Rate Note.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit C to be delivered pursuant to Section 2.1.(c) evidencing the Borrower's
request for a borrowing of Syndicated Loans.
"Notice of Continuation" means a notice substantially in the form of
Exhibit D to be delivered to the Agent pursuant to Section 2.8. evidencing the
Borrower's request for the Continuation of a LIBOR Loan.
"Notice of Conversion" means a notice substantially in the form of
Exhibit E to be delivered to the Agent pursuant to Section 2.9. evidencing the
Borrower's request for the Conversion of a Loan from one Type to another Type.
"Notice of Rejection" has the meaning given that term in Section
2.12.(b).
"Obligations" means, individually and collectively: (a) the aggregate
principal balance of, and all accrued and unpaid interest on, all Loans; (b)
all Reimbursement Obligations and all other Letter of Credit Liabilities; and
(c) all other indebtedness, liabilities, obligations, covenants and duties of
the Borrower and the other Loan Parties owing to the Agent, any Co-Agent or any
Lender of every kind, nature and description, under or in respect of this
Agreement or any of the other Loan Documents, including, without limitation,
the Fees and indemnification obligations,
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whether direct or indirect, absolute or contingent, due or not due, contractual
or tortious, liquidated or unliquidated, and whether or not evidenced by any
promissory note.
"Participant" has the meaning given that term in Section 12.6.(c).
"Paying Agent" means any Person engaged by the Borrower to accept
delivery of Commercial Paper tendered by the holder thereof for payment and to
make payment to such holder on behalf of the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor agency.
"Permitted Liens" means, as to any Person: (a) Liens securing taxes,
assessments and other charges or levies imposed by any Governmental Authority
(excluding any Lien imposed pursuant to any of the provisions of ERISA) or the
claims of materialmen, mechanics, carriers, warehousemen or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of
business, which are not at the time required to be paid or discharged under
Section 7.6.; (b) Liens consisting of deposits or pledges made, in the ordinary
course of business, in connection with, or to secure payment of, obligations
under workmen's compensation, unemployment insurance or similar Applicable
Laws; (c) Liens consisting of encumbrances in the nature of zoning
restrictions, easements, and rights or restrictions of record on the use of
real property, which do not materially detract from the value of such property
or impair the use thereof in the business of such Person; (d) Liens in
existence as of the Agreement Date and set forth in Schedule 6.1.(f); (e)
Purchase Money Liens but only to the extent the Indebtedness secured by such
Liens is permitted pursuant to Section 9.2.(f)(D); (f) Liens created under any
of the Loan Documents; (g) Liens securing Indebtedness of the Borrower and the
Material Subsidiaries permitted pursuant to Section 9.2.(f)(B) in an aggregate
amount not to exceed $1,000,000 at any time outstanding; (h) Liens securing
Indebtedness of the Subsidiaries that are not Material Subsidiaries permitted
pursuant to Section 9.2.(f)(C) and (i) Liens securing Indebtedness of the
Borrower and its Subsidiaries to the extent the Indebtedness secured by such
Liens is permitted pursuant to Section 9.2.(f)(D)(3).
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Placement Agent" means any Person engaged by the Borrower to act as
the Borrower's placement agent in connection with the issuance and sale of
Commercial Paper under a Commercial Paper Program.
"Plan" means an employee benefit or pension plan maintained for
employees of the Borrower, any of the other Loan Parties or any Affiliate
thereof that is covered by Title IV of ERISA, including such plans as may be
established after the Agreement Date.
"Pledge Agreement" means each pledge agreement executed and delivered
by each Loan Party pursuant to Section 5.1. or otherwise, and in the form of
Exhibit K.
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"Post-Default Rate" means, in respect of any principal of any Loan,
any Reimbursement Obligation or any other Obligation that is not paid when due
(whether at stated maturity, by acceleration, by optional or mandatory
prepayment or otherwise), a rate per annum during the period from and including
the due date to but excluding the date on which such amount is paid in full
equal to two percent (2.0%) plus the Base Rate as in effect from time to time;
provided that, if the amount so in default is the principal of a LIBOR Loan or
a Bid Rate Loan and the due date thereof is a day other than the last day of
the Interest Period therefor, the "Post-Default Rate" for such principal shall
be, for the period from and including such due date to but excluding the last
day of the Interest Period, two percent (2.0%) plus the interest rate for such
Loan as provided in Section 2.4.(a)(ii) or (iii), as the case may be, and
thereafter, the rate provided for above in this definition.
"Principal Office" means the main office of the Agent located at 600
Peachtree Street, 21st Floor, Atlanta, Georgia 30308 or such other office as
the Agent may from time to time designate in writing to the Borrower and the
Lenders.
"Purchase Money Lien" means a Lien on any item of equipment acquired
by the Borrower, any Subsidiary or any other Loan Party after the Agreement
Date; provided, however, that: (a) such Lien attaches only to the equipment to
be acquired; (b) if the purchase price of the equipment to be acquired exceeds
$7,500,000, the Indebtedness incurred in connection with such acquisition shall
not be less than 60% nor greater than the purchase price of such item of
equipment then being financed; and (c) such Lien shall secure only such
Indebtedness.
"Quarterly Date" means the last Business Day of March, June, September
and December in each year, the first of which shall be June 30, 1995.
"Register" has the meaning given that term in Section 12.6.(e).
"Regulatory Change" means, with respect to any Lender, any change
effective after the Agreement Date in Applicable Law (including without
limitation, Regulation D of the Board of Governors of the Federal Reserve
System) or the adoption or making after such date of any interpretation,
directive or request applying to a class of banks, including such Lender, of or
under any Applicable Law (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful) by any Governmental
Authority or monetary authority charged with the interpretation or
administration thereof or compliance by any Lender with any request or
directive regarding capital adequacy.
"Reimbursement Obligation" means the absolute, unconditional and
irrevocable obligation of the Borrower to reimburse the Agent for any drawing
honored by the Agent under a Letter of Credit.
"Rejecting Lender" has the meaning given that term in Section 2.12.(a).
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"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA, but shall not include a Reportable Event as to which the provision for
30 days' notice to the PBGC is waived under applicable regulations.
"Requisite Lenders" means, as of any date, Lenders having at least
66-2/3% of the aggregate amount of the Commitments, or, if the Commitments have
been terminated or reduced to zero, Lenders holding at least 66-2/3% of the
principal amount of the Loans and the Letter of Credit Liabilities.
"Restricted Payment" means: (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of the
Borrower or any of its Subsidiaries now or hereafter outstanding; (b) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of stock of the Borrower or any of its Subsidiaries now or hereafter
outstanding; and (c) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any
class of stock of the Borrower or any of its Subsidiaries now or hereafter
outstanding.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, together with all rules and regulations issued thereunder.
"Standby" as applied to a Letter of Credit issued hereunder, any other
letter of credit, or any other similar instrument, means such letter of credit
or instrument is being, or is to be, used by the Borrower to support
obligations owing by the Borrower to third parties arising out of transactions
other than those involving the sale of goods.
"Stated Amount" means the amount available to be drawn by a
beneficiary under a Letter of Credit from time to time, as such amount may be
increased or reduced from time to time in accordance with the terms of such
Letter of Credit.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which more than 50% of the
total voting power of shares of stock (or equivalent ownership or controlling
interest) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or any combination thereof.
"Syndicated Loan" means a loan made by a Lender to the Borrower
pursuant to Section 2.1.(a) or (b).
"Syndicated Note" has the meaning given that term in Section 2.10.(a).
"Taxes" has the meaning given that term in Section 3.12.(a).
"Termination Date" means May 11, 2000.
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"Termination Event" means (a) a Reportable Event; (b) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA or (c) the institution of proceedings
to terminate a Plan by the PBGC under Section 4042 of ERISA, or the appointment
of a trustee to administer any Plan.
"Total Indebtedness" means, at the time of computation thereof, all of
the following of the Borrower and its Subsidiaries as determined on a
consolidated basis (without duplication): (a) all Indebtedness less (b) all
reimbursement obligations under Documentary letters of credit and acceptances
(whether or not the same have been presented for payment).
"Type" with respect to any Loan, refers to whether such Loan is a
LIBOR Loan or Base Rate Loan.
Section 1.2. General.
Unless otherwise indicated, all accounting terms, ratios and
measurements shall be interpreted or determined in accordance with GAAP on a
basis consistent with that used in the preparation of the financial statements
of the Borrower most recently delivered to the Agent and the Lenders pursuant
to the terms hereof. In the event a change in GAAP occurs after the Effective
Date and such change materially affects the ability of the Borrower to comply
with the provisions of Section 9.1. hereof, the parties hereto shall enter into
good faith negotiations with a view to amending such Section with the desired
result that determination of the Borrower's compliance with such Section taking
into account such change in GAAP will be as close as possible to the
determination of the Borrower's compliance with such Section prior to such
change. References in this Agreement to "Sections", "Articles", "Exhibits" and
"Schedules" are to sections, articles, exhibits and schedules herein and hereto
unless otherwise indicated. References in this Agreement to any document,
instrument or agreement (a) shall include all exhibits, schedules and other
attachments thereto, (b) shall include all documents, instruments or agreements
issued or executed in replacement thereof, and (c) shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as amended,
modified or supplemented from time to time and in effect at any given time.
Wherever from the context it appears appropriate, each term stated in either
the singular or plural shall include the singular and plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
the feminine and the neuter. Unless explicitly set forth to the contrary, a
reference to "Subsidiary" means a Subsidiary of the Borrower or a Subsidiary of
such Subsidiary and a reference to an "Affiliate" means a reference to an
Affiliate of the Borrower. Unless otherwise indicated, all references to time
are references to Eastern Standard Time.
ARTICLE II. CREDIT FACILITY
Section 2.1 Syndicated Loans.
(a) Facility A Loans. Subject to Section 2.14. and the other terms
and conditions hereof, during the period from the Effective Date to but
excluding the Termination Date, each Lender severally and not jointly agrees to
make Facility A Loans to the Borrower in an aggregate
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principal amount at any one time outstanding up to, but not exceeding, the
Facility A Commitment Amount times such Lender's Commitment Percentage. Subject
to the terms and conditions of this Agreement, during the period from the
Effective Date to but excluding the Termination Date, the Borrower may borrow,
repay and reborrow Facility A Loans.
(b) Facility B Loans. Subject to Section 2.14. and the other terms
and conditions hereof, during the period from the Effective Date to but
excluding the Facility B Termination Date, each Lender severally and not
jointly agrees to make Facility B Loans to the Borrower in an aggregate
principal amount at any one time outstanding up to, but not exceeding, the
Facility B Commitment Amount times such Lender's Commitment Percentage. Subject
to the terms and conditions of this Agreement, during the period from the
Effective Date to but excluding the Facility B Termination Date, the Borrower
may borrow, repay and reborrow Facility B Loans.
(c) Requests for Syndicated Loans. The Borrower shall give the
Agent notice pursuant to a Notice of Borrowing or telephonic notice of each
borrowing of Syndicated Loans. Each Notice of Borrowing shall be delivered to
the Agent before 11:00 a.m. (i) in the case of LIBOR Loans, on the date three
Business Days prior to the proposed date of such borrowing and (ii) in the case
of Base Rate Loans, on the date one Business Day prior to the proposed date of
such borrowing. Any such telephonic notice shall include all information to be
specified in a written Notice of Borrowing and shall be promptly confirmed in
writing by the Borrower pursuant to a Notice of Borrowing sent to the Agent by
telecopy within 24 hours of the giving of such telephonic notice. The Agent
will transmit by telecopy the Notice of Borrowing (or the information contained
in such Notice of Borrowing) to each Lender promptly upon receipt by the Agent.
Each Notice of Borrowing or telephonic notice of each borrowing shall be
irrevocable once given and binding on the Borrower.
(d) Disbursement of Syndicated Loan Proceeds. No later than 12:00
noon on the date specified in the Notice of Borrowing, each Lender will make
available for the account of its applicable Lending Office to the Agent at the
Principal Office, in immediately available funds, the proceeds of the
Syndicated Loan to be made by such Lender using the wiring instructions for the
Agent set forth on Annex I or as otherwise directed by the Agent. With respect
to Syndicated Loans to be made after the Effective Date, unless the Agent shall
have been notified by any Lender prior to the specified date of borrowing that
such Lender does not intend to make available to the Agent the Syndicated Loan
to be made by such Lender on such date, the Agent may assume that such Lender
will make the proceeds of such Syndicated Loan available to the Agent on the
date of the requested borrowing as set forth in the Notice of Borrowing and the
Agent may, in reliance upon such assumption (but shall not be obligated to),
make available to the Borrower the amount of such Syndicated Loan to be
provided by such Lender. Provided that the applicable conditions set forth in
Article V. for such borrowing are fulfilled, the Agent will make the proceeds
of such borrowing available to the Borrower at the account specified by the
Borrower in such Notice of Borrowing.
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Section 2.2. Bid Rate Loans.
(a) Bid Rate Loans. In addition to borrowings of Syndicated Loans,
at any time during the period from the Effective Date to but excluding the
Termination Date the Borrower may, as set forth in this Section, request the
Lenders to make offers to make Bid Rate Loans to the Borrower in Dollars. The
Lenders 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.
(b) Requests for Bid Rate Loans. When the Borrower wishes to
request from the Lenders offers to make Bid Rate Loans, it shall give the Agent
notice (a "Bid Rate Quote Request") so as to be received no later than 10:00
a.m. on the Business Day next preceding the date of borrowing proposed therein.
The Agent shall deliver to each Lender a copy of each Bid Rate Quote Request
promptly upon receipt thereof by the Agent. The Borrower may request offers to
make Bid Rate Loans for up to ten different Interest Periods for a separate
borrowing (a "Bid Rate Borrowing") in each Bid Rate Quote Request (for which
purpose Interest Periods in different lettered clauses of the definition of the
term "Interest Period" shall be deemed to be different Interest Periods even if
they are coterminous). Each Bid Rate Quote Request shall be substantially in
the form of Exhibit F and shall specify as to each Bid Rate Borrowing:
(i) the proposed date of such borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Rate Borrowing,
which shall not cause any of the limits specified in Section 2.14. to
be violated; and
(iii) the duration of the Interest Period applicable
thereto.
Except as otherwise provided in this subsection (b), no Bid Rate Quote Request
shall be given within three Business Days (or such other number of days as the
Borrower and the Agent, with the consent of the Requisite Lenders, may agree)
of the giving of any other Bid Rate Quote Request.
(c) Bid Rate Quotes
(i) Each Lender may submit one or more Bid Rate Quotes,
each containing an offer to make a Bid Rate Loan in response to any
Bid Rate Quote Request; provided that, if the Borrower's request under
Section 2.2.(b) specified more than one Interest Period, such Lender
may make a single submission containing one or more Bid Rate Quotes
for each such Interest Period. Each Bid Rate Quote must be submitted
to the Agent not later than 10:00 a.m. on the proposed date of
borrowing; provided that NationsBank may submit a Bid Rate Quote only
if NationsBank notifies the Borrower of the terms of the offer
contained therein not later than 9:45 a.m. on the proposed date of
such borrowing. Subject to Articles V. and X., any Bid Rate Quote so
made shall be irrevocable except with the consent of the Agent given
at the request of the Borrower.
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(ii) Each Bid Rate Quote shall be substantially in the
form of Exhibit G and shall specify:
(A) the proposed date of borrowing and the
Interest Period therefor;
(B) the principal amount of the Bid Rate Loan for
which each such offer is being made, which principal amount
shall be at least $5,000,000 (or a larger multiple of
$1,000,000); provided that the aggregate principal amount of
all Bid Rate Loans for which a Lender submits Bid Rate Quotes
(x) may be greater or less than the aggregate Commitments of
such Lender but (y) shall not exceed the principal amount of
the Bid Rate Borrowing for a particular Interest Period for
which offers were requested;
(C) the rate of interest per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) offered
for each such Bid Rate Loan (the "Bid Rate"); and
(D) the identity of the quoting Lender.
Unless otherwise agreed by the Agent and the Borrower, no Bid Rate
Quote shall contain qualifying, conditional or similar language or
propose terms other than or in addition to those set forth in the
applicable Bid Rate Quote Request and, in particular, no Bid Rate
Quote may be conditioned upon acceptance by the Borrower of all (or
some specified minimum) of the principal amount of the Bid Rate Loan
for which such Bid Rate Quote is being made.
(d) Notification by Agent. The Agent shall, as promptly as
practicable after the Bid Rate Quotes are submitted (but in any event not later
than 10:30 a.m. on the proposed date of borrowing), notify the Borrower of the
terms (i) of any Bid Rate Quote submitted by a Lender that is in accordance
with Section 2.2.(c) and (ii) of any Bid Rate Quote that amends, modifies or is
otherwise inconsistent with a previous Bid Rate Quote submitted by such Lender
with respect to the same Bid Rate Quote Request. Any such subsequent Bid Rate
Quote shall be disregarded by the Agent unless such subsequent Bid Rate Quote
is submitted solely to correct a manifest error in such former Bid Rate Quote.
The Agent's notice to the Borrower shall specify (A) the aggregate principal
amount of the Bid Rate Borrowing for which offers have been received and (B)
the principal amounts and Bid Rates so offered by each Lender (identifying the
Lender that made each Bid Rate Quote).
(e) Acceptance by Borrower.
(i) Not later than 11:00 a.m. on the proposed date of
borrowing, the Borrower shall notify the Agent of its acceptance or
nonacceptance of the offers so notified to it pursuant to Section
2.2.(d) which notice shall be in the form of Exhibit H. In the case of
acceptance, such notice shall specify the aggregate principal amount
of offers for each Interest Period that are accepted. The failure of
the Borrower to give such notice
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by such time shall constitute nonacceptance. The Agent shall promptly
notify each affected Lender. The Borrower may accept any Bid Rate
Quote in whole or in part; provided that:
(A) the aggregate principal amount of each Bid
Rate Borrowing may not exceed the applicable amount set forth
in the related Bid Rate Quote Request;
(B) the aggregate principal amount of each Bid
Rate Borrowing shall comply with the provisions of Section
3.5. but shall not cause any of the limits specified in
Section 2.14. to be violated;
(C) acceptance of offers may be made only in
ascending order of Bid Rates in each case beginning with the
lowest rate so offered; and
(D) the Borrower may not accept any offer that
fails to comply with Section 2.2.(c) or otherwise fails to
comply with the requirements of this Agreement.
(ii) If offers are made by two or more Lenders with the
same Bid Rates for a greater aggregate principal amount than the
amount in respect of which offers are accepted for the related
Interest Period, the principal amount of Bid Rate Loans in respect of
which such offers are accepted shall be allocated pro rata by the
Agent among such Lenders in proportion to the aggregate principal
amount of such offers. Determinations by the Agent of the amounts of
Bid Rate Loans shall be conclusive in the absence of manifest error.
(f) Obligation to Make Bid Rate Loans. Any Lender whose offer to
make any Bid Rate Loan has been accepted shall, not later than 1:00 p.m. on the
date specified for the making of such Loan, make the amount of such Loan
available to the Agent at its Principal Office in immediately available funds,
for account of the Borrower. 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,
in an account of the Borrower designated by the Borrower.
(g) No Effect on Commitments. Except for the purpose and to the
extent expressly stated in Section 2.11., the amount of any Bid Rate Loan made
by any Lender shall not constitute a utilization of such Lender's Commitments.
Section 2.3. Letters of Credit.
(a) Letters of Credit. Subject to Section 2.14. and the other
terms and conditions of this Agreement, the Agent, on behalf of the Lenders,
agrees to issue for the account of the Borrower during the period from and
including the Effective Date to, but excluding, the Termination Date one or
more letters of credit (each a "Letter of Credit") in such form and containing
such terms as may be requested from time to time by the Borrower and acceptable
to
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the Agent, up to a maximum aggregate Stated Amount at any one time outstanding
not to exceed the L/C Commitment Amount.
(b) Terms of Letters of Credit. At the time of issuance, the
amount, terms and conditions of each Letter of Credit, and of any drafts or
acceptances thereunder, shall be subject to approval by the Agent and the
Borrower. Notwithstanding the foregoing, in no event may (i) the initial
expiration date of any Letter of Credit be later than one year after its
issuance or (ii) the expiration date of any Letter of Credit extend beyond the
Termination Date, and any Letter of Credit containing an automatic renewal
provision shall also contain a provision pursuant to which, notwithstanding any
other provisions thereof, it shall have a final expiration date no later than
the Termination Date.
(c) Requests for Issuance of Letters of Credit. The Borrower shall
give the Agent written notice (or telephonic notice promptly confirmed in
writing) at least two Business Days prior to the requested date of issuance of
a Letter of Credit, such notice to describe in reasonable detail the proposed
terms of such Letter of Credit and the nature of the transactions or
obligations proposed to be supported by such Letter of Credit, and in any event
shall set forth with respect to such Letter of Credit (i) the proposed initial
Stated Amount, (ii) the beneficiary, (iii) whether such Letter of Credit is a
Documentary Letter of Credit or Standby Letter of Credit and (iv) the proposed
expiration date. The Borrower shall also execute and deliver such customary
letter of credit application forms as requested from time to time by the Agent.
Provided the Borrower has given the notice prescribed by this Section and
subject to Section 2.14. and the other terms and conditions of this Agreement,
including the satisfaction of any applicable conditions precedent set forth in
Article V., the Agent shall issue the requested Letter of Credit on the
requested date of issuance for the benefit of the stipulated beneficiary. The
Agent shall deliver to the Borrower a copy of each issued Letter of Credit
within a reasonable time after the date of issuance thereof. To the extent any
term of a Letter of Credit Document is inconsistent with a term of any Loan
Document, the term of the Loan Document shall control.
(d) Reimbursement Obligations. Upon receipt by the Agent from the
beneficiary of a Letter of Credit of any demand for payment under such Letter
of Credit, the Agent shall promptly notify the Borrower of the amount to be
paid by the Agent as a result of such demand and the date on which payment is
to be made by the Agent to such beneficiary in respect of such demand. The
Borrower hereby unconditionally and irrevocably agrees to pay and reimburse the
Agent for the amount of each demand for payment under such Letter of Credit at
or prior to the date on which payment is to be made by the Agent to the
beneficiary thereunder, without presentment, demand, protest or other
formalities of any kind. Upon receipt by the Agent of any payment in respect of
any Reimbursement Obligation, the Agent shall promptly pay to each Lender that
has acquired a participation therein under the second sentence of Section
2.3.(f) such Lender's Commitment Percentage of such payment.
(e) Manner of Reimbursement. Upon its receipt of a notice referred
to in the immediately preceding subsection (d), the Borrower shall advise the
Agent whether or not the Borrower intends to borrow hereunder to finance its
obligation to reimburse the Agent for the amount of the related demand for
payment and, if it does, submit a timely Notice of Borrowing as
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provided in Section 2.1.(c) in the case of the borrowing of Syndicated Loans or
a timely Bid Rate Quote Request as provided in Section 2.2.(b). If the Borrower
fails to so advise the Agent, or if the Borrower fails to reimburse the Agent
for a demand for payment under a Letter of Credit by the date of such payment,
the Agent shall give each Lender prompt notice of the amount of the demand for
payment, specifying such Lender's Commitment Percentage of the amount of the
related demand for payment.
(f) Lenders' Participation in Letters of Credit. Immediately upon
the issuance by the Agent of any Letter of Credit each Lender shall be deemed
to have irrevocably and unconditionally purchased and received from the Agent,
without recourse or warranty, an undivided interest and participation to the
extent of such Lender's Commitment Percentage of the liability of the Agent
with respect to such Letter of Credit and each Lender thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as surety,
and shall be unconditionally obligated to the Agent to pay and discharge when
due, such Lender's Commitment Percentage of the Agent's liability under such
Letter of Credit. In addition, upon the making of each payment by a Lender to
the Agent in respect of any Letter of Credit pursuant to the immediately
following subsection (g), such Lender shall, automatically and without any
further action on the part of the Agent or such Lender, acquire (i) a
participation in an amount equal to such payment in the Reimbursement
Obligation owing to the Agent by the Borrower in respect of such Letter of
Credit and (ii) a participation in a percentage equal to such Lender's
Commitment Percentage in any interest or other amounts payable by the Borrower
in respect of such Reimbursement Obligation (other than Issuing Bank Fees).
(g) Payment Obligation of Lenders. Each Lender severally agrees to
pay to the Agent on demand in immediately available funds in Dollars the amount
of such Lender's Commitment Percentage of each drawing paid by the Agent under
each Letter of Credit to the extent such amount is not reimbursed by the
Borrower pursuant to Section 2.3.(d). Each such Lender's obligation to make
such payments to the Agent under this subsection, and the Agent's right to
receive the same, shall be absolute, irrevocable and unconditional and shall
not be affected in any way by any circumstance whatsoever, including without
limitation, (i) the failure of any other Lender to make its payment under this
subsection, (ii) the financial condition of the Borrower or any other Loan
Party, (iii) the existence of any Default or Event of Default, including any
Event of Default described in Section 10.1.(e) or 10.1.(f) or (iv) the
termination of the Commitments. Each such payment to the Agent shall be made
without any offset, abatement, withholding or deduction whatsoever.
(h) Agent's Duties Regarding Letters of Credit; Unconditional
Nature of Reimbursement Obligation. In examining documents presented in
connection with drawings under Letters of Credit and making payments under such
Letters of Credit against such documents, the Agent shall use the same standard
of care as it uses in connection with examining documents presented in
connection with drawings under letters of credit in which it has not sold
participations and making payments under such letters of credit. The Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit. Neither the
Agent, any Co-Agent nor any of the Lenders shall be responsible (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effects of any
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document submitted by any party in connection with the application for and
issuance of or any drawing honored under any Letter of Credit; (ii) for failure
of the beneficiary of any Letter of Credit to comply fully with conditions in
an underlying contract required in order to entitle it to draw upon such Letter
of Credit; (iii) for errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telex, telecopy or otherwise,
whether or not they be in cipher; (iv) for errors in interpretation of
technical terms; (v) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any Letter of Credit, or
of the proceeds thereof; (vi) for the misapplication by the beneficiary of any
such Letter of Credit, or the proceeds of any drawing under such Letter of
Credit; and (vii) for any consequences arising from causes beyond the control
of the Agent, the Co-Agents or the Lenders. None of the above shall affect,
impair or prevent the vesting of any of the Agent's rights or powers hereunder.
Any action taken or omitted to be taken by the Agent under or in connection
with any Letter of Credit, if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create against the Agent any
liability to the Borrower, any other Loan Party, either Co-Agent or any Lender.
In this connection, the obligation of the Borrower to reimburse the Agent for
any drawing made under any Letter of Credit shall be absolute, unconditional
and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances whatsoever, including without limitation, the
following circumstances: (i) any lack of validity or enforceability of any
Letter of Credit Document or any term or provisions therein; (ii) any amendment
or waiver of or any consent to departure from all or any of the Letter of
Credit Documents; (iii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against the Agent, either
Co-Agent, any Lender, any beneficiary of a Letter of Credit or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or in the Letter of Credit Documents or any unrelated
transaction; (iv) any breach of contract or dispute between the Borrower, the
Agent, either Co-Agent, any Lender or any other Person; (v) any demand,
statement or any other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein or
made in connection therewith being untrue or inaccurate in any respect
whatsoever; (vi) payment by the Agent under the Letter of Credit against
presentation of a draft or certificate which does not strictly comply, but
which does substantially comply, with the terms of the Letter of Credit; and
(vii) any other act, omission to act, delay or circumstance whatsoever that
might, but for the provisions of this Section, constitute a legal or equitable
defense to or discharge of the Borrower's Reimbursement Obligations.
(i) Amendments, Etc. The issuance by the Agent of any amendment,
supplement or other modification to any Letter of Credit shall be subject to
the same conditions applicable under this Agreement to the issuance of new
Letters of Credit (including, without limitation, that the request therefor be
made through the Agent), and no such amendment, supplement or other
modification shall be issued unless either (i) the respective Letter of Credit
affected thereby would have complied with such conditions had it originally
been issued hereunder in such amended, supplemented or modified form or (ii)
the Requisite Lenders shall have consented thereto.
(j) Information to Lenders. Promptly following the end of each
calendar month in which any Letters of Credit are outstanding, the Agent shall
deliver to each Lender and the Borrower a notice describing the aggregate
amount of all Letters of Credit outstanding at the end
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of such month. Upon the request of any Lender from time to time, the Agent
shall deliver any other information reasonably requested by such Lender with
respect to each Letter of Credit then outstanding. Other than as set forth in
this subsection, the Agent shall have no duty to notify the Lenders regarding
the issuance or other matters regarding Letters of Credit issued hereunder. The
failure of the Agent to perform its requirements under this subsection shall
not relieve any Lender from its obligations under Section 2.3.(g).
(k) Effect of Letters of Credit on Commitments. Upon the issuance
by the Agent of any Letter of Credit and until such Letter of Credit shall have
expired or been terminated, the Facility A Commitment of each Lender shall be
deemed to be utilized for all purposes of this Agreement in an amount equal to
such Lender's Commitment Percentage of the Stated Amount of such Letter of
Credit plus any related Reimbursement Obligations then outstanding.
Section 2.4. Rates and Payment of Interest on Loans.
(a) Rates. The Borrower promises to pay to the Agent for account
of each Lender interest on the unpaid principal amount of each Loan made by
such Lender for the period from and including the date of the making of such
Loan to but excluding the date such Loan shall be paid in full, at the
following per annum rates:
(i) during such periods as such Loan is a Base Rate Loan,
the Base Rate (as in effect from time to time);
(ii) during such periods as such Loan is a LIBOR Loan, the
Adjusted LIBO Rate for such Loan for the Interest Period therefor plus
the Applicable Margin; and
(iii) if such Loan is a Bid Rate Loan, the Bid Rate for
such Loan for the Interest Period therefor quoted by the Lender making
such Loan in accordance with Section 2.2.
Notwithstanding the foregoing, the Borrower hereby promises to pay to the Agent
for account of each Lender interest at the applicable Post-Default Rate on any
principal amount of any Loan made by such Lender, on all Reimbursement
Obligations and on any other amount payable by the Borrower hereunder or under
the Notes held by such Lender to or for account of such Lender, which are not
be paid in full when due (whether at stated maturity, by acceleration, by
mandatory prepayment or otherwise), for the period from and including the due
date thereof to but excluding the date the same is paid in full.
(b) Payment. Accrued interest on each Loan shall be payable (i) in
the case of a Base Rate Loan, quarterly on the Quarterly Dates, (ii) in the
case of a LIBOR Loan or a Bid Rate Loan, on the last day of each Interest
Period therefor and, if such Interest Period is longer than (A) three months in
the case of a LIBOR Loan, at three-month intervals following the first day of
such Interest Period and (B) 90 days in the case of a Bid Rate Loan, on the
90th day of such Interest Period, and (iii) in the case of any Loan, upon the
payment, prepayment or Continuation thereof or the Conversion of such Loan to a
Loan of another Type (but only on the principal amount so paid, prepaid or
Converted), except that interest payable at the Post-Default Rate shall
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be payable from time to time on demand. Promptly after the determination of any
interest rate provided for herein or any change therein, the Agent shall give
notice thereof to the Lenders to which such interest is payable and to the
Borrower. All determinations by the Agent of an interest rate hereunder shall
be conclusive and binding on the Co-Agents, the Lenders and the Borrower for
all purposes, absent manifest error.
Section 2.5. Number of Interest Periods.
There may be no more than ten different Interest Periods for both
Syndicated Loans and Bid Rate Loans outstanding at the same time (for which
purpose Interest Periods described in different lettered clauses of the
definition of the term "Interest Period" shall be deemed to be different
Interest Periods even if they are coterminous).
Section 2.6. Repayment of Loans.
(a) Syndicated Loans. The Borrower shall repay the entire
outstanding principal amount of, and all accrued but unpaid interest on, (i)
all Facility B Loans on the Facility B Termination Date and (ii) all Syndicated
Loans on the Termination Date.
(b) Bid Rate Loans. The Borrower shall repay the entire
outstanding principal amount of, and all accrued but unpaid interest on, each
Bid Rate Loan on the last day of the Interest Period of such Bid Rate Loan.
Section 2.7. Prepayments.
(a) Optional. Except as otherwise provided in Section 4.4., the
Borrower may prepay any Loan at any time without premium or penalty.
(b) Mandatory. If at any time the amount of all or any of the
outstanding Obligations exceeds any limitation imposed under any subsection of
Section 2.14., the Borrower shall immediately pay to the Agent for the accounts
of the Lenders the amount of such excess. Such payment shall be applied to pay
or repay the outstanding principal amount of the Loans and any Reimbursement
Obligations pro rata in accordance with the applicable provisions of Section
3.2. If the Borrower is required to pay any outstanding LIBOR Loans or Bid Rate
Loans by reason of this Section prior to the end of the applicable Interest
Period therefor, the Borrower shall pay all amounts due under Section 4.4.
Section 2.8. Continuation.
So long as no Event of Default shall have occurred and be continuing,
the Borrower may on any Business Day, with respect to any LIBOR Loan, elect to
maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a
new Interest Period for such LIBOR Loan. Each new Interest Period selected
under this Section shall commence on the last day of the immediately preceding
Interest Period. Each selection of a new Interest Period shall be made by the
Borrower's giving of a Notice of Continuation not later than 11:00 a.m. on the
third Business Day prior to the date of any such Continuation by the Borrower
to the Agent. Promptly after
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receipt of a Notice of Continuation, the Agent shall notify each Lender by
telex or telecopy, or other similar form of transmission of the proposed
Continuation. Such notice by the Borrower of a Continuation shall be by
telephone or telecopy, confirmed in writing within 24 hours of the giving of
such notice if by telephone, in the form of a Notice of Continuation,
specifying (a) the proposed date of such Continuation, (b) the LIBOR Loan and
portion thereof subject to such Continuation and (c) the duration of the
selected Interest Period, all of which shall be specified in such manner as is
necessary to comply with all limitations on Loans outstanding hereunder. Each
Notice of Continuation shall be irrevocable by and binding on the Borrower once
given. If the Borrower shall fail to select in a timely manner a new Interest
Period for any LIBOR Loan in accordance with this Section, such Loan will
automatically, on the last day of the current Interest Period therefore,
Convert into a Base Rate Loan notwithstanding failure of the Borrower to comply
with Section 2.9.
Section 2.9. Conversion.
So long as no Event of Default shall have occurred and be continuing,
the Borrower may on any Business Day, upon the Borrower's giving of a Notice of
Conversion to the Agent, Convert all or a portion of a Loan of one Type into a
Loan of another Type. Promptly after receipt of a Notice of Conversion, the
Agent shall notify each Lender by telex or telecopy, or other similar form of
transmission of the proposed Conversion. Any Conversion of a LIBOR Loan into a
Base Rate Loan shall be made on, and only on, the last day of an Interest
Period for such LIBOR Loan. Each such Notice of Conversion shall be given not
later than 11:00 a.m. on the date one Business Day prior to the date of any
proposed Conversion into Base Rate Loans and on the third Business Day prior to
the date of any proposed Conversion into LIBOR Loans. Subject to the
restrictions specified above, each Notice of Conversion shall be by telephone
or telecopy confirmed in writing within 24 hours of the giving of such notice
if by telephone in the form of a Notice of Conversion specifying (a) the
requested date of such Conversion, (b) the Type of Loan to be Converted, (c)
the portion of such Type of Loan to be Converted, (d) the Type of Loan such
Loan is to be Converted into and (e) if such Conversion is into a LIBOR Loan,
the requested duration of the Interest Period of such Loan. Each Notice of
Conversion shall be irrevocable by and binding on the Borrower once given.
Section 2.10. Notes.
(a) Syndicated Notes. The Syndicated Loans made by each Lender
shall also be evidenced by a single promissory note of the Borrower
substantially in the form of Exhibit I-1 (each a "Syndicated Note"), dated the
date hereof, payable to the order of such Lender in a principal amount equal to
the aggregate amount of such Lender's Commitments as originally in effect and
otherwise duly completed.
(b) Bid Rate Notes. The Bid Rate Loans made by any Lender shall
also be evidenced by a single promissory note of the Borrower substantially in
the form of Exhibit I-2 (each a "Bid Rate Note"), dated the date hereof,
payable to the order of such Lender and otherwise duly completed.
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(c) Recording On Notes. The date, amount, Type, interest rate and
duration of Interest Period (if applicable) of each Loan made by each Bank to
the Borrower, and each payment made on account of the principal thereof, shall
be recorded by such Bank on its books and such entries shall be binding on the
Borrower absent manifest error. Prior to any transfer of the Note evidencing
the Loans held by it, such Bank shall endorse such times on such Note or any
allonge thereof; provided that the failure of such Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing hereunder or under such Note in
respect of the Loans to be evidenced by such Note.
Section 2.11. Voluntary Reductions of the Commitment.
The Borrower shall have the right to terminate or reduce the aggregate
unused amount of the Commitments (for which purpose use of the Commitments
shall be deemed to include the aggregate amount of Letter of Credit Liabilities
and the aggregate principal amount of all Bid Rate Loans) at any time and from
time to time without penalty or premium upon not less than three Business Days
prior written notice to the Agent of each such termination or reduction, which
notice shall specify the effective date thereof, the amount of any such
reduction, whether such reduction is of the Facility A Commitments or the
Facility B Commitments and shall be irrevocable once given and effective only
upon receipt by the Agent. The Agent will promptly transmit such notice to each
Lender. The Commitments, once terminated or reduced, may not be increased or
reinstated.
Section 2.12. Extension of Facility B Termination Date.
(a) Extensions. The Borrower may request the Agent and the Lenders
to extend the current Facility B Termination Date by successive 364-day periods
by delivering to the Agent at least 60 days but no more than 90 days prior to
the current Facility B Termination Date, a written request for an extension (an
"Extension Request"). The Agent shall forward to each Lender a copy of each
Extension Request promptly upon receipt thereof. Each Lender agrees to notify
the Agent no earlier than the date which is 30 days prior to, and in any event
by the date which is 25 days prior to, the current Facility B Termination Date
whether such Lender accepts or rejects such Extension Request. If all Lenders
notify the Agent that they accept such Extension Request, the Facility B
Termination Date shall be extended by 364 days. Subject to the provisions of
subsection (b) of this Section, if any Lender shall not have notified the Agent
on or prior to the date which is 25 days prior to the current Facility B
Termination Date that it accepts such Extension Request, the Facility B
Termination Date shall not be extended. The Agent shall promptly notify the
Borrower whether an Extension Request has been accepted or rejected as well as
which Lender or Lenders rejected (or failed to accept) an Extension Request
(each such Lender a "Rejecting Lender").
(b) Rejecting Lenders. Notwithstanding the preceding subsection
(a), within five days after notification from the Agent that an Extension
Request has been rejected (a "Notice of Rejection"), and provided that the
aggregate amount of Commitments of the Rejecting Lenders does not exceed 20% of
the aggregate amount of Commitments then outstanding, the Borrower may, with
respect to each such Rejecting Lender, demand that such Rejecting Lender, and
upon
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such demand such Rejecting Lender shall promptly, assign its respective
Commitments to another financial institution subject to and in accordance with
the provisions of Section 12.6.(d) for a purchase price equal to the aggregate
principal balance of Loans then outstanding and owing to such Rejecting Lender
plus any accrued but unpaid interest thereon and accrued but unpaid Fees owing
to such Rejecting Lender. If all Rejecting Lenders have assigned their
Commitments to other financial institutions as contemplated by the immediately
preceding sentence, then the Extension Request which was initially rejected
shall be deemed to have been granted and accordingly the Facility B Termination
Date shall be extended as requested, otherwise the Facility B Termination Date
shall not be extended. If the aggregate amount of Commitments of the Rejecting
Lenders exceeds 20% of the aggregate amount of Commitments then outstanding,
the Facility B Termination Date shall not be extended.
(c) No Obligation to Extend. The Borrower understands that this
Section has been included in this Agreement for the Borrower's convenience in
requesting extensions of the Facility B Termination Date and acknowledges that
none of the Lenders has promised (either expressly or impliedly), nor has any
obligation or commitment whatsoever, to extend the Facility B Termination Date
at any time.
Section 2.13. Commercial Paper Program.
(a) Credit Enhancement. Subject to the terms and conditions
hereof, during the period from and including the Effective Date to but
excluding the date 180 days prior to the Termination Date, the Borrower may
designate that an aggregate amount not to exceed the Commercial Paper Limit of
the Lenders' Facility A Commitments be utilized for the credit enhancement of
Commercial Paper to be issued by the Borrower during such period. Such credit
enhancement may only be by way of (i) the issuance by the Agent (and the
participation therein by the Lenders) of a Letter of Credit for the benefit of
the Paying Agent for the Commercial Paper or (ii) reservation by the Lenders of
a portion of their Facility A Commitments for the sole purpose of providing
Facility A Loans to the Borrower which the Borrower will use to pay its
obligations under its Commercial Paper. The Agent and the Lenders will provide
such credit enhancement for no more than one Commercial Paper Program at any
one time.
(b) Requests for Credit Enhancement. If the Borrower desires that
the Lenders provide credit enhancement in connection with a Commercial Paper
Program, the Borrower shall give the Agent and the Lenders written notice
thereof at least 45 days prior to the issuance of Commercial Paper under such
Commercial Paper Program. Such notice shall set forth the following: (i) the
maximum aggregate face amount of Commercial Paper issuable under such
Commercial Paper Program; (ii) the initial duration of such Commercial Paper
Program; (iii) the name and address of the Placement Agent and Paying Agent and
(iv) whether the Borrower desires credit enhancement by way of a Letter of
Credit or the Lenders' reservation of a portion of the Lenders' Facility A
Commitments. Together with such notice, the Borrower shall deliver to the Agent
copies of all Commercial Paper Documents (or the most current drafts thereof)
to be executed in connection with such Commercial Paper Program. The Agent
shall deliver to each Lender a copy of such Commercial Paper Documents upon
request.
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(c) Authorization to Issue Commercial Paper. Subject to the terms
and conditions hereof, upon satisfaction of the applicable conditions contained
in Article V. in connection with a Commercial Paper Program, the Agent and the
Lenders agree (i) that the Borrower may issue Commercial Paper under such
Commercial Paper Program and (ii) to provide the type of credit enhancement
requested by the Borrower in the notice delivered pursuant to the immediately
preceding subsection (b).
(d) Effect on Commitments. The reservation by the Lenders of a
portion of their Facility A Commitments to provide credit enhancement for a
Commercial Paper Program shall for all purposes of this Agreement, including
without limitation Section 2.14., be deemed a utilization of such Facility A
Commitments to the extent of such reservation. If the Lenders provide credit
enhancement for a Commercial Paper Program by reservation of a portion of their
Facility A Commitments, then the Borrower may only use the proceeds of Facility
A Loans advanced under such reserved portion of the Facility A Commitments for
the purpose of paying its obligations under Commercial Paper.
Section 2.14. Amount Limitations.
Notwithstanding any other term of this Agreement or any other Loan
Document, at no time may:
(a) The aggregate principal amount of all outstanding Facility A
Loans, together with the aggregate amount of all Letter of Credit Liabilities
exceed the aggregate amount of the Facility A Commitments as in effect from
time to time; or
(b) The aggregate face amount of outstanding Commercial Paper the
credit of which has been enhanced by the Lenders' reservation of a portion of
their Facility A Commitments, together with aggregate principal amount of
Facility A Loans the proceeds of which were used to satisfy the Borrower's
obligations under Commercial Paper so enhanced, exceed the amount so reserved;
or
(c) The aggregate principal amount of all outstanding Facility B
Loans exceed the aggregate amount of the Facility B Commitments as in effect
from time to time; or
(d) The aggregate principal amount of all outstanding Bid Rate
Loans, together with the aggregate principal amount of all outstanding
Syndicated Loans, the aggregate amount of all Letter of Credit Liabilities and
the aggregate face amount of outstanding Commercial Paper the credit of which
has been enhanced by the Lenders' reservation of a portion of their Facility A
Commitments exceed the aggregate amount of the Commitments at such time.
ARTICLE III. PAYMENTS, FEES AND OTHER GENERAL PROVISIONS
Section 3.1. Payments.
Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this
Agreement or any other Loan Document
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shall be made in Dollars, in immediately available funds, without deduction,
set-off or counterclaim, to the Agent at its Principal Office, not later than
1:00 p.m. on the date on which such payment shall become due (each such payment
made after such time on such due date to be deemed to have been made on the
next succeeding Business Day) and shall be made in accordance with the wiring
instructions set forth for the Agent on Annex I or as otherwise directed by the
Agent. Subject to Sections 3.2. and 3.3., the Agent may (but shall not be
obligated to) debit the amount of any such payment which is not made by such
time from any special or general deposit account of the Borrower with the Agent
(with prompt notice to the Borrower and the other Lenders). The Borrower shall,
at the time of making each payment under this Agreement or any Note, specify to
the Agent the amounts payable by the Borrower hereunder to which such payment
is to be applied. Each payment received by the Agent for the account of a
Lender under this Agreement or any Note shall be paid promptly to such Lender,
by wire transfer of same day funds in accordance with the wiring instructions
set forth for such Lender on Annex I, for the account of such Lender at the
applicable Lending Office of such Lender. If the due date of any payment under
this Agreement or any other Loan Document would otherwise fall on a day which
is not a Business Day such date shall be extended to the next succeeding
Business Day and interest shall be payable for the period of such extension at
the applicable rate.
Section 3.2. Pro Rata Treatment.
Except to the extent otherwise provided herein, including without
limitation under Section 10.6.: (a) each borrowing from the Lenders under
Section 2.1.(a) and (b) shall be made from the Lenders, each payment of the
Fees under Section 3.6.(a) and clauses (i) and (ii) of Section 3.6.(b) shall be
made for account of the Lenders, and each termination or reduction of the
amount of the Commitments under Section 2.11. shall be applied to the
respective Commitments of the Lenders, pro rata according to the amounts of
their respective Commitments; (b) the making, Conversion and Continuation of
Syndicated Loans of a particular Type (other than Conversions provided for by
Section 4.6.) shall be made pro rata among the Lenders according to the amounts
of their respective Commitments (in the case of making of Loans) or their
respective Loans (in the case of Conversions and Continuations of Loans) and
the then current Interest Period for each Lender's portion of each Loan of such
Type shall be coterminous; (c) the Lenders' participation in, and payment
obligations in respect of, Letters of Credit under Section 2.3., shall be pro
rata in accordance with their respective Commitments; (d) each payment or
prepayment of principal of Syndicated Loans by the Borrower shall be made for
account of the Lenders pro rata in accordance with the respective unpaid
principal amounts of the Syndicated Loans held by them, provided that if
immediately prior to giving effect to any such payment in respect of any
Syndicated Loans the outstanding principal amount of the Syndicated Loans shall
not be held by the Lenders pro rata in accordance with their respective
Commitments in effect at the time such Loans were made, then such payment shall
be applied to the Syndicated Loans in such manner as shall result, as nearly as
is practicable, in the outstanding principal amount of the Syndicated Loans
being held by the Lenders pro rata in accordance with their respective
Commitments; (e) each payment of interest on Syndicated Loans by the Borrower
shall be made for account of the Lenders pro rata in accordance with the
amounts of interest on such Loans then due and payable to the respective
Lenders and (f) each reservation by the Lenders of their Facility A
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Commitments under Section 2.13. shall be applied to their respective Facility A
Commitments pro rata according to the amounts of their respective Commitments.
Section 3.3. Sharing of Payments, Etc.
The Borrower agrees that, in addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim a Lender or the Agent may
otherwise have, each Lender and the Agent shall be entitled, at its option, to
offset balances held by it for the account of the Borrower at any of such
Lender's (or the Agent's) offices, in Dollars or in any other currency, against
any principal of, or interest on, any of such Lender's Loans hereunder (or
other Obligations owing to such Lender or the Agent hereunder) which is not
paid when due, in which case such Lender shall promptly notify the Borrower,
all other Lenders and the Agent thereof; provided, however, such Lender's
failure to give such notice shall not affect the validity of such offset. If a
Lender shall obtain payment of any principal of, or interest on, any Loan made
by it to the Borrower under this Agreement, or shall obtain payment on any
other Obligation owing by the Borrower or a Loan Party through the exercise of
any right of set-off, banker's lien or counterclaim or similar right or
otherwise or through voluntary prepayments directly to a Lender or other
payments made by the Borrower to a Lender not in accordance with the terms of
this Agreement and such payment should be distributed to the Lenders pro rata
in accordance with Section 3.2., such Lender shall promptly purchase from the
other Lenders participations in (or, if and to the extent specified by such
Lender, direct interests in) the Loans made by the other Lenders or other
Obligations owed to such other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all the
Lenders shall share the benefit of such payment (net of any reasonable expenses
which may be incurred by such Lender in obtaining or preserving such benefit)
pro rata in accordance with Section 3.2. To such end, all the Lenders shall
make appropriate adjustments among themselves (by the resale of participations
sold or otherwise) if such payment is rescinded or must otherwise be restored.
The Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans or other Obligations owed to such other Lenders made by
other Lenders may exercise all rights of set-off, banker's lien, counterclaim
or similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
Section 3.4. Several Obligations.
No Lender shall be responsible for the failure of any other Lender to
make a Loan or to perform any other obligation to be made or performed by such
other Lender hereunder, and the failure of any Lender to make a Loan or to
perform any other obligation to be made or performed by it hereunder shall not
relieve the obligation of any other Lender to make any Loan or to perform any
other obligation to be made or performed by such other Lender.
Section 3.5. Minimum Amounts.
(a) Borrowings; Conversions; Continuations and Prepayments. Each
borrowing of Syndicated Loans, each Conversion or Continuation of LIBOR Loans,
and each prepayment of
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Loans shall be in an aggregate minimum amount of $10,000,000 and integral
multiples of $1,000,000 in excess of that amount, and each borrowing of a Bid
Rate Loan shall be in a minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount.
(b) Letters of Credit. The initial Stated Amount of each Letter of
Credit shall be at least $100,000.
(c) Reductions of Commitments. Each reduction of the Commitments
under Section 2.11. shall be at least $10,000,000 and integral multiples of
$1,000,000 in excess of that amount.
Section 3.6. Fees.
(a) Facility Fees. The Borrower agrees to pay to the Agent for the
account of the Lenders (i) a facility fee on the average daily aggregate amount
of the Facility A Commitments of the Lenders (whether or not utilized) at a per
annum rate equal to the Applicable Facility Fee for the period from and
including the Agreement Date to but excluding the date the Facility A
Commitments are terminated or reduced to zero or the Termination Date and (ii)
a facility fee on the average daily aggregate amount of the Facility B
Commitments of the Lenders (whether or not utilized) at a per annum rate equal
to the Applicable Facility Fee for the period from and including the Agreement
Date to but excluding the date the Facility B Commitments are terminated or
reduced to zero or the Facility B Termination Date. Such facility fees shall be
payable in arrears on (v) each Quarterly Date, (w) with respect to the facility
fee described in the preceding clause (ii) on the Facility B Termination Date,
(x) on the Termination Date, (y) on the date the Commitments are otherwise
terminated or reduced to zero and (z) thereafter from time to time on demand of
the Agent.
(b) Letter of Credit Fees. The Borrower agrees to pay (i) to the
Agent for account of the Lenders, a letter of credit fee at a rate per annum
equal to the Applicable Margin for Facility A Loans of the daily average Stated
Amount of each Standby Letter of Credit for the period from and including the
date of issuance of such Letter of Credit to and including the date such Letter
of Credit is drawn in full, expires or is terminated; (ii) to the Agent for
account of the Lenders, a letter of credit fee in respect of each Documentary
Letter of Credit on the daily average Stated Amount of such Letter of Credit
for the period from and including the date of issuance of such Letter of Credit
to and including the date such Letter of Credit is drawn in full, expires or is
terminated at a per annum rate equal to one- tenth of one percent (0.1%) and
(iii) to the Agent for its own account and not the account of any Lender, a
facing fee in respect of each Standby Letter of Credit on the daily average
Stated Amount of such Letter of Credit for the period from and including the
date of issuance of such Letter of Credit to and including the date such Letter
of Credit is drawn in full, expires or is terminated at a per annum rate equal
to one-twentieth of one percent (0.05%). Such Fees shall be nonrefundable and
paid in arrears (w) on each Quarterly Date, (x) on the Termination Date, (y) on
the date the Commitments are otherwise terminated or reduced to zero and (z)
thereafter from time to time on demand of the Agent. The Borrower shall pay
directly to the Agent solely for the Agent's account on demand all charges,
costs and expenses in the amounts customarily charged by the Agent from time to
time in like circumstances with
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respect to the issuance of each Letter of Credit, drawings, amendments and
other transactions relating thereto.
(c) Bid Rate Loan Fees. The Borrower agrees to pay to the Agent
together with each Bid Rate Quote Request an administrative fee in the amount
agreed upon in the Fee Letter.
(d) Agent's Administrative and Other Fees. The Borrower agrees to
pay the administrative and other fees of the Agent as set forth in the Fee
Letter.
Section 3.7. Computations.
Unless otherwise expressly set forth herein, any accrued interest on
any Loan and any Fees due hereunder shall be computed on the basis of a year of
360 days and the actual number of days elapsed.
Section 3.8. Usury.
In no event shall the amount of interest due or payable on the Loans
or other Obligations exceed the maximum rate of interest allowed by Applicable
Law and, if any such payment is paid by the Borrower or received by any Lender,
then such excess sum shall be credited as a payment of principal, unless the
Borrower shall notify the respective Lender in writing that the Borrower elects
to have such excess sum returned to it forthwith. It is the express intent of
the parties hereto that the Borrower not pay and the Lenders not receive,
directly or indirectly, in any manner whatsoever, interest in excess of that
which may be lawfully paid by the Borrower under Applicable Law.
Section 3.9. Agreement Regarding Interest and Charges.
The parties hereto hereby agree and stipulate that the only charge
imposed upon the Borrower for the use of money in connection with this
Agreement is and shall be the interest specifically described in Section
2.4.(a)(i) through (iii). Notwithstanding the foregoing, the parties hereto
further agree and stipulate that all agency fees, syndication fees, facility
fees, letter of credit fees, underwriting fees, default charges, late charges,
funding or "breakage" charges, increased cost charges, attorneys' fees and
reimbursement for costs and expenses paid by the Agent or any Lender to third
parties or for damages incurred by the Agent or any Lender, are charges made to
compensate the Agent or any such Lender for underwriting or administrative
services and costs or losses performed or incurred, and to be performed or
incurred, by the Agent and the Lenders in connection with this Agreement and
shall under no circumstances be deemed to be charges for the use of money
pursuant to Official Code of Georgia Annotated Sections 7-4-2 and 7-4-18. All
charges other than charges for the use of money shall be fully earned and
nonrefundable when due.
Section 3.10. Statements of Account.
The Agent will keep books and records with respect to the amount of
Loans, Letters of Credit, accrued interest and Fees, advances, charges and
payments made pursuant to this
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Agreement and the other Loan Documents, and the entries in such books and
records shall constitute prima facie evidence of all such amounts. The failure
of the Agent to keep such books and records shall not relieve or discharge the
Borrower from any of its obligations hereunder or under and other Loan
Document.
Section 3.11. Defaulting Lenders.
(a) Generally. If for any reason any Lender (a "Defaulting
Lender") shall fail or refuse to perform any of its obligations under this
Agreement or any other Loan Document to which it is a party within the time
period specified for performance of such obligation or, if no time period is
specified, if such failure or refusal continues for a period of two Business
Days after notice from the Agent, then, in addition to the rights and remedies
that may be available to the Agent or the Borrower under this Agreement or
Applicable Law, such Defaulting Lender's right to participate in the
administration of the Loans, this Agreement and the other Loan Documents,
including without limitation, any right to vote in respect of, to consent to or
to direct any action or inaction of the Agent or either Co-Agent or to be taken
into account in the calculation of the Requisite Lenders, shall be suspended
during the pendency of such failure or refusal. If a Lender is a Defaulting
Lender because it has failed to make timely payment to the Agent of any amount
required to be paid to the Agent hereunder (without giving effect to any notice
or cure periods), in addition to other rights and remedies which the Agent or
the Borrower may have under the immediately preceding provisions or otherwise,
the Agent shall be entitled (i) to collect interest from such Defaulting Lender
on such delinquent payment for the period from the date on which the payment
was due until the date on which the payment is made at the Federal Funds Rate,
(ii) to withhold or setoff and to apply in satisfaction of the defaulted
payment and any related interest, any amounts otherwise payable to such
Defaulting Lender under this Agreement or any other Loan Document and (iii) to
bring an action or suit against such Defaulting Lender in a court of competent
jurisdiction to recover the defaulted amount and any related interest. Any
amounts received by the Agent in respect of a Defaulting Lender's Loans shall
not be paid to such Defaulting Lender and shall be held by the Agent and either
applied against the purchase price of such Loans under the following subsection
(b) or paid to such Defaulting Lender upon the Defaulting Lender's curing of
its default.
(b) Purchase of Defaulting Lender's Commitments. Any Lender who is
not a Defaulting Lender shall have the right, but not the obligation, in its
sole discretion, to acquire all of a Defaulting Lender's Commitments. If more
than one Lender exercises such right, each such Lender shall have the right to
acquire such proportion of such Defaulting Lender's Commitments as they may
mutually agree. Upon any such purchase, the Defaulting Lender's interest in the
Loans and its rights hereunder (but not its liability in respect thereof or
under the Loan Documents or this Agreement to the extent the same relate to the
period prior to the effective date of the purchase) shall terminate on the date
of purchase, and the Defaulting Lender shall promptly execute all documents
reasonably requested to surrender and transfer such interest to the purchaser
thereof, including an appropriate Assignment and Acceptance Agreement and,
notwithstanding Section 12.6.(d), shall pay to the Agent an assignment fee in
the amount of $6,000. The purchase price for the Commitments of a Defaulting
Lender shall be equal to the amount of the aggregate principal balance of the
Loans outstanding and owed by the Borrower to
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the Defaulting Lender. Prior to payment of such purchase price to a Defaulting
Lender, the Agent shall apply against such purchase price any amounts retained
by the Agent pursuant to the last sentence of the immediately preceding
subsection (a). The Defaulting Lender shall be entitled to receive amounts owed
to it by the Borrower under the Loan Documents which accrued prior to the date
of the default by the Defaulting Lender, to the extent the same are received by
the Agent from or on behalf of the Borrower. There shall be no recourse against
any Lender or the Agent for the payment of such sums except to the extent of
the receipt of payments from any other party or in respect of the Loans.
Section 3.12. Taxes.
(a) Taxes Generally. All payments by the Borrower of principal of,
and interest on, the Loans and all other Obligations shall be made free and
clear of and without deduction for any present or future excise, stamp or other
taxes, fees, duties, levies, imposts, charges, deductions, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding (i) franchise taxes, (ii) any taxes (other than withholding taxes)
that would not be imposed but for a connection between a Lender, a Co-Agent or
the Agent and the jurisdiction imposing such taxes (other than a connection
arising solely by virtue of the activities of such Lender, such Co-Agent or the
Agent pursuant to or in respect of this Agreement or any other Loan Document),
(iii) any withholding taxes payable with respect to payments hereunder or under
any other Loan Document under Applicable Law in effect on the Agreement Date,
(iv) any taxes imposed on or measured by any Lender's assets, net income,
receipts or branch profits and (v) any taxes arising after the Agreement Date
solely as a result of or attributable to a Lender changing its designated
Lending Office after the date such Lender becomes a party hereto (such
non-excluded items being collective called "Taxes"). If any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any Applicable Law, then the Borrower will:
(i) pay directly to the relevant Governmental Authority
the full amount required to be so withheld or deducted;
(ii) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such Governmental Authority; and
(ii) pay to the Agent for its account or the account of
the applicable Lender, as the case may be, such additional amount or
amounts as is necessary to ensure that the net amount actually
received by the Agent or such Lender will equal the full amount of the
Agent or such Lender would have received had no such withholding or
deduction been required.
(b) Tax Forms. Each Lender or Participant organized under the laws
of a jurisdiction other than the United States of America agrees to deliver to
the Borrower and the Agent such certificates, documents or other evidence, as
required by the Internal Revenue Code, correctly completed and executed by such
Lender or Participant establishing that such payment is (i) not subject to
United States federal withholding tax under the Internal Revenue Code because
such
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payment is either effectively connected with the conduct by such Lender or
Participant of a trade or business in the United States or totally exempt from
United States federal withholding tax by reason of the application of the
provisions of a treaty to which the United States is a party or such Lender is
otherwise exempt.
(c) Tax Indemnification. If the Borrower fails to pay any Taxes
due by the Borrower when due to the appropriate taxing authority or fails to
remit to the Agent, for its account or the account of the respective Lender, as
the case may be, the required receipts or other required documentary evidence,
the Borrower shall indemnify the Agent, the Co-Agents and the Lenders for any
incremental Taxes, interest or penalties that may become payable by the Agent,
either Co-Agent or any Lender as a result of any such failure. For purposes of
this Section, a distribution hereunder by the Agent, either Co-Agent or any
Lender to or for the account of any Lender shall be deemed a payment by the
Borrower.
Section 3.13. Foreign Subsidiaries.
Notwithstanding any provision of this Agreement or any other Loan
Document, (a) no Foreign Subsidiary shall be required to execute and deliver a
Guaranty and (b) the Borrower and its Material Subsidiaries shall only be
obligated to pledge under a Pledge Agreement the maximum amount of the total
combined voting power of all classes of stock entitled to vote of its
respective Foreign Subsidiaries that it may so pledge without such Foreign
Subsidiary being deemed to be holding United States property by virtue of 26
C.F.R. Section 1.956-2(c)(2).
ARTICLE IV. YIELD PROTECTION, ETC.
Section 4.1. Additional Costs; Capital Adequacy.
(a) Additional Costs. The Borrower shall promptly pay to the Agent
for the account of a Lender from time to time such amounts as such Lender may
determine to be necessary to compensate such Lender for any costs incurred by
such Lender that it determines are attributable to its making or maintaining of
any LIBOR Loans or its obligation to make any LIBOR Loans hereunder, any
reduction in any amount receivable by such Lender under this Agreement or any
of the other Loan Documents in respect of any of such Loans or such obligation
or the maintenance by such Lender of capital in respect of its Loans or its
Commitments (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change that:
(i) changes the basis of taxation of any amounts payable to such Lender under
this Agreement or any of the other Loan Documents in respect of any of such
Loans (other than taxes imposed on or measured by the overall net income of
such Lender or of its Lending Office for any of such Loans by the jurisdiction
in which such Lender has its principal office or such Lending Office); or (ii)
imposes or modifies any reserve, special deposit or similar requirements (other
than Regulation D of the Board of Governors of the Federal Reserve System or
other reserve requirement utilized in the determination of the Adjusted LIBO
Rate for such Loan) relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, such Lender, or any commitment of
such Lender (including, without limitation, the Commitments of such Lender
hereunder); or (iii) has or would have the effect of reducing the rate of
return on capital of such Lender to a level below that which such Lender could
have achieved
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but for such Regulatory Change (taking into consideration such Lender's
policies with respect to capital adequacy).
(b) Lender's Suspension of LIBOR Loans. Without limiting the
effect of the provisions of the immediately preceding subsection (a), if by
reason of any Regulatory Change, any Lender either (i) incurs Additional Costs
based on or measured by the excess above a specified level of the amount of a
category of deposits or other liabilities of such Lender that includes deposits
by reference to which the interest rate on LIBOR Loans is determined as
provided in this Agreement or a category of extensions of credit or other
assets of such Lender that includes LIBOR Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets that it
may hold, then, if such Lender so elects by notice to the Borrower (with a copy
to the Agent), the obligation of such Lender to make or Continue, or to Convert
Base Rate Loans into, LIBOR Loans hereunder shall be suspended until such
Regulatory Change ceases to be in effect (in which case the provisions of
Section 4.6. shall apply).
(c) Additional Costs in Respect of Letters of Credit. Without
limiting the obligations of the Borrower under the preceding subsections of
this Section (but without duplication), if as a result of any Regulatory Change
or any risk-based capital guideline or other requirement heretofore or
hereafter issued by any Governmental Authority there shall be imposed, modified
or deemed applicable any tax, reserve, special deposit, capital adequacy or
similar requirement against or with respect to or measured by reference to
Letters of Credit and the result shall be to increase the cost to the Agent of
issuing (or any Lender purchasing participations in) or maintaining its
obligation hereunder to issue (or purchase participations in) any Letter of
Credit or reduce any amount receivable by the Agent or any Lender hereunder in
respect of any Letter of Credit, then, upon demand by the Agent or such Lender,
the Borrower shall pay immediately to the Agent for its account or the account
of such Lender, as applicable, from time to time as specified by the Agent or a
Lender, such additional amounts as shall be sufficient to compensate the Agent
or such Lender for such increased costs or reductions in amount.
(d) Notification and Determination of Additional Costs. The Agent
and each Lender agrees to notify the Borrower of any event occurring after the
date of this Agreement entitling the Agent or such Lender to compensation under
any of the preceding subsections of this Section as promptly as practicable;
provided, however, that except as otherwise limited by the next sentence, the
failure of the Agent or any Lender to give such notice shall not release the
Borrower from any of its obligations hereunder. The Agent and each Lender shall
only be entitled to compensation under any of the preceding subsections for
events occurring during the one-year period ending on the date the Borrower
receives the notice described in the first sentence of this subsection. The
Agent and or such Lender agrees to furnish to the Borrower a certificate
setting forth the basis and amount of each request by the Agent or such Lender
for compensation under this Section. Determinations by the Agent or any Lender
of the effect of any Regulatory Change shall be conclusive, provided that such
determinations are made on a reasonable basis and in good faith.
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Section 4.2. Suspension of LIBOR Loans.
Anything herein to the contrary notwithstanding, if, on or prior to
the determination of any Adjusted LIBO Rate for any Interest Period:
(a) the Agent reasonably determines (which determination
shall be conclusive) that quotations of interest rates for the
relevant deposits referred to in the definition of LIBOR are not being
provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for LIBOR Loans as provided
herein or is otherwise unable to determine the Adjusted LIBO Rate, or
(b) the Agent reasonably determines (which determination
shall be conclusive) that the relevant rates of interest referred to
in the definition of LIBOR upon the basis of which the rate of
interest for LIBOR Loans for such Interest Period is to be determined
are not likely adequately to cover the cost to the Lenders of making
or maintaining LIBOR Loans for such Interest Period;
then the Agent shall give the Borrower and each Lender prompt notice thereof
and, so long as such condition remains in effect, the Lenders shall be under no
obligation to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans
or Convert Base Rate Loans into LIBOR Loans and the Borrower shall, on the last
day of each current Interest Period for each outstanding LIBOR Loan, either
prepay such Loan or Convert such Loan into a Base Rate Loan.
Section 4.3. Illegality.
Notwithstanding any other provision of this Agreement, if it becomes
unlawful for any Lender or its Lending Office to honor its obligation to make
or maintain LIBOR Loans hereunder, then such Lender shall promptly notify the
Borrower thereof (with a copy to the Agent) and such Lender's obligation to
make or Continue, or to Convert Loans of any other Type into, LIBOR Loans shall
be suspended until such time as such Lender may again make and maintain LIBOR
Loans (in which case the provisions of Section 4.6. shall be applicable).
Section 4.4. Compensation.
The Borrower shall pay to the Agent for account of each Lender, upon
the request of such Lender through the Agent, such amount or amounts as shall
be sufficient (in the reasonable opinion of such Lender) to compensate it for
any loss, cost or expense that such Lender determines is attributable to:
(a) any payment or prepayment (whether mandatory or
optional) of a LIBOR Loan or Bid Rate Loan, or Conversion of a LIBOR
Loan, made by such Lender for any reason (including, without
limitation, acceleration) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any of the applicable
conditions precedent specified in Article V. to be
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satisfied) to borrow a LIBOR Loan or Bid Rate Loan from such Lender on
the date for such borrowing, or to Convert a Base Rate Loan into a
LIBOR Loan or Continue a LIBOR Loan on the requested date of such
Conversion or Continuation,
such compensation to include in the case of a LIBOR Loan, without limitation,
an amount equal to the excess, if any, of (i) the amount of interest that
otherwise would have accrued on the principal amount so paid, prepaid or
Converted or not borrowed for the period from the date of such payment,
prepayment, Conversion or failure to borrow or Convert to the last day of the
then current Interest Period for such Loan (or, in the case of a failure to
borrow or Convert, the Interest Period for such Loan that would have commenced
on the date specified for such borrowing or Conversion) at the applicable rate
of interest for such Loan provided for herein plus such Lender's normal
administrative charges, if any, associated with such payment, prepayment,
Conversion or failure to borrow over (ii) the amount of interest that otherwise
would have accrued on such principal amount at a rate per annum equal to LIBOR
at such time for an amount comparable to such principal amount and for a
maturity comparable to such period (as reasonably determined by such Lender).
At the request of the Borrower, any Lender requesting compensation pursuant to
this Section shall provide the Borrower with a statement setting forth the
basis for requesting such compensation and the method for determining the
amount thereof. Any such statement shall be conclusive absent manifest error.
Section 4.5. Affected Lenders.
If any Lender requests compensation pursuant to Section 3.12. or
Section 4.1., or the obligation of any Lender to make LIBOR Loans or to
Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended
pursuant to Section 4.1.(b), Section 4.2. or Section 4.3., then, so long as
there does not then exist any Default or Event of Default, the Borrower may
either (a) demand that such Lender (the "Affected Lender"), and upon such
demand the Affected Lender shall promptly, assign its Commitments to another
financial institution subject to and in accordance with the provisions of
Section 12.6.(d) for a purchase price equal to the aggregate principal balance
of Loans then owing to the Affected Lender plus any accrued but unpaid interest
thereon and accrued but unpaid fees owing to the Affected Lender, or (b) pay to
the Affected Lender the aggregate principal balance of Loans then owing to the
Affected Lender plus any accrued but unpaid interest thereon and accrued but
unpaid fees owing to the Affected Lender, whereupon the Affected Lender shall
no longer be a party hereto or have any rights or obligations hereunder or
under any of the other Loan Documents and the Facility A Commitment Amount and
the Facility B Commitment Amount shall each immediately and permanently be
reduced by an amount equal to the amount of the Affected Lender's respective
Facility A Commitment and Facility B Commitment. The Agent shall reasonably
cooperate in effectuating the replacement of an Affected Lender under this
Section, but at no time shall the Agent be obligated in any way whatsoever to
initiate any such replacement. The exercise by the Borrower of its rights under
this Section shall be at the Borrower's sole cost and expenses and at no cost
or expense to the Agent, the Affected Lender or any of the other Lenders. The
terms of this Section shall not in any way limit the Borrower's obligation to
pay to any Affected Lender compensation owing to such Affected Lender pursuant
to Section 3.12. or Section 4.1.
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Section 4.6. Treatment of Affected Loans.
If the obligation of any Lender to make LIBOR Loans or to Continue, or
to Convert Base Rate Loans into, LIBOR Loans shall be suspended pursuant to
Section 4.1.(b), Section 4.2. or Section 4.3., such Lender's LIBOR Loans shall
be automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for LIBOR Loans (or, in the case of a Conversion
required by Section 4.1.(b) or 4.3., on such earlier date as such Lender may
specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 4.1., Section 4.2. or 4.3. that gave rise to such Conversion no longer
exist:
(a) to the extent that such Lender's LIBOR Loans have
been so Converted, all payments and prepayments of principal that
would otherwise be applied to such Lender's LIBOR Loans shall be
applied instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued
by such Lender as LIBOR Loans shall be made or Continued instead as
Base Rate Loans, and all Base Rate Loans of such Lender that would
otherwise be Converted into LIBOR Loans shall remain as Base Rate
Loans.
If such Lender gives notice to the Borrower with a copy to the Agent that the
circumstances specified in Section 4.1. or 4.3. that gave rise to the
Conversion of such Lender's LIBOR Loans pursuant to this Section no longer
exist (which such Lender agrees to do promptly upon such circumstances ceasing
to exist) at a time when LIBOR Loans made by other Lenders are outstanding,
such Lender's Base Rate Loans shall be automatically Converted, on the first
day(s) of the next succeeding Interest Period(s) for such outstanding LIBOR
Loans, to the extent necessary so that, after giving effect thereto, all Loans
held by the Lenders holding LIBOR Loans and by such Lender are held pro rata
(as to principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
Section 4.7. Change of Lending Office.
Each Lender agrees that it will use reasonable efforts to designate an
alternate Lending Office with respect to any of its Loans affected by the
matters or circumstances described in Sections 3.12., 4.1. or 4.3. to reduce
the liability of the Borrower or avoid the results provided thereunder, so long
as such designation is not disadvantageous to such Lender as determined by such
Lender in its sole discretion.
ARTICLE V. CONDITIONS PRECEDENT
Section 5.1. Initial Conditions Precedent.
The obligation of the Lenders to make any Loans, the obligation of the
Agent to issue any Letters of Credit and the obligation of the Lenders to
provide credit enhancement for Commercial Paper under Section 2.13. are subject
to the condition precedent that the Borrower deliver to the
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Agent each of the following, each of which shall be satisfactory in form and
substance to the Agent:
(a) Counterparts of this Agreement executed by each of the parties
hereto;
(b) Notes executed by the Borrower, payable to each Lender and
complying with the terms of Section 2.10.(a) and (b);
(c) Guaranties executed by each of the Material Subsidiaries
except those Material Subsidiaries that are not required to deliver Guaranties
under Section 3.13.;
(d) Pledge Agreements executed by the Borrower and each of the
Material Subsidiaries covering the capital stock of Foreign Subsidiaries, but
only if and to the extent required under Section 3.13.;
(e) All stock certificates evidencing all Pledged Collateral (as
defined in each Pledge Agreement);
(f) Appropriate stock transfer powers endorsed in blank by the
applicable Loan Party with respect to the stock certificates referred to in the
immediately preceding subsection (e);
(g) An opinion of King & Spalding, counsel to the Borrower and the
other Loan Parties, in substantially the form of Exhibit J-1, and an opinion of
the Borrower's General Counsel, in substantially the form of Exhibit J-2, in
each case addressed to Agent, the Co-Agents and Lenders;
(h) The articles of incorporation of the Borrower certified as of
a recent date by the Secretary of State of the State of Georgia;
(i) A Certificate of Existence issued as of a recent date by the
Secretary of State of the State of Georgia and certificates of qualification to
transact business or other comparable certificates issued by each Secretary of
State (and any state department of taxation, as applicable) of each state in
which the Borrower has any place of business (excluding sales and service
offices);
(j) A certificate of incumbency signed by the Secretary or
Assistant Secretary of the Borrower with respect to each of the officers of the
Borrower authorized to execute and deliver the Loan Documents to which the
Borrower is a party;
(k) Certified copies (certified by the Secretary or Assistant
Secretary of the Borrower) of the bylaws of the Borrower and of all corporate
or other necessary action taken by the Borrower to authorize the execution,
delivery and performance of the Loan Documents to which it is a party;
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(l) The articles of incorporation, charter or other comparable
document of each Material Subsidiary certified as of a recent date by the
Secretary of State or other comparable Governmental Authority of the
jurisdiction of formation of such Material Subsidiary;
(m) Certificates of good standing issued as of a recent date by
the Secretary of State or other comparable Governmental Authority of the
jurisdiction of formation of such Material Subsidiary and qualification to
transact business or other comparable certificates issued by each Secretary of
State (and any state department of taxation, as applicable) of each state in
which such Material Subsidiary has any place of business;
(n) A certificate of incumbency signed by the Secretary or
Assistant Secretary of each Material Subsidiary with respect to each of the
officers of such Material Subsidiary authorized to execute and deliver the Loan
Documents to which such Material Subsidiary is a party;
(o) Certified copies (certified by the Secretary or Assistant
Secretary of each Material Subsidiary) of the bylaws or other comparable
document of such Material Subsidiary and of all corporate or other necessary
action taken by such Material Subsidiary to authorize the execution, delivery
and performance of the Loan Documents to which it is a party;
(p) The Fees, if any, then due under Section 3.6.; and
(q) Such other documents, agreements and instruments as Agent may
reasonably request.
Section 5.2. Conditions Precedent to Issuance of Commercial Paper.
The obligation of the Lenders under Section 2.13. to provide credit
enhancement for a Commercial Paper Program and to give their consent to the
issuance by the Borrower of Commercial Paper under such Commercial Paper
Program is subject to the condition precedent that the Agent receive each of
the following, each of which shall be satisfactory in form and substance to the
Agent:
(a) A copy of each Commercial Paper Document, fully executed by
all of the parties thereto;
(b) An agreement among the Agent, the Borrower, the Placement
Agent and the Paying Agent regarding, among other things, the ability of the
Requisite Lenders to terminate the Borrower's right to issue Commercial Paper
under such Commercial Paper Program upon the occurrence of an Event of Default;
(c) A copy of each legal opinion delivered in connection with the
closing of such Commercial Paper Program, together with a letter from the
issuer of such opinion stating that the Agent, the Co-Agents and the Lenders
may rely on such legal opinion as if it were addressed to them;
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(d) Any amendment or other modification to this Agreement or any
other Loan Document which the Agent reasonably believes is necessary in
connection with such Commercial Paper Program;
(e) Evidence that all conditions precedent to the issuance of
Commercial Paper under the Commercial Paper Documents has been satisfied; and
(f) The placement memorandum or other offering document to
provided to purchasers and prospective purchasers of the Commercial Paper and
such other documents, instruments and agreements as the Agent may reasonably
request.
Section 5.3. Conditions Precedent to All Loans, Letters of Credit
and Issuance of Commercial Paper.
The obligation of the Lenders to make any Loans, of the Agent to issue
Letters of Credit and of the Lenders to provide credit enhancement for
Commercial Paper under Section 2.13. is subject to the further condition
precedent that, as of the date of the making of such Loan or date of issuance
of such Letter of Credit or the providing of such credit enhancement and after
giving effect thereto: (a) no Default or Event of Default shall have occurred
and be continuing, whether or not as a result thereof and (b) the
representations and warranties made or deemed made by the each Loan Party in
the Loan Documents to which it is a party, shall be true and correct on and as
of the date of the making of such Loan, date of issuance of such Letter of
Credit or providing of such credit enhancement with the same force and effect
as if made on and as of such date except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and
accurate on and as of such earlier date) and except for changes in factual
circumstances specifically and expressly permitted hereunder. Each Credit
Event shall constitute a certification by the Borrower to the effect set forth
in the preceding sentence (both as of the date of the giving of notice relating
to such Credit Event and, unless the Borrower otherwise notifies the Agent
prior to the date of such Credit Event, as of the date of the occurrence of
such Credit Event).
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties.
The Borrower represents and warrants to the Agent, each Co-Agent and
each Lender as follows:
(a) Organization; Power; Qualification. Each of the Loan Parties
is a corporation, duly organized, validly existing and in good standing under
the jurisdiction of its incorporation, has the power and authority to own or
lease its respective properties and to carry on its respective business as now
being and hereafter proposed to be conducted and is duly qualified and is in
good standing as a foreign corporation, and authorized to do business, in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization and where the failure to
be so qualified or authorized could have, in each instance, a Material Adverse
Effect.
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(b) Ownership Structure. As of the Effective Date, Schedule
6.1.(b) correctly sets forth the corporate structure and ownership interests of
all of the Borrower's Subsidiaries, including the correct legal name of each
Subsidiary, the aggregate amount of capital contributions made by the Borrower
or other Subsidiaries to such Subsidiary, the shareholders or partners, as
applicable, or other Persons holding equity interests in each Subsidiary, their
percentage equity or voting interest in such Subsidiary and whether such
Subsidiary is a Material Subsidiary. Except as set forth in such Schedule, the
outstanding stock and securities of, or other equity interests in, each such
Subsidiary are owned by the Persons indicated on such Schedule, free and clear
of all Liens, warrants, options and rights of others of any kind whatsoever.
(c) Authorization. The Borrower and each other Loan Party has the
right and power, and has taken all necessary action to authorize it, to borrow
hereunder and to execute, deliver and perform each Loan Document to which it is
a party in accordance with their respective terms and to consummate the
transactions contemplated hereby. This Agreement, the Notes and each of the
other Loan Documents to which the Borrower or any other Loan Party is a party
have been duly executed and delivered by the duly authorized officers of such
Person and each is a legal, valid and binding obligation of such Person
enforceable against such Person in accordance with its respective terms.
(d) Compliance of Loan Documents with Laws. The execution,
delivery and performance of this Agreement and the other Loan Documents to
which the Borrower or any other Loan Party is a party in accordance with their
respective terms and the borrowings hereunder do not and will not, by the
passage of time, the giving of notice, the satisfaction of any condition, or
any combination of the foregoing: (i) require any Governmental Approval or
violate any Applicable Law (including all Environmental Laws) relating to the
Borrower or any other Loan Party; (ii) conflict with, result in a breach of or
constitute a default under the articles of incorporation or the bylaws of the
Borrower or the organizational documents of any other Loan Party; (iii)
conflict with, result in a breach of or constitute a default under any
indenture, agreement or other instrument to which the Borrower or any other
Loan Party is a party or by which it or any of its properties may be bound,
which conflict, breach or default would have a Material Adverse Effect; or (iv)
result in or require the creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by the Borrower or any
other Loan Party other than in favor of the Agent for the benefit of the
Lenders.
(e) Compliance with Law; Governmental Approvals. The Borrower,
each Subsidiary and each other Loan Party is in compliance with each
Governmental Approval applicable to it and in compliance with all other
Applicable Law relating to the Borrower, a Subsidiary or such Loan Party except
for noncompliances which, and Governmental Approvals the failure to possess
which, could not, singly or in the aggregate, cause a Default or Event of
Default or have a Material Adverse Effect and in respect of which adequate
reserves have been established on the books of the Borrower, such Subsidiary or
such other Loan Party.
(f) Titles to Properties. The Borrower, its Subsidiaries and the
other Loan Parties have good, marketable and legal title to, or a valid
leasehold interest in, its respective properties,
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free and clear of all Liens except for those described on Schedule 6.1.(f) and
other Permitted Liens.
(g) Indebtedness. Schedule 6.1.(g) is a complete and correct
listing of all Indebtedness of the Borrower, its Subsidiaries and the other
Loan Parties having an outstanding principal amount in excess of $500,000 as of
March 31, 1995. During the period from March 31, 1995 to the Agreement Date,
the aggregate amount of the increase, if any, in all such Indebtedness does not
exceed $1,000,000. The Borrower, its Subsidiaries and the other Loan Parties
have performed and are in compliance with all of the terms of such Indebtedness
and all instruments and agreements relating thereto, and no default or event of
default, or event or condition which with the giving of notice, the lapse of
time, a determination of materiality, the satisfaction of any other condition
or any combination of the foregoing, would constitute such a default or event
of default, exists with respect to any such Indebtedness.
(h) Material Contracts. Neither the Borrower nor any of its
Subsidiaries has received any notice of, or is aware of, the intent of any
other party to a Material Contract to (i) terminate such Material Contract,
(ii) accelerate payment or performance thereunder or (iii) exercise its other
rights or remedies under or in respect of such Material Contract, which
exercise would have a Material Adverse Effect.
(i) Litigation. Except as set forth on Schedule 6.1.(i), there
are no actions, suits or proceedings pending (nor, to the knowledge of the
Borrower, are there any actions, suits or proceedings threatened) against or in
any other way relating adversely to or affecting the Borrower, any Subsidiary
or any other Loan Party or any of its respective property in any court or
before any arbitrator of any kind or before or by any governmental body which,
if adversely determined, could have a Material Adverse Effect, and there are no
strikes, slow downs, work stoppages or walkouts or other labor disputes in
progress or threatened relating to the Borrower, any Subsidiary or any other
Loan Party.
(j) Taxes. All federal, state and other tax returns of the
Borrower, each Subsidiary and each other Loan Party required by Applicable Law
to be filed have been duly filed, and all federal, state and other taxes,
assessments and other governmental charges or levies upon the Borrower, any
Subsidiary and each Loan Party and its properties, income, profits and assets
which are due and payable have been paid, except any such nonpayment which is
at the time permitted under Section 7.6. Except as set forth on Schedule
6.1.(j), none of the United States income tax returns of the Borrower, its
Subsidiaries or any other Loan Party are under audit. All charges, accruals
and reserves on the books of the Borrower, each Subsidiary and each other Loan
Party in respect of any taxes or other governmental charges are in accordance
with GAAP.
(k) Financial Statements. The Borrower has furnished to each
Lender copies of the audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at July 1, 1994, and the related consolidated
statements of income, retained earnings and cash flow for the Fiscal Year
ending on such date, with the opinion thereon of Arthur Andersen LLP, and the
unaudited consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at December 30, 1994, and the related consolidated statements
of income, retained earnings and
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cash flow of the Borrower and its consolidated Subsidiaries for the fiscal
quarter ending on such date. All such financial statements (including in each
case related schedules and notes) are complete and correct and present fairly,
in accordance with GAAP consistently applied throughout the periods involved,
the consolidated financial position of the Borrower and its consolidated
Subsidiaries as at their respective dates and the results of operations and the
cash flow for such periods. None of the Borrower nor any of its consolidated
Subsidiaries has on the Agreement Date any material contingent liabilities,
liabilities for taxes, unusual or long-term commitments or unrealized or
forward anticipated losses from any unfavorable commitments, except as referred
to or reflected or provided for in said financial statements. From July 1,
1994 through the Agreement Date, there has been no material adverse change in
the financial condition, operations, business or prospects of the Borrower and
its consolidated Subsidiaries. Each of the Borrower, its Subsidiaries and the
other Loan Parties is Solvent.
(l) ERISA. Each Plan, and, to the knowledge of the Borrower, each
Multiemployer Plan, is in compliance in all respects with, and has been
administered in all respects in compliance with, the applicable provisions of
ERISA, the Internal Revenue Code and any other Applicable Law except where
failure to be so in compliance or to be so administered could not result in a
Material Adverse Effect, and, on and as of the Agreement Date, no event or
condition has occurred and is continuing as to which the Borrower would be
under an obligation to furnish a report to the Lenders under Section 8.5.
(m) Absence of Defaults. Neither the Borrower, any Subsidiary nor
any other Loan Party is in default under its articles of incorporation or its
bylaws, and no event has occurred, which has not been remedied, cured or
waived: (i) which constitutes a Default or an Event of Default; or (ii) which
constitutes, or which with the passage of time, the giving of notice, the
satisfaction of any condition, or any combination of the foregoing, would
constitute, a default or event of default by the Borrower, any Subsidiary or
any other Loan Party under any judgment, decree or order to which the Borrower
or any Subsidiary or Loan Party is a party or by which the Borrower or any
Subsidiary or Loan Party or any of their respective properties may be bound,
other than defaults and events of default, the exercise of rights and remedies
in respect of which would not have a Material Adverse Effect.
(n) Environmental Laws. The Borrower, its Subsidiaries and each
other Loan Party has obtained all Governmental Approvals which are required
under Environmental Laws and is in compliance with all terms and conditions of
such Governmental Approvals except for those Governmental Approvals, the
failure to obtain or the failure with which to comply, could not have a
Material Adverse Effect. Each of the Borrower, its Subsidiaries and each other
Loan Party is also in material compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables contained in the Environmental Laws. Except for
matters which would not have a Material Adverse Effect, the Borrower is not
aware of, and has not received notice of, any past, present, or future events,
conditions, circumstances, activities, practices, incidents, actions, or plans
which, with respect to the Borrower, its Subsidiaries and each other Loan
Party, may interfere with or prevent compliance or continued compliance with
Environmental Laws, or may give rise to any common-law or legal liability, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing,
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study, or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling or the
emission, discharge, release or threatened release into the environment, of any
Hazardous Material; and there is no civil, criminal, or administrative action,
suit, demand, claim, hearing, notice, or demand letter, notice or violation,
investigation, or proceeding pending or, to the Borrower's knowledge,
threatened, against the Borrower, its Subsidiaries and each other Loan Party
relating in any way to Environmental Laws an adverse determination in respect
of which would have a Material Adverse Effect.
(o) Use of Proceeds. All proceeds of the Loans and Letters of
Credit will be used only in accordance with Section 7.8.
(p) Investment Company; Public Utility Holding Company. Neither
the Borrower, nor any Subsidiary nor any other Loan Party is (i) an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, (ii) a "holding
company" or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended, or
(iii) subject to any other Applicable Law which purports to regulate or
restrict its ability to borrow money or to consummate the transactions
contemplated by this Agreement or to perform its obligations under any Loan
Document to which it is a party.
(q) Margin Stock. Neither the Company, any Subsidiary nor any
other Loan Party is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying "margin stock" within the meaning
of Regulations G, U and X of the Board of Governors of the Federal Reserve
System, and no part of the proceeds of any extension of credit hereunder will
be used to buy or carry any such "margin stock."
(r) Affiliate Transactions. Except as permitted by Section 9.7.,
neither the Borrower, any Subsidiary nor any other Loan Party is a party to or
bound by any agreement or arrangement (whether oral or written) to which any
Affiliate of the Borrower, any Subsidiary or other Loan Party is a party.
Neither the Borrower, any Subsidiary nor any other Loan Party is a party to any
agreement or arrangement which restricts or prohibits the payment of dividends
or the repayment of inter-company loans by a Subsidiary to the Borrower.
(s) Intellectual Property. Each of the Borrower, its Subsidiaries
and the other Loan Parties owns, is licensed to use or otherwise has the legal
right to use, all patents, trademarks, trade names, copyrights, technology,
licenses, franchises, trade secrets, know-how and processes used in or
necessary for the conduct of its business as currently conducted that are
material to the condition (financial or other), business or operations of such
Person (collectively called "Intellectual Property"). All such Intellectual
Property is protected and/or duly and properly registered, filed or issued in
the appropriate office and jurisdictions for such registrations, filing or
issuances. Except as disclosed in Schedule 6.1.(s), no material claim (which
remains unsettled) has been asserted by any Person with respect to the use by
the Borrower or any of its Subsidiaries
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of any Intellectual Property, or challenging or questioning the validity or
effectiveness of any Intellectual Property. Except as disclosed in such
Schedule, to the Borrower's knowledge, the use of such Intellectual Property by
the Borrower, its Subsidiaries and the other Loan Parties, does not infringe on
the rights of any Person, except for such claims and infringements as do not,
in the aggregate, give rise to any liabilities on the part of the Borrower and
its Subsidiaries that could reasonably be expected to have a Material Adverse
Effect.
(t) Accuracy and Completeness of Information. All written
information, reports and other papers and data furnished to the Agent, either
Co-Agent or any Lender by, on behalf of, or at the direction of, the Borrower,
any Subsidiary or any other Loan Party were, at the time the same were so
furnished, complete and correct in all material respects, to the extent
necessary to give the recipient a true and accurate knowledge of the subject
matter and did not fail to state any material fact necessary in order to make
the statements contained therein not misleading, or, in the case of financial
statements, present fairly, in accordance with GAAP consistently applied
throughout the periods involved, the financial position of the Persons involved
as at the date thereof and the results of operations for such periods. In the
case of financial projections, such projections were based on assumptions that
were reasonable in light of circumstances at the time such assumptions were
made; provided, however, no representation is made with respect to the ability
of the Borrower and its Subsidiaries to achieve the results contained in such
financial projections. No fact is known to the Borrower which has had, or is
likely to have in the future (so far as the Borrower can reasonably foresee), a
Material Adverse Effect which has not been set forth in the financial
statements referred to in Section 6.1.(k) or in such information, reports or
other papers or data or otherwise disclosed in writing to the Agent and the
Lenders prior to the Effective Date.
Section 6.2. Survival of Representations and Warranties, Etc.
All statements contained in any certificate, financial statement or
other instrument delivered by or on behalf of the Borrower, any Subsidiary or
any other Loan Party to the Agent, either Co-Agent or any Lender pursuant to or
in connection with this Agreement or any of the other Loan Documents
(including, but not limited to, any such statement made in or in connection
with any amendment thereto or any statement contained in any certificate,
financial statement or other instrument delivered by or on behalf of the
Borrower prior to the Agreement Date and delivered to the Agent, either
Co-Agent or the Lender in connection with closing the transactions contemplated
hereby) shall constitute representations and warranties made by the Borrower
under this Agreement. All representations and warranties made under this
Agreement shall be deemed to be made at and as of the Agreement Date, the
Effective Date and at and as of the date of any Credit Event, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date) and except for changes in
factual circumstances specifically permitted hereunder.
ARTICLE VII. AFFIRMATIVE COVENANTS
For so long as any of the Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, the Borrower shall:
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Section 7.1. Preservation of Existence and Similar Matters.
Preserve and maintain, and cause each Subsidiary and each other Loan
Party to preserve and maintain, its respective existence (except as otherwise
permitted under Section 9.6.), rights, franchises, licenses and privileges in
the jurisdiction of its formation and qualify and remain qualified and
authorized to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification and
authorization and where the failure to be so authorized and qualified could
have a Material Adverse Effect.
Section 7.2. Compliance with Applicable Law.
Comply, and cause each Subsidiary and other Loan Party to comply, with
ERISA and all other Applicable Law, including the obtaining of all Governmental
Approvals, if the failure to comply or obtain could have a Material Adverse
Effect.
Section 7.3. Maintenance of Property.
In addition to, and not in limitation of, the requirements of any of
the other Loan Documents, (a) protect and preserve, and cause each Subsidiary
and other Loan Party to protect and preserve, all of its material properties,
including, but not limited to, all Intellectual Property, and maintain in good
repair, working order and condition all tangible properties used in the
ordinary course of its business, and (b) maintain all of its properties used or
useful in the ordinary course of its business in good working order and repair,
ordinary wear and tear excepted.
Section 7.4. Conduct of Business.
At all times carry on, and cause its Subsidiaries and the other Loan
Parties to carry on, its respective businesses in the same fields and areas as
engaged in on the Agreement Date and not enter, and prohibit its Subsidiaries
and the other Loan Parties from entering, into any field or area of business
not otherwise engaged in as of the Agreement Date or any other field or area of
business related thereto.
Section 7.5. Insurance.
In addition to, and not in limitation of, the requirements of any of
the other Loan Documents, maintain, and cause each Subsidiary and Loan Party to
maintain, insurance with financially sound and reputable insurance companies,
or maintain self-insurance programs, against such risks and in such amounts as
is customarily maintained by similar businesses or, in the case of insurance,
as may be required by Applicable Law.
Section 7.6. Payment of Taxes and Claims.
Pay or discharge, and cause each Subsidiary and other Loan Party to
pay and discharge, when due (a) all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or upon any properties
belonging to it, and (b) all lawful claims of
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materialmen, mechanics, carriers, warehousemen and landlords for labor,
materials, supplies and rentals which, if unpaid, might become a Lien on any
properties of such Person; provided, however, that this Section shall not
require the payment or discharge of any such tax, assessment, charge, levy or
claim which is being contested in good faith by appropriate proceedings which
operate to suspend the collection thereof and for which adequate reserves have
been established on the books of the Borrower, such Subsidiary or such other
Loan Party, as applicable, in accordance with GAAP.
Section 7.7. Visits and Inspections.
Permit, and cause each Subsidiary and other Loan Party to permit,
representatives or agents of any Lender or the Agent, from time to time, as
often as may be reasonably requested during normal business hours (and so long
as no Event of Default shall have occurred and be continuing, upon at least one
Business Day's prior notice and at the Agent's or such Lender's expense) to do
the following, subject to the provisions of Section 12.8.: (a) visit and
inspect all properties of the Borrower such Subsidiary or such other Loan
Party; (b) inspect and make extracts from their respective relevant books and
records, and (c) discuss with its principal officers, and its independent
accountants, business, assets, liabilities, financial conditions, results of
operations and business prospects.
Section 7.8. Use of Proceeds; Letters of Credit.
(a) Use the proceeds of Loans and the Letters of Credit only for
working capital purposes, to finance Capital Expenditures and Investments of
the type described in clause (a) of the definition of Investments and for other
general corporate purposes; provided, however, only Facility A Loans and
Letters of Credit may be used to provide credit enhancement for Commercial
Paper under Section 2.13.; and (b) not use any of such proceeds or Letters of
Credit to purchase or carry, or to reduce or retire or refinance any credit
incurred to purchase or carry, any margin stock (within the meaning of
Regulations U and X of the Board of Governors of the Federal Reserve System) or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock.
Section 7.9. Additional Material Subsidiaries.
Upon the acquisition, incorporation or other creation of a Material
Subsidiary after the Agreement Date, the Borrower shall within 30 days of such
acquisition, incorporation or creation deliver to the Agent each of the
following in form and substance satisfactory to the Agent: (a) except as
otherwise provided under Section 3.13., a Guaranty executed by such Material
Subsidiary, (b) if such Material Subsidiary is a Foreign Subsidiary, a Pledge
Agreement executed by the Borrower or other Subsidiary owning the capital stock
of such Material Subsidiary if and to the extent required under Section 3.13.,
together with such capital stock and (c) the items that would have been
delivered under Sections 5.1.(g), (l) through (o) and (q) if such Material
Subsidiary had been one on the Agreement Date.
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Section 7.10. Environmental Matters.
Comply, and cause all of its Subsidiaries to comply, with all
Environmental Laws except to the extent that the failure of the Borrower and
its Subsidiaries to comply with any such Environmental Law would not have a
Material Adverse Effect. If the Borrower, any Subsidiary or any other Loan
Party shall (a) receive notice that any violation of any Environmental Law may
have been committed or is about to be committed by such Person, (b) receive
notice that any administrative or judicial complaint or order has been filed or
is about to be filed against the Borrower, any Subsidiary or any other Loan
Party alleging violations of any Environmental Law or requiring the Borrower,
any Subsidiary or any other Loan Party to take any action in connection with
the release of Hazardous Materials or (c) receive any notice from a
Governmental Authority or private party alleging that the Borrower, any
Subsidiary or any other Loan Party may be liable or responsible for costs
associated with a response to or cleanup of a release of a Hazardous Materials
or any damages caused thereby, and the events or circumstances relating to,
described in or resulting in the giving of such notices, individually or in the
aggregate, could have a Material Adverse Effect, the Borrower shall provide the
Agent with a copy of such notice within 30 days after the receipt thereof by
the Borrower, such Subsidiary or such Loan Party. The Borrower and the
Subsidiaries shall promptly take all actions reasonably necessary to prevent
the imposition of any Liens on any of their respective properties arising out
of or related to any Environmental Laws.
ARTICLE VIII. INFORMATION
For so long as any of the Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, the Borrower shall furnish to each
Lender at its Lending Office (or to only the Agent if so provided below):
Section 8.1. Quarterly Financial Statements.
As soon as available and in any event within 45 days after the end of
the first three fiscal quarters of each Fiscal Year of the Borrower, (a)
consolidated statements of income, retained earnings and cash flow of the
Borrower and its consolidated Subsidiaries for such period and for the period
from the beginning of the respective fiscal year to the end of such period, and
the related consolidated balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such period, setting forth in each case in
comparative form the corresponding consolidated figures for the corresponding
period in the preceding Fiscal Year, accompanied by a certificate of the chief
financial officer or treasurer of the Borrower, which certificate shall state
that said consolidated financial statements fairly present the consolidated
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries in accordance with GAAP, as at the end of, and for,
such period (subject to normal year-end audit adjustments and (b) an unaudited
balance sheet as at the end of such period and income statement for such period
for each Material Subsidiary.
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Section 8.2. Year-End Statements.
As soon as available and in any event within 90 days after the end of
each Fiscal Year of the Borrower, (a) consolidated statements of income,
retained earnings and cash flow of the Borrower and its consolidated
Subsidiaries for such Fiscal Year and the related consolidated balance sheets
of the Borrower and its consolidated Subsidiaries as at the end of such Fiscal
Year, setting forth in each case in comparative form the corresponding
consolidated figures for the preceding Fiscal Year, and accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated financial
statements fairly present the consolidated financial condition and results of
operations of the Borrower and its consolidated Subsidiaries as at the end of,
and for, such Fiscal Year in accordance with GAAP, and a certificate of such
accountants stating that, in making the examination necessary for their
opinion, they obtained no knowledge, except as specifically stated, of any
Default or Event of Default and (b) an unaudited balance sheet as at the end of
such period and income statement for such period for each Material Subsidiary.
Section 8.3. Compliance Certificate.
At the time the financial statements are furnished pursuant to
Sections 8.1. and 8.2., a certificate executed by the Borrower's treasurer or
chief financial officer (a) setting forth in reasonable detail the calculations
required to establish whether or not the Borrower, and when appropriate its
consolidated Subsidiaries, were in compliance with the covenants contained in
Sections 9.1., 9.2., 9.3., 9.5. and 9.6. as of the end of the applicable fiscal
quarter or Fiscal Year; (b) the Consolidated Funded Debt/EBITDA Ratio for the
Four-Quarter Period ending as of the date of such financial statements and the
calculations of such ratio in reasonable detail and (c) stating that no Default
or Event of Default has occurred and is continuing, or, if such is not the
case, specifying such Default or Event of Default and its nature, when it
occurred and the steps being taken or proposed to be taken by the Borrower with
respect to these.
Section 8.4. Notice of Litigation and Other Matters.
Prompt notice of:
(a) to the extent the Borrower is aware of the same, the
commencement of any proceeding or investigation by or before any Governmental
Authority and any action or proceeding in any court or other tribunal or before
any arbitrator against or in any other way relating adversely to, or adversely
affecting, the Borrower, any Subsidiary or any other Loan Party or any of their
respective properties, assets or businesses which, if determined or resolved
adversely to such Person, could have a Material Adverse Effect;
(b) any change in the President, Chief Financial Officer or Chief
Executive Officer of the Borrower, any Material Subsidiary or any other Loan
Party or of the Chief Technical Officer of the Borrower and any change in the
business, assets, liabilities, financial condition, results of operations or
business prospects of the Borrower, any Subsidiary or any other Loan Party
which has had or may have a Material Adverse Effect;
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(c) the occurrence of any Default or Event of Default;
(d) any order, judgment or decree in excess of $10,000,000 having
been entered against the Borrower, any Subsidiary or any other Loan Party or
any of their respective properties or assets;
(e) the acquisition, incorporation or other creation of any
Subsidiary, the purpose for such Subsidiary and the nature of the assets and
liabilities thereof;
(f) the proposed sale, transfer or other disposition of any
material assets of the Borrower, any Subsidiary or any other Loan Party to any
other Subsidiary, Affiliate or other Person; and
(g) any strikes, slow downs, work stoppages or walkouts or other
labor disputes in progress or threatened relating to the Borrower, any
Subsidiary or any other Loan Party.
Section 8.5. ERISA.
To the Agent as soon as possible, and in any event within 10 Business
Days after the Borrower knows that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan has occurred or exists, a
statement signed by the chief financial officer of the Borrower setting forth
details respecting such event or condition and the action, if any, that the
Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by the
Borrower or an ERISA Affiliate with respect to such event or condition):
(a) any reportable event, as defined in Section 4043(b) of ERISA
and the regulations issued thereunder, with respect to a Plan, as to which PBGC
has not 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 that a
failure to meet the minimum funding standard of Section 412 of the Internal
Revenue Code or Section 302 of ERISA, including, without limitation, the
failure to make on or before its due date a required installment under Section
412(m) of the Internal Revenue Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in accordance with
Section 412(d) of the Internal Revenue Code); and any request for a waiver
under Section 412(d) of the Internal Revenue Code for any Plan;
(b) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by the Borrower or an ERISA
Affiliate to terminate any Plan under Section 4041(c) of ERISA;
(c) the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice
from a Multiemployer Plan that such action has been taken by PBGC with respect
to such Multiemployer Plan;
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(d) the complete or partial withdrawal from a Multiemployer Plan
by the Borrower or any ERISA Affiliate that results in liability under Section
4201 or 4204 of ERISA (including the obligation to satisfy secondary liability
as a result of a purchaser default) or the receipt by the Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
(e) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within 30 days; and
(f) the adoption of an amendment to any Plan that, pursuant to
Section 401 (a)(29) of the Internal Revenue Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such Plan is a
part if the Borrower or an ERISA Affiliate fails to timely provide security to
the Plan in accordance with the provisions of said Sections.
The Borrower shall establish, maintain and operate all Plans to comply
in all material respects with the provisions of ERISA, Internal Revenue Code,
and all other Applicable Laws, and the regulations and interpretations
thereunder other than to the extent that Borrower is in good faith contesting
by appropriate proceedings the validity or implication of any such provision,
law, rule, regulation or interpretation.
Section 8.6. Copies of Other Reports.
(a) Promptly upon receipt thereof, a copy of any management report
submitted to the Borrower by its independent public accountants in connection
with the review of the Borrower's financial statements;
(b) Promptly upon their becoming available, copies of all
financial statements or other financial information, all registration
statements and other periodic or special reports, if any, which the Borrower
shall file with the Securities and Exchange Commission (or any Governmental
Authority substituted therefor) or any national securities exchange other than
(i) any registration statement on Form S-8 (or its equivalent) filed under the
Securities Act and (ii) any supplemental listing application filed with any
securities exchange; and
(c) Promptly upon the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and proxy
statements so mailed.
Section 8.7. Other Information.
From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the business, assets, liabilities, financial condition, results of operations
or business prospects of the Borrower, its Subsidiaries and the other Loan
Parties as any Lender or the Agent may reasonably request. The rights of the
Lenders and the Agent under this Section are in addition to and not in
limitation of their rights under any other provision of this Agreement or any
of the other Loan Documents.
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ARTICLE IX. NEGATIVE COVENANTS
For so long as any of the Obligations remains outstanding, unpaid or
unperformed, or this Agreement is in effect, the Borrower shall not, directly
or indirectly:
Section 9.1. Financial Covenants.
Permit at any time:
(a) Maximum Leverage Ratio. The ratio of (i) Total Indebtedness
at such time to (ii) Consolidated EBITDA for the Four-Quarter Period ending on
the date of determination to exceed 3.00 to 1.00.
(b) Minimum Fixed Charge Coverage Ratio. The ratio of (i) (A)
Consolidated EBITDA for the Four-Quarter Period ending on the date of
determination plus (B) Consolidated Operating Lease Expense for such
Four-Quarter Period minus (C) all Capital Expenditures made during such
Four-Quarter Period to (ii) (A) Consolidated Interest Expense for such
Four-Quarter Period plus (B) dividends declared by the Borrower (whether or not
paid) during such Four-Quarter Period plus (C) Consolidated Operating Lease
Expense for such Four-Quarter Period plus (D) Consolidated Current Maturities
for the Four-Quarter Period beginning on the date of determination, to be less
than the applicable ratio set forth below:
<TABLE>
<CAPTION>
Four-Quarter Period ending Minimum Fixed Charge
-------------------------- --------------------
during Fiscal Year Coverage Ratio
------------------ --------------
<S> <C>
1995 2.00 to 1.00
1996 2.50 to 1.00
1997 and thereafter 3.00 to 1.00
</TABLE>
Section 9.2. Indebtedness.
Create, incur, assume or suffer to exist, or permit any Subsidiary or
other Loan Party to create, incur, assume or suffer to exist, any Indebtedness
other than the following:
(a) the Obligations;
(b) Indebtedness set forth on Schedule 6.1.(g) and any extension,
renewal or replacement of such Indebtedness that is on at least as favorable
terms (adjusted for market conditions at the time of such extension, renewal or
replacement) and that does not increase the aggregate principal amount of such
Indebtedness;
(c) Indebtedness owing by (i) the Borrower to any Subsidiary in
any amount, (ii) the Material Subsidiaries to the Borrower in any amount and
(iii) Subsidiaries that are not Material Subsidiaries to the Borrower in an
aggregate outstanding amount not to exceed 10% of Consolidated Tangible Net
Worth at any time; provided, however, any Indebtedness in an
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aggregate amount in excess of $5,000,000 owing by a Subsidiary that is not a
Material Subsidiary to the Borrower or any Material Subsidiary that is not a
Foreign Corporation shall be evidenced by a promissory note which must be
pledged to the Agent as security for the obligations of the Borrower or such
Material Subsidiary under the Loan Documents to which it is a party;
(d) Indebtedness in respect of Commercial Paper issued by the
Borrower under a Commercial Paper Program for which the Agent and Lenders are
providing credit enhancement as contemplated by Section 2.13.;
(e) Indebtedness incurred as a result of endorsement of negotiable
instruments for deposit or collection in the ordinary course of business;
(f) Other Indebtedness of the Borrower and its Subsidiaries
(including any Subsidiary that is acquired by (or merged or consolidated into)
the Borrower or a Subsidiary after the Agreement Date) in an aggregate amount
not to exceed $200,000,000 at any time outstanding; provided, however, that:
(A) The incurrence of any such Indebtedness would not
result in a violation of any term of this Agreement or any other Loan
Document, including without limitation, Section 9.1. hereof, or
otherwise result in a Default or Event of Default;
(B) Such other Indebtedness (including Indebtedness in
respect of Standby letters of credit) of the Borrower and its Material
Subsidiaries shall not exceed $175,000,000 in the aggregate at any one
time outstanding and shall be pari passu in right of repayment with
the Obligations;
(C) Such other Indebtedness of Subsidiaries that are not
Material Subsidiaries shall not exceed $50,000,000 in the aggregate at
any one time outstanding; and
(D) Such other Indebtedness (1) secured by Purchase Money
Liens, (2) constituting Capitalized Lease Obligations and (3) assumed
by the Borrower or any Subsidiary in connection with any transaction
of merger or consolidation with any Person or in connection with the
acquisition by the Borrower or a Subsidiary of all or substantially
all of the assets constituting the business or a division or operating
unit of a Person and which such assumed Indebtedness is secured by a
Lien on assets acquired in connection with such merger, consolidation
or acquisition, shall not exceed $50,000,000 in the aggregate at any
one time outstanding.
Section 9.3. Investments; Acquisitions.
(i) Acquire or purchase, or permit any Subsidiary to acquire or
purchase, all or substantially all of the assets constituting the business or a
division or operating unit of any Person or (ii) acquire, make or purchase, or
permit any Subsidiary to acquire, make or purchase, any Investment or (iii)
permit any Investment of the Borrower or any Subsidiary to be outstanding on
and after the Agreement Date other than the following:
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(a) Investments in Subsidiaries in existence on the Agreement Date
and disclosed on Schedule 6.1.(b), together with any increases in such
Investments after the Agreement Date in Material Subsidiaries;
(b) Investments that constitute Indebtedness permitted under
Section 9.2.;
(c) Loans and advances to employees for moving, entertainment,
travel and other similar expenses in the ordinary course of business consistent
with past practices not to exceed $10,000,000 in the aggregate at any one time;
(d) Investments in "Eligible Investments" described in, and in
accordance with, the Borrower's Cash Investment Policy, a copy of which as in
effect on the Agreement Date is attached as Exhibit M, as such Cash Investment
Policy is amended or otherwise modified from time to time on terms not
inconsistent with the Cash Investment Policy as currently in effect;
(e) Acquisitions or purchases by the Borrower or any Material
Subsidiary of all or substantially all of the assets constituting the business
or a division or operating unit of any Person, and the making of Investments in
Material Subsidiaries which Investments are not otherwise subject to any of the
preceding subsections; provided, however, that during any Fiscal Year, (A) the
amount of cash paid, together with the fair market value of all other assets
(excluding assets of the type described in the following clause (B)) conveyed,
by the Borrower and its Material Subsidiaries in consideration for such
acquisitions, purchases and Investments shall not exceed $150,000,000 in the
aggregate and (B) the market value of all capital stock, warrants and options
to acquire capital stock, of the Borrower conveyed by the Borrower in
consideration for such acquisitions, purchases and Investments shall not exceed
$400,000,000 in the aggregate; provided, further, however, neither the Borrower
nor any Material Subsidiary shall effect any one such acquisition, purchase or
Investment (or series of related acquisitions, purchases or Investments)
without the prior written consent of the Requisite Lenders if the market value
of the capital stock, warrants and options to acquire capital stock, of the
Borrower to be conveyed by the Borrower in consideration for such acquisition,
purchase or Investment equals or exceeds $300,000,000 in the aggregate; and
(f) Acquisitions or purchases by any Subsidiary that is not a
Material Subsidiary of all or substantially all of the assets constituting the
business or a division or operating unit of any Person, and the making by the
Borrower or any Subsidiary after the Agreement Date of Investments in Persons
that are not Material Subsidiaries; provided, however, (A) the aggregate
consideration paid (excluding any Indebtedness assumed in connection with such
acquisition, purchase or Investment) for such acquisitions, purchases and
Investments and (B) the aggregate amount of increases after the Agreement Date
in Investments in such Persons that are not Material Subsidiaries existing as
of the Agreement Date, shall not exceed $100,000,000 in the aggregate during
any Fiscal Year and $300,000,000 during the term of this Agreement. If after
the Agreement Date, (x) any Person that is not a Material Subsidiary the
Investment in which is subject to the limitations of this subsection shall
become a Material Subsidiary and the Loan Documents required to be delivered
under Section 7.9. are so delivered or (y) the Borrower, at its
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election, delivers the Loan Documents that would be required to be delivered
under Section 7.9. if such Person were a Material Subsidiary, then the
Investment in, and any increase therein, such Person shall be excluded from the
limitations of this subsection.
All cash, the market value of all capital stock, warrants and options to
acquire capital stock, of the Borrower and the fair market value of all other
assets conveyed by the Borrower as consideration for any transaction of merger
or consolidation effected by the Borrower or a Subsidiary and which is
permitted under Section 9.6.(vii), shall be included in determinations of the
Borrower's compliance with the immediately preceding subsections (e) and (f).
Section 9.4. Liens; Agreements Regarding Liens; Other Matters.
(a) Create, assume, incur or permit or suffer to exist, or permit
any Subsidiary to create, assume, incur or permit or suffer to exist, any Lien
upon any of its properties, assets, income or profits of any character whether
now owned or hereafter acquired, other than Permitted Liens;
(b) Enter into or assume any agreement (other than the Loan
Documents), or permit any Subsidiary to enter into or assume any agreement
(other than the Loan Documents), prohibiting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired; or
(c) Create or otherwise cause or suffer to exist or become
effective, or permit any Subsidiary to create or otherwise cause or suffer to
exist or become effective, any consensual encumbrance or restriction of any
kind on the ability of any Subsidiary to: (i) pay dividends or make any other
distribution on any of such Subsidiary's capital stock owned by the Borrower or
any Subsidiary of the Borrower; (ii) pay any Indebtedness owed to the Borrower
or any other Subsidiary; (iii) make loans or advances to the Borrower or any
other Subsidiary; or (iv) transfer any of its property or assets to the
Borrower or any other Subsidiary.
Section 9.5. Dividends and Other Restricted Payments.
Except for dividends or other distributions in respect of capital
stock payable solely in shares of such capital stock and dividends or other
distributions payable by any Subsidiary to the Borrower or any of its other
Subsidiaries, declare, make or pay, or incur any liability to declare, make or
pay, and shall not permit any Subsidiary to declare, make or pay, or to incur
any liability to declare, make or pay, any Restricted Payment if a Default or
Event of Default (a) shall have occurred and be continuing or (b) would result
after giving effect thereto.
Section 9.6. Merger, Consolidation, Sales of Assets and Other
Arrangements.
(a) Enter into, or permit any Subsidiary or other Loan Party to enter
into, any transaction of merger or consolidation with any Person; (b)
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution) or permit any Subsidiary or other Loan Party to do any of the
foregoing; or (c) convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any part of its
business or assets, including capital stock of or
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other equity interests in any of its Subsidiaries, whether now owned or
hereafter acquired or permit any Subsidiary or other Loan Party to do any of
the foregoing; provided, however, that:
(i) Subsidiaries of the Borrower may merge or consolidate
with the Borrower and with other Subsidiaries of the Borrower;
(ii) a Subsidiary may sell, transfer or dispose of its
assets to the Borrower or another Subsidiary of the Borrower;
(iii) the Borrower, its Subsidiaries and the other Loan
Parties may sell inventory in the ordinary course of business;
(iv) the Borrower may sell its accounts receivable on a
non-recourse basis in an aggregate amount not to exceed $100,000,000
at any time;
(v) the Borrower and its Subsidiaries may, during any
Fiscal Year, sell, transfer or otherwise dispose of assets (excluding
the capital stock of any Subsidiary) having an aggregate book value in
an amount not to exceed 10% of the total book value of the assets of
the Borrower and its Subsidiaries taken as a whole;
(vi) the Borrower and its Subsidiaries may, during any
Fiscal Year, enter into sale and leaseback transactions covering fixed
or capital property which collectively cover property having an
aggregate fair market value, as determined for each item of property
at the time such property became the subject of such a transaction,
not in excess of 10% of the total book value of the assets of the
Borrower and its Subsidiaries taken as a whole; and
(vii) the Borrower or any Subsidiary may merge or
consolidate with any other corporation, provided that (A) the Borrower
or such Subsidiary shall be the continuing or surviving corporation or
the surviving corporation becomes thereby a wholly-owned Subsidiary
and (B) if instead of the Borrower or such Subsidiary merging or
consolidating with such corporation, the Borrower were to acquire all
of the issued and outstanding capital stock of such corporation, such
acquisition would be permitted under Section 9.3., and in each case,
immediately prior to such merger or consolidation and immediately
after such merger or consolidation and after giving effect thereto, no
Default or Event of Default is or would be in existence.
Section 9.7. Transactions with Affiliates.
Permit to exist or enter into, and will not permit any of its
Subsidiaries or any of the other Loan Parties to enter into or permit to exist,
any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate except
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of the Borrower or any of its Subsidiaries and
upon fair and reasonable terms which terms, upon written request will be
disclosed to the Agent and the Lenders, and are no less favorable to the
Borrower,
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such Subsidiary or other Loan Party than would be obtained in a comparable
arm's length transaction with a Person that is not an Affiliate.
Section 9.8. Hedging Obligations
Create, incur, assume or suffer to exist, or permit any Subsidiary or
other Loan Party to create, incur, assume or suffer to exist, any Hedging
Obligations other than the following:
(a) Hedging Obligations under Interest Rate Agreements for
notional amounts not to exceed $300,000,000 in the aggregate at any one time;
(b) Hedging Obligations under foreign currency exchange
agreements, forward contracts and other foreign currency transactions that are
intended to hedge identifiable foreign currency exposures consistent with the
practice of the Borrower and its Subsidiaries as of the Agreement Date; and
(c) Hedging Obligations under commodity swap or option
arrangements or other forward commodities contracts for notional amounts not to
exceed $50,000,000 in the aggregate at any one time.
ARTICLE X. DEFAULT
Section 10.1. Events of Default.
Each of the following shall constitute an Event of Default, whatever
the reason for such event and whether it shall be voluntary or involuntary or
be effected by operation of Applicable Law or pursuant to any judgment or order
of any Governmental Authority:
(a) Default in Payment. (i) The Borrower shall fail to pay when
due (whether upon demand, at maturity, by reason of acceleration or otherwise)
the principal of any of the Loans, or any Reimbursement Obligation or (ii) the
Borrower shall fail to pay when due any interest on any of the Loans or any of
the other payment Obligations owing by the Borrower under this Agreement or any
other Loan Document and such failure shall continue for a period of 5 days or
(iii) any other Loan Party shall fail to pay when due any payment Obligation
owing by such Loan Party under any Loan Document to which it is a party.
(b) Default in Performance. (i) The Borrower shall fail to
perform or observe any term, covenant, condition or agreement contained in
Article IX. or Section 8.4.(c) or (ii) the Borrower or any other Loan Party
shall fail to perform or observe any term, covenant, condition or agreement
contained in this Agreement or any other Loan Document to which it is a party
and not otherwise mentioned in this Section and such failure referred to in
this clause (ii) shall continue for a period of 30 days after the earlier of
(x) the date upon which the Borrower or such Loan Party obtains knowledge of
such failure or (y) the date upon which the Borrower has received written
notice of such failure from the Agent.
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(c) Misrepresentations. Any written statement, representation or
warranty made or deemed made by or on behalf of the Borrower or any other Loan
Party under this Agreement or under any other Loan Document, or any amendment
hereto or thereto, or in any other writing or statement at any time furnished
or made or deemed made by or on behalf of the Borrower or any other Loan Party,
shall at any time prove to have been incorrect or misleading in any material
respect when furnished or made.
(d) Indebtedness Cross-Default.
(i) The Borrower or any other Loan Party shall fail to
pay when due and payable the principal of, or interest on, any
Indebtedness other than the Loans having an aggregate outstanding
principal amount of $10,000,000 or more and such failure shall
continue beyond any applicable cure periods; or
(ii) the maturity of any such Indebtedness shall have (x)
been accelerated in accordance with the provisions of any indenture,
contract or instrument evidencing, providing for the creation of or
otherwise concerning such Indebtedness or (y) been required to be
prepaid prior to the stated maturity thereof; or
(iii) any other event shall have occurred and be continuing
beyond any applicable cure periods which, would permit any holder or
holders of such Indebtedness, any trustee or agent acting on behalf of
such holder or holders or any other Person, to accelerate the maturity
of any such Indebtedness or require any such Indebtedness to be
prepaid prior to its stated maturity.
(e) Voluntary Bankruptcy Proceeding. The Borrower, any Subsidiary
or any other Loan Party shall: (i) commence a voluntary case under the
Bankruptcy Code of 1978, as amended or other federal bankruptcy laws (as now or
hereafter in effect); (ii) file a petition seeking to take advantage of any
other Applicable Laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts; (iii)
consent to, or fail to contest in a timely and appropriate manner, any petition
filed against it in an involuntary case under such bankruptcy laws or other
Applicable Laws or consent to any proceeding or action described in the
immediately following subsection; (iv) apply for or consent to, or fail to
contest in a timely and appropriate manner, the appointment of, or the taking
of possession by, a receiver, custodian, trustee, or liquidator of itself or of
a substantial part of its property, domestic or foreign; (v) admit in writing
its inability to pay its debts as they become due; (vi) make a general
assignment for the benefit of creditors; (vii) make a conveyance fraudulent as
to creditors under any Applicable Law; or (viii) take any corporate or
partnership action for the purpose of effecting any of the foregoing.
(f) Involuntary Bankruptcy Proceeding. A case or other proceeding
shall be commenced against the Borrower, any Subsidiary or any other Loan
Party, in any court of competent jurisdiction seeking: (i) relief under the
Bankruptcy Code of 1978, as amended or other federal bankruptcy laws (as now or
hereafter in effect) or under any other Applicable Laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding-up, or
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composition or adjustment of debts; or (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of such Person, or of all or any
substantial part of the assets, domestic or foreign, of such Person, and such
case or proceeding shall continue undismissed or unstayed for a period of sixty
consecutive calendar days, or an order granting the relief requested in such
case or proceeding against the Borrower, such Subsidiary or Loan Party
(including, but not limited to, an order for relief under such Bankruptcy Code
or such other federal bankruptcy laws) shall be entered.
(g) Litigation. The Borrower or any other Loan Party shall
disavow, revoke or terminate any Loan Document to which it is a party or shall
otherwise challenge or contest in any action, suit or proceeding in any court
or before any Governmental Authority the validity or enforceability of this
Agreement, any Note or any other Loan Document.
(h) Judgment. A judgment or order for the payment of money not
adequately covered by insurance as to which the insurance company has
acknowledged coverage in writing shall be entered against the Borrower or any
Loan Party by any court or other tribunal which exceeds, individually or
together with all other such judgments or orders entered against the Borrower
and the Loan Parties, $10,000,000 in amount (or which shall otherwise have a
Material Adverse Effect) and such judgment or order shall continue for a period
of 30 days without being stayed or dismissed through appropriate appellate
proceedings.
(i) Attachment. A warrant, writ of attachment, execution or
similar process shall be issued against any property of the Borrower or any
other Loan Party which exceeds, individually or together with all other such
warrants, writs, executions and processes, $10,000,000 in amount and such
warrant, writ, execution or process shall not be discharged, vacated, stayed or
bonded for a period of 30 days;
(j) ERISA. (i) Any Termination Event with respect to a Plan (other
than a Plan that is terminated under Section 4041(b) of ERISA) shall occur;
(ii) any Plan shall incur an "accumulated funding deficiency" (as defined in
Section 412 of the Internal Revenue Code or Section 302 of ERISA) for which a
waiver has not been obtained in accordance with the applicable provisions of
the Internal Revenue Code and ERISA and which has resulted in the imposition of
a Lien under Section 302(f) of ERISA; or (iii) the Borrower is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from the Borrower's complete or partial withdrawal
(as described in Section 4203 or 4205 of ERISA) from such Multiemployer Plan.
(k) Loan Documents. An Event of Default (as defined therein)
shall occur under any of the other Loan Documents.
(l) Change of Control. (i) If any Person (or two or more Persons
acting in concert) shall acquire "beneficial ownership" within the meaning of
Rule 13d-3 of the Securities and Exchange Act of 1934, as amended, of capital
stock or securities of the Borrower representing 20.0% or more of the aggregate
voting power of all classes of capital stock and securities of the Borrower or
(ii) during any twelve-month period (commencing both before and after the
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Agreement Date), individuals who at the beginning of such period were directors
of the Borrower shall cease for any reason (other than death or mental or
physical disability) to constitute a majority of the board of directors of the
Borrower.
(m) Suspension of Business. The cessation or substantial
curtailment of revenue producing activities of the Borrower, any Subsidiary or
any other Loan Party shall occur (whether as a result of strike, lockout, labor
dispute, embargo, condemnation, force majeure or otherwise) and continue for a
period in excess of 20 consecutive days beyond the coverage period of any
applicable business interruption insurance, and the occurrence or continuance
of which could have a Material Adverse Effect.
Section 10.2. Remedies Upon Event of Default.
Upon the occurrence of an Event of Default the following provisions
shall apply:
(a) Acceleration; Termination of Commitments.
(i) Automatic. Upon the occurrence of an Event of
Default specified in Sections 10.1.(e) or 10.1.(f), (A)(1) the
principal of, and all accrued interest on, the Loans and the Notes at
the time outstanding, (2) an amount equal to the Stated Amount of all
Letters of Credit outstanding as of the date of the occurrence of the
Event of Default and (3) all of the other Obligations of the Borrower,
including, but not limited to, the other amounts owed to the Lenders,
the Co-Agents and the Agent under this Agreement, the Notes or any of
the other Loan Documents shall become immediately and automatically
due and payable by the Borrower without presentment, demand, protest,
or other notice of any kind, all of which are expressly waived by the
Borrower and (B) the Commitments shall immediately and automatically
terminate.
(ii) Optional. If any other Event of Default shall have
occurred and be continuing, the Requisite Lenders may direct the Agent
to, and the Agent if so directed shall: (A) declare (1) the principal
of, and accrued interest on, the Loans and the Notes at the time
outstanding, (2) an amount equal to the Stated Amount of all Letters
of Credit outstanding as of the date of the occurrence of the Event of
Default and (3) all of the other Obligations, including, but not
limited to, the other amounts owed to the Lenders, the Co-Agents and
the Agent under this Agreement, the Notes or any of the other Loan
Documents to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand,
protest or other notice of any kind, all of which are expressly waived
by the Borrower and (B) terminate the Commitments.
(b) Loan Documents. The Requisite Lenders may direct the Agent
to, and, subject to the terms hereof, the Agent if so directed shall, exercise
any and all of its rights under any and all of the other Loan Documents.
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(c) Applicable Law. The Agent may, at the direction of the
Requisite Lenders, exercise all other rights and remedies it may have under any
Applicable Law.
Section 10.3. Remedies Upon Default.
Upon the occurrence of a Default specified in Sections 10.1.(e) or
10.1.(f), the Commitments shall immediately and automatically terminate. Upon
the occurrence of a Default specified in Section 10.1.(a), the Requisite
Lenders may direct the Agent to, and the Agent if so directed shall, terminate
the Commitments.
Section 10.4. Performance by Agent.
If the Borrower shall fail to perform any covenant, duty or agreement
contained in any of the Loan Documents, the Agent may perform or attempt to
perform such covenant, duty or agreement on behalf of the Borrower after the
expiration of any cure or grace periods set forth herein. In such event, the
Borrower shall, at the request of the Agent, promptly pay any amount reasonably
expended by the Agent in such performance or attempted performance to the
Agent, together with interest thereon at the applicable Post-Default Rate from
the date of such expenditure until paid. Notwithstanding the foregoing,
neither the Agent, either Co-Agent nor any Lender shall have any liability or
responsibility whatsoever for the performance of any obligation of the
Borrower under this Agreement or any other Loan Document.
Section 10.5. Rights Cumulative.
The rights and remedies of the Agent, the Co-Agents and the Lenders
under this Agreement and each of the other Loan Documents shall be cumulative
and not exclusive of any rights or remedies which any of them may otherwise
have under Applicable Law. In exercising their respective rights and remedies
the Agent, the Co-Agents and the Lenders may be selective and no failure or
delay by the Agent or any of the Lenders in exercising any right shall operate
as a waiver of it, nor shall any single or partial exercise of any power or
right preclude its other or further exercise or the exercise of any other power
or right.
Section 10.6. Application of Proceeds After Default.
If an Event of Default shall have occurred and be continuing and the
Loans and other Obligations have been accelerated under Section 10.2. or
otherwise, all payments received by the Agent hereunder or under any other Loan
Documents shall be applied in satisfaction of the Obligations in the following
order:
(a) To Obligations then owing under Sections 3.6., 12.2. and 12.9.
to the Lenders and the Agent pro rata in accordance with the amount of such
Obligations then owing to the Agent and each Lender;
(b) To all accrued and unpaid interest on the Loans and other
Obligations pro rata in accordance with the amounts of such interest;
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(c) To all outstanding principal of the Loans and other
Obligations pro rata in accordance with the amounts of such principal; and
(d) To be held by the Agent as cash collateral as provided in any
applicable Letter of Credit Document for application to any Reimbursement
Obligations that may arise in respect of any Letters of Credit then
outstanding.
ARTICLE XI. THE AGENT
Section 11.1. Authorization and Action.
Each Lender hereby appoints and authorizes the Agent to take such
action as agent on such Lender's behalf and to exercise such powers under this
Agreement and the other Loan Documents as are specifically delegated to the
Agent by the terms and thereof, together with such powers as are reasonably
incidental thereto. The powers of attorney set forth hereinabove shall be
irrevocable and coupled with an interest. The relationship between the Agent
and the Lenders shall be that of principal and agent only and nothing herein
shall be construed to deem the Agent a trustee or fiduciary for any Lender nor
to impose on the Agent duties or obligations other than those expressly
provided for herein. At the request of a Lender, the Agent will forward to
each Lender copies or, where appropriate, originals of the documents delivered
to the Agent pursuant to this Agreement or the other Loan Documents. The Agent
will also furnish to any Lender, upon the request of such Lender, a copy of any
certificate or notice furnished to the Agent by the Borrower, any Loan Party or
any other Affiliate of the Borrower, pursuant to this Agreement or any other
Loan Document not already delivered to such Lender pursuant to the terms of
this Agreement or any such other Loan Document. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of any of the Obligations), the Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Requisite Lenders, and
such instructions shall be binding upon all Lenders and all holders of any of
the Obligations; provided, however, that, notwithstanding anything in this
Agreement to the contrary, the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement or any other Loan Document or Applicable Law. Not in limitation of
the foregoing, the Agent shall not exercise any right or remedy it or the
Lenders may have under any Loan Document upon the occurrence of a Default or an
Event of Default unless the Requisite Lenders have so directed the Agent to
exercise such right or remedy.
Section 11.2. Agent's Reliance, Etc.
Neither the Agent, nor any of its directors, officers, agents,
employees or counsel shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement, except for its
or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (a) may treat the payee of any Note as
the holder thereof until the Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent;
(b) may consult with legal counsel (including its own
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counsel or counsel for the Borrower or any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) make no warranty or
representation to any Lender or any other Person and shall not be responsible
to any Lender or any other Person for any statements, warranties or
representations made by any Person in or in connection with this Agreement or
any other Loan Document; (d) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of any of this Agreement or any other Loan Document or the
satisfaction of any conditions precedent under this Agreement or any Loan
Document on the part of the Borrower or other Persons or inspect the property,
books or records of the Borrower or any other Person; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document, any other instrument or document furnished pursuant
thereto or any Collateral covered thereby or the perfection or priority of any
Lien in favor of the Agent on behalf of the Lenders in any such Collateral; and
(f) shall incur no liability under or in respect of this Agreement or any other
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telephone or telecopy) believed by it to
be genuine and signed, sent or given by the proper party or parties.
Section 11.3. Notice of Defaults.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on Loans, Reimbursement Obligations or of Fees) unless
the Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing with reasonable specificity such Default or Event of
Default and stating that such notice is a "notice of default." If any Lender
becomes aware of any Default or Event of Default, it shall promptly send to the
Agent such a "notice of default." Further, if the Agent receives such a
"notice of default", the Agent shall give prompt notice thereof to the Lenders
(and shall give each Lender prompt notice of each such non-payment).
Section 11.4. NationsBank as Lender.
NationsBank, as a Lender, shall have the same rights and powers under
this Agreement and any other Loan Document as any other Lender and may exercise
the same as though it were not the Agent; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include NationsBank in each case
in its individual capacity. NationsBank and its affiliates may each accept
deposits from, maintain deposits or credit balances for, invest in, lend money
to, act as trustee under indentures of, serve as financial advisor to, and
generally engage in any kind of business with the Borrower, any other Loan
Party or any other Affiliate thereof as if it were any other bank and without
any duty to account therefor to the other Lenders. Further, the Agent and any
of its affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement and otherwise without having to
account for the same to the other Lenders.
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Section 11.5. Lender Credit Decision, Etc.
Each Lender expressly acknowledges and agrees that neither the Agent
nor any of its officers, directors, employees, agents, counsel,
attorneys-in-fact or other affiliates has made any representations or
warranties as to the financial condition, operations, creditworthiness,
solvency or other information concerning the business or affairs of the
Borrower, any other Loan Party, any Subsidiary or other Person to such Lender
and that no act by the Agent hereinafter taken, including any review of the
affairs of the Borrower, shall be deemed to constitute any such representation
or warranty by the Agent to any Lender. Each Lender acknowledges that it has,
independently and without reliance upon the Agent any other Lender or counsel
to the Agent, or any of their respective officers, directors, employees and
agents, and based on the financial statements of the Borrower, the Subsidiaries
or any other Affiliate thereof, and inquiries of such Persons, its independent
due diligence of the business and affairs of the Borrower, the Loan Parties,
the Subsidiaries and other Persons, its review of the Loan Documents, the legal
opinions required to be delivered to it hereunder, the advice of its own
counsel and such other documents and information as it has deemed appropriate,
made its own credit and legal analysis and decision to enter into this
Agreement and the transaction contemplated hereby. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent,
any other Lender or counsel to the Agent or any of their respective officers,
directors, employees and agents, and based on such review, advice, documents
and information as it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under the Loan Documents. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Agent hereunder, the Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of the Borrower, any other Loan Party or any other Affiliate
thereof which may come into possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or other affiliates.
Section 11.6. Indemnification of Agent.
Each Lender agrees to indemnify the Agent (to the extent not
reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so) pro rata in accordance with such Lender's respective Commitment
Percentage, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of the
Loan Documents, any transaction contemplated hereby or thereby or any action
taken or omitted by the Agent under the Loan Documents; provided, however, that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting from the Agent's gross negligence or
willful misconduct or if the Agent fails to follow the written direction of the
Requisite Lenders unless such failure is pursuant to the advice of counsel of
which the Lenders have received notice. Without limiting the generality of the
foregoing sentence, but subject to the proviso contained therein, each Lender
agrees to reimburse the Agent promptly upon demand for such Lender's ratable
share of any out-of-pocket expenses (including counsel fees of the counsel(s)
of the Agent's own choosing) incurred by the Agent in connection with the
preparation, execution, administration, or enforcement of, or legal advice
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with respect to the rights or responsibilities of the parties under, the Loan
Documents, any suit or action brought by the Agent to enforce the terms of the
Loan Documents and/or collect any Obligations, any "lender liability" suit or
claim brought against the Agent and/or the Lenders, and any claim or suit
brought against the Agent and/or the Lenders arising under any Environmental
Laws, to the extent that the Agent is not reimbursed for such expenses by the
Borrower. Such out-of-pocket expenses (including counsel fees) shall be
advanced by the Lenders on the request of the Agent notwithstanding any claim
or assertion that the Agent is not entitled to indemnification hereunder upon
receipt of an undertaking by the Agent that the Agent will reimburse the
Lenders if it is actually and finally determined by a court of competent
jurisdiction that the Agent is not so entitled to indemnification. The
agreements in this Section shall survive the payment of the Loans and all other
amounts payable hereunder or under the other Loan Documents and the termination
of this Agreement.
Section 11.7. Collateral Matters.
(a) The Agent is authorized on behalf of all of the Lenders,
without the necessity of any notice to or further consent from any Lender, from
time to time prior to an Event of Default, to take any action with respect to
any Collateral or Loan Documents which may be necessary to perfect and maintain
perfected the Liens upon the Collateral granted pursuant to any of the Loan
Documents.
(b) The Lenders hereby authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment and satisfaction
of all of the Obligations at any time arising under or in respect of this
Agreement or the Loan Documents or the transactions contemplated hereby or
thereby; or (ii) if approved, authorized or ratified in writing by all of the
Lenders hereunder. Upon request by the Agent at any time, the Lenders will
confirm in writing the Agent's authority to release particular types or items
of Collateral pursuant to this Section.
(c) The Agent shall have no obligation whatsoever to the Lenders
or to any other Person to assure that the Collateral exists or is owned by any
Loan Party or is cared for, protected or insured or that the Liens granted to
the Agent herein or pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the rights,
authorities and powers granted or available to the Agent in this Section or in
any of the Loan Documents, it being understood and agreed that in respect of
the Collateral, or any act, omission or event related thereto, the Agent may
act in any manner it may deem appropriate, in its sole discretion, given the
Agent's own interest in the Collateral as one of the Lenders and that the Agent
shall have no duty or liability whatsoever to the Lenders, except for its gross
negligence or willful misconduct.
Section 11.8. Successor Agent.
The Agent may resign at any time as Agent under the Loan Documents by
giving written notice thereof to the Lenders and the Borrower. In the event of
a material breach of its duties hereunder, the Agent may be removed as Agent
under the Loan Documents at any time by the
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Requisite Lenders and the Borrower upon 30 day's prior notice. Upon any such
resignation or removal, the Requisite Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders, and shall have accepted such appointment, within thirty days
after the resigning Agent's giving of notice of resignation or the Requisite
Lenders' removal of the resigning Agent, then the resigning or removed Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall be a
Lender, if any Lender shall be willing to serve, and otherwise shall be a
commercial bank having combined capital and surplus of at least
$10,000,000,000. 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 resigning
Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. After any resigning Agent's resignation
or removal hereunder as Agent, the provisions of this Article XI. shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Agent under the Loan Documents.
ARTICLE XII. MISCELLANEOUS
Section 12.1 Notices.
Unless otherwise provided herein, communications provided for
hereunder shall be in writing and shall be mailed, telecopied or delivered as
follows:
If to the Borrower:
Scientific-Atlanta, Inc.
Corporate Office
One Technology Parkway, South
Norcross, Georgia 30092-2967
Attention: General Counsel
Telecopy Number: (404) 903-4751
Telephone Number: (404) 903-4623
If to the Agent:
NationsBank of Georgia,
National Association
c/o NationsBank Corporation
101 North Tryon Street, NC 1-001-15-04
Charlotte, North Carolina 28255-0001
Attention: Melissa Mullis
Telecopy Number: (704) 386-9923
Telephone Number: (704) 386-2881
If to a Lender, to such Lender's address or telecopy number, as
applicable, set forth on the then current Annex I.
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or, as to each party at such other address as shall be designated by such party
in a written notice to the other parties delivered in compliance with this
Section. All such notices and other communications shall be effective only
when actually received. The terms of any notice given by telephone shall
control over the terms of a subsequent written confirmation of such notice.
Neither the Agent, nor any Lender shall incur any liability to the Borrower
(nor shall the Agent incur any liability to the Lenders) for acting upon any
telephonic notice referred to in this Agreement which the Agent believes in
good faith to have been given by a person authorized to deliver such notice or
for otherwise acting in good faith under hereunder.
Section 12.2. Expenses.
The Borrower will pay all present and future expenses of the Agent in
connection with the negotiation, preparation, execution, delivery and
administration (including out-of-pocket costs and expenses incurred in
connection with the assignment of Commitments pursuant to Section 12.6.(d)) of
this Agreement, the Notes and each of the other Loan Documents, whenever the
same shall be executed and delivered, including the reasonable fees and
disbursements of each special and local counsel retained by the Agent.
Further, the Borrower shall pay all future expenses of the Agent and each of
the Lenders in connection with:
(a) the negotiation, preparation, execution and delivery of any
waiver, amendment or consent by the Agent or any Lender relating to this
Agreement, the Notes or any of the other Loan Documents;
(b) any restructuring, refinancing or "workout" of the
transactions contemplated by this Agreement, the Notes and the other Loan
Documents, or any material amendment to the terms of this Agreement or any
other Loan Document, including the reasonable fees and disbursements of counsel
to the Agent or to any Lender;
(c) the collection or enforcement of the obligations of the
Borrower or any Loan Party under this Agreement or any other Loan Document
including the reasonable fees and disbursements of counsel to the Agent or to
any Lender if such collection or enforcement is done by or through an attorney;
(d) prosecuting or defending any claim in any way arising out of,
related to, or connected with this Agreement or any of the other Loan
Documents, which expenses shall include the reasonable fees and disbursements
of counsel to the Agent or to any Lender and of experts and other consultants
retained by the Agent or any Lender;
(e) the exercise by the Agent or any Lender of any right or remedy
granted to it under this Agreement, the Notes or any of the other Loan
Documents including the reasonable fees and disbursements of counsel to the
Agent or any Lender if such exercise is done by or through any attorney;
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(f) costs and expenses incurred by the Agent or any Lender in
appraising, selling, preparing for sale and advertising to sell any Collateral,
whether or not a sale is consummated; and
(g) to the extent not already covered by any of the preceding
subsections, any bankruptcy or other proceeding of the type described in
Sections 10.1.(e) or 10.1.(f), and the fees and disbursements of counsel to the
Agent and any Lender incurred in connection with the representation of the
Agent or such Lender in any matter relating to or arising out of any such
proceeding including, without limitation (i) any motion for relief from any
stay or similar order, (ii) the negotiation, preparation, execution and
delivery of any document relating to the Obligations and (iii) the negotiation
and preparation of any debtor-in-possession financing or any plan of
reorganization of the Borrower, whether proposed by the Borrower, the Lenders
or any other Person, and whether such fees and expenses are incurred prior to,
during or after the commencement of such proceeding or the confirmation or
conclusion of any such proceeding.
As used in this Section and in Section 12.9., the term "reasonable fees" of
legal counsel shall mean the reasonable fees of such legal counsel actually
incurred without reference to any statutory definition of such term.
Section 12.3. Stamp, Intangible and Recording Taxes.
The Borrower will pay any and all stamp, intangible, registration,
recordation and similar taxes, fees or charges and shall indemnify the Agent
and each Lender against any and all liabilities with respect to or resulting
from any delay in the payment or omission to pay any such taxes, fees or
charges, which may be payable or determined to be payable in connection with
the execution, delivery, performance or enforcement of this Agreement, the
Notes and any of the other Loan Documents or the perfection of any rights or
Liens thereunder.
Section 12.4. Setoff.
Subject to Section 3.3. and in addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
the Agent is hereby authorized by the Borrower, at any time or from time to
time, without any prior notice to the Borrower or any notice to any other
Person, any such notice being hereby expressly waived, to set-off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Agent or any affiliate of the Agent, to or for the credit or the account of
the Borrower against and on account of any of the Obligations, irrespective of
whether or not the Requisite Lenders shall have declared any or all of the
Loans and all other Obligations to be due and payable as permitted by Section
10.2., and although such obligations shall be contingent or unmatured. The
Agent agrees to give the Borrower prompt notice after the exercise by the Agent
of such right of set-off but the failure of the Agent to give such notice shall
not effect the validity of any such set-off.
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Section 12.5. Litigation and Certain Waivers.
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY
BETWEEN OR AMONG THE BORROWER, THE AGENT, EITHER CO-AGENT OR ANY OF THE LENDERS
WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT. ACCORDINGLY,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE LENDERS, THE AGENT, EACH
CO-AGENT AND THE BORROWER HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN
ACTION MAY BE COMMENCED BY OR AGAINST ANY PARTY HERETO ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR IN CONNECTION WITH ANY COLLATERAL OR
ANY LIEN OR BY REASON OF ANY OTHER SUIT, CAUSE OF ACTION OR DISPUTE WHATSOEVER
BETWEEN OR AMONG THE BORROWER, THE AGENT, EITHER CO-AGENT OR ANY OF THE LENDERS
OF ANY KIND OR NATURE.
(b) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF
COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND
SHALL SURVIVE THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER
OR UNDER THE OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS AGREEMENT.
Section 12.6. 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, except that the Borrower may not assign or otherwise transfer any of
its rights under this Agreement without the prior written consent of all
Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an affiliate of such
Lender except to the extent such transfer would result in increased costs to
the Borrower.
(c) Any Lender may at any time grant to one or more banks or other
financial institutions (each a "Participant") participating interests in its
Commitments or the Obligations owing to such Lender; provided, however, no
Lender may grant a participating interest in its Commitments, or if the
Commitments have been terminated, the aggregate outstanding principal balance
of Notes held by it, in an amount less than $10,000,000. Except as otherwise
provided in Section 12.4., no Participant shall have any rights or benefits
under this Agreement or any other Loan Document. In the event of any such
grant by a Lender of a participating interest to a Participant, such Lender
shall remain responsible for the performance of its obligations hereunder, 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. Any agreement pursuant to which any Lender may grant such a
participating interest shall provide that such Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower hereunder
including, without limitation, the right to approve any amendment, modification
or
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waiver of any provision of this Agreement; provided, however, such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) increase, or extend the term or extend the time or
waive any requirement for the reduction or termination of, such Lender's
Commitments, (ii) extend the date fixed for the payment of principal of or
interest on the Loans or portions thereof owing to such Lender, (iii) reduce
the amount of any such payment of principal, (iv) reduce the rate at which
interest is payable thereon or (v) any release of all or substantially all of
the Collateral. An assignment or other transfer which is not permitted by
subsection (d) below shall be given effect for purposes of this Agreement only
to the extent of a participating interest granted in accordance with this
subsection (c). The selling Lender shall notify the Agent and the Borrower of
the sale of any participation hereunder and the terms thereof.
(d) Any Lender may with the prior written consent of the Agent and
the Borrower (which consent, in each case, shall not be unreasonably withheld)
assign to one or more banks or other financial institutions (each an
"Assignee") all or a portion of its Commitments and its other rights and
obligations under this Agreement and the Notes; provided, however, (i) no such
consent by the Borrower or the Agent shall be required in the case of any
assignment to another Lender or any affiliate of such Lender or another Lender;
(ii) any partial assignment shall be in an aggregate amount of Commitments at
least equal to $25,000,000, except for partial assignments from any Lender to
another Lender which may be in an aggregate amount of at least $5,000,000;
(iii) any partial assignment must be of proportionate amounts of the transferor
Lender's Facility A Commitment and Facility B Commitment; (iv) any Lender
assigning all of its Commitments must also assign all of its Bid Rate Loans to
the Assignee; (v) any assignment by a Lender of any of its Facility A
Commitment and its Facility B Commitment must be to the same Assignee and (vi)
each such assignment shall be effected by means of an Assignment and Acceptance
Agreement. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Lender of an amount equal to the purchase price
agreed between such transferor Lender and such Assignee, such Assignee shall be
deemed to be a Lender party to this Agreement as of the effective date of the
Assignment and Acceptance Agreement and shall have all the rights and
obligations of a Lender with the Commitments as set forth in such Assignment
and Acceptance Agreement, and the transferor Lender shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (d), the transferor Lender, the Agent and the
Borrower shall make appropriate arrangements so that new Notes are issued to
the Assignee and such transferor Lender, as appropriate. In connection with
any such assignment (including any assignment by one Lender to another Lender,
but excluding any assignment by the Agent in its capacity as a Lender), the
transferor Lender shall pay to the Agent an administrative fee for processing
such assignment in the amount of $3,000.
(e) The Agent shall maintain a copy of each Assignment and
Acceptance Agreement delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Commitments of
each Lender from time to time (the "Register"). The Agent shall give each
Lender notice of the assignment by any Lender of its rights as contemplated by
this Section. The Borrower, the Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register
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and copies of each Assignment and Acceptance Agreement shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time
to time upon reasonable prior notice to the Agent. Upon its receipt of an
Assignment and Acceptance Agreement executed by an assigning Lender, together
with each Note subject to such assignment (the "Surrendered Note"), the Agent
shall, if such Assignment and Acceptance Agreement has been completed and if
the Agent receives the processing and recording fee described in subsection (d)
above, (i) accept such Assignment and Acceptance Agreement, (ii) record the
information contained therein in the Register, and (iii) revise the information
set forth on Annex I to reflect the effect of such Assignment and Acceptance
Agreement, and distribute a copy of such revised Annex I to each Lender and the
Borrower. Failure of the Agent to so distribute a revised Annex I shall not
relieve or modify the obligations of the Borrower, the other Loan Parties or
the Lenders owing to the Agent hereunder.
(f) In addition to the assignments and participations permitted
under the foregoing provisions of this Section, any Lender may assign and
pledge all or any portion of its Loans and its Notes to any Federal Reserve
Bank as collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank, and such Loans and Notes shall be fully
transferable as provided therein. No such assignment shall release the
assigning Lender from its obligations hereunder.
(g) A Lender may furnish any information concerning the Borrower,
any other Loan Party or any of their respective Subsidiaries in the possession
of such Lender from time to time to Assignees and Participants (including
prospective Assignees and Participants).
(h) Anything in this Section to the contrary notwithstanding, no
Lender may assign or participate any interest in any Loan held by it hereunder
to the Borrower, any other Loan Party or any of their respective Affiliates or
Subsidiaries.
(i) Each Lender agrees that, without the prior written consent of
the Borrower and the Agent, it will not make any assignment hereunder in any
manner or under any circumstances that would require registration or
qualification of, or filings in respect of, any Loan or Note under the
Securities Act or any other securities laws of the United States of America or
of any other jurisdiction.
Section 12.7. Amendments.
Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement or in any Loan Document to
be given by the Lenders may be given, and any term of this Agreement or of any
other Loan Document may be amended, and the performance or observance by the
Borrower or any Loan Party or Subsidiary of any terms of this Agreement or such
other Loan Document or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Requisite Lenders (and, in the case of an amendment to any Loan Document, the
written consent of the Borrower). Notwithstanding the foregoing, no amendment,
waiver or consent shall, unless in writing, and signed by all of the
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Lenders, do any of the following: (i) increase the Commitments of the Lenders
or subject the Lenders to any additional obligations; (ii) reduce the principal
of, or interest rates that have accrued or that will be charged on the
outstanding principal amount of, any Loans or other Obligations; (iii) reduce
the amount of any Fees payable hereunder; (iv) postpone any date fixed for any
payment of any principal of, interest on, or Fees with respect to, any Loans or
any other Obligations; (v) change the Commitment Percentages; (vi) amend this
Section or amend the definitions of the terms used in this Agreement or the
other Loan Documents insofar as such definitions affect the substance of this
Section or (vii) modify the definition of the term "Requisite Lenders" or
modify in any other manner the number or percentage of the Lenders required to
make any determinations or waive any rights hereunder or to modify any
provision hereof. Further, no amendment, waiver or consent unless in writing
and signed by the Agent, in addition to the Lenders required hereinabove to
take such action, shall affect the rights or duties of the Agent under this
Agreement or any of the other Loan Documents. Further, no Collateral shall be
released or disposed of by the Agent unless all of the Lenders so direct the
Agent or unless released or disposed of as permitted by, and in accordance with
Section 11.7. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon and any amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose set forth therein. No course of dealing or delay or omission on the
part of any Lender, either Co-Agent or the Agent in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. Except as
otherwise explicitly provided for herein or in any other Loan Document, no
notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances. In addition, the
Borrower, the Co-Agents and the Lenders hereby authorize the Agent to modify
this Agreement by unilaterally amending or supplementing Annex I from time to
time in the manner requested by the Borrower, the Agent or any Lender in order
to reflect any assignments or transfers of the Commitments as provided for
hereunder; provided, however, that the Agent shall promptly deliver a copy of
any such modification to the Borrower and each Lender as requested by such
party.
Section 12.8. Confidentiality.
Except as otherwise provided by Applicable Law, the Agent, each
Co-Agent, each Participant and each Lender shall utilize all non-public
information obtained pursuant to the requirements of this Agreement which has
been identified as confidential or proprietary by the Borrower in accordance
with its customary procedure for handling confidential information of this
nature and in accordance with safe and sound banking practices but in any event
may make disclosure (subject to the terms of any nondisclosure agreement
executed pursuant to the next sentence but except as may be required under
Applicable Law): (a) to any of their respective affiliates (provided they shall
agree to keep such information confidential in accordance with the terms of
this Section); (b) as reasonably required by any bona fide transferee or
participant in connection with the contemplated transfer of any Commitments or
participations therein as permitted hereunder (provided they shall agree to
keep such information confidential in accordance with the terms of this
Section); (c) as required by any Governmental Authority or representative
thereof or pursuant to legal process; (d) to the Agent's, such Co-Agent's or
such Lender's independent auditors and other professional advisors (provided
they shall be notified of
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the confidential nature of the information and agree to maintain it in
confidence); and (e) after the happening and during the continuance of an Event
of Default, to any other Person, in connection with the exercise by the Agent,
the Co-Agents or the Lenders of rights hereunder or under any of the other Loan
Documents. Prior to disclosure to the Agent, any Lender, or any of their
officers, agents, legal counsel or accountants, by the Borrower or any of its
Subsidiaries of any of the Borrower's or such Subsidiary's proprietary
information, the Agent and each Lender agrees to execute and deliver, and to
cause any such officer, agent, legal counsel or accountant to whom such
proprietary information is to be disclosed to execute and deliver, a
non-disclosure agreement substantially in the form of Exhibit L.
Section 12.9. Indemnification.
(a) The Borrower shall and hereby agrees to indemnify, defend and
hold harmless the Agent, any affiliate of the Agent and each of the Lenders and
their respective directors, officers, shareholders, agents, employees and
counsel (each referred to herein as an "Indemnified Party") from and against
any and all losses, claims, damages, liabilities, deficiencies, judgments or
expenses of every kind and nature (including, without limitation, reasonable
amounts paid in settlement, court costs and the reasonable fees and
disbursements of counsel incurred in connection with any litigation,
investigation, claim or proceeding or any advice rendered in connection
therewith) (the foregoing items referred to herein as "Claims and Expenses")
incurred by an Indemnified Party arising out of or by reason of any suit, cause
of action, claim, arbitration, investigation or settlement, consent decree or
other proceeding (the foregoing referred to herein as an "Indemnity
Proceeding") which arise out of, or are in any way related directly or
indirectly to: (i) this Agreement or any other Loan Document or the
transactions contemplated thereby; (ii) the making of any Loans or issuance of
Letters of Credit hereunder; (iii) any actual or proposed use by the Borrower
of the proceeds of the Loans or Letters of Credit; (iv) the Agent's or any
Lender's entering into this Agreement; (v) the fact that the Agent and the
Lenders have established the credit facility evidenced hereby in favor of the
Borrower and the Subsidiaries; (vi) the fact that the Agent and the Lenders are
creditors of the Borrower and have or are alleged to have information regarding
the financial condition, strategic plans or business operations of the Borrower
and the Subsidiaries; (vii) the fact that the Agent and the Lenders are
material creditors of the Borrower and the Subsidiaries and are alleged to
influence directly or indirectly the business decisions or affairs of the
Borrower and the Subsidiaries or their financial condition; (viii) the exercise
of any right or remedy the Agent or the Lenders may have under this Agreement
or the other Loan Documents including, but not limited to, the foreclosure
upon, or seizure of, any Collateral or the exercise of any other rights of a
secured party; provided, however, that the Borrower shall not be obligated to
indemnify any Indemnified Party for any acts or omissions of such Indemnified
Party in connection with matters described in this subparagraph (viii) that
constitute gross negligence or willful misconduct; (ix) any violation or
non-compliance by the Borrower or any Subsidiary of any Applicable Law
(including any Environmental Law) including, but not limited to, any Indemnity
Proceeding commenced by the Internal Revenue Service or state taxing authority
or any Indemnity Proceeding commenced by any Governmental Authority or other
Person under any Environmental Law including any Indemnity Proceeding commenced
by a Governmental Authority or other Person seeking remedial or other action to
cause the Borrower
-77-
<PAGE> 83
or its Subsidiaries (or its respective properties) (or the Agent and/or the
Lenders as successors to the Borrower) to be in compliance with such
Environmental Laws.
(b) This indemnification shall apply to all Indemnity Proceedings
arising out of, or related to, the foregoing whether or not an Indemnified
Party is a named party in such Indemnity Proceeding. In this connection, this
indemnification shall cover all costs and expenses of any Indemnified Party in
connection with any deposition of any Indemnified Party or compliance with any
subpoena (including any subpoena requesting the production of documents). This
indemnification shall, among other things, apply to any Indemnity Proceeding
commenced by other creditors of the Borrower or any Subsidiary, any shareholder
of the Borrower or any Subsidiary (whether such shareholder(s) are prosecuting
such Indemnity Proceeding in their individual capacity or derivatively on
behalf of the Borrower), any account debtor of the Borrower or any Subsidiary
or by any Governmental Authority.
(c) This indemnification shall apply to any Indemnity Proceeding
arising during the pendency of any bankruptcy proceeding filed by or against
the Borrower and/or any Subsidiary.
(d) All out-of-pocket fees and expenses of, and all amounts paid
to third-persons by, an Indemnified Party shall be advanced by the Borrower at
the request of such Indemnified Party notwithstanding any claim or assertion by
the Borrower that such Indemnified Party is not entitled to indemnification
hereunder upon receipt of an undertaking by such Indemnified Party that such
Indemnified Party will reimburse the Borrower if it is actually and finally
determined by a court of competent jurisdiction that such Indemnified Party is
not so entitled to indemnification hereunder.
(e) 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. If
requested by the Borrower in writing, and so long as no Event of Default shall
have occurred and be continuing, 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 relieve the
Borrower from liability hereunder only if and to the extent that such failure
results in the forfeiture by the Borrower of substantive rights and defenses.
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
-78-
<PAGE> 84
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 reasonable fees and
disbursements of such counsel; provided, however, that each Indemnified Party
shall endeavor, but shall not be obligated, in connection with any matter
covered by this Section which also involves other indemnitees, to use
reasonable efforts to avoid unnecessary duplication of efforts by counsel for
all indemnities. 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 and the
Indemnified Party may participate in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom. If (i) the Borrower
is required to indemnify an Indemnified Party pursuant hereto and (ii) the
Borrower 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 Indemnified Proceeding, then such Indemnified Party shall not settle or
compromise any such Indemnified Proceeding without the prior written consent of
the Borrower (which consent shall not be unreasonably withheld or delayed) and
shall only settle or compromise any such Indemnified Proceeding on reasonable
terms.
(f) If and to the extent that the obligations of the Borrower
hereunder are unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under Applicable Law.
(g) The Borrower's obligations hereunder are in addition to, and
not in substitution of, any of its other obligations set forth in this
Agreement or any of the other Loan Documents to which it is a party.
Section 12.10. Survival.
Notwithstanding any termination of this Agreement, or of the other
Loan Documents, the indemnities to which the Agent and the Lenders are entitled
under the provisions of Sections 11.6., 12.2. and 12.9. and any other provision
of this Agreement and the other Loan Documents, the waivers of jury trials
contained in Section 12.5., shall continue in full force and effect and shall
protect the Agent and the Lenders against events arising after such termination
as well as before.
Section 12.11. Titles and Captions.
Titles and captions of Articles, Sections, subsections and clauses in
this Agreement are for convenience only, and neither limit nor amplify the
provisions of this Agreement.
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<PAGE> 85
Section 12.12. Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating the
remainder of such provision or the remaining provisions or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 12.13. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF GEORGIA.
Section 12.14. Counterparts.
This Agreement and any amendments, waivers, consents or supplements
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument.
Section 12.15. Obligations with Respect to Loan Parties.
The obligations of the Borrower to direct or prohibit the taking of
certain actions by the other Loan Parties as specified herein shall be absolute
and not subject to any defense the Borrower may have that the Borrower does not
control such Loan Parties.
Section 12.16. Limitation of Liability.
Neither the Agent, nor any Lender, nor any affiliate, officer,
director, employee, attorney, or agent of the Agent or any Lender shall have
any liability with respect to, and the Borrower hereby waives, releases, and
agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Borrower in
connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents. The Borrower hereby waives,
releases, and agrees not to sue the Agent or any Lender or any of the Agent's
or any Lender's affiliates, officers, directors, employees, attorneys, or
agents for punitive damages in respect of any claim in connection with, arising
out of, or in any way related to, this Agreement or any of the other Loan
Documents, or any of the transactions financed hereby. Except as specifically
provided in this Agreement and in the other Loan Documents, neither the
Borrower, nor any affiliate, officer, director, employee, attorney, or agent of
the Borrower shall have any liability with respect to, and each of the Agent
and the Lenders hereby waives, releases, and agrees not to sue any of them
upon, any claim for any special, indirect, incidental, or consequential damages
suffered or incurred by the Agent or any Lender in connection with, arising out
of, or in any
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<PAGE> 86
way related to, this Agreement or any of the other Loan Documents. Each of the
Agent and the Lenders hereby waives, releases, and agrees not to sue the
Borrower or any of the Borrower's affiliates, officers, directors, employees,
attorneys, or agents for punitive damages in respect of any claim in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement
or financed hereby.
[Signatures on Following Pages]
-81-
<PAGE> 87
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their authorized officers all as of the day and
year first above written.
SCIENTIFIC-ATLANTA, INC.
By: /s/ Harvey A. Wagner
------------------------------------------
Name: Harvey A. Wagner
Title: Senior Vice President, Finance, Chief
Financial Officer and Treasurer
NATIONSBANK OF GEORGIA, NATIONAL
ASSOCIATION, individually and as Agent
By: /s/ James S. Scully
------------------------------------------
Name: James S. Scully
Title: Vice President
THE BANK OF NEW YORK, individually and as
Co-Agent
By: /s/ Gregory L. Batson
------------------------------------------
Name: Gregory L. Batson
Title: Vice President
ABN AMRO BANK N.V., acting through its Atlanta
Agency, individually and as Co-Agent
By: /s/ Steven Hipsman
------------------------------------------
Name: Steven Hipsman
Title: Vice President
By:/s/ Adam Greene
------------------------------------------
Name: Adam Greene
Title: Vice President
[Signatures Continued on Next Page]
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<PAGE> 88
[SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF
MAY 11, 1995 WITH SCIENTIFIC-ATLANTA, INC.]
AUSTRALIA AND NEW ZEALAND
BANKING GROUP LIMITED
By: /s/ Pamela Couch
------------------------------------------
Name: Pamela Couch
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Karen H. McClain
------------------------------------------
Name: Karen H. McClain
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ Frederic B. Hawley
------------------------------------------
Name: Frederic Hawley
Title: Vice President
THE BANK OF TOKYO LIMITED,
ATLANTA AGENCY
By: /s/ Gary England
------------------------------------------
Name: Gary England
Title: Vice President and Manager
-83-
<PAGE> 89
ANNEX I
LIST OF LENDERS, COMMITMENT AMOUNTS AND LENDING OFFICES
<TABLE>
<CAPTION>
<S> <C>
NATIONSBANK OF GEORGIA, NATIONAL
ASSOCIATION
Lending Office (all Types of Loans): Initial Facility A Commitment Amount:
-------------- ------------------------------------
600 Peachtree Street, 21st Floor $42,500,000
Atlanta, Georgia 30308
Initial Facility B Commitment Amount:
------------------------------------
$42,500,000
Wiring Instructions:
To: NationsBank of Georgia, N.A., Atlanta,
Georgia
Attention: Corporate Credit Support
ABA #061000052
Reference: Scientific-Atlanta, Inc.
Account: 10101366219970
THE BANK OF NEW YORK
Lending Office (all Types of Loans): Initial Facility A Commitment Amount:
-------------- ------------------------------------
1 Wall Street $27,500,000
New York, New York 10286
Attention: Gregory Batson Initial Facility B Commitment Amount:
------------------------------------
Telecopier: (212) 635-6434
Telephone: (212) 635-6898 $27,500,000
Wiring Instructions:
To: The Bank of New York
1 Wall Street (22N)
New York, New York 10286
ABA #021000018
Account No.: GLA 111-556
Attention: Lorna O. Alleyne, AVP
</TABLE>
I-1
<PAGE> 90
<TABLE>
<S> <C>
ABN AMRO BANK N.V., ACTING THROUGH
ITS ATLANTA AGENCY
Lending Office (all Types of Loans): Initial Facility A Commitment Amount:
-------------- ------------------------------------
Suite 1200, One Ravinia Drive $25,000,000
Atlanta, Georgia 30346
Attention: Adam Greene Initial Facility B Commitment Amount:
------------------------------------
Telecopier: (404) 395-9188
Telephone: (404)396-0066 $25,000,000
Wiring Instructions:
To: Federal Reserve Bank, NY, NY
Favor of: ABN*AMRO New York
ABA #0260-09580
Account: 651-0-010197-41
Reference: Scientific Atlanta
AUSTRALIA AND NEW ZEALAND BANKING
GROUP LIMITED
Lending Office (all Types of Loans): Initial Facility A Commitment Amount:
-------------- ------------------------------------
1177 Avenue of the Americas $12,500,000
New York, New York 10036
Attention: Paul Clifford Initial Facility B Commitment Amount:
------------------------------------
Telecopier: (212) 801-9131
Telephone: (212) 801-9713 $12,500,000
Wiring Instructions:
To: Morgan Guaranty Trust Company
For: Australia and New Zealand Banking Group
ABA #021-000-238
Account: 631-00-888
Attention: Ms. Tessie Amante
</TABLE>
I-2
<PAGE> 91
<TABLE>
<S> <C>
WACHOVIA BANK OF GEORGIA, N.A.
Lending Office (all Types of Loans): Initial Facility A Commitment Amount:
-------------- ------------------------------------
191 Peachtree Street, 29th Floor $17,500,000
Atlanta, Georgia 30303
Attention: Karen H. McClain Initial Facility B Commitment Amount:
------------------------------------
Telecopier: (404) 332-5016
Telephone: (404) 332-6555 $17,500,000
Wiring Instructions:
To: Wachovia Bank of Georgia, N.A.
191 Peachtree Street
Atlanta, Georgia 30303
ABA #0610-00010
Account: 18-800621 (Wachovia Clearing Account)
Attention (Interest & Fees on Loans): Shirley Clements or Karen McClain
Attention (Documentary Letter of Credit Fees): Marilyn Hare
Attention: (Standby Letter of Credit Fees): Rhonda Sulier
TORONTO DOMINION (TEXAS), INC.
Lending Office (all Types of Loans): Initial Facility A Commitment Amount:
-------------- ------------------------------------
The Toronto Dominion Bank $12,500,000
900 Fannin, Suite 1700
Houston, Texas 77010 Initial Facility B Commitment Amount:
------------------------------------
Attention: Frederic B. Hawley
Telecopier: (713) 951-9921 $12,500,000
Telephone: (713) 653-8281
Address for Notices:
-------------------
The Toronto Dominion Bank
31 West 52nd Street
New York, New York 10019
Attention: Doug Weir
Telecopier: (212) 262-1926
Telephone: (212) 468-0575
</TABLE>
I-3
<PAGE> 92
<TABLE>
<S> <C>
Wiring Instructions:
To: Toronto Dominion Bank
900 Fannin, Suite 1700
Houston, Texas 77010
ABA #026003243
Favor: TD Houston Acct. #2159251
Reference: Scientific Atlanta, Inc.
THE BANK OF TOKYO LIMITED, ATLANTA
AGENCY
Lending Office (all Types of Loans): Initial Facility A Commitment Amount:
-------------- ------------------------------------
133 Peachtree Street, NE, #5050 $12,500,000
Atlanta, Georgia 30303-1808
Attention: Gary England Initial Facility B Commitment Amount:
------------------------------------
Telecopier: (404) 577-1155
Telephone: (404) 577-2960 $12,500,000
Wiring Instructions:
To: The Bank of Tokyo, Ltd.
1251 Avenue of the Americas New
York, New York 10116-3138
ABA #026-009-632
Account 30001680
Attention: The Bank of Tokyo, Ltd., Atlanta
Agency, G. Staten
</TABLE>
I-4
<PAGE> 1
EXHIBIT 11
SCIENTIFIC-ATLANTA, INC., AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995
(In Thousands, Except Earnings Per Share)
<TABLE>
<CAPTION>
1995 1994 1993
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 76,194 74,986 72,308
Add - Shares of common stock assumed issued
upon exercise of options using the "treasury
stock" method as it applies to the computation
of primary earnings per share 2,098 1,652 2,774
---------- ---------- ----------
NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 78,292 76,638 75,082
Add - Additional shares of common stock assumed issued
upon exercise of options using the "treasury stock"
method as it applies to the computation of fully
diluted earnings per share 92 467 175
---------- ---------- ----------
NUMBER OF SHARES OUTSTANDING
ASSUMING FULL DILUTION 78,384 77,105 75,257
========== ========== ==========
--------------------------------------------------------------------------------------------------------------
NET EARNINGS FOR PRIMARY
AND FULLY DILUTED COMPUTATION $ 63,540 $ 35,022 $ 19,974
========== ========== ==========
--------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE
AND COMMON EQUIVALENT SHARE (1)
Primary $ 0.83 $ 0.46 $ 0.27
Fully diluted $ 0.83 $ 0.46 $ 0.27
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In 1995 the dilutive effect of equivalent shares derived from stock options
was less than 3 percent and therefore, the equivalent shares were not
included in the computation of earnings per share.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated August 4. 1995, appearing on page 11 of this Form 10-K, into
the Company's previously filed registration statements as listed below:
1. Registration Statements on Form S-8 covering the
Scientific-Atlanta, Inc. 1978 Non-Qualified Stock Option Plan
for Key Employees, as amended (File Nos. 2-72029, 33-5623,
33-20858, and 33-36926);
2. Registration Statements on Form S-8 covering the
Scientific-Atlanta, Inc.Employee Stock Purchase Plan, as
amended (File Nos. 33-5621 and 33-36925);
3. Registration Statement on Form S-8 covering the
Scientific-Atlanta, Inc. 1981 Incentive Stock Option Plan
(File No. 33-781);
4. Registration Statement on Form S-8 covering the
Scientific-Atlanta, Inc. Non-Employee Directors Stock Option
Plan (File No. 33- 35313);
5. Registration Statement on Form S-8 covering the
Scientific-Atlanta, Inc. Voluntary Employee Retirement and
Investment Plan (File No.33-69827);
6. Registration Statement on Form S-8 covering the
Scientific-Atlanta. Inc. 1992 Employee Stock Option Plan
(File No. 33-69218);
7. Registration Statement on Form S-8 covering the
Scientific-Atlanta, Inc. Restricted Stock Award granted to
James F. McDonald (File No. 33-52417);
8. Registration Statement on Form S-8 covering the
Scientific-Atlanta, Inc. 1993 Restricted Stock Awards
(File No. 33-52135); and
9. Registration Statement on Form S-8 covering the
Scientific-Atlanta, Inc. Long-Term Incentive Plan
(File No.33-56449).
ARTHUR ANDERSEN LLP
Atlanta, Georgia
September 12, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-02-1994
<PERIOD-END> JUN-30-1995
<CASH> 80,311
<SECURITIES> 0
<RECEIVABLES> 247,243
<ALLOWANCES> 3,823
<INVENTORY> 257,427
<CURRENT-ASSETS> 615,379
<PP&E> 189,153
<DEPRECIATION> 64,539
<TOTAL-ASSETS> 785,264
<CURRENT-LIABILITIES> 275,714
<BONDS> 773
<COMMON> 38,475
0
0
<OTHER-SE> 435,714
<TOTAL-LIABILITY-AND-EQUITY> 785,264
<SALES> 1,146,502
<TOTAL-REVENUES> 1,146,502
<CGS> 825,254
<TOTAL-COSTS> 825,254
<OTHER-EXPENSES> 83,316
<LOSS-PROVISION> 343
<INTEREST-EXPENSE> 775
<INCOME-PRETAX> 93,441
<INCOME-TAX> 29,901
<INCOME-CONTINUING> 63,540
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,540
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.83
</TABLE>
