<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended December 31, 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 1-11237
AT&T CAPITAL CORPORATION
A DELAWARE I.R.S. EMPLOYER IDENTIFICATION
CORPORATION No. 22-3211453
44 Whippany Road, Morristown, New Jersey 07962-1983
Telephone Number 201-397-3000
------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on
which registered
- ------------------- -------------------
Common Stock, New York Stock Exchange
$.01 par value
Securities registered pursuant to Section 12(g) 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.......
Indicate 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. ( x )
The aggregate market value of the common stock of the registrant held by
non-affiliates as of February 29, 1996 was approximately $261,750,143. For
purposes of the foregoing calculation only, all directors and officers of the
registrant have been deemed affiliates. As of February 29, 1996, there were
46,975,583 shares of the registrant's common stock $.01 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's definitive proxy statement dated March 19, 1996 issued
in connection with the 1995 annual meeting of shareholders (Part III).
<PAGE>
<PAGE>
TABLE OF CONTENTS
PART I
Item Description Page
1. Business 1
2. Properties 18
3. Legal Proceedings 18
4. Submission of Matters to a Vote of Security-Holders 18
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 18
6. Selected Financial Data 19
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 24
8. Financial Statements and Supplementary Data 41
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 85
PART III
10. Directors and Executive Officers of the Registrant 85
11. Executive Compensation 86
12. Security Ownership of Certain Beneficial Owners and
Management 86
13. Certain Relationships and Related Transactions 87
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 87
<PAGE>
<PAGE>
PART I
ITEM 1. BUSINESS
RESTRUCTURING AND INITIAL PUBLIC OFFERING
AT&T Capital Corporation ("AT&T Capital" or the "Company") was incorporated
on December 21, 1992, as AT&T Leasing, Inc., and was renamed AT&T Capital
Corporation on March 31, 1993. The Company is the successor entity to certain
businesses of AT&T Capital Holdings, Inc. (formerly known as AT&T Capital
Corporation) ("Old Capital"), a wholly owned subsidiary of AT&T Corp. ("AT&T"),
and its subsidiaries, including AT&T Credit Holdings, Inc. (formerly known as
AT&T Credit Corporation) ("Old Credit"), a wholly owned subsidiary of Old
Capital that commenced operations in 1985. In a restructuring that occurred on
March 31, 1993 (the "Restructuring"), Old Capital and Old Credit transferred
substantially all of their assets, except for certain assets consisting
principally of equity interests in project finance transactions and leveraged
leases of commercial aircraft ("Lease Finance Assets"), in exchange for shares
of the Company's common stock and the assumption by the Company of certain
related liabilities.
In connection with the Restructuring, AT&T issued direct, full and
unconditional guarantees of all existing indebtedness outstanding as of March
31, 1993 for borrowed money incurred, assumed or guaranteed by Old Capital
entitled to the benefit of a Support Agreement between AT&T and Old Capital (the
"Support Agreement"), including the debt of Old Capital assumed by the Company
in the Restructuring. Debt issued by the Company subsequent to March 31, 1993,
however, is not guaranteed or supported by AT&T (see Note 7 to the Consolidated
Financial Statements).
An initial public stock offering combined with a management stock offering
totaling approximately 14% of the Company's stock ("IPO") occurred on August 4,
1993 (see Note 8 to the Consolidated Financial Statements). As a result of the
IPO, approximately 86% of the outstanding common stock of the Company is owned
indirectly by AT&T (through Old Capital and Old Credit.)
In connection with the IPO, the Company entered into certain intercompany,
operating, license and tax agreements with AT&T. The Intercompany Agreement
includes a provision requiring minimum ownership by AT&T of 20% of the Company's
common stock outstanding immediately after the IPO for a period of five years.
Provisions for management by the Company of certain portfolios owned by AT&T
(for a fee), allowing the Company to utilize certain AT&T corporate and
administrative services (for a fee) and generally requiring the Company to
continue certain equipment financing programs for AT&T are also included. The
Operating Agreement, provides, among other things, that AT&T is required to
promote the Company's financing and ancillary services and to provide the
Company with certain preferred provider rights in connection with the financing
of AT&T products and services. In addition, the Operating Agreement restricts
AT&T from competing with the Company with respect to certain products of the
Company.
1
<PAGE>
<PAGE>
The License Agreement defines the Company's rights to use certain AT&T service
marks and trade names, and to use "AT&T" and "NCR" as part of the corporate
names of the Company and certain of its subsidiaries. The initial term of the
License Agreement will expire on the seventh anniversary of the date of the IPO.
The License Agreement may be terminated prior to the end of its term by either
party if the other party breaches or defaults on terms of the Intercompany
Agreement, the Operating Agreement or the License Agreement. Additionally, AT&T
can elect to terminate the License Agreement if the long-term unsecured debt of
the Company is rated below investment grade by at least two nationally
recognized rating agencies, or if the Company receives a qualified audit opinion
from its independent accountants. Because such license is an important strategic
asset of the Company, termination of the License Agreement could have an adverse
effect on the Company. For a discussion of AT&T's restructuring plans and their
potential impacts on these agreements, see Note 16 to the Consolidated Financial
Statements.
On September 20, 1995, AT&T announced a plan to pursue the public or
private sale of its remaining 86% interest in AT&T Capital. As noted in AT&T's
1995 Annual Report on Form 10-K, AT&T has stated that it cannot predict the
timing or terms of any such transaction. On such date, AT&T also announced a
plan to separate (the "Separation") into three publicly-held stand-alone global
businesses that will each be focused on serving certain core businesses:
communication services, communications systems and technology, and
transaction-intensive computing. The Separation is targeted by AT&T to be
completed by the end of 1996, but remains subject to a number of conditions. For
a more detailed discussion of AT&T's restructuring plans and their potential
impacts on the Company, see Note 16 to the Consolidated Financial Statements.
2
<PAGE>
<PAGE>
DESCRIPTION OF THE BUSINESS
AT&T Capital is a full-service, diversified equipment leasing and finance
company that operates in the United States, Europe, Canada, the Asia/Pacific
Region, Mexico and South America. The Company is one of the largest equipment
leasing and finance companies in the United States based on the aggregate value
of equipment leased or financed.
The Company, through its various subsidiaries, leases and finances
equipment manufactured and distributed by numerous vendors, including AT&T and
its affiliates, principally Lucent Technologies Inc. ("Lucent") and NCR
Corporation ("NCR"). In addition, the Company provides equipment leasing and
financing and related services directly to end-user customers. The Company's
customers include large global companies, small and mid-size businesses and
federal, state and local governments and their agencies.
AT&T Capital leases and finances a wide variety of equipment including
telecommunications equipment (such as private branch exchanges, telephone
systems and voice processing units), information technology (such as personal
computers, retail point-of-sale systems, and automatic teller machines), general
office, manufacturing and medical equipment ("General Equipment"), and
transportation equipment (primarily vehicles), and also finances real estate
(including real estate related loans in the Company's Small Business
Administration ("SBA") lending and franchise finance businesses). The Company is
the largest lessor of telecommunications equipment in the United States.
At December 31, 1995, the Company's net portfolio assets (net investment in
finance receivables, capital leases and operating leases), which aggregated $9.1
billion, were diversified across various types of financed equipment:
telecommunications equipment 23%; information technology 23%; General Equipment
28%; and transportation equipment 19%; as well as real estate 7%.
The Company leases and finances such equipment through a variety of
financing and related products and services, including capital leases, operating
leases, inventory financing and other secured working capital loans for
equipment dealers and distributors, SBA lending, asset based loans and equipment
management and remarketing services. In addition, the Company offers its
customers certain equipment rental and administration services.
AT&T Capital's portfolio assets are diversified among a large customer
base, as well as numerous industries and geographic regions. The Company has one
of the largest customer bases in the commercial equipment leasing and finance
market with approximately 500,000 customers. At December 31, 1995, the Company's
99 largest customers (after AT&T and its affiliates) accounted for approximately
21% of the Company's net portfolio assets, and no single customer (with the
exception of AT&T and its affiliates) accounted for more than 1% of such net
portfolio assets.
3
<PAGE>
<PAGE>
Although the Company operates principally in the United States, the Company
began operations in the United Kingdom in 1991 and in Canada in 1992.
In 1994, the Company acquired Australian Guarantee Corporation Finance
(H.K.) Limited ("A.G.C. Finance"), a Hong Kong-based vehicle and equipment
leasing finance company with assets at that time of approximately $150 million.
Also in January 1994, the Company, through its wholly-owned Canadian subsidiary,
acquired the vehicle portfolio and infrastructure assets constituting the Avis
Canada Leasing Division of AvisCar, Inc. This unit provides automobile leasing
to small and mid-size commercial and corporate clients in Canada and had
approximately $90 million in assets at the time of acquisition. Later in 1994,
the Company opened offices in Mexico and Australia.
In January 1995, the Company acquired the vendor leasing and finance
companies of Banco Central Hispano and certain of its affiliates (collectively,
"CFH Leasing International") located in the United Kingdom, Germany, France,
Italy, Belgium, and the Netherlands. This European network of leasing operations
provides financial services to equipment manufacturers and vendors. It served
approximately 4,600 customers and had approximately $540 million in assets at
the time of acquisition. In June 1995, the Company also acquired an Australian
equipment finance company with approximately $40 million in assets. In the third
quarter of 1995, the Company entered into a joint venture with Banco Frances, a
leading Argentine commercial bank, to operate an equipment leasing operation in
Argentina.
The Company, from time to time, investigates potential opportunities to
make acquisitions abroad, and the Company may open additional foreign offices on
a limited basis either directly or through acquisitions or joint ventures.
A significant part of the Company's total United States assets, revenues
and net income are attributable to leasing and financing of AT&T equipment
provided to customers of AT&T and its affiliates (collectively, "Customers of
AT&T Equipment"). AT&T and its affiliates and employees (collectively, "AT&T as
End-User") are also significant customers of the Company, primarily with respect
to leased information technology equipment and vehicles.
4
<PAGE>
<PAGE>
The following table shows the respective percentages of the assets,
revenues and net income (loss) related to United States and foreign operations
attributable to (i) leasing and financing services provided by the Company to
customers of AT&T, (ii) transactions involving AT&T as end-user and (iii) the
Company's non-AT&T business, in each case at or for the years ended December 31,
1995, 1994 and 1993. The net income (loss) shown below were calculated based
upon what the Company believes to be a reasonable allocation of interest, income
taxes and certain corporate overhead expenses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
At or for the year ended
December 31, 1995
Assets Revenues Net Income (Loss)
-------------------- --------------------- ---------------------
U.S. Foreign Total U.S. Foreign Total U.S. Foreign Total
% % % % % % % % %
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Customers
of AT&T 29.4 0.1 29.5 32.3 0.4 32.7 67.2 0.7 67.9
AT&T as
End-User 5.3 - 5.3 8.3 - 8.3 8.2 - 8.2
Non-AT&T
Business 47.8 17.4 65.2 46.3 12.7 59.0 27.0 (3.1) 23.9
----- ----- ----- ----- ----- ----- ----- ----- -----
Total 82.5 17.5 100.0 86.9 13.1 100.0 102.4 (2.4) 100.0
- ---------------------------------------------------------------------------
<CAPTION>
At or for the year ended
December 31, 1994
Assets Revenues Net Income (Loss)
-------------------- --------------------- ---------------------
U.S. Foreign Total U.S. Foreign Total U.S. Foreign Total
% % % % % % % % %
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Customers
of AT&T 34.3 0.3 34.6 33.1 0.3 33.4 83.9 (1.4) 82.5
AT&T as
End-User 6.8 - 6.8 9.5 - 9.5 8.5 - 8.5
Non-AT&T
Business 48.0 10.6 58.6 47.8 9.3 57.1 11.8 (2.8) 9.0
----- ----- ----- ----- ----- ----- ----- ----- ----
Total 89.1 10.9 100.0 90.4 9.6 100.0 104.2 (4.2) 100.0
- --------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
At or for the year ended
December 31, 1993
Assets Revenues Net Income (Loss)
-------------------- --------------------- ---------------------
U.S. Foreign Total U.S. Foreign Total U.S. Foreign Total*
% % % % % % % % %
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Customers
of AT&T 38.1 0.3 38.4 31.1 0.2 31.3 99.8 (1.7) 98.1
AT&T as
End-User 9.5 - 9.5 14.9 - 14.9 20.8 - 20.8
Non-AT&T
Business 46.1 6.0 52.1 47.8 6.0 53.8 (6.9) (12.0) (18.9)
----- ----- ----- ----- ----- ----- ------ ----- ------
Total 93.7 6.3 100.0 93.8 6.2 100.0 113.7 (13.7) 100.0
- ---------------------------------------------------------------------------
</TABLE>
*The customers of AT&T, AT&T as end-user and non-AT&T business net income
(loss) before cumulative effect of the 1993 accounting change and impact of
the tax rate change was 89.0%, 20.2% and (9.2%), respectively. For a
description of the 1993 accounting change and impact of the tax rate
change, see Note 10 to the Consolidated Financial Statements.
The Company intends to continue its strategy of expanding its non-AT&T
businesses, while at the same time enhancing its relationship with AT&T and its
affiliates. Because the growth in revenues generated by the Company's non-AT&T
businesses can be expected to lag behind the incurrence of expenses necessary to
expand and operate such businesses, the Company anticipates that the percentage
of its total net income and revenues attributable to non-AT&T businesses may
vary from year to year depending upon the stage of development of these non-AT&T
businesses.
The 1995 increases in the non-AT&T business assets and revenues (as a % of
total Company) were generated almost equally from U.S. and foreign operations.
The significant increase realized from U.S. non-AT&T related net income was
primarily generated from the Company's large-ticket specialty and structured
finance activities, SBA loan sales and growth in the automobile portfolio. Net
losses from foreign non-AT&T businesses somewhat offset the strong U.S. results.
The securitization of certain non-AT&T portfolio assets positively affected
net income of the non-AT&T businesses in all years presented; however, the
Company decreased the amount of securitizations each year from 1993 to 1995.
Partly as a result of the reduction in securitized assets, the portion of the
Company's non-AT&T net income attributable to securitization has decreased by
88.7% from 1993 to 1995 (see Note 6 to the Consolidated Financial Statements).
Marketing and Business Activities
The Company offers a wide range of financial products and services to its
customers through two principal marketing channels. The first, which the Company
refers to as "Global Vendor Finance", provides leasing and
6
<PAGE>
<PAGE>
financing services, together with related services, to customers of its
equipment vendor clients (i.e., manufacturers, dealers and distributors) with
which the Company has an ongoing marketing relationship. With the second
approach, "Direct Customer Finance", the Company provides leasing and financing
services, together with related services, directly to its small, mid-size and
large business customers.
GLOBAL VENDOR FINANCE
The Company's vendor finance marketing activities commenced in 1985 when
the Company's predecessor (Old Credit) was organized to provide financing and
related support to equipment customers of AT&T. Since then, the Company has
established on-going relationships with other select manufacturers and
distributors that seek to increase equipment sales, gain customer loyalty,
enhance their control over the marketing life cycle of their products through
the use of customized financing programs, and leave the management of credit
risk to AT&T Capital. The Company offers its vendor clients one of the most
extensive global financing networks in the equipment leasing and finance
industry.
AT&T and Affiliates
AT&T is the Company's original and largest vendor client. Historically, the
Company has financed (for AT&T's customers) a large volume of AT&T's
telecommunications and information technology equipment. Since AT&T's 1991
merger with NCR, the Company has financed an increasing percentage of NCR's
information technology and related equipment.
In the first quarter of 1996, AT&T's telecommunications manufacturing and
marketing businesses were transferred to Lucent, currently a wholly-owned
subsidiary of AT&T. AT&T intends to distribute to its shareholders by the end of
1996 all its interest in Lucent, which will be preceded by a public offering of
less than 20% of Lucent's shares. AT&T has also announced plans to separate NCR
from AT&T by the end of 1996.
During the year ended December 31, 1995, the Company generated $1.1 billion
of financing volume from AT&T and affiliate related vendor finance activities.
Of such financing volume, 86% was related to the AT&T businesses that will
comprise Lucent and 14% was related to the NCR business.
To facilitate the financing of sales of AT&T (including NCR and Lucent)
equipment, the Company has connected its data and telecommunications systems
with those of AT&T's sales and marketing offices and maintains personnel and
equipment at AT&T sales and marketing sites. The Company uses these linkages,
personnel and equipment in conjunction with its competitive strengths (e.g.,
credit scoring capabilities) and its personnel and equipment based at its own
sites to provide high volume processing capabilities that enable the Company to
serve large numbers of customers in an efficient and timely basis. In addition,
these linkages permit AT&T to invoice the Company electronically for certain
types of telecommunications and information technology equipment and permit the
Company to pay invoices electronically.
7
<PAGE>
<PAGE>
Other Vendor Clients
In serving AT&T's vendor finance needs over the past decade, the Company
has gained core competencies in vendor program development and administration,
credit analysis, equipment residual management, sales support, and high volume
small-ticket processing. The Company has leveraged these skills in developing
similar vendor finance programs for other large manufacturers and distributors.
Some of the many leading global vendors that are clients of the Company, include
Hyster Company, Tandem Computer, Abbott Laboratories, Gestetner Holdings, and
Canon Inc. The Company's non-AT&T global vendor activities are strategically
focused on four equipment markets: (i) computer technology; (ii) medical; (iii)
material handling and manufacturing; and (iv) document imaging and printing.
The Company has enhanced its relationships with vendor clients by
providing: a variety of customer financing products; sales aid services,
including the training of vendor personnel and point-of-sale support; private
label programs, in which the Company provides financing to the vendor's
customers under the vendor's name; customer operations support and interfaces;
alternate channel programs (distribution channels not involving the vendor's
direct sales force); inventory financing; and support for value-added retailers
or distributors (retailers or distributors that modify products and re-sell
them). AT&T Capital's management believes its ability to identify creditworthy
accounts represents a strategic competitive resource to vendors seeking to
increase sales without increasing their personnel costs. In addition, the
Company's high volume processing capabilities, relationship-based transaction
skills and residual assessment, equipment management and marketing expertise
provide vendors with competitive pricing and enhanced customer account control
after sales close.
During the year ended December 31, 1995, the Company generated $1.6 billion
of financing volume from its non-AT&T Global Vendor Finance activities.
DIRECT CUSTOMER FINANCE
The Company's Direct Customer Finance activities are a logical extension of
its Global Vendor Finance activities. The Company's Global Vendor Finance
activities have laid the foundation for what management believes is one of the
largest customer bases in the commercial equipment leasing and finance market
with approximately 500,000 customers. This customer base provides the Company
with the opportunity to offer these customers additional financing and equipment
management services.
Commercial Finance and Leasing
The Company leverages its large customer base, sophisticated transaction
structuring skills, and high volume transaction processing capabilities to
provide niche financial services directly to business customers (including AT&T
and its employees). AT&T Capital targets small and medium-size companies in the
United States with a wide range of
8
<PAGE>
<PAGE>
products including SBA loans, asset based loans, franchise financing, and other
financing products (such as pre-approved credit lines). In addition, the Company
serves large commercial customers by providing highly structured transactions
and project financing solutions.
For the year ended December 31, 1995, the Company generated $1.0 billion of
financing volumes from its commercial financing and leasing activities.
Specialized Equipment Financing and Services
The Company's specialized equipment knowledge and effective equipment
management competencies have been integral to its success in executing its
Global Vendor Finance and Direct Customer Finance strategies. Building on its
equipment knowledge and management skills, the Company has identified related
growth opportunities in managing and financing specialized equipment for
customers.
The Company's specialized equipment financing activities have been
concentrated in vehicle and computer leasing markets. The Company's equipment
management services have included procurement, tracking, deployment and
remarketing of equipment. AT&T Capital has principally focused its specialized
equipment management and remarketing services in the following markets: (i)
vehicle and high technology equipment leasing and financing; (ii) vehicle fleet
management; and (iii) high technology equipment rental and related services.
For the year ended December 31, 1995, the Company generated $.9 billion of
financing volumes from its specialized financing activities.
The following table shows approximate financing volumes and total assets
for each of the AT&T and other global vendor marketing channels and the
commercial finance and leasing and specialized equipment financing services
direct customer marketing channels as a percentage of total Company financing
volumes for the year ended December 31, 1995 and total Company assets as of
December 31, 1995.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Financing Total
Volume Assets
--------- ------
<S> <C> <C>
Global Vendor
AT&T & Affiliates 24% 29%
Other Vendor Clients 34% 27%
Direct Customer
Commercial
Finance & Leasing 22% 23%
Specialized Equipment
Financing Services 20% 21%
- --------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<PAGE>
Income Tax Considerations
The Company is currently a member of AT&T's consolidated group for federal
income tax purposes. The Company would cease to be a member of such consolidated
group for federal income tax purposes (a "Tax Deconsolidation") if, among other
events, AT&T's ownership interest in the outstanding common stock decreases to
below 80%. Tax Deconsolidation would have certain adverse effects on the Company
(see Notes 10 and 16 to the Consolidated Financial Statements).
As long as the Company is a part of the AT&T consolidated federal income
tax group, the payment of federal income taxes associated with sales of products
manufactured by AT&T is deferred (the amount of such taxes so deferred being
herein called "Gross Profit Tax Deferral"), generally as the products are
depreciated or until sold outside the group. Pursuant to the Gross Profit Tax
Deferral Interest Free Loan Agreement between the Company and AT&T, AT&T has
extended and has agreed to extend interest-free loans to the Company from time
to time in an amount equal to the then outstanding amount of Gross Profit Tax
Deferral. Such loans, the outstanding balance of which totaled $249.8 million as
of December 31, 1995, are repayable by the Company when and to the extent that
any such deferred taxes are required to be paid by AT&T. Upon any Tax
Deconsolidation, the Company would be required to repay such loans and would no
longer receive such loans, which have constituted a competitive advantage to the
Company in financing AT&T products.
Pursuant to the Federal Tax Sharing and the State Tax Sharing Agreements
between the Company and AT&T, the AT&T consolidated federal income tax liability
is generally allocated among the members of the AT&T consolidated group that
report taxable income. Members of the AT&T consolidated group that report tax
losses are compensated currently by AT&T (through cash payments made on a
periodic basis) for their losses to the extent those losses are used to reduce
the AT&T consolidated federal income tax liability. Similar principles and cash
payments also apply to certain state and local income tax liabilities.
Upon any Tax Deconsolidation, the Company would no longer be entitled to
receive quarterly cash payments from AT&T in compensation for the use of any tax
losses. The tax losses would, instead, be available to the Company to reduce
future taxable income. Thus, the Company may derive a benefit in the future from
tax losses, but only to the extent the Company has taxable income in later
years. In 1995, on a stand-alone basis, the Company had taxable income.
In addition, upon Tax Deconsolidation, it is possible that the Company
could be subject to the federal alternative minimum tax. A taxpayer's
alternative minimum tax liability is computed by applying the alternative
minimum tax rate, which is lower than the regular tax rate, to a measure of
taxable income that is broader than that used in computing the regular tax.
Payments of any alternative minimum tax incurred by the Company after a Tax
Deconsolidation would be available in the future as credits against the
Company's regular tax liability.
10
<PAGE>
<PAGE>
AT&T announced on September 20, 1995 plans to pursue a sale of its remaining
86% interest in the Company to the general public or another company. In light
of AT&T's announcement, it is possible that a Tax Deconsolidation will occur by
the end of 1996.
Credit Quality
The control of credit losses is an important element of the Company's
business. The Company seeks to minimize its credit risk through diversification
of its portfolio assets by customer, customer type, geographic location and
maturity. The Company's financing activities have been spread across a wide
range of equipment types (e.g., telecommunications, General Equipment,
information technology, transportation and real estate) and a large number of
customers located throughout the United States, and to a lesser extent, in
foreign countries.
The following table shows the components of the Company's allowance for
credit losses related to (i) lease financing (capital leases and rentals
receivable on operating leases) from United States operations, (ii) finance
receivables from United States operations and (iii) lease financing and finance
receivables from foreign operations; collectively "finance assets". In addition,
other key credit quality indicators, by loan type, are also provided. The
breakdown of the allowance for credit losses at each year-end reflects
management's estimate of credit losses and may not be indicative of actual
future charge-offs by loan classification.
<TABLE>
<CAPTION>
(Dollars in Thousands)
1995 1994* 1993* 1992* 1991*
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at beginning
of year:
- - Lease Financing-U.S. $113,735 $ 95,196 $ 86,086 $ 74,019 $ 57,578
- - Finance Receivables-U.S. 46,637 56,974 36,139 19,861 17,791
- - Foreign 16,056 7,649 1,736 87 -
- ---------------------------------------------------------------------------
Total 176,428 159,819 123,961 93,967 75,369
- ---------------------------------------------------------------------------
Additions Charged
to Operations:
- - Lease Financing-U.S. 66,505 62,447 91,605 87,156 100,445
- - Finance Receivables-U.S. 15,167 13,488 28,604 23,090 8,190
- - Foreign 4,542 4,953 3,469 1,469 -
- ---------------------------------------------------------------------------
Total 86,214 80,888 123,678 111,715 108,635
- ---------------------------------------------------------------------------
Charge-offs:
- Lease Financing-U.S. 48,834 47,585 61,233 76,462 76,422
- Finance Receivables-U.S. 10,446 22,908 14,135 18,183 15,466
- Foreign 5,595 3,024 284 125 -
- ---------------------------------------------------------------------------
Subtotal 64,875 73,517 75,652 94,770 91,888
</TABLE>
11
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
1995 1994* 1993* 1992* 1991*
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Recoveries:
- Lease Financing-U.S. 13,944 14,666 15,505 14,913 8,261
- Finance Receivables-U.S. 1,403 1,561 1,118 1,365 1,672
- Foreign 2,758 1,745 - 125 -
- ---------------------------------------------------------------------------
Subtotal 18,105 17,972 16,623 16,403 9,933
- ---------------------------------------------------------------------------
Net Charge-offs:
- - Lease Financing-U.S. 34,890 32,919 45,728 61,549 68,161
- - Finance Receivables-U.S. 9,043 21,347 13,017 16,818 13,794
- - Foreign 2,837 1,279 284 - -
- ---------------------------------------------------------------------------
Total 46,770 55,545 59,029 78,367 81,955
- ---------------------------------------------------------------------------
Transfers and Other (a):
- - Lease Financing-U.S. (684) (10,989) (36,767) (13,540) (15,843)
- - Finance Receivables-U.S. (154) (2,478) 5,248 10,006 7,674
- - Foreign 8,186 4,733 2,728 180 87
- ---------------------------------------------------------------------------
Total 7,348 (8,734) (28,791) (3,354) (8,082)
- ---------------------------------------------------------------------------
Balance at end of year:
- - Lease Financing-U.S. 144,666 113,735 95,196 86,086 74,019
- - Finance Receivables-U.S. 52,607 46,637 56,974 36,139 19,861
- - Foreign 25,947 16,056 7,649 1,736 87
- ---------------------------------------------------------------------------
Total $223,220 $ 176,428 $159,819 $123,961 $ 93,967
===========================================================================
Percentage of loan types to total finance assets:
- - Lease Financing-U.S. 62.2% 67.9% 70.6% 73.3% 73.4%
- - Finance Receivables-U.S. 20.8% 21.5% 23.1% 24.9% 26.4%
- - Foreign 17.0% 10.6% 6.3% 1.8% 0.2%
===========================================================================
Ratio of Net Charge-offs
during the year to
average finance assets:
outstanding during the year:
- Lease Financing 0.73% 0.78% 1.27% 1.94% 2.35%
- Finance Receivables 0.58% 1.69% 1.13% 1.53% 1.34%
- Foreign 0.24% 0.22% 0.15% - -
===========================================================================
Nonaccrual assets $118,484 $120,494 $160,574 $151,562 $85,381
</TABLE>
===========================================================================
* Amounts have been reclassified to conform to the 1995 presentation.
12
<PAGE>
<PAGE>
(a) Primarily includes transfers out of allowance for credit losses related to
receivables securitized, transfers in of reserves related to businesses
acquired and reclassifications.
The ratio of net charge-offs to average Finance Receivables increased in
1994 compared with 1993, while the allowance for credit losses decreased in 1994
compared with 1993 due to reserves established for specific assets (particularly
in the media portfolio) that were subsequently charged off in 1994. As a result,
in 1994 there were fewer assets that required specific reserves.
The following table reflects the Company's portfolio credit performance
indicators. Portfolio Assets include the investment in finance receivables,
capital leases and operating leases.
<TABLE>
<CAPTION>
Year Ending December 31 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Allowance for credit losses $223.2 $176.4 $159.8
Nonaccrual assets $118.5 $120.5 $160.6
Net charge-offs/Portfolio assets 0.50% 0.73% 0.95%
Allowance for credit losses/Portfolio assets 2.39% 2.30% 2.56%
Nonaccrual assets/Portfolio assets 1.27% 1.57% 2.58%
Delinquency (two months or greater) 1.46% 1.49% 2.41%
</TABLE>
Accounts are placed in nonaccrual status at 90 days past due or sooner if
identified as a problem account. Revenue which would have been recorded in 1995
on nonaccrual assets had these assets been earning at the original contractual
rate amounted to approximately $9.3 million. Revenue actually recognized in 1995
for assets in nonaccrual status at December 31, 1995 amounted to approximately
$6.0 million.
Pursuant to agreements with the Company, AT&T has agreed to repurchase or
guarantee certain finance assets that go into default. Finance assets subject to
such provisions were $238.8 million, $243.0 million, and $321.0 million at
December 31, 1995, 1994 and 1993, respectively. The Company believes that the
Company's total allowance for credit losses is adequate based on a review of
historical loss experience, a detailed analysis of delinquencies and problem
portfolio assets, and an assessment of probable losses in the portfolio as a
whole given its diversification.
Lease terms that are modified in the normal course of business, for which
additional consideration is received or insignificant concessions are made, are
accounted for as changes in a provision for a lease in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 13, "Accounting for Leases". The
amount of impaired loans at December 31, 1995 is not material (see Note 4 to the
Consolidated Financial Statements).
13
<PAGE>
<PAGE>
Residual Value Realization
The establishment and realization of residual values on leases are also
important elements of the Company's business. The Company's residual management
capabilities include its equipment remarketing skills, its in-house equipment
refurbishment facilities and its knowledge of developing technologies, products
and obsolescence trends. These competencies are used in setting residual values
upon the acquisition and leasing of the equipment based on the estimated value
of the equipment at the end of the lease term. These estimates are determined by
the Company from, among other things, studies prepared by the Company,
professional appraisals, historical experience and industry data, market
information on sales of used equipment, end-of-lease customer behavior and
estimated obsolescence trends.
The Company strategically manages its portfolio to ensure a broad
diversification of residual risk by equipment type and lease expiration. The
Company's risk management department, in conjunction with equipment experts in
the Company's business units, regularly reviews residual values, and if they
have declined, adjustments are made that result in an immediate charge to income
for capital leases and adjustments to depreciation expense for operating leases
over the shorter of the useful life of the asset or the remaining term of the
lease. (On an aggregate basis, the Company historically has realized proceeds
from the sale of equipment during the lease term and at lease termination in
excess of the Company's recorded residual values). There can be no assurance,
however, that such results will be realized in future years. The Company
recognizes, in total revenue, amounts in excess of recorded residuals over the
re-lease, or upon the sale or other disposition by the Company of leased
equipment.
14
<PAGE>
<PAGE>
The Company actively manages its residuals by working with lessees and
vendors during the lease term to encourage lessees to extend their leases or
upgrade and enhance their leased equipment, as appropriate, and by monitoring
the various equipment industries, particularly the information technology
industries, for obsolescence trends. The Company utilizes its equipment
management (including equipment remarketing), engineering and other technical
expertise to help manage its residual positions.
The following table shows projected residual expirations, as an approximate
percentage of aggregate recorded residuals as of December 31, 1995, by equipment
type for the years ended December 31, 1996, 1997, 1998, 1999 and 2000 and the
years thereafter:
<TABLE>
<CAPTION>
Equipment Type 1996 1997 1998 1999 2000+ Totals
---- ---- ---- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Telecommunications 5% 7% 7% 7% 8% 34%
Information Technology 8% 7% 6% 2% 1% 24%
Transportation 3% 4% 4% 2% 8% 21%
General equipment & other 3% 4% 4% 4% 6% 21%
Real Estate 0% 0% 0% 0% 0% 0%
--- --- --- --- --- ----
Total 19% 22% 21% 15% 23% 100%
</TABLE>
15
<PAGE>
<PAGE>
Competition and Related Matters
The equipment leasing and finance industry is highly competitive.
Participants in the industry compete through price (including the ability to
control costs), risk management, innovation and customer service. Principal cost
factors include the cost of funds, the cost of selling to or obtaining new
end-user customers and vendors, and the cost of managing portfolios (including,
for example, billing, collection, credit risk management, and residual
management). Adequate risk management is required to achieve satisfactory
returns on investment and to provide appropriate pricing of financing products.
The Company believes that innovation is necessary to compete in the industry,
involving specialization in certain types of equipment, financial structuring
for larger transactions, utilization of alternative channels of distribution and
optimization of tax treatment between owner and user. In addition, end-users of
equipment generally desire transactions to be simple, flexible and
customer-responsive.
In its leasing and financing operations and programs, the Company competes
with captive or related leasing companies (such as General Electric Capital
Corporation and IBM Credit Corporation), independent leasing companies (such as
Comdisco, Inc.), certain banks engaged in leasing, lease brokers and investment
banking firms that arrange for the financing of leased equipment, and
manufacturers and vendors who lease their own products to customers. In
addition, the Company competes with all banking and other financial
institutions, manufacturers, vendors and others who extend or arrange credit for
the acquisition of equipment, and in a sense, with end-users' available cash
resources to purchase equipment that the Company may otherwise finance. Many of
the competitors of the Company are large companies that have substantial
capital, technological and marketing resources; some of these competitors are
significantly larger than the Company and have access to debt at a lower cost
than the Company.
Recently there have been substantial changes in the equipment leasing and
finance industry, including the sale or cessation of operations of certain large
competitors of the Company and an apparent trend toward consolidation. While
these developments may on balance be favorable for the Company's prospects, they
are indicative of the strong competitive pressures on all participants in the
industry, including the Company.
The Company's penetration rate for AT&T's sales of telecommunications
equipment in the United States (i.e., the percentage of the dollar volume of
such sales that the Company finances) was approximately 37% for the year ended
December 31, 1995. The Company does not expect material increases in this
penetration rate, and there can be no assurance that the existing rate will be
maintained. The Company has a lower penetration rate (approximately 24% for the
year ended December 31, 1995) with respect to sales of NCR's products (data
processing and related products, including personal computers, retail
point-of-sale computers, and automatic teller machines) relative to its
penetration rates for telecommunications product
16
<PAGE>
<PAGE>
sales; however, such penetration rate increased from 1994. Additionally, the
Company has an insignificant penetration rate with respect to international
sales of AT&T's network systems products (large telecommunications switches,
cable products, cellular telephone equipment and microwave dishes and
equipment), which sales the Company has been financing for a relatively short
period of time. Because the markets for financing these products are highly
competitive and substantially different from the markets for financing
telecommunications equipment in the United States, there can be no assurance
that the penetration rates in these product areas will increase.
In addition to competition within the leasing and financing industry,
competition experienced in AT&T and its affiliates' industries may adversely
affect the Company because of the significance to the Company of its business
with customers of AT&T and its affiliates. Those industries are highly
competitive and subject to rapid changes in technology and customer needs. Many
of AT&T and its affiliates' competitors are large companies that have
substantial capital, technology and marketing resources.
In addition, the Regional Bell Operating Companies (the "RBOCs"), which
have historically been prohibited from manufacturing telecommunications
equipment by the terms of the Modified Final Judgment entered into in connection
with the divestiture of the RBOCs by AT&T in 1984, will be permitted to
manufacture such equipment and compete with Lucent, subject to satisfying
certain conditions, pursuant to telecommunications legislation recently enacted
by Congress. It is possible that one or more of the RBOCs may decide to
manufacture telecommunications equipment or form alliances with other
manufacturers. Either of such developments could result in increased competition
for Lucent, reduce the RBOCs' purchases of equipment from Lucent, and
consequently, adversely impact the Company's financing volumes.
While the Company is not able to fully predict whether Lucent's and NCR's
planned separation from AT&T and the cessation of their use of the "AT&T" brand
name will affect their equipment sales, any resulting change in the level of
equipment sales by Lucent and NCR would likely have a corresponding impact on
the Company's future financing volumes associated with such sales.
Employees
AT&T Capital has approximately 2850 employees as of February 1, 1996, each
of whom is referred to within the Company as a "member". Titles are not used
internally. In general, members function using a team approach, with business
generally conducted on a collaborative rather than hierarchical basis.
Management believes that its members are skilled and highly motivated and that
the Company's ability to achieve its objectives depends upon their efforts and
competencies. None of the Company's members are represented by a union. The
Company believes that its relations with its members are good.
17
<PAGE>
<PAGE>
ITEM 2. PROPERTIES
The Company's properties consist primarily of administrative offices,
warehouses for the storage and refurbishment of equipment and a number of
geographically dispersed sales offices. The Company has its headquarters in
Morristown, New Jersey, with its principal domestic offices and warehouses
located in Morristown and Parsippany, New Jersey; Framingham, Massachusetts;
Bloomfield Hills, Michigan; Towson, Maryland; and Dallas, Texas. The Company's
principal international offices are in London, England; Toronto, Canada; Hong
Kong; Sydney, Australia; and Mexico City, Mexico. All these offices and
warehouses are leased (some being subleased from AT&T or one of its affiliates),
except for one building (of approximately 9,000 square feet) in Framingham,
Massachusetts, owned by a subsidiary of the Company. This building is designed
as office space and storage and is sublet to a nonaffiliated company. The
Company considers its present locations suitable and adequate to carry on its
current business.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently a party to any pending litigation nor is the
Company aware of any threatened litigation which in the opinion of the Company's
management will have a material adverse impact on the Company's financial
condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Market Information
The principal market on which the common stock of the Company is
traded is the New York Stock Exchange.
18
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended Quarterly Stock Prices Dividends
declared
per share
High Low
<S> <C> <C> <C>
March 31, 1994 $27.000 $22.875 $0.09
June 30, 1994 $24.750 $21.625 $0.09
September 30, 1994 $24.375 $21.375 $0.09
December 31, 1994 $24.500 $19.750 $0.10
March 31, 1995 $27.250 $21.625 $0.10
June 30, 1995 $27.750 $24.000 $0.10
September 30, 1995 $38.625 $27.125 $0.10
December 31, 1995 $40.375 $35.750 $0.11
</TABLE>
(b) Holders
As of February 29, 1996, there were 827 holders of record of the
Company's common stock, including AT&T through Old Capital and
Old Credit (which held 40,250,000 shares or approximately 86% of
total shares outstanding).
(c) Dividends
It is anticipated that the Company will continue to pay regular
quarterly dividends. The declaration of dividends and their amounts
will be at the discretion of the Company's Board of Directors, and
there can be no assurance that additional dividends will be declared.
ITEM 6. SELECTED FINANCIAL DATA
The Results of Operations Data for the years ended December 31, 1995, 1994,
1993, 1992, 1991 and 1990, as well as the Balance Sheet Data and Other Data at
December 31, 1995, 1994, 1993, 1992 and 1991, are derived from the Consolidated
Financial Statements of the Company at such dates and for such periods, which
have been audited by Coopers & Lybrand L.L.P., independent accountants. The
Results of Operations Data for the years ended December 31, 1989, 1988, 1987 and
1986, as well as the Balance Sheet Data and Other Data at December 31, 1990,
1989, 1988, 1987 and 1986, are derived from unaudited consolidated financial
information. In management's opinion, the Company's unaudited consolidated
financial statements at or for the years ended December 31, 1990, 1989, 1988,
1987 and 1986, include all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation.
The selected financial data as presented under the "Financial Highlights"
caption in the Company's Annual Report should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and related notes thereto.
19
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
For the years ended December 31,
(Dollars in thousands, 1995 1994 1993 1992 1991
except per share amounts) ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Results of Operations Data:
Total revenue $1,577,035 $1,384,079 $1,359,589 $1,265,526 $1,160,150
Interest expense 411,040 271,812 236,335 252,545 275,650
Operating and
administrative
expenses 473,663 427,187 381,515 359,689 298,833
Provision for credit
losses 86,214 80,888 123,678 111,715 108,635
Income before income
taxes, extraordinary
loss and cumulative
effect on prior years
of accounting change 208,239 173,614 138,040 114,875 82,559
Income before extra-
ordinary loss, cumu-
lative effect on prior
years of accounting
change and impact of
tax rate change 127,555 100,336 83,911 73,572 54,199
Extraordinary loss - - - - -
Cumulative effect on
prior years of
accounting change (1) - - (2,914) - -
Impact of 1993 tax rate
change (1) - - (12,401) - -
Net income (1) 127,555 100,336 68,596 73,572 54,199
Earnings per share (1) 2.70 2.14 1.60 1.83 1.35
Earnings per share
before tax charges
(1), (2) 2.70 2.14 1.95 1.83 1.35
Dividends paid 19,231 17,338 4,216 49,632 55,512
Dividends per
share (6) $ 0.41 $ 0.37 $ 0.09 $ - $ -
Return on average
equity 12.1% 10.5% 8.5% 11.4% 10.7%
Return on average
assets 1.5% 1.4% 1.1% 1.3% 1.1%
Return on average equity
before tax charges (2) 12.1% 10.5% 10.3% 11.4% 10.7%
Return on average assets
before tax charges (2) 1.5% 1.4% 1.4% 1.3% 1.1%
- ---------------------------------------------------------------------------
Balance Sheet Data, at December 31:
Total assets $9,541,259 $8,021,923 $6,409,726 $5,895,429 $5,197,245
Total debt(3) 6,928,409 5,556,458 4,262,405 4,089,483 3,594,247
Total liabilities 8,425,134 7,013,705 5,485,283 5,158,808 4,647,979
Total shareowners'
equity $1,116,125 $1,008,218 $ 924,443 $ 736,621 $ 549,266
</TABLE>
20
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
For the years ended December 31,
(Dollars in thousands, 1990 1989 1988 1987 1986
except per share amounts) ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Results of Operations Data:
Total revenue $ 881,183 $ 466,508 $ 319,029 $ 259,716 $ 191,284
Interest expense 262,646 177,474 130,913 93,275 67,145
Operating and
administrative
expenses 193,882 118,430 90,528 76,752 55,211
Provision for credit
losses 75,508 32,222 19,135 39,227 28,049
Income before income
taxes, extraordinary
loss and cumulative
effect on prior years
of accounting change 70,891 59,346 47,306 40,269 38,816
Income before extra-
ordinary loss, cumu-
lative effect on prior
years of accounting
change and impact of
tax rate change 47,755 44,416 30,756 26,147 22,659
Extraordinary loss - - - - (1,157)
Cumulative effect on
prior years of
accounting change (1) - - - - -
Impact of 1993 tax rate
change (1) - - - - -
Net income (1) 47,755 44,416 30,756 26,147 21,502
Earnings per share (1) 1.19 1.10 0.76 0.65 0.53
Earnings per share
before tax charges
(1), (2) 1.19 1.10 0.76 0.65 0.53
Dividends paid 34,423 17,746 28,192 24,674 15,195
Dividends
per share (6) $ - $ - $ - $ - $ -
Return on average
equity 11.0% 12.7% 11.5% 11.8% 13.0%
Return on average
assets 1.1% 1.4% 1.2% 1.3% 1.7%
Return on average equity
before tax charges (2) 11.0% 12.7% 11.5% 11.8% 13.0%
Return on average assets
before tax charges (2) 1.1% 1.4% 1.2% 1.3% 1.7%
- ---------------------------------------------------------------------------
Balance Sheet Data, at December 31:
Total assets $4,722,694 $3,836,799 $2,715,592 $2,324,695 $1,552,847
Total debt(3) 3,312,421 2,742,843 1,692,556 1,640,879 1,019,970
Total liabilities 4,257,186 3,435,792 2,417,280 2,074,198 1,360,870
Total shareowners'
equity $ 465,508 $ 401,007 $ 298,312 $ 250,497 $ 191,977
</TABLE>
21
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
At or for the years ended December 31,
(Dollars in thousands, 1995 1994 1993 1992 1991
except per share amounts) ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Other Data:
Net portfolio assets
of the Company $9,105,403 $7,484,798 $6,076,805 $5,600,741 $4,956,830
Allowance for credit
losses 223,220 176,428 159,819 123,961 93,967
Assets of others
managed by the
Company 2,214,502 2,659,526 2,795,663 1,374,354 649,014
Volume of equipment
financed (4) $4,567,000 $4,251,000 $3,467,000 $3,253,000 $2,453,000
Ratio of earnings to
fixed charges (5) 1.50 1.62 1.57 1.44 1.29
Ratio of total debt to
shareowners' equity 6.22 5.51 4.61 5.55 6.54
Ratio of allowance for
credit losses to net
charge-offs 4.77 3.18 2.71 1.58 1.15
Ratio of net charge-
offs to portfolio
assets 0.50% 0.73% 0.95% 1.37% 1.62%
Ratio of allowance for
credit losses to
portfolio assets 2.39% 2.30% 2.56% 2.17% 1.86%
<CAPTION>
At or for the years ended December 31,
1990 1989 1988 1987 1986
------ ------ ------ ------ ------
Other Data:
Net portfolio assets
of the Company $4,513,280 $3,228,609 $2,529,834 $2,094,593 $1,440,626
Allowance for credit
losses 75,369 37,868 42,733 52,695 29,015
Assets of others
managed by the
Company 313,981 102,003 18,529 - -
Volume of equipment
financed (4) $2,300,000 $1,729,000 $1,489,000 $1,409,000 $1,101,000
Ratio of earnings to
fixed charges (5) 1.26 1.33 1.36 1.43 1.58
Ratio of total debt to
shareowners' equity 7.12 6.84 5.67 6.55 5.31
Ratio of allowance for
credit losses to net
charge-offs 1.62 1.02 1.47 3.04 3.71
Ratio of net charge-
offs to portfolio assets 1.01% 1.13% 1.13% 0.81% 0.53%
Ratio of allowance for
credit losses to
portfolio assets 1.64% 1.16% 1.66% 2.45% 1.97%
</TABLE>
22
<PAGE>
<PAGE>
(1) Net income and earnings per share for 1993 were adversely impacted by the
federal tax rate increase to 35% ($12.4 million) and a cumulative effect on
prior years of accounting change ($2.9 million). (See Note 10 to the
Consolidated Financial Statements.) Net income and earnings per share without
these charges for 1993 would have been $83.9 million and $1.95 per share,
respectively.
(2) The Company defines return on average equity before tax charges, return on
average assets before tax charges and earnings per share before tax charges, as
income before cumulative effect on prior years of accounting change and impact
of tax rate change as a percentage of average equity, average assets and divided
by average weighted shares outstanding, respectively.
(3) Does not include certain interest free loans from AT&T to the Company under
certain tax agreements, in aggregate outstanding principle amounts of $248.9
million, $214.1 million, $188.6 million, $193.1 million, $206.6 million, $239.6
million, $232.6 million, $244.5 million, $209.0 million and $134.1 million at
December 31, 1995, 1994, 1993, 1992, 1991, 1990, 1989, 1988, 1987 and 1986,
respectively.
(4) Total principal amount of loans and total cost of equipment associated with
finance and lease transactions recorded by the Company and the increase, if any,
in outstanding inventory financing loans.
(5) Earnings before income taxes, extraordinary loss and cumulative effect on
prior years of accounting change plus the sum of interest on indebtedness and
the portion of rentals representative of the interest factor divided by the sum
of interest on indebtedness and the portion of rentals representative of the
interest factor. A portion of the Company's indebtedness to AT&T does not bear
interest.
(6) Prior to July 28, 1993, AT&T owned 100% of the Company's stock and
therefore, dividends per share is not meaningful.
23
<PAGE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On September 20, 1995, AT&T Corp. ("AT&T") announced a plan to pursue the
public or private sale of its remaining 86% interest in AT&T Capital. As noted
in AT&T's 1995 Annual Report on Form 10-K, AT&T has stated that it cannot
predict the timing or terms of any such transaction. On such date, AT&T also
announced a plan to separate (the "Separation") into three publicly-held
stand-alone global businesses. The Separation is targeted by AT&T to be
completed by the end of 1996, but remains subject to a number of conditions. For
a more detailed discussion of AT&T's restructuring plans and their potential
impacts on the Company, see Note 16 to the Consolidated Financial Statements.
RESULTS OF OPERATIONS
1995 versus 1994
Net income for the year ended December 31, 1995, was $127.6 million, an
increase of $27.2 million, or 27.1%, compared with 1994. Earnings per share were
$2.70, a 26.2% increase over the $2.14 reported in 1994. The respective
increases in net income and earnings per share were generated principally
through increased portfolio revenues resulting from a higher level of average
net portfolio assets, strong secondary market activity and a favorable credit
environment. Higher interest expense and operating and administrative expenses,
associated with administering a higher level of assets, partially offset the
increased revenues.
Finance revenue of $174.5 million increased $53.7 million, or 44.5%, for
1995 compared with 1994 while the average net finance receivable portfolio
increased $396.2 million, or 32.0%, to $1,633.9 million for 1995. The increased
level of average net finance receivables accounted for $38.7 million of the
finance revenue increase. The increase in average yield to 10.68% in 1995 from
9.76% in 1994 contributed the remaining $15.0 million. The improved yield is
primarily due to the increased level of higher yielding products in the
Company's large-ticket specialty and structured finance portfolios and the
Company's Small Business Administration ("SBA") portfolio.
Capital lease revenue of $586.1 million increased $108.3 million, or 22.7%,
for 1995, compared with 1994. This increase was due to a 22.8% increase in the
average net capital lease portfolio to $5,690.1 million. The acquisition of the
vendor leasing and finance companies of Banco Central Hispano and certain of its
affiliates ("CFH Leasing International") was the largest contributor to the
increase in the capital lease portfolio. The overall yield of 10.3% was
unchanged from the prior year. Although certain of the Company's non-U.S.
businesses achieved improved yields over the prior year, certain small-ticket
leasing portfolios experienced decreased yields in 1995.
24
<PAGE>
<PAGE>
Rental revenue on operating leases of $561.0 million increased $85.6
million, or 18.0%, for 1995, compared with 1994. Depreciation on operating
leases of $354.5 million increased $40.9 million, or 13.1% for 1995, compared
with 1994. Rental revenue less associated depreciation ("operating lease
margin") was $206.5 million, or 36.8% of rental revenue for 1995, compared
with $161.8 million, or 34.0%, for 1994. The increased operating lease margin
in 1995 relates primarily to a higher level of renewed leases in the Company's
small-ticket telecommunications equipment portfolio, higher margins in the
testing and diagnostic equipment portfolio and the automobile portfolio, as
well as a reduced level of lower yielding mainframe computer assets.
Net interest margin (finance revenue, capital lease revenue and rental
revenue on operating leases, less depreciation on operating leases and interest
expense) of $556.1 million was 6.69% of average net portfolio assets for the
year ended December 31, 1995. This compares with a net interest margin of $488.7
million, or 7.29%, of average net portfolio assets for the year ended December
31, 1994. The decrease in net interest margin was due to an increase in the
Company's average cost of debt, partially offset by higher yields on the
Company's net portfolio assets, and an increase in the Company's debt to equity
ratio. For 1995, the average cost of debt was 6.60%, compared to 5.65% in 1994
while the total portfolio yield increased to 11.64% in 1995 from 11.34% in 1994.
As interest rates change, product pricing is generally adjusted to reflect the
Company's higher or lower cost of borrowing. However, the pricing in connection
with some small-ticket portfolios tends to lag and may not be commensurate with
the change in the Company's borrowing costs. The Company's debt to equity ratio
was 6.22 in 1995 versus 5.51 in 1994.
Revenue from sales of equipment of $48.7 million in 1995 decreased
substantially from $126.6 million in 1994. Similarly, cost of equipment sales of
$43.4 million in 1995 decreased from $117.0 million in 1994. The Company is
experiencing lower equipment sales generally due to a shift in customer behavior
away from the purchase of mainframe computers. Equipment sales revenue less
associated cost of equipment sales ("equipment sales margin") was $5.4 million,
or 11.0% of equipment sales revenue for the year ended December 31, 1995.
Equipment sales margin for the year ended December 31, 1994, was $9.6 million,
or 7.6% of equipment sales revenue. The equipment sales margin for 1995 was
favorably impacted by increased trading in the higher margin mid-range computer
area, a relatively new market for the Company.
25
<PAGE>
<PAGE>
Other revenue of $206.7 million increased $23.2 million, or 12.7%, in 1995,
compared with 1994. Other revenue consists mainly of sales of leased and
off-lease equipment, gains on receivables securitized and SBA loan sales,
portfolio servicing fees and other fee related revenue (see Note 6 to the
Consolidated Financial Statements). The increase in other revenue was primarily
generated from higher remarketing gains of $10.5 million from sales of leased
and off-lease equipment, higher gains on the sale of SBA loans of $9.0 million
and increased other fee related revenue of $5.2 million. These increases were
somewhat offset by a decrease of $8.9 million in securitization gains, as well
as lower portfolio servicing fees of $3.6 million due to a lower managed asset
base.
In the fourth quarter of 1995 and 1994, respectively, the Company
securitized $74.8 million and $259.1 million of lease receivables resulting in
gains of $5.9 million and $14.8 million. The gain on receivables securitized as
a percent of the assets securitized (the "spread") was 7.8% in 1995 and 5.7% in
1994. The improvement in the securitization spread is due primarily to a lower
discount rate used in the 1995 securitization as a result of a lower interest
rate environment.
Under the terms of this and previous years' securitizations, the Company is
liable to the purchasers of such receivables for a limited amount of recourse
granted by the Company to such purchasers. In the unlikely event that all such
receivables became uncollectible, the Company's maximum exposure under limited
recourse provisions granted to the purchasers of all securitized lease
receivables would have been $254.8 million and $353.1 million at December 31,
1995 and 1994, respectively. In addition, the Company provides such purchasers
with billing and collection and other services with respect to such securitized
receivables.
At December 31, 1995, total assets managed by the Company on behalf of
others were $2.2 billion compared with $2.7 billion at December 31, 1994. The
decrease in the level of assets managed is attributable to normal run-off
coupled with lower securitization activity. The total assets managed on behalf
of AT&T and its affiliates represented 68.0% and 55.9% of the total assets
managed at December 31, 1995 and 1994, respectively.
26
<PAGE>
<PAGE>
The following table shows the respective percentages of the assets,
revenues and net income (loss) related to United States and foreign operations
attributable to (i) leasing and financing services provided by the Company to
customers of AT&T , (ii) transactions involving AT&T as end-user and (iii) the
Company's non-AT&T business, in each case at or for the years ended December 31,
1995, 1994 and 1993. The net income (loss) shown below was calculated based upon
what the Company believes to be a reasonable allocation of interest, income
taxes and certain corporate overhead expenses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
At or for the year ended
December 31, 1995
Assets Revenues Net Income (Loss)
-------------------- --------------------- ---------------------
U.S. Foreign Total U.S. Foreign Total U.S. Foreign Total
% % % % % % % % %
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Customers
of AT&T 29.4 0.1 29.5 32.3 0.4 32.7 67.2 0.7 67.9
AT&T as
End-User 5.3 - 5.3 8.3 - 8.3 8.2 - 8.2
Non-AT&T
Business 47.8 17.4 65.2 46.3 12.7 59.0 27.0 (3.1) 23.9
----- ----- ----- ----- ----- ----- ----- ----- -----
Total 82.5 17.5 100.0 86.9 13.1 100.0 102.4 (2.4) 100.0
- ---------------------------------------------------------------------------
<CAPTION>
At or for the year ended
December 31, 1994
Assets Revenues Net Income (Loss)
-------------------- --------------------- ---------------------
U.S. Foreign Total U.S. Foreign Total U.S. Foreign Total
% % % % % % % % %
- ---------------------------------------------------------------------------
Customers
of AT&T 34.3 0.3 34.6 33.1 0.3 33.4 83.9 (1.4) 82.5
AT&T as
End-User 6.8 - 6.8 9.5 - 9.5 8.5 - 8.5
Non-AT&T
Business 48.0 10.6 58.6 47.8 9.3 57.1 11.8 (2.8) 9.0
----- ----- ----- ----- ----- ----- ----- ----- ----
Total 89.1 10.9 100.0 90.4 9.6 100.0 104.2 (4.2) 100.0
- --------------------------------------------------------------------------
</TABLE>
27
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
At or for the year ended
December 31, 1993
Assets Revenues Net Income (Loss)
-------------------- --------------------- ---------------------
U.S. Foreign Total U.S. Foreign Total U.S. Foreign Total*
% % % % % % % % %
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Customers
of AT&T 38.1 0.3 38.4 31.1 0.2 31.3 99.8 (1.7) 98.1
AT&T as
End-User 9.5 - 9.5 14.9 - 14.9 20.8 - 20.8
Non-AT&T
Business 46.1 6.0 52.1 47.8 6.0 53.8 (6.9) (12.0) (18.9)
----- ----- ----- ----- ----- ----- ------ ----- ------
Total 93.7 6.3 100.0 93.8 6.2 100.0 113.7 (13.7) 100.0
- --------------------------------------------------------------------------
</TABLE>
*The customers of AT&T, AT&T as end-user and non-AT&T business net income
(loss) before cumulative effect of the 1993 accounting change and impact of the
tax rate change was 89.0%, 20.2% and (9.2%), respectively. For a description of
the 1993 change and impact of the tax rate change, see Note 10 to the
Consolidated Financial Statements.
The Company intends to continue its strategy of expanding its non-AT&T
businesses, while at the same time enhancing its relationship with AT&T and its
affiliates. Because the growth in revenues generated by the Company's non-AT&T
businesses can be expected to lag behind the incurrence of expenses necessary to
expand and operate such businesses, the Company anticipates that the percentage
of its total net income and revenues attributable to non-AT&T businesses may
vary from year to year depending upon the stage of development of these non-AT&T
businesses.
The increases in the non-AT&T 1995 assets and revenues (as a % of total
Company) were generated almost equally from U.S. and foreign operations. The
significant increase realized from U.S. non-AT&T related net income was
primarily generated from the Company's large-ticket specialty and structured
finance activities, SBA loan sales and growth in the automobile portfolio. Net
losses from foreign non-AT&T businesses somewhat offset the strong U.S. results.
The securitization of certain non-AT&T portfolio assets positively affected
the net income of the non-AT&T businesses in all years presented; however, the
Company decreased the amount of securitizations each year from 1993 to 1995.
Partly as a result of the reduction in securitized assets, the portion of the
Company's non-AT&T net income attributable to securitization has decreased by
88.7% from 1993 to 1995 (see Note 6 to the Consolidated Financial Statements).
28
<PAGE>
<PAGE>
Growth in the Company's portfolio assets primarily caused the average
borrowings outstanding to increase by 29.5%, or $1.4 billion, to $6.2 billion,
while the Company's interest expense increased 51.2%, or $139.2 million, to
$411.0 million for 1995, compared with the prior year. The Company's 1995 debt
to equity ratio increased to 6.22 from 5.51. The increase in average borrowings
caused interest expense to increase by approximately $80.1 million. A higher
average cost of debt in 1995 (versus 1994) increased interest expense by $59.1
million. The Company's average 1995 interest rate on borrowings was 6.60% as
compared to 5.65% in 1994. The increase in the Company's 1995 average cost of
debt is a function of the Company issuing new debt at higher average rates than
the debt that matured during 1995. During 1995, the Company issued approximately
$2.9 billion of medium and long-term debt with an average interest rate of 7.2%.
The Company had $1.8 billion of medium and long-term debt with an average
interest rate of 5.9% mature in 1995. In addition, the Company's average
interest rate on commercial paper increased to 5.3% in 1995, up from 4.3% in
1994.
Operating and administrative expenses of $473.7 million increased $46.5
million, or 10.9%, in 1995, compared with 1994. This increase includes $27.0
million of expenses associated with the start-up of certain non-AT&T businesses,
acquisitions and international expansion. In addition, higher expenses were
incurred associated with managing a higher level of portfolio assets. For 1995,
operating and administrative expenses to total year-end assets decreased to
4.96% compared with 5.33% for 1994. This decrease can be attributed to some of
the Company's businesses (including recent start-up businesses) more fully
utilizing their infrastructure, increased operating efficiencies and increases
in assets financed. The Company's goal is to reach 4.5% or lower within the next
few years.
The effective income tax rate was 38.7% and 42.2% for 1995 and 1994,
respectively. The decline in the effective tax rate for 1995, compared with
1994, resulted from several factors including a lower level of non-tax
deductible goodwill and various other decreases.
See "Credit Quality" below for a discussion of the provision for credit
losses.
29
<PAGE>
<PAGE>
1994 versus 1993
Net income for the year ended December 31, 1994, was $100.3 million, an
increase of $31.7 million, or 46.3%, compared with 1993. Earnings per share for
the year ended December 31, 1994, were $2.14, a 33.8% increase over the $1.60
reported in 1993. The increase in net income and earnings per share for 1994
compared with 1993 was impacted by the 1993 adoption of Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes", which
resulted in a cumulative effect of accounting change of $2.9 million, and an
$11.4 million charge to reflect the impact on deferred tax balances of the third
quarter 1993 increase in the income tax rate to 35% from 34%. Absent the 1993
effect of adopting SFAS No. 109 and the impact of the increase in the income tax
rate, net income increased $17.4 million, or 21.0%, and earnings per share
increased $.21 per share. The increase principally reflected a higher average
level of finance assets resulting from both origination volume and acquisitions
of portfolios and businesses, and improved portfolio performance attributable to
a stronger economy, which contributed to a lower provision for credit losses.
Finance revenue of $120.8 million increased $13.4 million, or 12.4%, for
1994, compared with 1993, while the average earning finance receivable portfolio
increased $165.3 million, or 15.8%, to $1,213.3 million for 1994. The increase
in finance revenue due to the higher average earning finance receivables was
offset by slightly lower average yield rates earned on the average 1994
portfolio compared with rates earned on the average 1993 portfolio. This was
consistent with the Company's slightly lower average cost of debt (see interest
expense discussion below). A higher interest rate environment generally does not
impact the margin on assets that are already recorded by the Company, since the
Company employs a well-defined strategy to match fund assets with borrowings in
order to limit interest rate risk. The effects of higher borrowing costs would
be reflected in the pricing of new assets leased or financed. As the lower
yielding earning assets (as well as the corresponding lower cost borrowings) are
replaced with higher yielding assets, reflective of the current interest rate
environment, the Company's average rates associated with recorded assets and
associated borrowings will increase.
Capital lease revenue of $477.9 million increased $85.9 million, or 21.9%,
for 1994, compared with 1993, while the average earning capital lease portfolio
increased $1,007.4 million, or 27.6%, to $4,653.3 million for 1994. $40.7
million of the increase in capital lease revenue for 1994, compared with 1993,
was due to international acquisitions and expansion. The growth in capital lease
revenue resulted from a higher level of assets (including an AT&T mainframe
computer lease extension which resulted in the reclassification of the lease
from an operating lease to a capital lease) but was partially offset by a
decline in yields due to lower average rates associated with recorded assets of
the Company. As noted above, this was consistent with the Company's slightly
lower cost of debt. However, the Company experienced some margin compression in
certain equipment leasing portfolios as pricing in connection with some
portfolios is less reactive to interest rate movements.
30
<PAGE>
<PAGE>
Rental revenue on operating leases of $475.4 million decreased $26.8
million, or 5.3%, for 1994, compared with 1993. Depreciation on operating leases
of $313.6 million decreased $20.6 million, or 6.2%, for 1994, compared with
1993. These decreases were primarily due to the AT&T mainframe computer lease
extension during the first quarter of 1994. The terms of the extension, which
reduced the Company's mainframe residual exposure, resulted in the
reclassification of the lease from an operating lease to a capital lease. The
impact of this lease extension reduced rental revenue and depreciation on
operating leases by $75.3 million and $51.2 million, respectively. While U.S.
rental revenue and depreciation decreased, rental revenue and depreciation
related to the Company's international operations increased $13.0 million and
$10.8 million, respectively, for 1994 compared with 1993. Operating lease margin
was $161.8 million, or 34.0%, of rental revenue for 1994, compared with $167.9
million, or 33.4%, for 1993.
Market forces, economic uncertainty and the transition to a new generation
of mainframes and technological alternatives, adversely impacted the market for
mainframe computers. At December 31, 1994, $527.1 million, or 7.0%, of portfolio
assets (with related residual values of $79.1 million) related to mainframe
computers. This compares with $687.0 million, or 11.3%, (with related residual
values of $232.2 million) at December 31, 1993.
For the year ended December 31, 1994, revenue from sales of equipment
purchased for resale of $126.6 million decreased $35.0 million, or 21.6%,
compared with 1993. Cost of equipment sales of $117.0 million decreased $28.8
million, or 19.8%, for 1994, compared with 1993. Equipment sales margin was $9.6
million, or 7.6%, of equipment sales revenue for the year ended December 31,
1994. Equipment sales margin for the year ended December 31, 1993, was $15.7
million, or 9.7%, of equipment sales revenue. The decrease in the equipment
sales margin as a percentage of related revenue reflected the continued softness
in the mainframe computer market, as well as increased competition. In 1993, the
Company, was able to seize an opportunity to expand this activity to Europe.
However, the European market experienced increased competition in 1994.
Other revenue of $183.5 million decreased $13.0 million, or 6.6%, in 1994,
compared with 1993. The decrease in other revenue was primarily due to lower
securitization gains of $36.7 million and lower service fee revenue of $10.2
million. The decreases were partially offset by increased gains on sales of
leased and off-lease equipment of $26.8 million.
31
<PAGE>
<PAGE>
In the fourth quarter of 1994, the Company securitized $259.1 million of
lease receivables resulting in a gain of $14.8 million. Similar securitizations
in the first and fourth quarters of 1993 of $561.9 million in lease receivables
resulted in $51.5 million in gains. While the assets securitized in 1994 were
down by 53.9%, the related gain decreased by 71.3%. The difference was primarily
attributable to a higher discount rate used in the 1994 securitization due to
the higher interest rate environment.
At December 31, 1994, total assets managed by the Company on behalf of
others were $2.7 billion compared with $2.8 billion at December 31, 1993. Of the
total assets managed by the Company on behalf of others, 55.9% in 1994 and 59.2%
in 1993, were assets managed on behalf of AT&T and its affiliates.
Growth in the Company's portfolio assets caused the average borrowings
outstanding to increase by 15.6%, or $650.2 million, to $4.8 billion, while the
Company's interest expense increased 15.0%, or $35.5 million, to $271.8 million
for 1994, compared with 1993. The increase in average borrowings caused interest
expense to increase by approximately $37.0 million. This increase was partially
offset by $1.5 million in lower interest expense due to lower average interest
rates. The Company's average interest rate on borrowings was 5.65% for 1994,
compared with 5.68% for 1993. The increase in borrowing costs was reflected in
new borrowings made by the Company.
Operating and administrative expenses of $427.2 million increased $45.7
million, or 12.0%, in 1994, compared with 1993. The increase was primarily
attributable to expenses of approximately $30.0 million associated with the
start-up of certain non-AT&T businesses, acquisitions and international
expansion as well as expenses of $10.9 million associated with the Company's new
benefit and incentive plans. Also contributing to the increase were higher
expenses associated with managing a higher level of portfolio assets. For 1994,
operating and administrative expenses to total year-end assets decreased to
5.33% compared with 5.95% for 1993. This decrease was attributed to some of the
Company's start-up businesses more fully utilizing their infrastructure,
increased operating efficiencies and timing of assets financed.
32
<PAGE>
<PAGE>
Effective January 1, 1993, the Company adopted SFAS No. 109. The change in
accounting for income taxes resulted in a charge to earnings of $2.9 million in
the first quarter of 1993 as the cumulative effect on prior years of this
change, but had no effect on cash flows. The majority of this charge related to
establishing a valuation allowance against certain deferred tax assets relating
to state and local income taxes.
The effective income tax rate was 42.2% and 48.2% for 1994 and 1993,
respectively. The decrease was primarily due to the effect of the retroactive
tax rate increase recorded in the third quarter of 1993. Due to the increase in
the federal statutory corporate income tax rate from 34% to 35% signed into law
in August 1993, the Company recorded an additional charge to the provision for
income taxes of $12.4 million in 1993. The $12.4 million charge includes the
impact of increasing previously recorded deferred tax liabilities by $11.4
million. (See Note 10 to the Consolidated Financial Statements.) Excluding the
$11.4 million impact of increasing previously recorded deferred tax liabilities
to reflect the increase in the federal statutory corporate income tax rate for
1993, the effective tax rate would have been 39.9%. The increase in the
effective tax rate for 1994, compared with the adjusted effective tax rate for
1993, was due to increased non-deductible goodwill amortization expense related
to goodwill associated with assets that were sold during the second quarter of
1994 as well as various other increases.
See "Credit Quality" below for a discussion of the provision for credit
losses.
CREDIT QUALITY
The active management of credit losses is an important element of the
Company's business. The Company seeks to minimize its credit risk through
diversification of its portfolio assets by customer, industry segment,
geographic location and maturity. The Company's financing activities have been
spread across a wide range of equipment types (e.g., telecommunications, general
equipment (consists of general office, manufacturing and medical equipment),
information technology and transportation) and real estate and a large number of
customers located throughout the United States and, to a lesser extent, abroad.
33
<PAGE>
<PAGE>
As reflected below, the Company's portfolio credit performance indicators
have continued to be favorable in 1995.
<TABLE>
<CAPTION>
At or for the year ended December 31:
(dollars in millions) 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Allowance for credit losses $223.2 $176.4 $159.8
Nonaccrual assets $118.5 $120.5 $160.6
Net charge-offs/Portfolio assets .50% .73% .95%
Allowance for credit losses/Portfolio assets 2.39% 2.30% 2.56%
Nonaccrual assets/Portfolio assets 1.27% 1.57% 2.58%
Delinquency (two months or greater) 1.46% 1.49% 2.41%
</TABLE>
The Company maintains an allowance for credit losses at a level management
believes is adequate to cover estimated losses in the portfolio based on a
review of historical loss experience, a detailed analysis of delinquencies and
problem portfolio assets, and an assessment of probable losses in the portfolio
as a whole given its diversification. Management also takes into consideration
the potential impact of existing and anticipated economic conditions.
FINANCIAL CONDITION
Net portfolio assets (investment in finance receivables, capital leases and
operating leases, net of reserves) increased by $1.6 billion, or 21.7%, at
December 31, 1995, to $9.1 billion compared with December 31, 1994, principally
due to growth in the capital lease portfolio.
In January 1995, the Company acquired CFH Leasing International which has
locations in the United Kingdom, Germany, France, Italy, Belgium and the
Netherlands. CFH Leasing International provides financial services to equipment
manufacturers and vendors. With offices throughout western Europe, it serves
approximately 4,600 customers and had approximately $540 million in assets at
the time of acquisition.
The Company also acquired two relatively small businesses in the second
quarter of 1995, a United States mid-range computer asset business with
approximately $180 million in assets and an Australian equipment finance company
with approximately $40 million in assets.
As a result of the above mentioned international acquisitions, the
Company's international assets (excluding cross border transactions) at December
31, 1995, grew to 17.5% of total assets, up from 10.9% at December 31, 1994.
The net investment in finance receivables increased by $.3 billion, or
23.9% to $1.8 billion at December 31, 1995 compared with December 31, 1994
primarily due to increased loans related to transportation equipment, the
acquisition of CFH Leasing International and growth in the SBA lending
portfolio.
34
<PAGE>
<PAGE>
The net investment in capital leases increased by $1.1 billion, or 20.6% at
December 31, 1995, to $6.2 billion compared with December 31, 1994. This
increase was primarily due to the acquisition of CFH Leasing International and
growth in the Company's small-ticket equipment portfolios.
The net investment in operating leases increased by $.2 billion, or 23.8%,
at December 31, 1995, to $1.1 billion compared with the prior year. The increase
was primarily due to growth in the automobile portfolio, small-ticket equipment
portfolios and international businesses including the acquisition of CFH Leasing
International.
The Company regularly monitors its estimates of residual values for all
leased equipment, including mainframe computers, and believes that its residual
values are conservatively stated.
35
<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company generates a substantial portion of its funds to support the
Company's operations from lease and rental receipts, but is also highly
dependent upon external financing, including the issuance of commercial paper
and medium and long-term debt in public markets and, to a lesser extent,
privately placed asset-backed financings (or securitizations) and foreign bank
lines of credit. Standard & Poor's, Moody's Investors Service, and Duff & Phelps
Credit Rating Co. have rated the Company's senior medium and long-term debt A,
A3 and A, respectively, and have rated the Company's commercial paper A-1, P-1
and D-1, respectively. In connection with the previously mentioned September 20,
1995 restructuring announcement by AT&T, the Company's senior medium and
long-term debt and commercial paper ratings were placed on Credit Watch by
Standard & Poor's and under Review by Moody's Investors Service. Duff & Phelps
Credit Rating Co. affirmed the Company's senior medium and long-term debt and
commercial paper ratings.
Funds required to support the Company's operations during 1995, were
derived internally primarily from principal and interest collections from
customers (which include realization of cash from residual values through
remarketing activities), and externally from issuances of commercial paper, and
issuances of medium and long-term debt. The Company estimates that, under
existing lease and loan terms, gross cash receipts of approximately $9.7 billion
may be generated in the future.
In 1995, the Company issued commercial paper of $28.0 billion, issued
medium and long-term notes of $2.9 billion and made commercial paper repayments
of $28.2 billion and repaid medium and long-term debt of $1.8 billion. In 1994,
the Company issued commercial paper of $29.0 billion and made commercial paper
repayments of $28.4 billion, and issued medium and long-term debt of $2.1
billion and repaid medium and long-term debt of $1.4 billion.
During 1995 and 1994, principal collections from customers and proceeds
from securitized receivables and SBA loan sales of approximately $4.1 billion
and $3.9 billion, respectively, were received. These receipts were primarily
used for financing portfolio assets (including purchases of finance asset
portfolios and businesses) of approximately $5.8 billion in 1995, and $5.5
billion in 1994.
In conjunction with acquisitions, in 1995 and 1994 the Company assumed
$473.0 million and $106.9 million of debt respectively, of which $53.6 million
was outstanding at December 31, 1995.
36
<PAGE>
<PAGE>
During 1995 and 1994, the Securities and Exchange Commission ("SEC")
declared effective debt registration statements (which allow the Company to
issue debt to the public) of $3.0 billion and $2.5 billion, respectively. As of
December 31, 1995, all of the debt associated with the 1994 registration
statement was issued and $2.0 billion was available for issuance under the
Company's 1995 debt registration.
In the second quarter of 1995, the Company re-established credit facilities
of $2.0 billion. These facilities, negotiated with a consortium of 35 lending
institutions, support the commercial paper issued by the Company. At December
31, 1995, these facilities were unused. In addition, the Company's foreign
operations have short-term bank lines of credit of approximately $1.0 billion,
of which $.6 billion was unused at December 31, 1995.
The Company has, from time to time, borrowed funds on an interest free
basis directly from AT&T pursuant to a Gross Profit Tax Deferral Interest Free
Loan Agreement. The aggregate outstanding principal balance of such interest
free loans was $248.9 million at December 31, 1995. As discussed in more detail
in Note 16 to the Consolidated Financial Statements, the Company is obligated to
repay such loans if the Company were to cease being a member of AT&T's
consolidated group for federal income tax purposes.
Future financing is contemplated to be arranged as necessary to meet the
Company's capital and other requirements with the timing of issue, principal
amount and form depending on the Company's needs and prevailing market and
general economic conditions.
The Company anticipates obtaining necessary external financing through
issuances of commercial paper and medium and long-term debt and available lines
of credit for certain foreign operations, and to a lesser extent asset-backed
financings (or securitizations).
The Company considers its current financial resources, together with the
debt facilities referred to above and estimated future cash flows, to be
adequate to fund the Company's future growth and operating requirements.
The Company has paid quarterly dividends every quarter since the fourth
quarter of 1993, its first full quarter of operations after its initial public
offering. On January 19, 1996, the Company's Board of Directors declared a
quarterly dividend of eleven cents per share. The dividend is payable on
February 29, 1996, to shareowners of record as of February 9, 1996.
37
<PAGE>
<PAGE>
ASSET AND LIABILITY MANAGEMENT
AT&T Capital's asset and liability management process takes a coordinated
approach to the management of interest rate and foreign currency risks. The
Company's overall strategy is to match the average maturities of its borrowings
with the average cash flows of its portfolio assets, as well as the currency
denominations of its borrowings with those of its portfolio assets, in a manner
intended to reduce the Company's interest rate and foreign currency exposure.
The following discussion describes certain key elements of this process,
including AT&T Capital's use of derivatives to manage risk.
Match Funding
The Company generally matches the duration and maturity structure of its
liabilities to that of its portfolio assets. The Company routinely projects the
expected future cash flows related to its current portfolio assets. Based on
these projections, the Company is able to match the maturity and duration of its
debt with that of its assets. The cash flow projections incorporate assumptions
about customer behavior such as prepayments, refinancings and charge-offs. The
assumptions are based on historical experience with the Company's individual
markets and customers and are continually monitored and updated as markets and
customer behaviors change, to reflect current customer preferences, competitive
market conditions, portfolio growth rates and portfolio mix.
Interest Rate Risk and Currency Exchange Risk
The Company actively manages interest rate risk to protect the Company's
margins on existing transactions. Interest rate risk is the risk of earnings
volatility attributable to changes in interest rates. The Company routinely
analyzes its portfolio assets and strives to match floating rate assets with
floating rate debt and fixed rate assets with fixed rate debt. The Company
generally achieves a matched position through issuances of commercial paper and
medium and long-term debt, as well as through the use of interest rate swaps.
The Company does not speculate on interest rates, but rather seeks to mitigate
the possible impact of interest rate fluctuations encountered through the normal
course of business. This is a continual process due to prepayments,
refinancings, nonaccrual leases and loans, as well as other portfolio dynamics,
and therefore, interest rate risk can be significantly limited but never fully
eliminated. Additionally, the Company enters into foreign exchange contracts and
participates in the currency swap market to mitigate its exposure to assets and
liabilities denominated in foreign currencies and to meet local funding
requirements.
The Company has and expects to continue to enter into foreign exchange
contracts and currency swaps in 1996 as a result of its international
operations.
38
<PAGE>
<PAGE>
Using Derivatives to Manage Interest Rate and Currency Risk
AT&T Capital uses derivatives to match fund its portfolio and thereby
manage interest rate and currency risk. Derivatives can be customized in terms
of duration and interest rate basis (i.e., fixed or floating). Derivatives used
by the Company are operationally efficient to arrange and maintain. Whether AT&T
Capital issues medium and long-term debt, on which it pays a fixed rate, or
issues floating rate debt and utilizes interest rate swaps, on which it
generally pays a fixed rate and receives a floating rate, the Company's interest
rate risk position can be equally well managed. However, it is the interplay
between liquidity, capital, portfolio characteristics, and economic and market
conditions which will determine the final mix of medium and long-term debt,
commercial paper and swaps (or other derivatives) used to manage interest rate
risk. Notes 7 and 13 to the Consolidated Financial Statements provide more
details regarding the Company's debt portfolio and interest rate and currency
swap and foreign exchange contract positions.
As of December 31, 1995 the total notional amount of the Company's interest
rate and currency swaps was $2.2 billion and $.3 billion, respectively, as
compared to $2.7 billion and $.2 billion, respectively, as of December 31, 1994.
The U.S. dollar equivalent of the Company's foreign currency forward exchange
contracts was $658.8 million and $318.1 million at the end of 1995 and 1994,
respectively.
Derivative Credit Risk
The notional amount of derivative contracts does not represent direct
credit exposure. Rather, credit exposure may be defined as the market value of
the derivative contract and the ability of the counterparty to perform its
payment obligation under the agreement. The majority of the Company's interest
rate swaps require AT&T Capital to pay a fixed rate and receive a floating rate.
Therefore, this risk is reduced in a declining interest rate environment as the
Company is generally in a payable position, and is increased in a rising
interest rate environment as the Company is generally in a receivable position.
The Company seeks to control the credit risk of its interest rate swap
agreements through credit approvals, exposure limits and monitoring procedures.
All swap agreements are with major money center banks and intermediaries rated
investment grade by national rating agencies, with the majority of the Company's
counterparties being rated "AA" or better.
There were no past due amounts or reserves for credit losses at December
31, 1995, related to derivative transactions. The Company has never experienced
a credit related charge-off associated with derivative transactions.
Debt to Equity
The Company's ratio of total debt to equity at December 31, 1995 was 6.22
compared to 5.51 at December 31, 1994. This increase is consistent with the
Company's trend toward its current target leverage of approximately 6.25.
39
<PAGE>
<PAGE>
RECENT PRONOUNCEMENTS
Effective January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan", and No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures". These standards
require that impaired loans be measured based on the present value of expected
cash flows, discounted at the loan's effective interest rate, or the loan's
observable market price, or the fair value of the collateral if the loan is
collateral dependent, as well as requiring certain related disclosures. The
adoption of these statements did not have a material effect on the Company's
consolidated financial statements.
Effective October 1, 1995, the Company adopted SFAS No. 121, "Accounting
for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of". This standard requires that long-lived assets and certain identifiable
intangibles held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The adoption of the standard did not have a material
impact on the Company's consolidated financial statements.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation". This statement establishes
financial accounting and reporting standards for stock-based employee
compensation plans. This standard is effective for fiscal years beginning after
December 15, 1995 and will allow companies to choose either 1) a fair value
method of valuing stock-based compensation plans which will affect reported net
income, or 2) to continue following the existing accounting rules for stock
option accounting but disclose what the impacts would have been had the new
standard been adopted. The Company will choose the disclosure option of this
standard which would require disclosing the pro forma net income and earnings
per share amounts assuming the fair value method was adopted on January 1, 1995.
As a result, the adoption of this standard will not impact the Company's results
of operations, financial position or cash flows.
40
<PAGE>
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
At December 31, 1995 1994
(Dollars in Thousands)
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 3,961 $ 54,464
Net investment in finance
receivables 1,800,636 1,452,947
Net investment in capital leases 6,187,131 5,129,326
Net investment in operating leases, net of
accumulated depreciation of $642,728 in
1995 and $567,398 in 1994 1,117,636 902,525
Deferred charges and other assets 431,895 482,661
- ---------------------------------------------------------------------------
Total Assets 9,541,259 8,021,923
- ---------------------------------------------------------------------------
LIABILITIES AND SHAREOWNERS' EQUITY:
LIABILITIES:
Short-term notes, less unamortized discounts
of $9,698 in 1995 and $4,619 in 1994 2,212,351 2,176,877
Deferred income taxes 555,296 555,287
Income taxes and other payables 581,000 545,270
Payables to AT&T and affiliates 360,429 356,690
Medium and long-term debt 4,716,058 3,379,581
Commitments and contingencies
- ---------------------------------------------------------------------------
Total Liabilities $8,425,134 $7,013,705
- ---------------------------------------------------------------------------
</TABLE>
(Continued on next page)
41
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
At December 31, 1995 1994
(Dollars in Thousands)
- -------------------------------------------------------------------------------
<S> <C> <C>
SHAREOWNERS' EQUITY:
Common stock, one cent par value:
Authorized 100,000,000 shares, issued and
outstanding, 46,968,810 shares in 1995 and
46,962,439 in 1994 $ 470 $ 470
Additional paid-in capital 783,244 782,785
Recourse loans to senior executives (20,512) (19,651)
Foreign currency translation adjustments (2,173) (2,158)
Retained earnings 355,096 246,772
- -------------------------------------------------------------------------------
Total Shareowners' Equity 1,116,125 1,008,218
- -------------------------------------------------------------------------------
Total Liabilities and Shareowners' Equity $9,541,259 $8,021,923
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
42
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
For the Years Ended December 31, 1995 1994 1993
(Dollars in Thousands, except per share amounts)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Finance revenue $ 174,523 $ 120,800 $ 107,436
Capital lease revenue 586,141 477,875 391,985
Rental revenue on operating leases
(includes $86,651 in 1995,
$79,573 in 1994 and $158,592 in
1993 from AT&T and affiliates) 560,964 475,375 502,132
Equipment sales 48,724 126,567 161,529
Other revenue, net 206,683 183,462 196,507
- ---------------------------------------------------------------------------
Total Revenues 1,577,035 1,384,079 1,359,589
- ---------------------------------------------------------------------------
EXPENSES:
Interest (includes $21,602 in 1993
to AT&T and affiliates) 411,040 271,812 236,335
Operating and administrative (includes
$25,532 in 1995, $24,729 in 1994 and
$44,775 in 1993 to AT&T and affiliates) 473,663 427,187 381,515
Depreciation on operating leases 354,509 313,583 334,191
Cost of equipment sales 43,370 116,995 145,830
Provision for credit losses 86,214 80,888 123,678
- ---------------------------------------------------------------------------
Total Expenses 1,368,796 1,210,465 1,221,549
- ---------------------------------------------------------------------------
Income before income taxes and cumulative
effect on prior years of accounting change 208,239 173,614 138,040
Provision for income taxes 80,684 73,278 66,530
- ---------------------------------------------------------------------------
Income before cumulative effect on prior
years of accounting change 127,555 100,336 71,510
Cumulative effect on prior years of
accounting change - - (2,914)
- ---------------------------------------------------------------------------
NET INCOME $ 127,555 $ 100,336 $ 68,596
- ---------------------------------------------------------------------------
</TABLE>
(Continued on next page)
43
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
For the Years Ended December 31, 1995 1994 1993
(Dollars in Thousands, except per share amounts)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings per common share and common share equivalent:
Income before cumulative effect on
prior years of accounting change $ 2.70 $ 2.14 $ 1.67
Cumulative effect on prior years of
accounting change - - (.07)
- ---------------------------------------------------------------------------
Net Income Per Share $ 2.70 $ 2.14 $ 1.60
- ---------------------------------------------------------------------------
Weighted average shares
outstanding (thousands): 47,182 46,906 43,002
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
44
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
For the Years Ended December 31, 1995 1994 1993
(Dollars in Thousands)
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock
Balance at beginning of year $ 470 $ 469 $ 403
Stock issuances:
Public offering - - 58
Pension and benefit plans - 1 8
- --------------------------------------------------------------------------
Balance at end of year 470 470 469
- --------------------------------------------------------------------------
Additional paid-in capital
Balance at beginning of year 782,785 780,591 638,371
Capital contributions - - 9,106
Stock issuances, net:
Public offering - - 114,482
Pension and benefit plans 459 2,194 18,632
- --------------------------------------------------------------------------
Balance at end of year 783,244 782,785 780,591
- --------------------------------------------------------------------------
Recourse loans to senior executives
Balance at beginning of year (19,651) (17,788) -
Loans made (2,613) (2,760) (17,788)
Loans repaid 1,752 897 -
- --------------------------------------------------------------------------
Balance at end of year (20,512) (19,651) (17,788)
- --------------------------------------------------------------------------
Foreign currency translation adjustments
Balance at beginning of year (2,158) (2,603) (1,547)
Unrealized translation gain (loss) (15) 445 (1,056)
- --------------------------------------------------------------------------
Balance at end of year (2,173) (2,158) (2,603)
- --------------------------------------------------------------------------
Retained earnings
Balance at beginning of year 246,772 163,774 99,394
Net income 127,555 100,336 68,596
Cash dividends paid (19,231) (17,338) (4,216)
- --------------------------------------------------------------------------
Balance at end of year 355,096 246,772 163,774
- --------------------------------------------------------------------------
Total Shareowners' Equity $1,116,125 $1,008,218 $924,443
- --------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
45
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
For the Years Ended December 31, 1995 1994* 1993*
(Dollars in Thousands)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 127,555 $ 100,336 $ 68,596
Noncash items included in income:
Depreciation and amortization 412,044 353,954 384,933
Deferred taxes (2,772) 106,384 43,419
Provision for credit losses 86,214 80,888 123,678
Gain on receivables
securitizations (5,866) (14,799) (51,496)
Gain on SBA loan sales (10,508) (1,512) (1,192)
Cumulative effect on prior years
of accounting change - - 2,914
Decrease (increase) in deferred
charges and other assets 34,614 (124,305) 12,640
Increase in income taxes
and other payables 50,362 3,068 72,451
Decrease in payables to
AT&T and affiliates (3,509) (10,257) (1,340)
- ---------------------------------------------------------------------------
Net Cash Provided by
Operating Activities 688,134 493,757 654,603
- ---------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisitions of fixed
assets, net (8,018) (6,622) (6,555)
Purchase of businesses, net of cash
acquired (294,472) (234,375) -
Purchase of finance asset portfolios (19,769) (217,939) (100,589)
Financings and lease equipment
purchases (5,467,773) (5,031,041) (5,027,031)
Principal collections from
customers, net of amounts
included in income 3,855,592 3,553,620 3,612,043
Cash proceeds from receivables
securitizations 134,316 286,821 572,348
Cash proceeds from SBA loan sales 157,160 19,585 10,684
- --------------------------------------------------------------------------
Net Cash Used for Investing
Activities $(1,642,964) $(1,629,951) $ (939,100)
- ---------------------------------------------------------------------------
</TABLE>
(Continued on next page)
46
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
For the Years Ended December 31, 1995 1994* 1993*
(Dollars in Thousands)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES:
(Decrease) increase in short-term
notes, net $ (207,045) $ 523,370 $ (355,463)
Additions to medium and
long-term debt 2,905,920 2,142,993 1,161,638
Repayments of medium and
long-term debt (1,828,426) (1,448,470) (632,563)
Increase (decrease) in payables to
AT&T and affiliates 53,109 (9,897) 9
Dividends paid (19,231) (17,338) (4,216)
Proceeds from sale of common stock, net - - 115,092
- ---------------------------------------------------------------------------
Net Cash Provided by Financing
Activities 904,327 1,190,658 284,497
- ---------------------------------------------------------------------------
Net (Decrease) Increase in Cash
and Cash Equivalents (50,503) 54,464 -
Cash and Cash Equivalents at
Beginning of Period 54,464 - -
- ---------------------------------------------------------------------------
Cash and Cash Equivalents at
End of Period $ 3,961 $ 54,464 $ -
- ---------------------------------------------------------------------------
</TABLE>
Interest paid, including discount on commercial paper, was $365,473,
$253,960 and $247,565 during 1995, 1994 and 1993, respectively.
Net income taxes paid (received) were $27,781, $55,712 and $(22,972) during
1995, 1994 and 1993, respectively.
Noncash Investing and Financing Activities:
In 1995, 1994 and 1993, the Company entered into capital lease obligations
of $105,215, $41,442 and $25,259, respectively, for equipment that was
subleased. In 1995 and 1994, the Company assumed debt in conjunction with
acquisitions of $472,952 and $106,945, respectively. In 1993, Old Capital (as
defined in Note 1) made capital contributions to the Company of $9,106 primarily
relating to deferred tax assets arising as a result of the Restructuring.
* Certain amounts have been reclassified to conform to the 1995
presentation.
The accompanying notes are an integral part of these Consolidated Financial
Statements.
47
<PAGE>
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, except per share amounts)
1. THE COMPANY
For a discussion regarding the potential impacts of AT&T Corp.'s ("AT&T")
announcement to sell its 86% interest in AT&T Capital Corporation ("AT&T
Capital" or the "Company"), see Note 16.
Background
The Company was incorporated on December 21, 1992, as AT&T Leasing, Inc.,
and was renamed AT&T Capital Corporation on March 31, 1993. The Company is the
successor entity to certain businesses of AT&T Capital Holdings, Inc. (formerly
known as AT&T Capital Corporation) ("Old Capital"), a wholly owned subsidiary of
AT&T, and its subsidiaries, including AT&T Credit Holdings, Inc. (formerly known
as AT&T Credit Corporation) ("Old Credit"), a wholly owned subsidiary of Old
Capital that commenced operations in 1985. In a restructuring that occurred on
March 31, 1993 (the "Restructuring"), Old Capital and Old Credit transferred
substantially all of their assets, except for certain assets consisting
principally of equity interests in project finance transactions and leveraged
leases of commercial aircraft ("Lease Finance Assets"), in exchange for shares
of the Company's common stock and the assumption by the Company of certain
related liabilities.
In connection with the Restructuring, AT&T issued direct, full and
unconditional guarantees of all existing indebtedness outstanding as of March
31, 1993, for borrowed money incurred, assumed or guaranteed by Old Capital
entitled to the benefit of a Support Agreement between AT&T and Old Capital,
including the debt of Old Capital assumed by the Company in the Restructuring.
Debt issued by the Company subsequent to March 31, 1993, however, is not
guaranteed or supported by AT&T (see Note 7).
An initial public stock offering combined with a management stock offering
totaling approximately 14% of the Company's stock occurred on August 4, 1993
(see Note 8). As a result of the stock offerings, approximately 86% of the
outstanding common stock of the Company is owned by AT&T through Old Credit and
Old Capital.
Basis of Presentation
The consolidated financial statements reflect the financial position,
results of operations and cash flows of the businesses transferred to the
Company on March 31, 1993, by Old Capital and Old Credit as a result of the
Restructuring. The Restructuring was accounted for in a manner similar to a
pooling of interests. The common stock issued in connection with the
incorporation of the Company has been reflected as outstanding for all periods
presented.
The consolidated financial statements include allocations of certain
liabilities and expenses relating to the businesses transferred to the Company
by Old Capital and Old Credit.
48
<PAGE>
<PAGE>
DESCRIPTION OF THE BUSINESS
The Company is a full-service, diversified equipment leasing and finance
company that operates predominantly in the United States; however, it also has
operations in Europe, Canada, the Asia/Pacific Region, Mexico and South America.
The Company operates primarily in one business segment - equipment leasing and
financing. This segment represents more than 90% of consolidated revenues, net
income and total assets. The Company leases and finances equipment manufactured
and distributed by AT&T and its affiliates and numerous other companies. The
Company also provides inventory financing for equipment dealers and
distributors, Small Business Administration ("SBA")lending, and equipment
management and remarketing services. In addition, the Company offers its
customers high-technology equipment rental and certain other equipment
administration services.
At December 31, 1995, AT&T Capital's portfolio assets were comprised of
telecommunications equipment totaling 23%, general equipment (consists of
general office, manufacturing and medical equipment) aggregating 28%,
information technology equipment of 23%, transportation equipment of 19% and
real estate of 7%.
AT&T Capital's portfolio assets are diversified among a large customer
base, as well as numerous industries and geographic regions. The Company's
customers are diversified across many industries including manufacturing,
services, communications and retail, as well as many small and mid-size business
customers and federal, state and local governments and their agencies. At
December 31, 1995, the Company's 99 largest customers (after AT&T and its
affiliates - see Note 12) accounted for approximately 21% of the Company's net
portfolio assets, and no customer (with the exception of AT&T and its
affiliates) accounted for more than 1% of such net portfolio assets.
Other than AT&T and its affiliates (including Lucent Technologies Inc.
("Lucent") and NCR Corporation ("NCR")), as of December 31, 1995, management is
not aware of any significant concentration of business transacted with a
particular customer, supplier or lender that could severely impact the Company's
operations. Also, the Company does not have a concentration regarding the types
of financing products or available sources of debt, labor or services, or
licenses or other rights that could severely impact its operations.
49
<PAGE>
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The accompanying consolidated financial statements include all
majority-owned subsidiaries. The accounts of operations located outside of the
United States are included on the basis of their fiscal years, ended either
November 30, or December 31.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the period reported. Actual results
could differ from those estimates. Significant areas in which estimates are used
include residual values, allowance for credit losses and contingencies.
Revenue Recognition for Finance Receivables and Capital Leases
For loans and other financing contracts ("Finance Receivables"), revenue is
recognized over the life of the contract using the interest method.
For leases classified as Capital Leases, the difference between (i) the sum
of the minimum lease payments due and the estimated unguaranteed residual values
and (ii) the asset purchase price paid by the Company is initially recorded as
unearned income. The difference is subsequently amortized over the life of the
lease contract and recognized as revenue, using the interest method.
Accrual of income on portfolio assets is generally suspended when a loan or
a lease becomes contractually delinquent for 90 days or more (or earlier if
deemed necessary). Accrual is resumed when the receivable becomes contractually
current and management believes there is no longer any significant probability
of loss.
50
<PAGE>
<PAGE>
Investment in Operating Leases
Equipment under Operating Leases is generally depreciated over the
estimated useful life of the asset. During the term of the related lease, annual
depreciation is generally calculated on a straight-line basis based on the
estimated residual values at the end of the respective lease terms. Rental
revenue is recognized on a straight-line basis over the related lease terms.
Estimated Unguaranteed Residual Values
Estimated unguaranteed residual values are established upon acquisition and
leasing of the equipment based upon the estimated value of the equipment at the
end of the lease term. They are determined on the basis of studies prepared by
the Company, professional appraisals, historical experience and industry data.
Although it is reasonably possible that a change in the unguaranteed residual
values could occur in the near term, the Company actively manages its residual
values by working with lessees and vendors during the lease term to encourage
lessees to extend their leases or upgrade and enhance their leased equipment.
Residual values are reviewed by the Company at least annually. Declines in
residual values for capital leases are recognized as an immediate charge to
income. Declines in residual values for operating leases are recognized as
adjustments to depreciation expense over the shorter of the useful life of the
asset or the remaining term of the lease.
Allowance for Credit Losses
In connection with the financing of leases and other receivables, the
Company records an allowance for credit losses to provide for estimated losses
in the portfolio. The allowance for credit losses is estimated by management
considering delinquencies and problem assets, an assessment of overall risks and
evaluation of probable losses in the portfolio given its diversification, and a
review of historical loss experience. Although currently deemed adequate by
management, it is reasonably possible that a change in the estimate could occur
in the near term as a result of changes in the above mentioned factors. The
Company's reserve policy is based on an analysis of the aging of the Company's
portfolio, a review of all non-accrual receivables and leases, and prior
collection experience. An account is charged off when analysis indicates that
the account is uncollectible. Additionally, Company policy generally requires
the "at risk" portion (the amount of the receivable not covered by estimated
equipment or other collateral value) of accounts 180 days past due to be
reserved for or charged off.
Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
51
<PAGE>
<PAGE>
Other Assets
The cost of property and equipment is depreciated on a straight-line basis
over their estimated useful lives, which generally range from three to
twenty-five years. Leasehold improvements are amortized over the lesser of the
term of the related lease or the estimated useful lives of the related assets on
a straight-line basis.
Goodwill represents the excess of the cost of companies acquired over the
fair value of their net assets on the date of acquisition, and is amortized as a
charge against income on a straight-line basis generally over three to twenty
year periods. Goodwill in excess of associated expected operating cash flows is
considered to be impaired and is written down to fair value.
Derivative Financial Instruments
The Company enters into derivative financial instruments, mainly interest
rate swaps and currency swaps, to hedge interest rate and foreign currency
exchange risk and to match fund assets and liabilities. Interest rate swaps
generally involve the exchange of interest payments without the exchange of
underlying notional principal amounts. Currency swaps generally involve both the
exchange of principal and interest payments in distinct currencies. The criteria
which must be satisfied for hedges are as follows: (1) the asset or liability to
be hedged exposes AT&T Capital, as a whole, to interest rate or currency
exchange risk, (2) the derivative acts to reduce the interest rate or currency
exchange risk by reducing the sensitivity to interest rate or currency exchange
movements, and (3) the derivative is designated and effective as a hedge.
For interest rate swaps, the Company records the net interest to be
received or paid as an adjustment to interest expense. In the event of an early
termination of a swap contract, the gain or loss on a swap accounted for as a
hedge is amortized over the remaining life of the related transaction. The
Company does not enter into speculative swaps; however, if the underlying
transaction associated with a swap accounted for as a hedge is terminated early,
the swap is then considered speculative. The gain or loss on a speculative swap
is recognized immediately.
The Company enters into foreign exchange contracts as a hedge against
assets and liabilities denominated in foreign currencies. Gains and losses are
recognized on the contracts and offset foreign exchange gains or losses on the
related assets and liabilities.
Foreign Currency Translation
The financial statements of the Company's foreign operations are translated
into U.S. dollars in accordance with Statement of Financial Accounting Standards
("SFAS") No. 52, "Foreign Currency Translation", the resulting translation
adjustments are recorded as a separate component of shareowners' equity. A
transaction gain or loss realized upon settlement of a foreign currency
transaction generally is included in determining net income for the period in
which the transaction is settled.
52
<PAGE>
<PAGE>
Earnings Per Common Share and Common Share Equivalent
Earnings per common share and common share equivalent are calculated using
the weighted average number of common shares outstanding during the period
giving effect to dilutive common stock equivalents in the form of stock options
using the treasury stock method. Fully diluted earnings per share is not
materially different from primary earnings per share.
Impairment of Long-Lived Assets
Effective October 1, 1995, the Company adopted SFAS No. 121, "Accounting
for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of". This standard requires that long-lived assets and certain identifiable
intangibles held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. The adoption of the standard did not have a material
impact on the Company's consolidated financial statements.
3. ACQUISITIONS
On January 4, 1995, the Company acquired the vendor leasing and finance
companies of Banco Central Hispano and certain of its affiliates ("CFH Leasing
International") located in the United Kingdom, Germany, France, Italy, Belgium
and the Netherlands. CFH Leasing International provides financial services to
equipment manufacturers and vendors and had approximately $540 million in assets
at the time of acquisition. In addition, on June 30, 1995, the Company acquired
two relatively small businesses, a United States mid-range computer asset
business with approximately $180 million in assets and an Australian equipment
finance company with approximately $40 million in assets. The above acquisitions
were accounted for under the purchase method and the total cash paid, net of
cash acquired, for all of the above was $294.5 million. In addition, the Company
assumed certain existing debt associated with these acquisitions. The results of
operations are included in the income statement of the Company from the
respective acquisition dates.
Unaudited pro forma revenues, net income and earnings per share would have
been approximately $1,457.4 million, $111.4 million and $2.37, respectively, for
the year ended December 31, 1994 had the acquisitions occurred on January 1,
1994. The pro forma amounts for the year ended December 31, 1995 would not
differ materially from the actual amounts reported if the acquisitions had
occurred on January 1, 1995. The pro forma information is based on various
assumptions and is not necessarily indicative of results of operations that
would have been reported had the acquisitions been completed at the date
mentioned above. The associated goodwill is amortized over periods not to exceed
15 years.
53
<PAGE>
<PAGE>
4. NET INVESTMENT IN FINANCE RECEIVABLES AND CAPITAL LEASES
Finance receivables and capital leases consisted of the following:
<TABLE>
<CAPTION>
Finance
Receivables Capital Leases
At December 31, 1995 1994 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Receivables $1,959,004 $1,634,454 $6,846,834 $5,712,848
Estimated unguaranteed
residual values - - 734,140 606,207
Unearned income (104,170) (133,620) (1,230,418) (1,066,457)
Allowance for credit losses (54,198) (47,887) (163,425) (123,272)
- ---------------------------------------------------------------------------
Net investment $1,800,636 $1,452,947 $6,187,131 $5,129,326
- ---------------------------------------------------------------------------
</TABLE>
The schedule of maturities at December 31, 1995 for the finance receivables
and capital leases is as follows:
<TABLE>
<CAPTION>
Finance Capital
Receivables Leases
- ---------------------------------------------------------------------------
<S> <C> <C>
1996 $ 553,021 $2,618,921
1997 314,683 1,929,454
1998 229,225 1,195,209
1999 198,687 638,032
2000 209,451 253,268
2001 and thereafter 453,937 211,950
- ---------------------------------------------------------------------------
Total $1,959,004 $6,846,834
- ---------------------------------------------------------------------------
</TABLE>
AT&T has agreed to repurchase or guarantee certain finance receivables and
capital leases that go into default. At December 31, 1995 and 1994, $123,600 and
$155,312, respectively, of the Company's net investment in finance receivables
contained such recourse provisions. At December 31, 1995 and 1994, $115,233 and
$87,716, respectively, of the Company's net investment in capital leases
contained such provisions.
54
<PAGE>
<PAGE>
Effective January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan", and No. 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures". These standards
require that impaired loans be measured based on the present value of expected
cash flows, discounted at the loan's effective interest rate or, the loan's
observable market price or, the fair value of the collateral if the loan is
collateral dependent, as well as requiring certain related disclosures. The
adoption of these statements did not have a material effect on the Company's
consolidated financial statements. The amount of impaired loans at December 31,
1995 is not material.
5. NET INVESTMENT IN OPERATING LEASES
The following is a summary of equipment under operating leases at December
31, 1995 and 1994, including equipment on lease to AT&T affiliates (see Note
12):
<TABLE>
<CAPTION>
At December 31, 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
Original equipment cost:
Information technology $ 628,857 $ 571,504
Telecommunications 378,426 366,259
Transportation 456,575 304,936
General equipment and other 254,984 204,153
- ---------------------------------------------------------------------------
1,718,842 1,446,852
Less: Accumulated depreciation (642,728) (567,398)
Rentals receivable, net 41,522 23,071
- ---------------------------------------------------------------------------
Net investment in operating leases $1,117,636 $ 902,525
- ---------------------------------------------------------------------------
</TABLE>
Minimum future rentals to be received on noncancelable operating leases as
of December 31, 1995, are as follows:
<TABLE>
<S> <C>
1996 $428,862
1997 248,915
1998 116,810
1999 46,974
2000 23,541
2001 and thereafter 8,857
- --------------------------------------------------------------------------
Total minimum future rentals $873,959
- ---------------------------------------------------------------------------
</TABLE>
55
<PAGE>
<PAGE>
6. OTHER REVENUE
For a discussion regarding the potential impacts of AT&T's announcement to
sell its 86% interest in the Company, see Note 16.
Other revenue consisted of the following:
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Net gain on sale of leased and off-lease
equipment $ 86,987 $ 76,453 $ 49,653
Gain on receivables securitizations 5,866* 14,799* 51,496*
Portfolio servicing fees 23,584 27,203 37,363
Other fee related revenue 44,105 38,871 40,290
Gain on SBA loan sales 10,508 1,512 1,192
Other portfolio related revenue 35,633 24,624 16,513
- ---------------------------------------------------------------------------
Total other revenue $206,683 $183,462 $196,507
- ---------------------------------------------------------------------------
</TABLE>
* $5,866, $14,799 and $39,106 relates to securitizations in the fourth
quarter of 1995, 1994 and 1993, respectively; and $12,390 relates to a
securitization in the first quarter of 1993.
For the years ended December 31, 1995, 1994 and 1993, the Company
securitized portions of its capital lease portfolio amounting to $74,795,
$259,061 and $561,943, with proceeds received of $86,762, $287,550 and $648,887,
respectively. Included in other assets at December 31, 1995, is $61,490 of sales
proceeds withheld by the purchasers on the 1995 and prior years'
securitizations. This holdback, which acts as a credit enhancement for the
purchasers, is repaid to the Company over the life of the securitized
receivables. The securitization agreements provide for limited recourse to the
Company for any uncollectible amounts. Under the agreements, the Company will
service these accounts for the purchasers. A portion of the gains have been
deferred representing service fees to be earned over the terms of the agreements
plus an estimate of the losses under recourse provisions for the lease
receivables securitized. At December 31, 1995 and 1994, $559,010 and $853,003,
respectively, of receivables previously securitized remained outstanding. The
Company's maximum exposure under these recourse provisions, in the unlikely
event that all such receivables became uncollectible, amounted to $254,787 at
December 31, 1995 and $353,143 at December 31, 1994. The Company has recorded a
liability for the amount that it expects to reimburse the purchasers.
On a periodic basis, the Company sells the guaranteed portion of SBA loans
in the secondary market. The gain on these sales is 1) decreased by an
adjustment to reduce the carrying value of the retained unguaranteed portion of
the loan to its fair value and 2) adjusted for any excess servicing fees to be
received.
56
<PAGE>
<PAGE>
7. DEBT
For a discussion regarding the potential impacts of AT&T's announcement to
sell its 86% interest in the Company, see Note 16.
Commercial Paper
Commercial paper is generally issued at a discount. The maturities of
commercial paper ranged up to eight months (with the majority maturing within 90
days) at December 31, 1995 and 1994. Interest rates ranged from 5.48% to 5.83%
and 5.0% to 6.0% at December 31, 1995 and 1994, respectively. The discount
amortized on commercial paper, which reflects the cost of such debt, amounted to
$94,029, $69,341 and $64,790 in 1995, 1994 and 1993, respectively.
To support the commercial paper issued, the Company has revolving credit
facilities totaling $2.0 billion, all of which were available at December 31,
1995 and 1994. The majority of these facilities are renewed annually and contain
certain restrictive financial covenants. The Company is in compliance with all
covenants of these facilities. In addition, certain of the Company's foreign
operations have short-term bank lines of credit of approximately $1.0 billion,
of which approximately $638.0 million was unused at December 31, 1995. These
facilities are generally renewed annually. Facility fees paid for the revolving
and foreign credit arrangements were not material in 1995 or 1994.
57
<PAGE>
<PAGE>
Data with respect to short-term notes (principally commercial paper) are as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
End of year balance, net $2,212,351 $2,176,877 $1,546,562
Weighted average interest
rate at December 31, 5.9% 5.8% 3.3%
Highest month-end balance $2,212,351 $2,176,877 $2,067,592
Average month-end balance (a) $1,921,298 $1,741,872 $1,313,312
Weighted average interest rate (b) 5.3% 4.3% 3.3%
- ---------------------------------------------------------------------------
</TABLE>
(a) The average month-end balance was computed by dividing the total of the
outstanding month-end balances by the number of months.
(b) The weighted average interest rate during the year is calculated by
dividing the interest charged for the year by the average month-end
balance.
Medium and Long-term Debt
Medium and long-term debt outstanding at December 31, 1995 and 1994,
consisted of the following:
<TABLE>
<CAPTION>
Maturities 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
4.12% - 5.99% Medium-term notes 1995 - 1999 $ 716,900 $ 938,625
6.00% - 6.99% Medium-term notes 1995 - 2000 1,466,025 970,900
7.00% - 9.15% Medium-term notes 1995 - 2005 1,043,825 326,795
Floating rate Medium-term notes
Interest periodically reprices
based on various indices. As of
December 31, 1995 and 1994, the
average interest rate ranged from
4.93%-5.74% and 5.79%-6.20%,
respectively. 1995 - 1997 1,129,500 980,000
Other long-term debt 1995 - 2001 359,808 163,261
- ---------------------------------------------------------------------------
Total medium and long-term debt $4,716,058 $3,379,581
- ---------------------------------------------------------------------------
</TABLE>
58
<PAGE>
<PAGE>
The Company's medium and long-term debt matures as follows:
<TABLE>
<S> <C>
1996 $2,168,515
1997 1,401,476
1998 794,821
1999 163,169
2000 69,003
2001 and thereafter 119,074
- ---------------------------------------------------------------------------
Total $4,716,058
- ---------------------------------------------------------------------------
</TABLE>
To reduce exposure to interest rate movements, the Company enters into
interest rate swap agreements (see Note 13). The weighted average interest rate
on average total debt outstanding, including the effect of these swaps, was
6.60% and 5.65% for the years ended December 31, 1995 and 1994, respectively.
During 1995 and 1994, the Securities and Exchange Commission ("SEC")
declared effective debt registration statements (which allow the Company to
issue debt to the public) of $3.0 billion and $2.5 billion, respectively. As of
December 31, 1995, all of the debt associated with the 1994 registration
statement was issued and $2.0 billion was available for issuance under the
Company's 1995 debt registration.
As a result of the Restructuring (see Note 1), medium and long-term notes
outstanding at March 31, 1993, entitled to the benefit of a Support Agreement
between AT&T and Old Capital (which agreement was terminated in the
Restructuring) became directly guaranteed by AT&T. At December 31, 1995 and
1994, the amount of such guaranteed debt was $319,200 and $747,895,
respectively. In addition, as a result of the Restructuring, AT&T guaranteed the
Company's recourse exposure of securitizations at March 31, 1993 (see Note 6)
which amounted to $88,302 and $212,199 at December 31, 1995 and 1994,
respectively.
8. SHAREOWNERS' EQUITY AND EARNINGS PER SHARE
For a discussion regarding the potential impacts of AT&T's announcement to
sell its 86% interest in the Company, see Note 16.
During 1995, the Company's Board of Directors declared dividends totaling
$.41 per share. In addition, on January 19, 1996, the Company's Board of
Directors declared a quarterly dividend of $.11 per share to shareowners of
record on February 9, 1996. The dividend is payable on February 29, 1996.
On June 28, 1993, the Company affected a 402,500 for one stock
reclassification. The par value of the stock remained at $.01 per share.
Accordingly, common stock and additional paid-in capital have been restated to
reflect the reclassification.
59
<PAGE>
<PAGE>
On August 4, 1993, the Company sold common shares in an initial public
stock offering and in a management stock offering. The shares issued represent
approximately 14% of the total shares outstanding after the offerings. AT&T,
through Old Credit and Old Capital, remains the owner of 40,250,000 shares. The
net proceeds received by the Company from the sale of the common stock in the
stock offerings were $115,092. Certain costs of the offerings not offset by the
proceeds were borne by AT&T. Such proceeds did not include $17,788 of future
proceeds attributable to the purchases of common stock in the management stock
offering that were funded by recourse loans from the Company to certain senior
executives of the Company.
9. FAIR VALUE DISCLOSURES
Fair value is a subjective and imprecise measurement that is based on
assumptions and market data which require significant judgment and may only be
valid at a particular point in time. The use of different market assumptions or
valuation methodologies may have a material effect on the estimated fair value
amounts. Accordingly, management cannot provide assurance that the fair values
presented are indicative of the amounts that the Company could realize in a
current market exchange.
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments at December 31, 1995 and 1994:
Cash and Cash Equivalents
The carrying amount is a reasonable estimate of fair value.
Net Investment in Finance Receivables
The fair value of the finance receivable portfolio is estimated by
discounting the expected future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit ratings and for the
same remaining maturities.
Short-term Notes (Commercial Paper and Other Short-term Notes)
The carrying amount is a reasonable estimate of fair value for commercial
paper. Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate the fair value of other short-term
notes.
Gross Profit Tax Deferral Payable to AT&T
The fair value of the gross profit tax deferral is estimated by discounting
the expected future cash flows using the Company's current cost of debt. Based
on the AT&T announcement (see Note 16), this amount for 1995 has been calculated
based on the assumption that the amount will be repaid by December 31, 1996.
60
<PAGE>
<PAGE>
Medium and Long-term Debt
Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate the fair value of existing debt.
Interest Rate and Currency Swap Agreements
The fair value of interest rate and currency swaps is estimated by
discounting the expected future cash flows using the rate at which the Company
could terminate the swaps in the market today.
Foreign Exchange Contracts
The fair value of foreign exchange contracts is estimated based on current
market quotes obtained from dealers for foreign exchange contracts with the same
remaining terms.
Credit Facilities
The fair value of the credit facilities are based on fees currently paid
for similar arrangements.
The following table summarizes the carrying and fair values of on-balance
sheet instruments (as determined using the methods described above):
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
- ---------------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 3,961 $ 3,961 $ 54,464 $ 54,464
Net investment in finance
receivables (Note 4) 1,800,636 1,844,617 1,452,947 1,432,070
Liabilities:
Short-term notes (Note 7) 2,212,351 2,212,403 2,176,877 2,176,877
Gross profit tax deferral
payable to AT&T (Note 10) 248,902 237,845 214,066 184,238
Medium and long-term debt
(Note 7) $4,716,058 $4,844,594 $3,379,581 $3,319,101
- ---------------------------------------------------------------------------
</TABLE>
61
<PAGE>
<PAGE>
The following tables summarize the carrying and fair values of off-balance
sheet financial instruments (as determined using methods described above):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
December 31, 1995
- ---------------------------------------------------------------------------
Carrying Amount Fair Value
Receivable Payable Receivable Payable
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest rate swap agreements $ 3,681 $(1,477) $ 2,234 $(53,359)
Currency swap agreements 278 (1,185) 7,066 (8,235)
Foreign currency forward
exchange contracts $13,104 $ (814) $(3,036) $ (2,227)
- ---------------------------------------------------------------------------
<CAPTION>
December 31, 1994
- ---------------------------------------------------------------------------
Carrying Amount Fair Value
Receivable Payable Receivable Payable
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest rate swap agreements $ 2,048 $(1,541) $57,033 $ (4,726)
Currency swap agreements 290 (444) 11,200 (2,338)
Foreign currency forward
exchange contracts $ 6,036 $(2,710) $2,852 $ (6,088)
- ---------------------------------------------------------------------------
</TABLE>
Matching maturities of its portfolio assets and debt is a key component of
the financial strategy used by the Company to manage interest rate risk. Based
on unaudited calculations performed by the Company, the increased fair value of
the Company's debt has been offset by the increased fair value of the Company's
portfolio assets at December 31, 1995. Likewise, at December 31, 1994, the
decreased fair value of the Company's debt was offset by the decreased fair
value of the Company's portfolio assets. The fair value of the Company's lease
portfolio is not a required disclosure under SFAS No. 107, "Disclosure About
Fair Value of Financial Instruments" and, therefore, only the fair value of the
finance receivable portfolio has been disclosed.
Hedging the net cash inflows from foreign denominated assets is a key
component of the financial strategy used by the Company to manage its exposure
to foreign currency fluctuations. Based on unaudited calculations performed by
the Company, the decreased fair value of the Company's forward exchange
contracts is generally offset by an increase in the fair value of the Company's
foreign denominated assets.
The Company has unused revolving credit facilities totaling $2.0 billion
and approximately $638 million of unused foreign credit facilities. The fair
value of the credit facilities is based upon fees currently paid for similar
arrangements which are not material (see Note 7).
62
<PAGE>
<PAGE>
At December 31, 1995 and 1994, the Company had a maximum exposure under
limited recourse provisions related to asset securitizations, in the unlikely
event that all such receivables became uncollectible, of $254,787 and $353,143,
respectively. The Company has recorded a liability for the amount that it
expects to reimburse the purchasers (see Note 6).
10. INCOME TAXES
For a discussion regarding the potential impacts of AT&T's announcement to
sell its 86% interest in the Company, see Note 16.
The Company is included in the consolidated federal income tax return, and
for certain states, combined state returns, of AT&T. AT&T does not expect to be
subject to the alternative minimum tax ("AMT") provisions of the 1986 Tax Reform
Act for 1995. Also, in 1993, the Company utilized all AMT credits arising from
1990 and 1992 AMT payments made. The Company's income tax expense would not have
differed materially from that reported had the Company filed tax returns on a
stand-alone basis.
As part of an Intercompany Agreement, the Company has received interest
free loans to the extent of the tax deferrals generated by transactions between
AT&T and the Company. These interest free loans amounted to $248,902 and
$214,066 at December 31, 1995 and 1994, respectively. The average balance
outstanding for such loans was $245,869, $213,172 and $200,835 for the years
ending December 31, 1995, 1994 and 1993, respectively. These amounts are repaid
to AT&T as the temporary differences that generated the deferrals reverse. As
discussed in Note 16, the Company is obligated to repay such loans if the
Company were to cease being a member of AT&T's consolidated group for federal
income tax purposes. Management is of the opinion that the Company has
sufficient cash and credit resources to repay such loans if the Company were to
cease being a member of AT&T's consolidated group for federal income tax
purposes.
At December 31, 1995 and 1994, taxes currently payable to AT&T and third
parties were $30,589, and taxes currently receivable from AT&T and third parties
were $23,286, respectively.
Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting
for Income Taxes", which changed the method of accounting for income taxes from
the deferred method to the liability method and requires deferred tax balances
to be determined using the enacted income tax rates for the years in which these
taxes will actually be paid or refunds received. In connection with such
adoption, the Company recognized a charge to net income of $2.9 million as the
cumulative prior years' effect of this accounting change. This change in
accounting for income taxes had no effect on cash flows. Unless the U.S.
Congress changes tax rates, the Company does not expect SFAS No. 109 to affect
net income materially in future periods. Also during 1993, the Company recorded
an additional $12.4 million to the provision for income taxes due to the
increase in the highest federal corporate income tax rate from 34% to 35% of
which $11.4 million relates to adjusting prior years deferred tax balances.
63
<PAGE>
<PAGE>
The provision (benefit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $59,252 $(13,494) $(8,948)
State and local 13,415 (23,150) 31,448
Foreign 10,789 3,538 611
- --------------------------------------------------------------------------
Total current portion 83,456 (33,106) 23,111
- ---------------------------------------------------------------------------
Deferred:
Federal (5,460) 72,729 67,101
State and local 205 33,655 (23,682)
Foreign 2,483 - -
- ---------------------------------------------------------------------------
Total deferred portion (2,772) 106,384 43,419
- ---------------------------------------------------------------------------
Total provision for income taxes $80,684 $ 73,278 $66,530
- ---------------------------------------------------------------------------
</TABLE>
The Company recorded tax credits of $10,850 and $3,446 in 1995 and 1994,
respectively. No tax credits were recorded in 1993.
64
<PAGE>
<PAGE>
Deferred income tax (liabilities) assets are composed of the following:
<TABLE>
<CAPTION>
At December 31,
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
Gross deferred income tax liabilities:
Lease related differences $(692,442) $(607,085)
Other (51,618) (89,463)
- --------------------------------------------------------------------------
Gross deferred income tax liabilities (744,060) (696,548)
- --------------------------------------------------------------------------
Gross deferred income tax assets:
Allowance for credit losses 124,186 101,591
Pensions 11,718 8,052
State and foreign net operating losses 17,926 18,802
Other 39,982 17,293
- --------------------------------------------------------------------------
Gross deferred income tax assets 193,812 145,738
- --------------------------------------------------------------------------
Valuation allowance (5,048) (4,477)
- --------------------------------------------------------------------------
Net deferred income tax liabilities $(555,296) $(555,287)
- --------------------------------------------------------------------------
</TABLE>
A valuation allowance has been recorded to offset related deferred tax
assets due to the uncertainty of realizing the benefit of separate state net
operating loss carryforwards and net operating loss carryforwards of foreign
subsidiaries. State tax loss carryforwards of $290,098 related to various state
jurisdictions expire in the following years:
<TABLE>
<S> <C>
1996 $ 16,054
1997 20,593
1998 25,026
1999 51,130
2000 61,289
2001 and thereafter 116,006
- ---------------------------------------------------------------------------
Total $290,098
- ---------------------------------------------------------------------------
</TABLE>
65
<PAGE>
<PAGE>
A reconciliation between the federal statutory tax rate and the Company's
effective tax rate is shown below:
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory income tax rate 35.0% 35.0% 35.0%
State and local income taxes, net of federal
income tax effect 4.2 3.9 3.7
Impact of federal tax rate increase on prior years
deferred taxes - - 8.4
Tax exempt income (1.6) (1.7) (0.8)
Goodwill 0.5 1.2 0.8
Other 0.6 3.8 1.1
- ---------------------------------------------------------------------------
Effective tax rate 38.7% 42.2% 48.2%
- ---------------------------------------------------------------------------
</TABLE>
The Company has no available AMT credit carryforwards at December 31, 1995
to reduce future federal income taxes payable.
For the years ended December 31, 1995, 1994 and 1993, the consolidated
income (loss) before income taxes and cumulative effect of accounting change by
domestic and foreign source was $210,296 and $(2,057), $177,662 and $(4,048),
and $153,010 and $(14,970), respectively.
11. PENSION AND BENEFIT PLANS
For a discussion regarding the potential impacts of AT&T's announcement to
sell its 86% interest in the Company, see Note 16.
Pension
Effective January 1, 1994, all employees of the Company and its domestic
subsidiaries were covered by the AT&T Capital Corporation Retirement and Savings
Plan ("RSP"), a qualified defined contribution plan.
66
<PAGE>
<PAGE>
Under a defined contribution plan, the amount of future pension benefits is
based solely on the amount contributed and the returns earned on those amounts.
The RSP has a profit sharing component (including a cash or deferred
arrangement) under Section 401(k) of the Internal Revenue Code and a money
purchase component. The Company's annual contribution under the profit sharing
component, which is discretionary above 5%, is expected to equal approximately
9% of employee pay (i.e., aggregate base salaries and annual incentives of
participants in the RSP). In addition, the Company matches an amount equal to
66-2/3% of the first 6% of compensation that each employee contributes to the
RSP under Section 401(k). RSP participants can select from a variety of funds
within the RSP to invest their allotments. The Company recorded $14,367 and
$13,525 of pension expense in 1995 and 1994, respectively, related to the RSP.
In addition, in 1995 and 1994 the Company recorded pension expense of $2,431 and
$1,366, respectively, in connection with RSP-related nonqualified defined
contribution plans. The Company also sponsors various international plans which
are available to certain employees of its international subsidiaries. The plans
are similar to the RSP, in that they enable employees of the Company to
contribute a percentage of their salary to provide for postretirement income.
The Company recorded $1,412 and $1,034 of pension expense in 1995 and 1994,
respectively, related to the various international plans.
Prior to 1994, many of the Company's employees were covered by AT&T's
noncontributory defined benefit pension plans. Also, through December 31, 1993,
other eligible employees of several wholly owned subsidiaries of the Company
were covered by an AT&T qualified defined contribution retirement plan, with
provisions similar to the RSP. The Company recorded pension expense related to
the AT&T noncontributory defined benefit plans of $4,457 in 1993. In addition,
the Company recorded expenses of $6,312 in 1993 related to the AT&T qualified
defined contribution retirement plan.
On December 8, 1993, the Company sponsored three unfunded supplemental
nonqualified defined benefit retirement plans, which became effective on January
1, 1994, that provide certain employees with additional benefits after
retirement. Components of net periodic pension cost for the years ended December
31, were:
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Service cost - benefits earned $ 456 $ 575
Interest cost on projected benefit obligation 450 427
Amortization 365 374
- ------------------------------------------------------------------------
Net periodic pension cost $1,271 $1,376
- ------------------------------------------------------------------------
</TABLE>
67
<PAGE>
<PAGE>
The funded status of the plans at December 31 was:
<TABLE>
<CAPTION>
1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligations:
Vested benefit obligation $1,495 $1,119
Non-vested benefit obligation 5,471 2,578
Total 6,966 3,697
Additional benefits on estimated future salary 1,434 1,176
Total projected benefit obligation 8,400 4,873
Plan assets at fair value - -
Unfunded projected benefit obligation 8,400 4,873
Unrecognized prior service cost 4,845 4,391
Unrecognized net loss (gain) 945 (894)
Unrecognized transition obligation - -
Additional liability 4,458 2,387
Accrued pension liability recorded $7,068 $3,763
- ------------------------------------------------------------------------
</TABLE>
At December 31, 1995 and 1994, respectively, the projected benefit
obligation was determined using assumed discount rates of 7.0% and 8.75% and
assumed long-term rates of increase in future compensation levels of 4.5% or
5.5%, depending on the plan. The decrease in the discount rate caused the
obligation to increase. To illustrate, had the 1995 rate been 8.0% (1.0%
higher), the 1995 total projected benefit obligation would have been lower by
$1.2 million.
Share Performance Incentive Plan
The Company's Share Performance Incentive Plan, as amended ("SPIP"), is
designed to provide the opportunity for cash incentive awards to key employees
at the end of five three-year performance periods. The first such period
terminates on June 30, 1996, with each of the other performance periods ending
on the annual anniversary of such date through and including June 30, 2000.
These incentive awards are generally based on the performance of the Company's
stock price and dividend yield relative to (1) the share performance of a select
benchmark group of financial services companies, and (2) the interest rate on
three-year treasury notes at the beginning of such performance period. The
estimated compensation expense relating to the SPIP is charged against income
over the respective performance periods.
68
<PAGE>
<PAGE>
Leveraged Stock Purchase Plan
In 1993, the Company adopted the Leveraged Stock Purchase Plan ("LSPP")
under which 2,000,000 shares of common stock and options to purchase common
stock were reserved for purchase or grant. The terms and provisions of the LSPP
required certain senior management employees to purchase an aggregate of 851,716
shares of common stock in conjunction with the Company's initial public offering
at the offering price of $21.50 per share ("offering price"). The eligible
employees had the option of borrowing from the Company, on a recourse basis,
88.5% to 97.7% of the purchase price of the shares. The recourse loans mature on
August 4, 2000, and have a stated interest rate of 6.0% compounded on an annual
basis. The purchased shares are pledged as collateral for the recourse loans.
Sale of these shares is restricted prior to August 4, 1996, and is contingent
upon repayment of the loan and certain other requirements. The recourse loans
are shown on the balance sheet as a reduction of equity.
In addition, under the LSPP, the same senior management employees were
granted premium priced stock options which will provide participants with an
opportunity to purchase up to 1,095,040 shares of Company stock at an exercise
price equal to 125% of the offering price ($26.875 per share). The options are
exercisable during the period from August 4, 1996, through August 4, 2003.
Options canceled during 1995 and 1994 were 102,852 and 54,895, respectively. No
options were canceled in 1993. Pursuant to the terms of the LSPP, no further
purchases of stock, Company loans or option grants will be made under the LSPP
subsequent to December 31, 1993.
69
<PAGE>
<PAGE>
Long Term Incentive Plan
In 1993, the Company adopted a Long Term Incentive Plan ("LTIP") under
which the Company may grant various stock-based and other awards to employees of
the Company. The number of shares available for grant or purchase under the LTIP
is 2,000,000. Similar to the LSPP, eligible employees purchasing stock under the
LTIP have the option of borrowing from the Company, on a recourse basis, 88.5%
to 97.7% of the purchase price of the shares. The recourse loans, which are due
seven years from the loan date, have stated interest rates ranging from 6.0% to
7.92% compounded on an annual basis. The purchased shares are pledged as
collateral for the recourse loans. Sale of these shares is prohibited for a
three-year period and is contingent upon repayment of the loan and certain other
requirements. The recourse loans are shown on the balance sheet as a reduction
of equity. Awards under the LTIP will be made to executives and employees of the
Company at the Company's discretion.
The following table summarizes the option activity relating to the LTIP:
<TABLE>
<CAPTION>
Shares Under Option Number Price Per Share
- ---------------------------------------------------------------------------
<S> <C> <C>
Options granted in connection with
initial public offering 697,908 $21.50
Changes in 1993:
Options canceled (11,605) $21.50
- ---------------------------------------------------------------------------
Options outstanding at December 31, 1993 686,303 $21.50
Changes in 1994:
Options exercised (274) $21.50
Options canceled (85,367) $21.50-$26.15
Options granted 502,707 $21.81-$30.63
- ---------------------------------------------------------------------------
Options outstanding at December 31, 1994 1,103,369 $21.50-$30.63
Changes in 1995:
Options exercised (16,978) $21.50-$26.15
Options canceled (79,605) $21.50-$26.15
Options granted 345,036 $21.50-$47.03
- ---------------------------------------------------------------------------
Options outstanding at December 31, 1995 1,351,822 $21.50-$47.03
- ---------------------------------------------------------------------------
Options exercisable at December 31, 1995 59,157 $21.50-$26.56
Options exercisable at December 31, 1994 7,264 $21.50-$26.13
- ---------------------------------------------------------------------------
</TABLE>
70
<PAGE>
<PAGE>
In addition, the Company has awarded restricted stock under the LTIP to
certain employees in consideration of services rendered. During 1995, 1994 and
1993, respectively, restricted stock awards of 19,967, 17,801 and 15,306 were
made to employees under the LTIP.
As of December 31, 1995 and 1994, respectively, 405,106 and 735,936 shares
were available for issuance under the LTIP. The shares are not subject to stock
appreciation right features.
Employee Stock Purchase Plan
In April 1994, the Company's shareowners approved an employee stock
purchase plan effective August 1, 1994. The AT&T Capital Corporation 1994
Employee Stock Purchase Plan ("ESPP") enables employees to purchase shares of
AT&T Capital common stock at a discount. The price per share is 90% of the fair
market value of the common stock at the time of its purchase. No compensation
expense is recorded in connection with the ESPP. The maximum aggregate number of
shares of common stock that may be purchased under the ESPP is 500,000. During
1995 and 1994, 27,965 and 13,484 shares were purchased by employees at prices
ranging from $22.05 to $36.00 and $19.02 to $21.83 per share, respectively. At
December 31, 1995, there were 458,551 shares available for offering under the
ESPP.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation". This statement establishes
financial accounting and reporting standards for stock-based employee
compensation plans. This standard is effective for fiscal years beginning after
December 15, 1995 and will allow companies to choose either 1) a fair value
method of valuing stock-based compensation plans which will affect reported net
income, or 2) to continue following the existing accounting rules for stock
option accounting but disclose what the impacts would have been had the new
standard been adopted. The Company will choose the disclosure option of this
standard which would require disclosing the pro forma net income and earnings
per share amounts assuming the fair value method was adopted on January 1, 1995.
As a result, the adoption of this standard will not impact the Company's results
of operations, financial position or cash flows.
Severance Plans
In 1995, the Company's Compensation Committee and Board of Directors
approved broad-based plans that provide for benefits to members upon certain
terminations of employment. Such benefits are calculated using annual base pay
and annual incentive awards as well as other factors. No accrual for these
benefits have been reflected in the consolidated financial statement because the
amount cannot be reasonably estimated. In addition, no estimate can be made of
the impact of such benefits to the Company's financial position or operating
results resulting from a plan of force reduction, if any, associated with the
sale of the Company (see Note 16).
71
<PAGE>
<PAGE>
12. RELATED-PARTY TRANSACTIONS
For a discussion regarding the potential impacts of AT&T's announcement to
sell its 86% interest in the Company, see Note 16.
The Company leases certain office facilities from AT&T and affiliates.
Future minimum rental payments under noncancelable, long-term leases with AT&T
and affiliates are as follows:
<TABLE>
<S> <C>
1996 $ 5,465
1997 3,293
1998 96
1999 11
2000 11
2001 and thereafter 4
- --------------------------------------------------------------------------
Total $ 8,880
- --------------------------------------------------------------------------
</TABLE>
Rental expense under existing leases with AT&T and affiliates amounted to
$5,494, $4,101 and $7,998, in 1995, 1994 and 1993, respectively.
The Company purchases services from AT&T and affiliates, including data
processing, billing and collection, administration and other services. The
Company's expenses for such services were $20,038 in 1995, $20,628 in 1994 and
$32,320 in 1993.
At December 31, 1995, 1994 and 1993, the Company was the lessor to AT&T of
equipment comprising $176,369, $268,616 and $145,812 of capital leases and
$220,507, $204,647 and $376,970 of equipment under operating leases,
respectively. Revenue related to these leases was $105,787, $108,808 and
$170,788 in 1995, 1994 and 1993, respectively.
The Company also had an interest bearing intercompany debt payable to AT&T
and affiliates of $18,265 at December 31, 1995 and an interest bearing
intercompany note receivable from AT&T and affiliates of $40,105 at December 31,
1994 (see Note 7). The net interest income and expense associated with
intercompany borrowing were not material in 1995, 1994 or 1993. Additionally,
the Company had interest free loans related to tax agreements from AT&T at
December 31, 1995 and 1994, respectively, of $248,902 and $214,066 (see Note
10).
In 1993, AT&T and the Company entered into an Operating Agreement, pursuant
to which AT&T provides the Company with the right to be the preferred provider
of leasing and financing services for AT&T's products on a basis consistent with
past practice. The Company and AT&T have also entered into an Intercompany
Agreement whereunder, among other things, the Company manages and administers,
for a fee, certain lease portfolios, including the Lease Finance Assets of Old
Capital and Old Credit which were not transferred to the Company (see Note 1).
During 1995, 1994 and 1993, the Company recognized service fee revenue of
$7,608, $8,551 and $18,361, respectively, for such services.
72
<PAGE>
<PAGE>
The Company is also party to Operating and License Agreements with AT&T.
See Note 16 for a discussion of these agreements and the related potential
impacts of AT&T's announcement to sell its 86% interest in the Company.
13. COMMITMENTS AND CONTINGENCIES
Derivative Financial Instruments
In the normal course of business, the Company is routinely party to various
derivative financial instruments. These financial instruments are used by the
Company to reduce interest rate and foreign currency exposure, as well as to
meet the financing needs of its customers.
At both December 31, 1995 and 1994, in management's opinion, there was no
significant risk of loss in the event of nonperformance of the counterparties to
derivative contracts. There were no past due amounts, nor were there any
reserves for credit losses on derivatives as of December 31, 1995, 1994 and
1993. Generally, the Company does not require collateral or other security to
support financial instruments with credit risk. The Company has never
experienced a credit related charge-off associated with derivative transactions.
Information is provided below for each significant derivative product type.
The derivatives, with which the Company is involved, are primarily interest rate
swaps, currency swaps, and foreign currency forward exchange contracts.
Interest Rate and Currency Swaps
The Company enters into interest rate and foreign currency swap agreements
with major money center banks and intermediaries located in major financial
centers to reduce interest rate exposure, to more closely match the maturity of
its debt portfolio to that of its asset portfolio and to reduce its exposure to
currency fluctuations. Interest rate swaps also allow the Company to raise funds
at floating rates and effectively swap them into fixed rates that are lower than
those available to the Company if fixed-rate borrowings were made directly.
Under interest rate swaps, the Company agrees with other parties to
exchange, at specified intervals, the difference between fixed-rate and
floating-rate interest amounts calculated by reference to an agreed notional
principal amount. Generic swaps' notional amounts generally do not change for
the life of the contract. Amortizing and accreting swaps' notional amounts
generally change based upon a predetermined amortization or accretion schedule.
Currency swaps generally involve the exchange of both principal and interest
payments in distinct currencies.
73
<PAGE>
<PAGE>
The notional amounts shown below for interest rate swaps represent an
agreed upon amount on which calculations of amounts to be exchanged are based
and for currency swaps also represent the U.S. equivalent of an amount
exchanged. Notional amounts do not represent the Company's exposure. Rather, the
Company's exposure is limited to the current fair value of the contracts with a
positive fair value at the reporting date (see Note 9). A key assumption in the
information below is that rates remain constant at the reporting date levels. To
the extent that rates change, the variable interest rate information will
change.
Activity in interest rate and currency swaps which are all held for
purposes other than trading for 1995 and 1994, is summarized as follows:
<TABLE>
<CAPTION>
Generic Amortizing Generic
Pay Pay Pay Currency
Notional Amounts Fixed Fixed Floating Swaps Total
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1993 $1,139,000 $1,124,569 $450,000 $149,210 $2,862,779
Additions 607,800 285,972 175,000 129,860 1,198,632
Maturities/
amortization (175,000) (445,568) (450,000) (57,253) (1,127,821)
Terminations - - - - -
- --------------------------------------------------------------------------
December 31, 1994 1,571,800 964,973 175,000 221,817 2,933,590
Additions 124,339 373,435 240,000 151,631 889,405
Maturities/
amortization (350,000) (406,365) (175,000) (108,455) (1,039,820)
Terminations (225,000) (59,400) - - (284,400)
- --------------------------------------------------------------------------
December 31, 1995 $1,121,139 $ 872,643 $240,000 $264,993 $2,498,775
- --------------------------------------------------------------------------
</TABLE>
The schedule of maturities at December 31, 1995 for interest rate and
currency swaps which are all held for purposes other than trading is as follows:
<TABLE>
<CAPTION>
Generic Amortizing Generic
Pay Pay Pay Currency
Fixed Fixed Floating Swaps Total
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total notional
amounts $1,121,139 $872,643 $240,000 $264,993 $2,498,775
Weighted average
pay rate 6.34% 6.21% 5.73% 7.06% 6.31%
Weighted average
receive rate 5.83% 5.96% 5.80% 5.87% 5.88%
- ---------------------------------------------------------------------------
</TABLE>
74
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Generic Amortizing Generic
Pay Pay Pay Currency
Fixed Fixed Floating Swaps Total
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 Maturities $534,321 $447,136 $240,000 $ 93,655 $1,315,112
Weighted average
pay rate 5.54% 5.86% 5.73% 6.31% 5.74%
Weighted average
receive rate 5.80% 5.95% 5.80% 5.87% 5.86%
1997 Maturities $ 94,329 $242,069 - $ 85,549 $ 421,947
Weighted average
pay rate 5.85% 6.37% - 7.41% 6.46%
Weighted average
receive rate 5.75% 5.96% - 5.87% 5.90%
1998 Maturities $255,818 $ 91,841 - $ 61,615 $ 409,274
Weighted average
pay rate 6.80% 6.79% - 7.57% 6.91%
Weighted average
receive rate 5.87% 6.06% - 5.87% 5.91%
1999 Maturities $201,680 $ 44,538 - $ 19,836 $ 266,054
Weighted average
pay rate 8.00% 6.70% - 7.67% 7.76%
Weighted average
receive rate 5.87% 5.98% - 5.87% 5.89%
2000 Maturities $ 3,491 $ 22,806 - $ 4,338 $ 30,635
Weighted average
pay rate 6.56% 6.35% - 6.57% 6.41%
Weighted average
receive rate 5.93% 5.87% - 5.87% 5.88%
2001-2017 Maturities $ 31,500 $ 24,253 - - $ 55,753
Weighted average
pay rate 7.01% 7.75% - - 7.33%
Weighted average
receive rate 5.87% 5.87% - - 5.87%
- ---------------------------------------------------------------------------
</TABLE>
Foreign Currency Forward Exchange Contracts
The Company enters into foreign currency forward exchange contracts to
manage foreign exchange risk. The U.S. dollar equivalent of such contracts was
$658,808 and $318,054 at December 31, 1995 and 1994, respectively. The Company
enters into these contracts to hedge the cash flows associated with foreign
currency denominated assets. The term of these contracts is rarely more than
three years. The purpose of the Company's foreign currency hedging activities is
to protect the Company from the risk that the eventual dollar net cash inflows
resulting from these assets will be adversely affected by changes in exchange
rates.
75
<PAGE>
<PAGE>
Other Commitments and Contingencies
Certain regional office facilities and equipment of the Company are leased
from unrelated parties with renewal options of one to five years. Rental expense
to unrelated parties for the years ended December 31, 1995, 1994 and 1993 was
$17,258, $14,202 and $9,626, respectively. Rental expense associated with
sublease rentals on operating leases for 1995, 1994 and 1993, was $165, $115 and
$419, respectively. Minimum annual rental commitments at December 31, 1995,
under these operating lease agreements are as follows:
<TABLE>
<S> <C>
1996 $11,318
1997 8,900
1998 2,964
1999 2,441
2000 1,332
2001 and thereafter 2,431
- ---------------------------------------------------------------------------
Total $29,386
- ---------------------------------------------------------------------------
</TABLE>
The total of minimum rentals to be received in the future under
noncancelable subleases related to operating leases as of December 31, 1995, was
$11,841. The total of minimum rentals to be received in the future under
noncancelable subleases related to capital leases (recorded as debt) as of
December 31, 1995, was $109,290.
In the normal course of business, the Company is subject to certain
lawsuits and other claims. Such matters are subject to many uncertainties and
the outcomes are not predictable with assurance. Consequently, the ultimate
monetary liability or financial impact with respect to these matters at December
31, 1995 cannot be ascertained. While these matters could impact the operating
results, management believes that after final disposition, any monetary
liability or financial impact to the Company would not be material to the
consolidated financial statements.
14. FOREIGN OPERATIONS
The following data on other geographic areas pertain to operations that are
located outside the U.S. (primarily Europe, Canada, the Asia/ Pacific Region,
Mexico and South America). Net income (loss) includes certain allocated
operating expenses and interest expense. Revenues between geographic areas are
not material.
76
<PAGE>
<PAGE>
A summary of the Company's operations by geographic area is presented
below:
<TABLE>
<CAPTION>
For the Years Ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Total Revenues:
United States $1,370,672 $1,250,591 $1,274,615
Foreign 206,363 133,488 84,974
- --------------------------------------------------------------------------
Total $1,577,035 $1,384,079 $1,359,589
- --------------------------------------------------------------------------
Net Income (Loss):
United States $ 130,587 $ 104,558 $ 78,024
Foreign (3,032) (4,222) (9,428)
- --------------------------------------------------------------------------
Total $ 127,555 $ 100,336 $ 68,596
- --------------------------------------------------------------------------
At December 31, 1995 1994 1993
- --------------------------------------------------------------------------
Total Assets:
United States $7,868,941 $7,148,737 $6,002,857
Foreign 1,672,318 873,186 406,869
- --------------------------------------------------------------------------
Total $9,541,259 $8,021,923 $6,409,726
- --------------------------------------------------------------------------
</TABLE>
15. QUARTERLY DATA (Unaudited)
<TABLE>
<CAPTION>
Quarters First Second Third Fourth Total
1995
<S> <C> <C> <C> <C> <C>
Total revenues $362,814 $381,956 $395,881 $436,384 $1,577,035
Interest expense 93,998 100,806 106,086 110,150 411,040
Net income 25,083 27,912 32,472 42,088 127,555
Earnings per share 0.53 0.59 0.69 0.89 2.70
Stock price per share
high 27.250 27.750 38.625 40.375 -
low 21.625 24.000 27.125 35.750 -
Dividends declared $ 0.10 $ 0.10 $ 0.10 $ 0.11 $ 0.41
Quarters First Second Third Fourth Total
1994
Total revenues $326,012 $332,216 $348,368 $377,483 $1,384,079
Interest expense 60,107 65,654 68,942 77,109 271,812
Net income 15,805 18,901 25,040 40,590 100,336
Earnings per share 0.34 0.40 0.53 0.86 2.14
Stock price per share
high 27.000 24.750 24.375 24.500 -
low 22.875 21.625 21.375 19.750 -
Dividends declared $ 0.09 $ 0.09 $ 0.09 $ 0.10 $ 0.37
- ---------------------------------------------------------------------------
</TABLE>
77
<PAGE>
<PAGE>
Net income and earnings per share in the fourth quarters of 1995 and 1994,
reflected certain securitization transactions (see Note 6).
Earnings per share are computed independently for each quarter presented.
Because of changes in the weighted average number of shares outstanding, the sum
of the quarterly earnings per share may not equal the earnings per share for the
year.
16. AT&T SALE OF THE COMPANY (See Note 1)
On September 20, 1995, AT&T announced a plan to pursue the public or
private sale of its remaining 86% interest in AT&T Capital. As noted in AT&T's
1995 Annual Report on Form 10-K, AT&T has stated that it cannot predict the
timing or terms of any such transaction. On such date, AT&T also announced a
plan to separate (the "Separation") into three publicly-held stand-alone global
businesses that will each be focused on serving certain core businesses:
communication services (to be carried on by the new AT&T), communications
systems and technology (to be carried on by the newly formed Lucent Technologies
Inc. ("Lucent")), and transaction-intensive computing (to be carried on by NCR
Corporation ("NCR")). The Separation is to be accomplished via spin-offs of
Lucent and NCR to AT&T's shareholders, which in the case of Lucent will be
preceded by a public offering of less than 20% of its shares. The Separation is
targeted by AT&T to be completed by the end of 1996, but remains subject to a
number of conditions.
On October 3, 1995, the Company's Board of Directors (the "Board") held a
special meeting to consider AT&T's announced plans to sell its remaining
interest in the Company to the general public or another company. At that
meeting, the Company's Board authorized management to examine possible public
and private sale alternatives. The Board also created a Special Committee of the
Company's four outside directors to act upon such matters as may arise in the
course of considering alternative ways to maximize shareowner value and in which
there may be a conflict between the interests of AT&T and those of the Company
or its minority shareowners and to make recommendations thereon to the Company's
Board or shareowners. Additionally, the Board engaged the investment banking
firm of Goldman, Sachs & Co. and the law firm of Sullivan & Cromwell to act as
advisors to the Company.
Notwithstanding the Separation, the Operating Agreement between AT&T and
the Company (pursuant to which the Company serves as AT&T's preferred provider
of financing services and has certain related and other rights and privileges in
connection with the financing of equipment marketed by AT&T to its customers)
will remain in place with respect to AT&T, the initial term of which expires in
August 2000. In addition, consistent with the terms of the Operating Agreement,
comparable Operating Agreements are being put in place with NCR and Lucent, the
initial terms of which expire in August 2000. While the Company is not able to
evaluate if the Separation will affect AT&T's, Lucent's or NCR's equipment
sales, any resulting change in the level of equipment sales by AT&T, Lucent and
NCR would likely have a corresponding impact on the Company's future financing
volumes associated with such sales.
78
<PAGE>
<PAGE>
In addition, the Regional Bell Operating Companies (the "RBOCs"), which
have historically been prohibited from manufacturing telecommunications
equipment by the terms of the Modified Final Judgment entered into in connection
with the divestiture of the RBOCs by AT&T in 1984, will be permitted to
manufacture such equipment and compete with Lucent, subject to satisfying
certain conditions, pursuant to telecommunications legislation recently enacted
by Congress. It is possible that one or more of the RBOCs may decide to
manufacture telecommunications equipment or form alliances with other
manufacturers. Either of such developments could result in increased competition
for Lucent, reduce the RBOCs' purchases of equipment from Lucent, and,
consequently, adversely impact the Company's financing volumes.
The planned change in the Company's ownership could, as described below,
have certain significant effects on the Company.
Tax Deconsolidation (see Note 10)
The Company is currently a member of AT&T's consolidated federal income tax
group. If AT&T's ownership in the Company's common stock drops below 80%, the
Company would cease to be a member of AT&T's consolidated federal income tax
group ("Tax Deconsolidation"). In light of the announcement made by AT&T, it is
expected that AT&T's ownership in the Company will decrease below 80% by the end
of 1996.
Many financings by the Company of products manufactured by AT&T or its
affiliates (the "AT&T Entities") involve the purchase of such products by the
Company and the contemporaneous lease of such products to third parties. While
the Company is a member of AT&T's consolidated federal income tax group, the
payment of taxes associated with certain transactions which qualify as true or
operating leases for tax purposes is generally deferred until the products are
depreciated or sold outside the consolidated federal income tax group (the
amount of such taxes so deferred is herein referred to as "Gross Profit Tax
Deferral").
AT&T and the Company are parties to a Gross Profit Tax Deferral Interest
Free Loan Agreement which provides that AT&T will from time to time extend
interest free loans to the Company equal to the amount of the Gross Profit Tax
Deferral. The Company is obligated to repay such interest free loans upon Tax
Deconsolidation. Upon Tax Deconsolidation, the Company would no longer receive
such loans, which have constituted a competitive advantage to the Company in
financing AT&T products. The aggregate outstanding principal amount of such
interest free loans was $248.9 million at December 31, 1995. In management's
opinion, the Company has sufficient cash and credit resources to repay such
loans in the event of a Tax Deconsolidation. Based on unaudited calculations
performed by the Company, if a Tax Deconsolidation had occurred on December 31,
1995, and the Company had replaced such interest free loans with interest
bearing debt, the Company's net income would thereafter be reduced annually by
approximately $8.3 million. This estimate assumes that the Company refinanced
the interest free loans at current market interest rates (which are subject to
continual change).
79
<PAGE>
<PAGE>
License Agreement
Pursuant to a License Agreement (the "License") with the Company, AT&T has
licensed to the Company and certain of its subsidiaries certain trade names and
service marks, including but not limited to the AT&T Capital Corporation, AT&T
Credit Corporation, AT&T Systems Leasing and AT&T Automotive Services names. The
License provides that if AT&T ceases to own more than 50% of the voting stock of
the Company (as contemplated by AT&T's September 20, 1995 announcement), AT&T
may require (upon one year's notice and generally at AT&T's expense) the Company
to discontinue the use of the "AT&T" name as part of its corporate name. The
Company's subsidiaries may, notwithstanding such event, continue to use the
other AT&T licensed names (including NCR) and service marks pursuant to the
License (e.g., as part of such subsidiaries' corporate names and for marketing
purposes), subject to extensive restrictions on the use thereof in connection
with the issuance of securities and incurrence of indebtedness.
Intercompany Agreement
AT&T has agreed in the Intercompany Agreement to own, directly or
indirectly, at least 20% of the aggregate number of shares of the Company's
common stock until August 4, 1998. In its September 20, 1995 press release, AT&T
indicated its intent to sell the remainder of its interest in the Company by the
end of 1996, subject to obtaining a modification to the existing Intercompany
Agreement. AT&T has previously advised the Company that it has no plans to
modify the Intercompany Agreement without the approval of a majority of the
Company's independent directors.
Borrowing Performance (see Note 7)
The Company believes that because of its relationship with AT&T it has
generally enjoyed borrowing cost savings of approximately 10 basis points. If
the Company ceases to be a subsidiary of AT&T, there is no assurance that this
cost savings would continue. Any actual impact on borrowing costs would be
affected by many factors including the identity of the purchaser or purchasers
of AT&T's interest and whether AT&T's interest is sold in the public market or
to one or more other companies.
80
<PAGE>
<PAGE>
Compensation and Benefit Plans (see Note 11)
Awards under the Company's SPIP are generally based on the performance of
the Company's stock price and dividend yield relative to the interest rate on
three-year treasury notes and the total return on the stock of a specified peer
group of financial services companies over three-year performance periods. If
AT&T reduces its voting interest in the Company, certain provisions of the SPIP
trigger the possible acceleration of certain of these cash awards for
performance periods pending at such time.
The SPIP has been amended, subject to shareholder approval, to provide that
upon the consummation of a change in control transaction resulting in the common
stock of the Company no longer being publicly traded ("Private Sale"), Maximum
Payouts (as defined in the SPIP) associated with the pending and completed
performance periods, will be paid to the participants. If it is assumed that a
Private Sale occurs by year-end 1996, the Company estimates that it would incur
a possible charge to net income between $7 and $15 million. Alternatively, if a
Private Sale does not occur, but AT&T otherwise reduces its voting interest in
the Company below 50%, coupled with the withdrawal by AT&T of the Company's
rights under the License to use the "AT&T" name for certain corporate purposes a
"Disaffiliation Event" would occur. If a Disaffiliation Event were to occur,
awards for the pending performance periods would be accelerated and payable
immediately to participants as an interim payout based upon performance through
the date of such Disaffiliation Event, and the performance period would
continue. While the Company does not know with certainty if and when a
Disaffiliation Event will occur and what the relative performance of the
Company's stock as measured against the benchmark group would be as of the date
of such Disaffiliation Event, if it is assumed that a Disaffiliation Event
occurs by year-end 1996 and that only the then pending performance periods are
accelerated as provided in the SPIP, the Company estimates that it would incur a
possible charge to net income between $0 and $15 million.
In addition, the Company's compensation and benefit plans have various
provisions associated with the sale of AT&T's interest in the Company, including
the empowerment of the Compensation Committee of the Company's Board to
accelerate vesting rights or repurchase stock options on behalf of the Company.
Such actions of the Compensation Committee could have a material impact upon the
Company's consolidated financial statements. However, due to the uncertainties
and range of possible sale structures, the Company cannot estimate with
certainty the impact AT&T's sale of its interest in the Company would have on
its consolidated financial statements.
81
<PAGE>
<PAGE>
REPORT OF MANAGEMENT
--------------------
Management is responsible for the preparation, integrity and objectivity of
the financial statements and all other financial information included in this
report. Management is also responsible for maintaining a system of internal
controls as a fundamental requirement for the operational and financial
integrity of results.
The financial statements, which reflect the consolidated accounts of AT&T
Capital Corporation and its Subsidiaries, and other financial information shown
were prepared in conformity with generally accepted accounting principles.
Estimates included in the financial statements were based on judgments of
qualified personnel.
To maintain its system of internal controls, management carefully selects
key personnel and establishes the organizational structure to provide an
appropriate division of responsibility. We believe it is essential to conduct
business affairs in accordance with the highest ethical standards as set forth
in the AT&T Code of Conduct. These guidelines and other informational programs
are designed and used to ensure that policies, standards, and managerial
authorities are understood throughout the organization. AT&T Capital's Business
Controls Group, in conjunction with AT&T's internal auditors, monitor compliance
with the system of internal controls by means of an annual plan of internal
audits. On an ongoing basis, the system of internal controls is reviewed,
evaluated and revised as necessary in light of the results of constant
management oversight, internal and independent audits, changes in the Company's
business and other conditions.
Management believes that the system of internal controls, taken as a whole,
provides reasonable assurance that (1) financial records are adequate and can be
relied upon to permit the preparation of financial statements in conformity with
generally accepted accounting principles, and (2) access to assets occurs only
in accordance with management's authorizations.
The Audit Committee of the Board of Directors, which is composed of
directors who are not employees of the Company or AT&T, meets periodically with
management, AT&T Capital's Business Controls Group and the independent auditors
to review the manner in which these groups of individuals are performing their
responsibilities and to carry out the Audit Committee's oversight role with
respect to auditing, internal controls and financial reporting matters.
Periodically, the independent auditors meet privately with the Audit Committee.
Both the internal auditors and the independent auditors have access to the Audit
Committee and its individual members at any time.
82
<PAGE>
<PAGE>
The financial statements have been audited by Coopers & L.L.P., Independent
Auditors. Their audits were conducted in accordance with generally accepted
auditing standards and include a consideration of the internal control structure
and substantive tests of transactions. Their report follows.
Thomas C. Wajnert
Chairman and
Chief Executive Officer
Edward M. Dwyer
Senior Vice President,
Chief Financial Officer
83
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
------------------------------
To the Shareowners of AT&T Capital Corporation:
We have audited the consolidated balance sheets of AT&T Capital Corporation
and Subsidiaries at December 31, 1995 and 1994, and the related consolidated
statements of income, changes in shareowners' equity and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of AT&T Capital
Corporation and Subsidiaries at December 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 10 to the Consolidated Financial Statements, in 1993,
the Company changed its method of accounting for income taxes.
COOPERS & LYBRAND L.L.P.
1301 Avenue of the Americas
New York, New York
January 25, 1996
84
<PAGE>
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no changes in independent auditors and no disagreements
with independent auditors on any accounting or financial disclosure during the
past two years.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS
The information set forth under the caption "Nominees for Election" in the
Company's Proxy Statement for its Annual Meeting of Stockholders to be held on
April 19, 1996 (the "Proxy Statement") to be filed within 120 days after the end
of the Company's fiscal year ended December 31, 1995, is incorporated herein by
reference.
EXECUTIVE OFFICERS
Executive officers of the Company serve at the discretion of the Board of
Directors. No officer of the Company has a written employment or noncompetition
agreement with the Company, although each such officer has agreed not to
disclose confidential information of the Company. The Company does not have "key
man" insurance coverage on any of its officers. The executive officers of the
Company comprise the Corporate Leadership Team consisting of the following six
officers: Messrs. Wajnert, Rothman, Van Sickle, Dwyer, and McCarthy and Ms.
Morey.
Thomas C. Wajnert, 52, has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since July 1993 and as a director of the
Company since April 1993. From April 1993 to July 1993 Mr. Wajnert was
President, Chief Executive Officer and Vice Chairman of the Board of Directors
of the Company. From February 1990 to March 1993, Mr. Wajnert was President and
Chief Executive Officer and a director of Old Capital. From October 1984 to May
1993, Mr. Wajnert was the Chief Executive Officer of Old Credit.
Irving H. Rothman, 48, has served as Group President of the Company since
April 1993. Together with Mr. Van Sickle, Mr. Rothman shares responsibility for
the operations of the Company, with the heads of the Company's several business
units reporting to Messrs. Rothman and Van Sickle jointly. From March 1992 to
March 1993 Mr. Rothman served as Vice Chairman of Old Credit. From November 1991
to March 1993, Mr. Rothman was Group President of Old Capital. From March 1990
to January 1992, Mr. Rothman was president and Chief Operating Officer of Old
Credit and from February 1990 to March 1993, Mr. Rothman was a director of Old
Credit. From February 1988 to February 1990, Mr. Rothman was Executive Vice
President and Chief Financial Officer of Old Credit.
85
<PAGE>
<PAGE>
Charles D. Van Sickle, 53, has served as Group President of the Company
since April 1993. Together with Mr. Rothman, Mr. Van Sickle shares
responsibility for the operations of the Company, with the heads of the
Company's business units reporting to Messrs. Van Sickle and Rothman jointly.
From November 1991 to March 1993, Mr. Van Sickle was Group President of Old
Capital and from March 1992 to March 1993, he was Vice Chairman of Old Capital's
Capital Markets division. From January 1991 to March 1992 Mr. Van Sickle was
President and Chief Operating Officer of Old Capital's Capital Markets division.
From March 1990 to January 1991 and from November 1991 to March 1993, Mr. Van
Sickle was a director of Old Credit. From February 1988 to January 1991, Mr. Van
Sickle was a Senior Vice President of Old Credit's Capital Markets division.
Edward M. Dwyer, 39, has served as Senior Vice President and Chief
Financial Officer of the Company since October, 1995. From July 1994 to October
1995, Mr. Dwyer was Senior Vice President, Chief Financial Officer and
Treasurer. From April 1993 to June 1994, Mr. Dwyer was Vice President and
Treasurer of the Company. From July 1991 to March 1993, he was Vice President
and Treasurer of Old Capital. From February 1990 to July 1991, Mr. Dwyer was
Chief Financial Officer of Old Capital's Capital Markets division. From October
1989 to February 1990, he was Old Capital's Head of Business Planning.
G. Daniel McCarthy, 46, has served as Senior Vice President, General
Counsel, Secretary and Chief Risk Management Officer of the Company since April
1993. From February 1990 to March 1993, Mr. McCarthy was Senior Vice President,
General Counsel, Secretary and Chief Risk Management Officer of Old Capital.
From February 1988 to February 1990 he was Vice President, General Counsel and
Secretary of Old Credit.
Ruth A. Morey, 52, has served as Senior Vice President and Corporate
Resource Officer of the Company since April 1993. From February 1990 to March
1993, Ms. Morey served as Senior Vice President and Chief Administrative Officer
of Old Capital. From March 1989 to February 1991, Ms. Morey was Vice President
of Old Credit's Human Resources division and from March 1990 to March 1993 she
was a director of Old Credit. From 1987 to March 1989, Ms. Morey was the head of
Old Credit's Human Resources division.
Item 11. EXECUTIVE COMPENSATION.
The information set forth under the caption "Executive Compensation" in the
Proxy Statement is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under the caption "Security Ownership" in the
Proxy Statement is incorporated herein by reference.
86
<PAGE>
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information set forth under the caption "Executive Compensation" in the
Proxy Statement is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 10-K.
(a) Documents filed as a part of the report:
(1) Financial Statements: Page
Consolidated Balance Sheets 41
Consolidated Statements of Income 43
Consolidated Statements of Changes
in Shareowners' Equity 45
Consolidated Statements of Cash Flows 46
Notes to the Consolidated Financial
Statements 48
Report of Management 82
Report of Independent Auditors 84
(2) Financial Statement Schedules:
Schedule VIII - Valuation and Qualifying Accounts
Financial statement schedules other than the one listed above
are omitted because the required information is included in
the financial statements or notes thereto or because of the
absence of conditions under which they are required.
Report of Independent Auditors
(3) Exhibits:
Exhibit
Number
3(a). Restated Certificate of Incorporation of the registrant is
incorporated by reference to Exhibit 3.1 of the registrant's
Registration Statement on Form S-1 [No. 33-49605], filed with
the Securities and Exchange Commission.
3(b). Amended and Restated By-laws of the registrant dated as of October
21, 1994 is incorporated by reference to Exhibit 3(b) of the
registrant's Annual Report on Form 10K [No. 1-11237] for the year
ended December 31, 1994, filed with the Securities and Exchange
Commission.
87
<PAGE>
<PAGE>
4(a). Indenture dated as of July 1, 1993 between the registrant and
Chemical Bank, Trustee (the "Indenture") is incorporated by
reference to Exhibit 4A of the registrant's Registration Statement
on Form S-3 [No. 33-49671] filed with the Securities and Exchange
Commission.
4(b). First Indenture Supplement dated as of June 24, 1994, to the
Indenture is incorporated by reference to Exhibit 4A-2 of the
registrant's Registration Statement on Form S-3 [No.33-54359]
filed with the Securities and Exchange Commission.
4(c). Instruments other than described above in 4(a) and 4(b) that
define the rights of holders of long-term debt of the registrant
and all of its consolidated subsidiaries, are omitted pursuant to
Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant hereby
agrees to furnish a copy of any such instrument to the Securities
and Exchange Commission upon request.
10(a). Operating Agreement between the registrant and AT&T dated as of
June 25, 1993 is incorporated by reference to exhibit 10.1 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(b). First Amendment to Operating Agreement between the registrant
and AT&T dated January 5, 1995.
10(c). Intercompany Agreement between the registrant and AT&T dated as of
June 25, 1993 is incorporated by reference to Exhibit 10.2 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(d). License Agreement between the registrant and AT&T dated as of June
25, 1993 is incorporated by reference to Exhibit 10.3 of the
registrant's Registration Statement on Form S-1 [No. 33- 49605]
filed with the Securities and Exchange Commission.
10(e). Registration Rights Agreement between the registrant and AT&T
dated as of June 25, 1993 is incorporated by reference to Exhibit
10.4 of the registrant's Registration Statement on Form S-1 [No.
33-49605] filed with the Securities and Exchange Commission.
10(f). Tax Agreements between the registrant and AT&T dated as of June
25, 1993 is incorporated by reference to Exhibit 10.5 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(g). AT&T Capital Corporation 1993 Long Term Incentive Plan is
incorporated by reference to Exhibit 10.9 of the registrant's
Registration Statement on Form S-1 [No. 33-49605] filed with the
Securities and Exchange Commission.
88
<PAGE>
<PAGE>
10(h). Form of Stock Option Agreement under the 1993 Long Term Incentive
Plan is incorporated by reference to Exhibit 10.10 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(i). Form of Restricted Stock Agreement under the 1993 Long Term
Incentive Plan is incorporated by reference to Exhibit 10.11 of
the registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(j). Form of Director's Stock Option Agreement under the 1993 Long Term
Incentive Plan is incorporated by reference to Exhibit 10.12 of
the registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(k). Form of Director's Restricted Stock Award under the 1993 Long Term
Incentive Plan is incorporated by reference to Exhibit 10.13 of
the registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(l). AT&T Capital Corporation 1993 Leveraged Stock Purchase Plan is
incorporated by reference to Exhibit 10.14 of the registrant's
Registration Statement on Form S-1 [No. 33-49605] filed with the
Securities and Exchange Commission.
10(m). Form of Stock Purchase Agreement and related exhibits under the
1993 Leveraged Stock Purchase Plan is incorporated by reference to
Exhibit 10.15 of the registrant's Registration Statement on Form
S-1 [No. 33-49605] filed with the Securities and Exchange
Commission.
10(n). AT&T Capital Corporation 1993 Share Performance Incentive Plan is
incorporated by reference to Exhibit 10.17 on the registrant's
Registration Statement on Form S-1 [No. 33-49605] filed with the
Securities and Exchange Commission.
10(o). Amendment Number 1 to the 1993 Share Performance Incentive
Plan dated November 14, 1995.
10(p). Restructuring Agreement dated as of March 29, 1993, among the
Registrant, Old Capital, Old Credit and AT&T is incorporated by
reference to Exhibit 10.18 of the registrant's Registration
Statement on Form S-1 [No. 33-49605] filed with the Securities and
Exchange Commission.
10(q). Credit Agreement dated as of June 30, 1995, among the registrant,
the Banks listed therein and Morgan Guaranty Trust Company of New
York, as Agent (five-year term).
89
<PAGE>
<PAGE>
10(r). Credit Agreement dated as of June 30, 1995, among the registrant,
the Banks listed therein and Morgan Guaranty Trust Company of New
York, as Agent (364-day term).
10(s). AT&T Capital Corporation 1993 Employee Compensation Adjustment
Plan is incorporated by reference to Exhibit 10.21 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(t). AT&T Capital Corporation 1993 Deferred Compensation
Plan as amended on October 21, 1994.
10(u). AT&T Capital Corporation 1993 Financial Counseling Plan is
incorporated by reference to Exhibit 10.22 of the registrant's
Registration Statement on Form S-1 [No.33-49605] filed with the
Securities and Exchange Commission.
10(v). AT&T Capital Corporation 1994 Employee Stock Purchase Plan is
incorporated by reference to Exhibit 4(c) of the registrant's
Registration Statement on Form S-8 [No. 33- 54315] filed with the
Securities and Exchange Commission.
10(w). AT&T Capital Corporation 1995 Annual Incentive Plan is
incorporated by reference to Exhibit 10(w) of the registrant's
Annual Report on Form 10K [No. 1-11237] for the year ended
December 31, 1994, filed with the Securities and Exchange
Commission.
10(x). AT&T Capital Corporation 1995 Senior Executive Annual Incentive
Plan is incorporated by reference to Exhibit A of the registrant's
definitive Proxy Statement dated March 20, 1995 issued in
connection with the 1995 Annual Meeting of Stockholders.
10(y). AT&T Capital Corporation Executive Benefit Plan as amended
and restated effective as of December 4, 1995.
10(z). AT&T Capital Corporation Supplemental Executive Retirement
Plan effective January 1, 1994.
10(aa).AT&T Capital Corporation Compensation Limit Excess Plan
effective January 1, 1995.
10(ab).Amendment to the AT&T Capital Corporation Compensation Limit
Excess Plan dated October 1, 1995.
10(ac).AT&T Capital Corporation Leadership Severance Plan
effective October 2, 1995.
10(ad).The Agreement between the registrant and AT&T dated
January 5, 1996.
90
<PAGE>
<PAGE>
11. Computation of Earnings Per Share
12. Computation of Ratio of Earnings to Fixed Charges.
21. Subsidiaries of the registrant.
23. Consent of Coopers & Lybrand L.L.P.
24(a). Powers of Attorney executed by officers and directors who
signed this report.
24(b). Certificate of Corporate Resolution.
27. Financial Data Schedule
(b) Reports on Form 8-K:
Report on Form 8K dated October 11, 1995 was filed pursuant to Item
5 (Other Events).
91
<PAGE>
<PAGE>
SCHEDULE VIII
AT&T CAPITAL CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Dollars In Thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- ---------------------------------------------------------------------------
Other
Balance at Charge-offs, Additions/ Balance
Beginning Net of (Deductions) at End
of Period Additions Recoveries (a) of Period
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Allowance for
Credit Losses:
U.S.:
Lease Financing(1)$113,735 $ 66,505 $ 34,890 $ (684) $144,666
Finance
Receivables(2) 46,637 15,167 9,043 (154) 52,607
Foreign 16,056 4,542 2,837 8,186 25,947
- --------------------------------------------------------------------------
Total $176,428 $ 86,214 $ 46,770 $ 7,348 $223,220
==========================================================================
1994*
Allowance for
Credit Losses:
U.S.:
Lease Financing(1)$ 95,196 $ 62,447 $ 32,919 $(10,989) $113,735
Finance
Receivables(2) 56,974 13,488 21,347 (2,478) 46,637
Foreign 7,649 4,953 1,279 4,733 16,056
- ---------------------------------------------------------------------------
Total $159,819 $ 80,888 $ 55,545 $ (8,734) $176,428
===========================================================================
1993*
Allowance for
Credit Losses:
U.S.:
Lease Financing(1)$ 86,086 $ 91,605 $ 45,728 $(36,767) $ 95,196
Finance
Receivables(2) 36,139 28,604 13,017 5,248 56,974
Foreign 1,736 3,469 284 2,728 7,649
- --------------------------------------------------------------------------
Total $123,961 $123,678 $ 59,029 $(28,791) $159,819
==========================================================================
</TABLE>
(1) Shown on the balance sheet as a deduction from applicable finance assets,
primarily capital leases.
(2) Shown on the balance sheet as a deduction from finance receivables.
(a) Primarily includes transfers out of credit losses related to
receivables securitized, transfers in of reserves related to
businesses acquired and reclassifications.
*Amounts have been reclassified to conform to the 1995 presentation.
92
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
------------------------------
Our report on the consolidated financial statements of AT&T Capital Corporation
and Subsidiaries is included on page 84 of this Form 10-K. In connection with
our audits of such financial statements, we have also audited the related
financial statement schedule listed as an exhibit on page 87 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
As discussed in our report referred to above, the Company changed its method of
accounting for income taxes in 1993.
COOPERS & LYBRAND L.L.P.
1301 Avenue of the Americas
New York, New York
January 25, 1996
93
<PAGE>
<PAGE>
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.
AT&T CAPITAL CORPORATION
By Thomas C. Wajnert
-------------------------
Thomas C. Wajnert,
March 6, 1996 (Chairman and Chief Executive
Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Principal Executive Officer:
T. C. Wajnert Chairman and Chief
Executive Officer
Principal Financial Officer:
E. M. Dwyer Senior Vice President,
Chief Financial Officer
By Thomas C. Wajnert
----------------------------
Principal Accounting Officer: (Thomas C. Wajnert,
Attorney-in-fact* and
on his own behalf as
R. Oliu, Jr. Vice President, Controller Director and a Principal
and Chief Accounting Officer Executive Officer).
Directors:
T. C. Wajnert
J. P. Clancey
J. P. Kelly March 6, 1996
G. M. Lowrie
W. B. Marx, Jr.
R. A. McGinn
J. J. Melone
R. W. Miller * by power of attorney
S. L. Prendergast
B. Walker, Jr.
M. J. Wasser
94
<PAGE>
<PAGE>
EXHIBIT INDEX
Exhibit Number
3(a). Restated Certificate of Incorporation of the registrant is
incorporated by reference to Exhibit 3.1 of the registrant's
Registration Statement on Form S-1 [No. 33-49605], filed with
the Securities and Exchange Commission.
3(b). Amended and Restated By-laws of the registrant dated as of October
21, 1994 is incorporated by reference to Exhibit 3(b) of the
registrant's Annual Report on Form 10K [No. 1-11237] for the year
ended December 31, 1994, filed with the Securities and Exchange
Commission.
4(a). Indenture dated as of July 1, 1993 between the registrant and
Chemical Bank, Trustee (the "Indenture") is incorporated by
reference to Exhibit 4A of the registrant's Registration Statement
on Form S-3 [No. 33-49671] filed with the Securities and Exchange
Commission.
4(b). First Indenture Supplement dated as of June 24, 1994, to the
Indenture is incorporated by reference to Exhibit 4A-2 of the
registrant's Registration Statement on Form S-3 [No.33-54359]
filed with the Securities and Exchange Commission.
4(c). Instruments other than described above in 4(a) and 4(b) that
define the rights of holders of long-term debt of the registrant
and all of its consolidated subsidiaries, are omitted pursuant to
Item 601(b)(4)(iii)(A) of Regulation S-K. The registrant hereby
agrees to furnish a copy of any such instrument to the Securities
and Exchange Commission upon request.
10(a). Operating Agreement between the registrant and AT&T dated as of
June 25, 1993 is incorporated by reference to exhibit 10.1 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(b). First Amendment to Operating Agreement between the registrant
and AT&T dated January 5, 1995.
10(c). Intercompany Agreement between the registrant and AT&T dated as of
June 25, 1993 is incorporated by reference to Exhibit 10.2 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(d). License Agreement between the registrant and AT&T dated as of June
25, 1993 is incorporated by reference to Exhibit 10.3 of the
registrant's Registration Statement on Form S-1 [No. 33- 49605]
filed with the Securities and Exchange Commission.
95
<PAGE>
<PAGE>
10(e). Registration Rights Agreement between the registrant and AT&T
dated as of June 25, 1993 is incorporated by reference to Exhibit
10.4 of the registrant's Registration Statement on Form S-1 [No.
33-49605] filed with the Securities and Exchange Commission.
10(f). Tax Agreements between the registrant and AT&T dated as of June
25, 1993 is incorporated by reference to Exhibit 10.5 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(g). AT&T Capital Corporation 1993 Long Term Incentive Plan is
incorporated by reference to Exhibit 10.9 of the registrant's
Registration Statement on Form S-1 [No. 33-49605] filed with the
Securities and Exchange Commission.
10(h). Form of Stock Option Agreement under the 1993 Long Term Incentive
Plan is incorporated by reference to Exhibit 10.10 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(i). Form of Restricted Stock Agreement under the 1993 Long Term
Incentive Plan is incorporated by reference to Exhibit 10.11 of
the registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(j). Form of Director's Stock Option Agreement under the 1993 Long Term
Incentive Plan is incorporated by reference to Exhibit 10.12 of
the registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(k). Form of Director's Restricted Stock Award under the 1993 Long Term
Incentive Plan is incorporated by reference to Exhibit 10.13 of
the registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(l). AT&T Capital Corporation 1993 Leveraged Stock Purchase Plan is
incorporated by reference to Exhibit 10.14 of the registrant's
Registration Statement on Form S-1 [No. 33-49605] filed with the
Securities and Exchange Commission.
10(m). Form of Stock Purchase Agreement and related exhibits under the
1993 Leveraged Stock Purchase Plan is incorporated by reference to
Exhibit 10.15 of the registrant's Registration Statement on Form
S-1 [No. 33-49605] filed with the Securities and Exchange
Commission.
10(n). AT&T Capital Corporation 1993 Share Performance Incentive Plan is
incorporated by reference to Exhibit 10.17 on the registrant's
Registration Statement on Form S-1 [No. 33-49605] filed with the
Securities and Exchange Commission.
96
<PAGE>
<PAGE>
10(o). Amendment Number 1 to the 1993 Share Performance Incentive
Plan dated November 14, 1995.
10(p). Restructuring Agreement dated as of March 29, 1993, among the
Registrant, Old Capital, Old Credit and AT&T is incorporated by
reference to Exhibit 10.18 of the registrant's Registration
Statement on Form S-1 [No. 33-49605] filed with the Securities and
Exchange Commission.
10(q). Credit Agreement dated as of June 30, 1995, among the registrant,
the Banks listed therein and Morgan Guaranty Trust Company of New
York, as Agent (five-year term).
10(r). Credit Agreement dated as of June 30, 1995, among the registrant,
the Banks listed therein and Morgan Guaranty Trust Company of New
York, as Agent (364-day term).
10(s). AT&T Capital Corporation 1993 Employee Compensation Adjustment
Plan is incorporated by reference to Exhibit 10.21 of the
registrant's Registration Statement on Form S-1 [No. 33-49605]
filed with the Securities and Exchange Commission.
10(t). AT&T Capital Corporation 1993 Deferred Compensation
Plan as amended on October 21, 1994.
10(u). AT&T Capital Corporation 1993 Financial Counseling Plan is
incorporated by reference to Exhibit 10.22 of the registrant's
Registration Statement on Form S-1 [No.33-49605] filed with the
Securities and Exchange Commission.
10(v). AT&T Capital Corporation 1994 Employee Stock Purchase Plan is
incorporated by reference to Exhibit 4(c) of the registrant's
Registration Statement on Form S-8 [No. 33- 54315] filed with the
Securities and Exchange Commission.
10(w). AT&T Capital Corporation 1995 Annual Incentive Plan is
incorporated by reference to Exhibit 10(w) of the registrant's
Annual Report on Form 10K [No. 1-11237] for the year ended
December 31, 1994, filed with the Securities and Exchange
Commission.
10(x). AT&T Capital Corporation 1995 Senior Executive Annual Incentive
Plan is incorporated by reference to Exhibit A of the registrant's
definitive Proxy Statement dated March 20, 1995 issued in
connection with the 1995 Annual Meeting of Stockholders.
10(y). AT&T Capital Corporation Executive Benefit Plan as amended
and restated effective as of December 4, 1995.
10(z). AT&T Capital Corporation Supplemental Executive Retirement
Plan effective January 1, 1994.
10(aa).AT&T Capital Corporation Compensation Limit Excess Plan
effective January 1, 1995.
97
<PAGE>
<PAGE>
10(ab).Amendment to the AT&T Capital Corporation Compensation Limit
Excess Plan dated October 1, 1995.
10(ac).AT&T Capital Corporation Leadership Severance Plan
effective October 2, 1995.
10(ad).The Agreement between the registrant and AT&T dated
January 5, 1996.
11 Computation of Earnings Per Share
12 Computation of Ratio of Earnings to Fixed Charges.
21 Subsidiaries of the registrant.
23 Consent of Coopers & Lybrand L.L.P.
24(a). Powers of Attorney executed by officers and directors who
signed this report.
24(b). Certificate of Corporate Resolution.
27. Financial Data Schedule
98
<PAGE>
<PAGE>
EXHIBIT 10(b)
Form 10-K for 1995
File No. 1-11237
EXECUTION COPY
FIRST AMENDMENT TO OPERATING AGREEMENT
This First Amendment to Operating Agreement dated as of
January 5, 1996 (this "Amendment"), is entered into between AT&T CORP.
(formerly American Telephone and Telegraph Company), a New York
corporation ("AT&T"), and AT&T CAPITAL CORPORATION, a Delaware
corporation ("Capital"), and amends the Operating Agreement dated as of
June 25, 1993 (as amended hereby, the "Operating Agreement"), entered
into among AT&T and Capital.
W I T N E S S E T H:
WHEREAS, the Board of Directors of AT&T has determined that it
is in the best interest of AT&T to separate AT&T's existing businesses
into three independent businesses;
WHEREAS, as part of the foregoing, AT&T Global Information
Solutions, Inc. ("GIS") and NS-MPG Inc. ("NS-MPG") will enter into a
Separation and Distribution Agreement with AT&T which provides, among
other things, for the separation of the NS-MPG assets and NS-MPG
liabilities, and the distribution and the execution and the delivery of
certain other agreements in order to facilitate and provide for the
foregoing;
WHEREAS, in connection with such reorganization, AT&T intends
(i) to spin-off GIS and NS-MPG in two or more transactions (including a
sale, spin-off or distribution of stock or assets to AT&T's shareowners
or to an unrelated Person or Persons) and (ii) to spin-off or sell its
interest in Capital (collectively, the "Spin-Off Transactions");
WHEREAS, in contemplation of the Spin-Off Transactions, the
parties hereto desire to make certain amendments the Operating
Agreement;
<PAGE>
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises herein
set forth and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, and subject to the
conditions and upon the terms hereof, the parties hereto hereby agree
as follows:
SECTION 1. Defined Terms. Terms defined in the
Operating Agreement not otherwise defined herein shall have the
meanings therein defined.
SECTION 2. Amendment to the Operating Agreement. The
Operating Agreement is, effective as of the date hereof, hereby
amended as follows:
-2-
<PAGE>
<PAGE>
2.01 Article I of the Operating Agreement is amended by adding
the following new definitions thereto:
"GIS Operating Agreement" means the Comparable Operating
Agreement to be entered into between Capital and GIS, as such
agreement is amended and supplemented from time to time in
accordance with its terms.
"NS-MPG Operating Agreement" means the Comparable
Operating Agreement to be entered into between Capital and NS-MPG,
as such agreement is amended and supplemented from time to time in
accordance with its terms.
2.02 Section 4.1(b) of the Operating Agreement is amended by
deleting clause (iii) in its entirety and replacing it with the
following:
(iii) the AT&T Entities (including AT&T Universal Card
Services Corporation) may issue credit cards; provided that the
AT&T Entities shall not use such credit cards to offer programs for
equipment leasing or other types of equipment Financing with
respect to Products, asset remarketing or Finance-related equipment
insurance in connection with Products that compete with programs
for such services offered by the Capital Entities (it being
understood that for purposes of this clause (iii) "Products" shall
include Products (as defined in the Communications Systems and
Technology Operating Agreement and as defined in the Computer
Company Operating Agreement);
2.03 The definition of "Captive Financing Trigger Event" in
Section 4.2 of the Operating Agreement is amended by (A) deleting the
following language beginning in the second line of such definition:
"each of the following conditions is met: (i) Capital ceases to be a
Subsidiary of AT&T; and (ii) "and (B) deleting "(ii)" in the tenth line
of such definition.
SECTION 3. Representation Regarding Additional Aqreements.
Each of AT&T and Capital represents to the other that as of the date
hereof to the best of its knowledge no agreement has been entered into
between AT&T and Capital that would vary the terms of the Operating
Agreement as contemplated in Section 13.1 of the Operating Agreement.
-3-
<PAGE>
<PAGE>
SECTION 4. Reference to and Effect on the Operating
Agreement.
4.01 Upon the effectiveness of this Amendment, on and after
the date hereof, each reference in the Operating Agreement to "this
Agreement", "hereunder", "hereof" or words of like import, and each
reference in the Intercompany Agreement and the License Agreement to
the Operating Agreement, shall mean and be a reference to the Operating
Agreement as amended hereby.
4.02 Except as specifically amended above, all of the terms of
the Operating Agreement shall remain unchanged and in full force and
effect.
SECTION 5. Execution in Counterparts. This Amendment may be
executed and delivered 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 and all of which taken
together shall constitute one and the same original agreement.
SECTION 6. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the
State of New York.
IN WITNESS WHEREOF, this Amendment has been duly executed on
the date set forth above.
AT&T CORP.
By: /s/ S. Lawrence Prendergast
------------------------------------
Name: S. Lawrence Prendergast
Title: Vice President and Treasurer
AT&T CAPITAL CORPORATION
By: /s/ G. Daniel McCarthy
------------------------------------
Name: G. Daniel McCarthy
Title: Senior Vice President,
General Counsel & Secretary
<PAGE>
<PAGE>
EXHIBIT 10(o)
Form 10-K for 1995
File No. 1-11237
AT&T CAPITAL CORPORATION
AMENDMENT NUMBER 1 TO 1993 SHARE PERFORMANCE INCENTIVE PLAN
Pursuant to resolutions adopted by the Compensation Committee and
Executive Committee of AT&T Capital Corporation's Board of Directors (dated
November 7, 1995 and November 14, 1995, respectively), the AT&T Capital
Corporation 1993 Share Performance Incentive Plan (the "Plan") is hereby amended
and supplemented effective November 14, 1995 as set forth below:
1. Section 2 of the Plan is amended and supplemented by adding the
following new paragraph (ap) at the end thereof:
(ap) "Private Sale" means any Change in Control that results
in, or will have the result of, the Common Stock no longer being publicly traded
on a national securities exchange or traded on the NASDAQ over-the-counter
market.
2. Section 5 of the Plan is amended and supplemented by adding the
following Section 5.3 at the end thereof:
5.3 Private Sale. (a) Notwithstanding anything in Sections 5.1 or 5.2 to
the contrary, upon the occurrence of a Private Sale during the term of the Plan,
the Company shall promptly pay to each Participant (i) 100% of such
Participant's Maximum Payout (without discount) for each pending Performance
Period under the Plan and (ii) with respect to any Performance Period completed
within twelve (12) months prior to such Private Sale, the excess of (A) 100% of
the Maximum Payout for such Participant for such Performance Period over (B) the
payment actually made to the Participant for such Performance Period.
(b) Subject to Section 5.2 hereof, following any Award Payout for
pending and completed Performance Periods under this Section 5.3, Award Payouts
with respect to any Performance Periods beginning after the occurrence of a
Private Sale will be determined in accordance with the provisions of Section 4
hereof without modification.
<PAGE>
<PAGE>
Exhibit 10(q)
Form 10-K for 1995
File No. 1-11237
$500,000,000
CREDIT AGREEMENT
dated as of
June 30, 1995
among
AT&T Capital Corporation
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE>
<PAGE>
TABLE OF CONTENTS*
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions .................................... 1
1.02 Accounting Terms and Determinations ............ 12
1.03 Types of Borrowings ............................ 13
1.04 Basis for Ratings .............................. 13
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend ............................ 13
2.02 Notice of Committed Borrowing .................. 13
2.03 Money Market Borrowings ........................ 14
2.04 Notice to Banks; Funding of Loans .............. 18
2.05 Notes .......................................... 19
2.06 Maturity of Loans; Termination of
Commitments .................................. 20
2.07 Interest Rates ................................. 20
2.08 Facility Fees .................................. 24
2.09 Optional Termination or
Reduction of Commitments ..................... 24
2.10 Method of Electing Interest Rates .............. 24
2.11 Optional Prepayments ........................... 26
2.12 General Provisions as to Payments .............. 27
2.13 Funding Losses ................................. 28
2.14 Computation of Interest and Fees ............... 28
2.15 Regulation D Compensation ...................... 29
ARTICLE III
CONDITIONS
SECTION 3.01 Effectiveness .................................. 29
3.02 Borrowings ..................................... 30
- ----------------
*The Table of Contents is not a part of this Agreement.
i
<PAGE>
<PAGE>
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Corporate Existence and Power................... 31
4.02 Corporate and Governmental
Authorization; No Contravention............... 31
4.03 Binding Effect.................................. 31
4.04 Financial Information........................... 32
4.05 Litigation...................................... 32
4.06 Subsidiaries.................................... 33
4.07 Not an Investment Company....................... 33
4.08 Full Disclosure................................. 33
ARTICLE V
COVENANTS
SECTION 5.01 Information..................................... 33
5.02 Maintenance of Existence........................ 34
5.03 Fixed Charge Coverage........................... 34
5.04 Debt............................................ 35
5.05 Limitation on Secured Debt...................... 35
5.06 Consolidations, Mergers and
Sales of Assets............................... 37
5.07 Use of Proceeds................................. 38
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default............................... 38
6.02 Notice of Default............................... 40
6.03 Rescission...................................... 40
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization................... 41
7.02 Agent and Affiliates............................ 41
7.03 Action by Agent................................. 41
7.04 Consultation with Experts....................... 41
7.05 Liability of Agent.............................. 41
7.06 Indemnification................................. 42
ii
<PAGE>
<PAGE>
Page
----
7.07 Credit Decision................................. 42
7.08 Successor Agent................................. 42
7.09 Agent's Fee..................................... 43
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair..................... 43
8.02 Illegality...................................... 44
8.03 Increased Cost and Reduced Return............... 44
8.04 Taxes........................................... 46
8.05 Base Rate Loans Substituted for
Affected Fixed Rate Loans..................... 49
8.06 Substitution of Bank............................ 49
8.07 Compensation.................................... 50
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices......................................... 50
9.02 No Waivers...................................... 51
9.03 Expenses; Indemnification....................... 51
9.04 Sharing of Set-Offs............................. 51
9.05 Amendments and Waivers.......................... 52
9.06 Successors and Assigns.......................... 52
9.07 Collateral...................................... 54
9.08 Governing Law; Submission to Juris-
diction....................................... 54
9.09 Counterparts; Integration....................... 55
9.10 WAIVER OF JURY TRIAL............................ 55
9.11 Confidentiality................................. 55
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
iii
<PAGE>
<PAGE>
Exhibit E - Opinion of Counsel for the Borrower
Exhibit F - Opinion of Special Counsel for the
Agent
Exhibit G - Assignment and Assumption Agreement
iv
<PAGE>
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of June 30, 1995 among AT&T CAPITAL
CORPORATION, the BANKS party hereto and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent.
W I T N E S S E T H :
WHEREAS, the Borrower (as defined below) has heretofore entered
into a $500,000,000 Credit Agreement dated as of July 11, 1994 with the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as agent for such banks (the "Existing Credit Agreement"); and
WHEREAS, the Borrower wishes to enter into this
Agreement to replace the Existing Credit Agreement; and
WHEREAS, upon the effectiveness of this Agreement in accordance
with Section 3.01, the Existing Credit Agreement shall terminate;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.03.
"Accounts Receivable" shall mean (i) any accounts receivable
(whether or not earned by performance), chattel paper, instruments, documents,
general intangibles, trade acceptances, any other rights to receive installment,
rental or other payments for, or relating to amounts due or to become due on
account of equipment or goods sold or leased or to be sold or leased or services
rendered or to be rendered or funds advanced or loaned or to be advanced or
loaned and other rights to payment of any kind, (ii) any proceeds of any of the
foregoing and (iii) any interest in
<PAGE>
<PAGE>
any property or asset of any kind (whether of the obligor under such Accounts
Receivable or any other Person) securing the payment of any item listed in
clause (i) hereof.
"Adjusted CD Rate" has the meaning set forth in
Section 2.07(b).
"Administrative Questionnaire" means, with respect to each Bank,
an administrative questionnaire in the form prepared by the Agent and submitted
to the Agent (with a copy to the Borrower) duly completed by such Bank.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Applicable Margin" has the meaning set forth in
Section 2.07(h).
"Assessment Rate" has the meaning set forth in
Section 2.07(b).
"Asset Drop-Down" has the meaning set forth in
Section 5.06.
"Assignee" has the meaning set forth in
Section 9.06(c).
"AT&T" means American Telephone and Telegraph Company, a New York
corporation, and its successors.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears interest
at the Base Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or the provisions of Article VIII or (ii) an
2
<PAGE>
<PAGE>
overdue amount which was a Base Rate Loan immediately before it became overdue.
"Borrower" means AT&T Capital Corporation, a
Delaware corporation, and its successors.
"Borrower's 1994 Form 10-K" means the Borrower's annual report on
Form 10-K for 1994, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly
report on Form 10-Q for the quarter ended March 31, 1995, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Borrowing" has the meaning set forth in
Section 1.03.
"CD Base Rate" has the meaning set forth in
Section 2.07(b).
"CD Loan" means (i) a Committed Loan which bears interest at a CD
Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or (ii) an overdue amount which was a CD Loan immediately
before it became overdue.
"CD Rate" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means Chemical Bank,
Citibank, N.A. and Morgan Guaranty Trust Company of New
York.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.09 or changed
pursuant to Section 9.06(c).
"Committed Loan" means a loan made by a Bank pursuant to Section
2.01; provided that, if any such loan or loans (or portions thereof) are
combined or subdivided pursuant to a Notice of Interest Rate Election, the term
"Committed Loan" shall refer to the combined principal amount resulting from
such combination or to each of the separate principal amounts resulting from
such subdivision, as the case may be.
3
<PAGE>
<PAGE>
"Consolidated Debt" means at any date the Debt of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated EBIT" means, for any period, the sum of (i) the
consolidated net income from continuing operations of the Borrower and its
Consolidated Subsidiaries for such period before extraordinary items and without
giving effect to unusual non-recurring events plus (ii) to the extent deducted
in determining such consolidated net income from continuing operations, the sum
of Consolidated Interest Expense and the provision for income tax for such
period.
"Consolidated Interest Expense" means, for any period, the
interest expense of the Borrower and its Consolidated Subsidiaries determined on
a consolidated basis for such period.
"Consolidated Net Tangible Assets" means, at the date of any
determination, the total assets appearing on the consolidated balance sheet of
the Borrower and its Restricted Subsidiaries as at the end of the most recent
fiscal quarter of the Borrower for which such balance sheet is available,
prepared in accordance with generally accepted accounting principles, less (a)
all current liabilities (obligations whose liquidation is reasonably expected to
occur within twelve months), (b) investments in and advances to Subsidiaries of
the Borrower other than Restricted Subsidiaries or other entities accounted for
on the equity method of accounting, and (c) Intangible Assets.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Tangible Net Worth" means, at any date, the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries less Intangible Assets, all determined as of such date.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money and (ii) all obligations of
others for borrowed money guaranteed by such Person; provided, however, that any
recourse provided by any Person in connection with any sale, transfer or other
disposition by such Person of Accounts Receivable or of any subsidiary of such
Person substantially all the assets of which are Accounts Receivable which
4
<PAGE>
<PAGE>
constitutes a "sale" under generally accepted accounting principles (as in
effect at the time of such sale, transfer or other disposition) shall not, in
any event, constitute Debt.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City are authorized or
required by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Agent; provided that any Bank
may so designate separate Domestic Lending Offices for its Base Rate Loans, on
the one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate
Loans or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.07(b).
"Drop-Down Subsidiary" has the meaning set forth
in Section 5.06.
"Effective Date" means the date this Agreement becomes effective
in accordance with Section 3.01.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its
5
<PAGE>
<PAGE>
Euro-Dollar Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears
interest at a Euro-Dollar Rate pursuant to the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which
was a Euro-Dollar Loan immediately before it became overdue.
"Euro-Dollar Rate" means a rate of interest determined pursuant
to Section 2.07(c) on the basis of a London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices
of The Fuji Bank, Limited, Royal Bank of Canada and Morgan Guaranty Trust
Company of New York.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents).
"Event of Default" has the meaning set forth in
Section 6.01.
"Existing Credit Agreement" has the meaning set
forth in the recitals hereto.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to Morgan Guaranty Trust
6
<PAGE>
<PAGE>
Company of New York on such day on such transactions as determined by the Agent.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money
Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base
Rate pursuant to Section 8.01(a)) or any combination of the foregoing.
"Group of Loans" means at any time a group of Loans consisting of
(i) all Committed Loans which are Base Rate Loans at such time or (ii) all
Committed Loans which are Fixed Rate Loans of the same type having the same
Interest Period at such time; provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Section
8.02 or 8.05, such Loan shall be included in the same Group or Groups of Loans
from time to time as it would have been in if it had not been so converted or
made.
"Indemnitee" has the meaning set forth in
Section 9.03(b).
"Intangible Assets" means the value (net of any applicable
reserves), as shown on or reflected in the Borrower's balance sheet, of: (i) all
trade names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organization and development costs; (iii) deferred charges (other than prepaid
items such as insurance, taxes, interest, commissions, rents and similar items
and tangible assets being amortized); and (iv) unamortized debt discount and
expense, less unamortized premium.
"Interest Period" means: (1) with respect to each Euro-Dollar
Loan, a period commencing on the date of borrowing specified in the applicable
Notice of Borrowing or on the date specified in the applicable Notice of
Interest Rate Election and ending one, two, three or six months thereafter, as
the Borrower may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (c) below, be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day
7
<PAGE>
<PAGE>
in the calendar month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of a calendar month;
and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Loan, a period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or on the date specified in the
applicable Notice of Interest Rate Election and ending 30, 60, 90 or 180 days
thereafter, as the Borrower may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (b) below, be
extended to the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(3) with respect to each Money Market LIBOR Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing and ending
such whole number of months thereafter as the Borrower may elect in accordance
with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (c) below, be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market Absolute Rate Loan, the period commencing
on the date of borrowing specified in
8
<PAGE>
<PAGE>
the applicable Notice of Borrowing and ending such number of days thereafter
(but not less than 14 days) as the Borrower may elect in accordance with Section
2.03; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (b) below, be
extended to the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Level I Status" exists at any date if, at such date, both (i)
the Borrower's outstanding senior unsecured long-term debt is rated both A+ or
higher by S&P and A1 or higher by Moody's and (ii) the Borrower's commercial
paper is rated both A1 or higher by S&P and P1 by Moody's.
"Level II Status" exists at any date if, at such date, (a) both
(i) the Borrower's outstanding senior unsecured long-term debt is rated both A-
or higher by S&P and A3 or higher by Moody's and (ii) the Borrower's commercial
paper is rated both A1 or higher by S&P and P1 by Moody's and (b) Level I Status
does not exist at such date.
"Level III Status" exists at any date if, at such date, (a) both
(i) the Borrower's outstanding senior unsecured long-term debt is rated both
BBB- or higher by S&P and Baa3 or higher by Moody's and (ii) the Borrower's
commercial paper is rated both A2 or higher by S&P and P2 or higher by Moody's
and (b) neither Level I Status nor Level II Status exists at such date.
"Level IV Status" exists at any date if, at such date, neither
Level I Status, Level II Status nor Level III Status exists.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means any mortgage, pledge, security
interest or lien.
"Loan" means a Domestic Loan or a Euro-Dollar
Loan or a Money Market Loan and "Loans" means Domestic Loans or
9
<PAGE>
<PAGE>
Euro-Dollar Loans or Money Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.07(c).
"Material Adverse Effect" means a material adverse effect on the
consolidated financial position of the Borrower and its subsidiaries.
"Money Market Absolute Rate" has the meaning set
forth in Section 2.03(d).
"Money Market Absolute Rate Loan" means a loan made or to be made
by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from time to time by
notice to the Borrower and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all references herein to
the Money Market Lending Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan made or to be made by a
Bank pursuant to a LIBOR Auction (including such a loan bearing interest at the
Base Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR
Loan or a Money Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth
in Section 2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc.
or any successor rating agency acceptable to the Agent and
the Borrower.
"Non-Recourse Debt" of the Borrower or any Restricted Subsidiary
means any indebtedness for borrowed money of the Borrower or any Restricted
Subsidiary, as the
10
<PAGE>
<PAGE>
case may be, which is secured by any Lien on or payable solely from the income
and proceeds of any property (including, without limiting the generality of such
term, any intangible assets), shares of stock, other equity interests or debt of
the Borrower or such Restricted Subsidiary, as the case may be, and which is not
a general obligation of the Borrower or such Restricted Subsidiary, as the case
may be.
"Notes" means promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
the Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as
defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in
Section 2.03(f)).
"Notice of Interest Rate Election" has the
meaning set forth in Section 2.10.
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in
Section 9.06(b).
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Quarterly Date" means the last Euro-Dollar
Business Day of each March, June, September and December.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 51% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes
11
<PAGE>
<PAGE>
evidencing at least 51% of the aggregate unpaid principal amount of the Loans.
"Restricted Subsidiary" means each Subsidiary of the Borrower
organized under the laws of any State of the United States or the District of
Columbia no substantial portion of the business of which is carried on outside
of the United States; provided that each Drop-Down Subsidiary (as defined in
Section 5.06) shall be a Restricted Subsidiary.
"S&P" means Standard & Poor's Ratings Group or any successor
rating agency acceptable to the Agent and the Borrower.
"Status" means, at any date, whichever of Level I Status, Level
II Status, Level III Status or Level IV Status exists at such date.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Borrower (or, if such term
is used with reference to any other Person, by such other Person).
"Termination Date" means June 30, 2000, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"United States" means the United States of America, including the
States thereof and the District of Columbia, but excluding its territories and
possessions.
"Wholly-Owned Restricted Subsidiary" means any Restricted
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and
Determinations. Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be
prepared in accordance with United States generally accepted accounting
principles as in effect from time to time, applied on a basis consistent (except
for changes made in consultation with the Borrower's independent public
accountants) with the most recent audited consolidated
12
<PAGE>
<PAGE>
financial statements of the Borrower and its subsidiaries delivered to the
Banks; provided that, if the Borrower notifies the Agent that the Borrower
wishes to amend any covenant in Article V to eliminate the effect of any change
in generally accepted accounting principles on the operation of such covenant
(or if the Agent notifies the Borrower that the Required Banks wish to amend
Article V for such purpose), then the Borrower's compliance with such covenant
shall be determined on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrower and the Required
Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on the same date, all of which Loans are of the same type
(subject to Article VIII) and, except in the case of Base Rate Loans, have the
same Interest Period or initial Interest Period. Borrowings are classified for
purposes of this Agreement either by reference to the pricing of Loans
comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article II
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in proportion
to their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which the Bank participants are determined on the basis of their
bids in accordance therewith).
SECTION 1.04. Basis for Ratings. The credit ratings to be
utilized in the determination of a Status are the ratings assigned to unsecured
obligations of the Borrower without third party credit support. Ratings assigned
to any obligation which is secured or which has the benefit of third party
credit support shall be disregarded.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to make loans to the
Borrower pursuant to this Section from time to time on and after the Effective
Date and prior to the Termination Date in amounts such that
13
<PAGE>
<PAGE>
the aggregate principal amount of Committed Loans by such Bank at any one time
outstanding shall not exceed the amount of its Commitment. Each Borrowing under
this Section shall be in an aggregate principal amount of $50,000,000 or any
larger multiple of $5,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.02(b)) and shall be made
from the several Banks ratably in proportion to their respective Commitments.
Within the foregoing limits, the Borrower may borrow under this Section, prepay
Loans to the extent permitted by Section 2.11, and reborrow at any time prior to
the Termination Date.
SECTION 2.02. Notice of Committed Borrowing. The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later than 10:30
A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the
second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate or at a CD Rate or a Euro-Dollar
Rate, and
(d) in the case of a Fixed Rate Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks to make offers to make Money Market Loans to the Borrower
prior to the Termination Date. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Agent by telex
14
<PAGE>
<PAGE>
or facsimile transmission a Money Market Quote Request substantially in the form
of Exhibit B hereto so as to be received no later than 10:30 A.M. (New York City
time) on (x) the fourth Euro-Dollar Business Day prior to the date of Borrowing
proposed therein, in the case of a LIBOR Auction or (y) the Domestic Business
Day next preceding the date of Borrowing proposed therein, in the case of an
Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to the
Banks not later than the date of the Money Market Quote Request for the first
LIBOR Auction or Absolute Rate Auction for which such change is to be effective)
specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day
in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing,
which shall be $5,000,000 or a larger multiple of
$1,000,000,
(iii) the duration of the Interest Period
applicable thereto, subject to the provisions of the
definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth a
Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of
a Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank
may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each
15
<PAGE>
<PAGE>
Money Market Quote must comply with the requirements of this subsection (d) and
must be submitted to the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 9.01 not later than (x) 4:00 P.M. (New York
City time) on the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective); provided that Money Market
Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the Agent or such
affiliate notifies the Borrower of the terms of the offer or offers contained
therein not later than (x) one hour prior to the deadline for the other Banks,
in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the
other Banks, in the case of an Absolute Rate Auction. Subject to Articles III
and VI, any Money Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which each
such offer is being made, which principal amount (w) may be greater than
or less than the Commitment of the quoting Bank, (x) must be $5,000,000
or a larger multiple of $1,000,000, (y) may not exceed the principal
amount of Money Market Loans for which offers were requested and (z) may
be subject to an aggregate limitation as to the principal amount of
Money Market Loans for which offers being made by such quoting Bank may
be accepted,
(C) in the case of a LIBOR Auction, the margin above or below the
applicable London Interbank Offered Rate (the "Money Market Margin")
offered for each such Money Market Loan, expressed as a percentage
(specified to the nearest 1/10,000th of 1%) to be added to or subtracted
from such base rate,
16
<PAGE>
<PAGE>
(D) in the case of an Absolute Rate Auction, the rate of interest
per annum (specified to the nearest 1/10,000th of 1%) (the "Money Market
Absolute Rate") offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded
if it:
(A) is not substantially in conformity with Exhibit D hereto or
does not specify all of the information required by subsection (d)(ii);
(B) except as provided in subsection
(d)(ii)(B)(z), contains qualifying, conditional or
similar language;
(C) except as provided in subsection (d)(ii)(B)(z), proposes
terms other than or in addition to those set forth in the applicable
Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is
in accordance with subsection (d) and (y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
17
<PAGE>
<PAGE>
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money Market
Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing
may not exceed the applicable amount set forth in the related Money
Market Quote Request,
(ii) the principal amount of each Money Market
Borrowing must be $5,000,000 or a larger multiple of
$1,000,000,
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may be,
and
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Banks as nearly as possible (in multiples
of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
18
<PAGE>
<PAGE>
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share (if
any) of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Bank participating therein shall make available its share
of such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the Banks available to
the Borrower by 3:00 P.M. (New York City time) on the date of such Borrowing at
the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a Bank prior
to the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, a rate per annum equal to the higher of the Federal Funds
Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii)
in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to
the Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan included in such Borrowing for purposes of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account of
its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such
19
<PAGE>
<PAGE>
Note shall be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of the relevant
type. Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(a),
the Agent shall forward such Note to such Bank. Each Bank shall record the date,
amount and type of each Loan made by it and the date and amount of each payment
of principal made by the Borrower with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement of its Note, endorse on
the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding; provided
that the failure of any Bank to make any such recordation or endorsement or any
error in making the same shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans; Termination of
Commitments. (a) The Commitments shall terminate on the
Termination Date, and all Committed Loans shall mature, and
the principal amount thereof shall be due and payable, on
such date.
(b) Each Money Market Loan included in any Money Market Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable quarterly in arrears on each
Quarterly Date and on the Termination Date, and, with respect to the principal
amount of any Base Rate Loan converted to a CD Loan or a Euro-Dollar Loan, on
each date a Base Rate Loan is so converted. Any overdue principal of or interest
on any Base Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 1% plus the rate otherwise
applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during
20
<PAGE>
<PAGE>
each Interest Period applicable thereto, at a rate per annum equal to the sum of
the Applicable Margin for such day plus the Adjusted CD Rate applicable to such
Interest Period; provided that if any CD Loan or any portion thereof shall, as a
result of clause (2)(b) of the definition of Interest Period, have an Interest
Period of less than 30 days, such portion shall bear interest during such
Interest Period at the rate applicable to Base Rate Loans during such period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 90 days, at intervals of 90 days
after the first day thereof. Any overdue principal of or interest on any CD Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 1% plus the rate applicable to Base Rate Loans for
such day.
The "Adjusted CD Rate" applicable to any Interest Period means a
rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
----------
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate
of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the
21
<PAGE>
<PAGE>
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including without limitation any basic, supplemental or emergency
reserves) for a member bank of the Federal Reserve System in New York City with
deposits exceeding five billion dollars in respect of new non-personal time
deposits in dollars in New York City having a maturity comparable to the related
Interest Period and in an amount of $100,000 or more. The Adjusted CD Rate shall
be adjusted automatically on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.4(a) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin for such
day plus the London Interbank Offered Rate applicable to such Interest Period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest
Period means a rate of interest determined by the Agent on the basis of at least
two offered rates for deposits in United States dollars for a period equal to
such Interest Period commencing on the first day of such Interest Period
appearing on the Reuters Screen LIBO Page as of 11:00 A.M. (London time) on the
day that is two Euro-Dollar Business Days prior to the first day of such
Interest Period. If at least two such offered rates appear on the Reuters Screen
LIBO Page, the rate with respect to each
Interest Period will be the arithmetic average (rounded upwards to the next
1/16th of 1%) of such offered rates. If fewer than two offered rates appear, the
"London Interbank Offered Rate" in respect of any Interest Period will be the
average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which
22
<PAGE>
<PAGE>
deposits in dollars are offered to each of the Euro-Dollar Reference Banks in
the London interbank market at approximately 11:00 A.M. (London time) two
Euro-Dollar Business Days before the first day of such Interest Period in an
amount approximately equal to the principal amount of the Euro-Dollar Loan of
such Euro-Dollar Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 1% plus the rate applicable to Base Rate Loans for
such day.
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the sum of the
London Interbank Offered Rate for such Interest Period (determined in accordance
with Section 2.07(c) as if the related Money Market LIBOR Borrowing were a
Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted
by the Bank making such Loan in accordance with Section 2.03.
Each Money Market Absolute Rate Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the Money Market Absolute Rate quoted by the Bank making such
Loan in accordance with Section 2.03. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than three months, at intervals of three months after the first day thereof. Any
overdue principal of or interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 1% plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation necessary to determine an interest rate in
accordance with this Section, the Agent shall determine the relevant interest
rate on the basis of the quotation or
23
<PAGE>
<PAGE>
quotations furnished by the remaining Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
(h) The "Applicable Margin" with respect to any Euro-Dollar Loan
or CD Loan at any date is the applicable percentage amount set forth in the
table below based on the Status on such date:
<TABLE>
<CAPTION>
==================================================================================================
Level I Level II Level III Level IV
Status Status Status Status
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Euro Dollar Loans 0.1800% 0.2100% 0.3250% 0.5000%
- --------------------------------------------------------------------------------------------------
CD Loans 0.3050% 0.3350% 0.4500% 0.6250%
==================================================================================================
</TABLE>
SECTION 2.08. Facility Fees. The Borrower shall pay to the Agent
for the account of the Banks ratably a facility fee at the Facility Fee Rate.
Such facility fee shall accrue from and including the Effective Date to but
excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety), on the daily aggregate amount of the Commitments
(whether used or unused). Accrued facility fees shall be payable quarterly on
each Quarterly Date and upon the date of termination of the Commitments in their
entirety.
The "Facility Fee Rate" at any date is: (i) 0.0700% if Level I
Status exists at such date, (ii) 0.0900% if Level II Status exists at such date,
(iii) 0.1750% if Level III Status exists at such date and (iv) 0.2500% if Level
IV Status exists at such date.
SECTION 2.09. Optional Termination or Reduction of Commitments.
The Borrower may, upon at least three Domestic Business Days' notice to the
Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at
such time or (ii) ratably reduce from time to time by an aggregate amount of
$25,000,000 or any larger multiple of $5,000,000, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans. The Agent shall promptly notify each Bank of any such notice received by
the Agent.
SECTION 2.10. Method of Electing Interest Rates. (a) The Loans
included in each Committed Borrowing shall bear interest initially at the type
of rate specified by the Borrower in the applicable Notice of Committed
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each
24
<PAGE>
<PAGE>
Group of Loans (subject in each case to the provisions of Article VIII), as
follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to convert
such Loans to Base Rate Loans or Euro-Dollar Loans or elect to continue
such Loans as CD Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period applicable
to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or CD Loans or elect to continue
such Loans as Euro-Dollar Loans for an additional Interest Period, in
each case effective on the last day of the then current Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three Euro-Dollar Business Days before the
conversion or continuation selected in such notice is to be effective (unless
the relevant Loans are to be converted from Domestic Loans to Domestic Loans of
the other type or continued as Domestic Loans of the same type for an additional
Interest Period, in which case such notice shall be delivered to the Agent at
least two Domestic Business Days before such conversion or continuation is to be
effective). A Notice of Interest Rate Election may, if it so specifies, apply to
only a portion of the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the Loans comprising
such Group and (ii) the portion to which such notice applies, and the remaining
portion to which it does not apply, are each $50,000,000 or any larger multiple
of $5,000,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Loans (or portion thereof) to
which such notice applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of subsection (a) above;
25
<PAGE>
<PAGE>
(iii) if the Loans comprising such Group are to be converted, the new
type of Loans and, if such new Loans are Fixed Rate Loans, the duration
of the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or Euro-Dollar
Loans for an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Agent shall promptly notify each
Bank of the contents thereof and such notice shall not thereafter be revocable
by the Borrower. If the Borrower fails to deliver a timely Notice of Interest
Rate Election to the Agent for any Group of Fixed Rate Loans, such Loans shall
be converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto.
SECTION 2.11. Optional Prepayments. (a) The Borrower may, upon at
least one Domestic Business Day's notice to the Agent, prepay the Group of Base
Rate Loans (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) in whole at any time, or from time to time in part
in amounts aggregating $50,000,000 or any larger multiple of $5,000,000, by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such Group or
Borrowing.
(b) The Borrower may, upon at least three Domestic Business Days'
notice to the Agent, in the case of a Group of CD Loans or upon at least three
Euro-Dollar Business Days' notice to the Agent, in the case of a Group of
Euro-Dollar Loans, prepay the Loans comprising such a Group on the last day of
any Interest Period applicable to such Group, in whole at any time, or from time
to time in part in amounts aggregating $50,000,000 or any larger multiple of
$5,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Group.
(c) Except as provided in subsection (a) above, the Borrower may
not prepay all or any portion of the
26
<PAGE>
<PAGE>
principal amount of any Money Market Loan prior to the maturity thereof.
(d) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share (if any) of such prepayment and such notice shall
not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of fees hereunder, not later than 12:00 Noon (New
York City time) on the date when due, in Federal or other funds immediately
available in New York City, to the Agent at its address referred to in Section
9.01. The Agent will promptly distribute to each Bank its ratable share of each
such payment received by the Agent for the account of the Banks. Whenever any
payment of principal of, or interest on, the Domestic Loans or of fees shall be
due on a day which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Dollar Loans or the Money
Market LIBOR Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. Whenever any payment of principal of, or
interest on, the Money Market Absolute Rate Loans shall be due on a day which is
not a Euro-Dollar Business Day, the date for payment thereof shall be extended
to the next succeeding Euro-Dollar Business Day. If the date for any payment of
principal is extended pursuant to this Agreement or by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Bank on
such due date an amount equal to the amount then due such Bank. If and to the
extent that the Borrower shall not have so made such payment, each Bank shall
repay to the Agent forthwith on demand such amount distributed to such
27
<PAGE>
<PAGE>
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment
of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Base Rate Loan (pursuant to Article VI or VIII or otherwise) on
any day prior to the last day of an Interest Period applicable thereto, or if
the Borrower fails to borrow, continue, convert or prepay any Fixed Rate Loans
after notice has been given to any Bank in accordance with Section 2.04(a),
2.10(c) or 2.11(d), the Borrower shall reimburse each Bank as provided in the
following paragraph for any resulting loss or expense incurred by it (or by a
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of the Applicable Margin or any other margin for the period after
any such payment or conversion or failure to borrow or prepay.
A certificate of each Bank setting forth such amount or amounts
(including the computation of such amount or amounts) as shall be necessary to
compensate such Bank or a Participant for the out-of-pocket expenses incurred by
such Bank shall be delivered to the Borrower and such amount or amounts may be
reviewed by the Borrower. If the Borrower, after receipt of any such certificate
from such Bank, disagrees in good faith with such Bank on the computation of the
amount or amounts owed to such Bank pursuant to this Section 2.13, such Bank and
the Borrower shall negotiate in good faith to promptly resolve such
disagreement. Any payment required to be paid to such Bank pursuant to this
Section 2.13 shall be paid within 30 days after demand is made therefor (or if
there is a disagreement, after such disagreement is resolved). Each Bank shall
have a duty to mitigate the damages to such Bank that may arise as a consequence
of such funding losses described above to the extent that such mitigation will
not, in the judgment of such Bank, entail any cost or disadvantage to such Bank
that such Bank is not reimbursed or compensated for by the Borrower.
SECTION 2.14. Computation of Interest and Fees. Interest based on
the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
28
<PAGE>
<PAGE>
SECTION 2.15. Regulation D Compensation. For so long as any Bank
maintains reserves against "Eurocurrency liabilities" (or any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of such Bank to United
States residents), and as a result the cost to such Bank (or its Applicable
Lending Office) of making or maintaining its Euro-Dollar Loans is increased,
then such Bank may require the Borrower to pay, contemporaneously with each
payment of interest on the Euro-Dollar Loans, additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum up to but not exceeding the
excess of (i)(A) the applicable London Interbank Offered Rate divided by (B) one
minus the Euro-Dollar Reserve Percentage over (ii) the rate specified in clause
(i)(A). Any Bank wishing to require payment of such additional interest (x)
shall so notify the Borrower, in which case such additional interest on the
Euro-Dollar Loans of such Bank shall be payable to such Bank at the rate and
place indicated in such notice with respect to each Interest Period commencing
at least three Euro- Dollar Business Days after the giving of such notice and
(y) shall furnish to the Borrower at least five Euro-Dollar Business Days prior
to each date on which interest is payable on the Euro-Dollar Loans an officers'
certificate setting forth the amount to which such Bank is then entitled under
this Section 2.15 (which shall be consistent with such Bank's good faith
estimate of the level at which the related reserves are maintained by it).
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of
the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex, facsimile transmission or
other written confirmation from such party of execution of a counterpart
hereof by such party);
29
<PAGE>
<PAGE>
(b) receipt by the Agent of a duly executed Note for the account
of each Bank dated on or before the Effective Date complying with the
provisions of Section 2.05;
(c) receipt by the Agent of evidence
satisfactory to it that no loans are outstanding under the
Existing Credit Agreement;
(d) receipt by the Agent of an opinion of the General Counsel or
any Assistant General Counsel of the Borrower, substantially in the form
of Exhibit E hereto;
(e) receipt by the Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit F
hereto; and
(f) receipt by the Agent of all documents the Agent may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement and the
Notes, and any other matters relevant hereto, all in form and substance
satisfactory to the Agent;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
July 7, 1995. The Agent shall promptly notify the Borrower and the Banks of the
Effective Date, and such notice shall be conclusive and binding on all parties
hereto. The Banks that are parties to the Existing Credit Agreement, comprising
the "Required Banks" as defined therein, and the Borrower agree that the
commitments under the Existing Credit Agreement shall terminate in their
entirety simultaneously with and subject to the effectiveness of this Agreement
and that the Borrower shall be obligated to pay on the Effective Date the
accrued facility fees thereunder to but excluding the date of such
effectiveness.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of
Borrowing as required by Section 2.02 or 2.03, as the case may
be;
(b) immediately after such Borrowing, the aggregate outstanding
principal amount of the Loans
30
<PAGE>
<PAGE>
will not exceed the aggregate amount of the Commitments;
(c) immediately before and after such Borrowing,
no Default shall have occurred and be continuing; and
(d) the representations and warranties of the Borrower contained
in this Agreement (except the representations and warranties set forth
in Sections 4.04(c) and 4.05) shall be true in all material respects on
and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted except those which the failure to have would not have a Material
Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate power, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Borrower or
of any material agreement, judgment, injunction, order, decree or other material
instrument binding upon the Borrower or result in the creation or imposition of
any Lien on any asset of the Borrower.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid
and binding agreement of the Borrower and the Notes, when executed and delivered
in accordance
31
<PAGE>
<PAGE>
with this Agreement, will constitute valid and binding obligations of the
Borrower, in each case enforceable against the Borrower in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
subsidiaries as of December 31, 1994 and the related consolidated statements of
income, changes in stockholders' equity and cash flows for the fiscal year then
ended, reported on by Cooper's & Lybrand and set forth in the Borrower's 1994
Form 10-K, a copy of which has been delivered to each of the Banks, present
fairly, in all material respects, the consolidated financial position of the
Borrower and its subsidiaries as of such date and the consolidated results of
their operations and cash flows for such fiscal year, in conformity with
generally accepted accounting principles.
(b) The unaudited consolidated balance sheet of the Borrower and
its subsidiaries as of March 31, 1995 and the related unaudited consolidated
statements of income and cash flows for the three months then ended, set forth
in the Borrower's Latest Form 10-Q, a copy of which has been delivered to each
of the Banks, present fairly, in all material respects, the consolidated
financial position of the Borrower and its subsidiaries as of such date and the
consolidated results of their operations and cash flows for such three-month
period, in conformity with generally accepted accounting principles for interim
financial information applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section.
(c) From March 31, 1995 through the Effective Date there has been
no material adverse change in the consolidated financial condition of the
Borrower and its subsidiaries.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against, the
Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable probability
of an adverse decision which would have a Material Adverse Effect, or which in
any manner draws
32
<PAGE>
<PAGE>
into question the validity or enforceability of this Agreement or the Notes.
SECTION 4.06. Subsidiaries. Each of the Borrower's Consolidated
Subsidiaries which is a corporation is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except those which the failure to have would not have a Material
Adverse Effect.
SECTION 4.07. Not an Investment Company. The
Borrower is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 4.08. Full Disclosure. No written information heretofore
furnished by the Borrower to the Agent or any Bank pursuant to Section 4.04 is,
and no written information hereafter furnished by the Borrower to the Agent or
any Bank pursuant to Section 5.01 contains or will contain any material
misstatement of any material facts.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks:
(a) within 105 days after the end of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its
subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, changes in stockholders' equity and
cash flows for such fiscal year, setting forth in each case in
comparative form the figures as of the end of and for the previous
fiscal year, all reported on in a manner acceptable to the Securities
and Exchange Commission by Coopers & Lybrand or other independent public
accountants of nationally recognized standing;
33
<PAGE>
<PAGE>
(b) within 60 days after the end of each of the first three
quarters of each fiscal year of the Borrower, a consolidated balance
sheet of the Borrower and its subsidiaries as of the end of such quarter
and the related consolidated statements of income for such quarter and
the related consolidated statements of income and cash flows for the
portion of the Borrower's fiscal year ended at the end of such quarter,
setting forth in the case of such statements of income in comparative
form the figures for the corresponding quarter and in the case of such
statements of income and cash flows the corresponding portion of the
Borrower's previous fiscal year, all certified as to fairness of
presentation, generally accepted accounting principles and consistency
by the chief financial officer or the chief accounting officer of the
Borrower, subject to normal year end adjustments;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.03 and 5.04, inclusive, on the date of the
consolidated balance sheet included in such financial statements and
(ii) stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;
(d) promptly after the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and
proxy statements so mailed; and
(e) promptly after the filing thereof, copies of all reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower shall
have filed with the Securities and Exchange Commission.
SECTION 5.02. Maintenance of Existence. The Borrower will
preserve, renew and keep in full force and effect its corporate existence except
as otherwise permitted under Section 5.06.
SECTION 5.03. Fixed Charge Coverage. The ratio
34
<PAGE>
<PAGE>
of Consolidated EBIT to Consolidated Interest Expense will not, for any period
of four consecutive fiscal quarters, be less than 1.15 to 1.
SECTION 5.04. Debt. Consolidated Debt determined at the end of
any fiscal quarter will not exceed 850% of Consolidated Tangible Net Worth
determined at the end of such fiscal quarter, and Consolidated Debt determined
at the end of any fiscal month which is not the last month of a fiscal quarter
will not exceed 850% of the greater of (i) Consolidated Tangible Net Worth
determined at the end of the most recently ended fiscal quarter or (ii)
Consolidated Tangible Net Worth determined at the end of such fiscal month.
SECTION 5.05. Limitation on Secured Debt. The Borrower will not,
nor will it permit any Restricted Subsidiary to, incur, issue, assume or
guarantee any Debt secured by any Lien on any property or assets of the Borrower
or any Restricted Subsidiary, or on any shares of stock or Debt of any
Restricted Subsidiary, without effectively providing that the principal of,
premium, if any, and interest, if any, on the Loans (together with, if the
Borrower so determines, any other Debt of the Borrower or such Restricted
Subsidiary, which is not subordinated to the Loans) shall be secured equally and
ratably with (or prior to) such Debt, so long as any such Debt shall be so
secured, unless, after giving effect thereto, the aggregate amount of all such
secured Debt of the Borrower and the Restricted Subsidiaries would not exceed
10% of Consolidated Net Tangible Assets of the Borrower and the Restricted
Subsidiaries; provided, however, that no Asset Drop Down shall, in any event,
constitute a Lien; and provided further that neither the satisfaction and
discharge of any Debt pursuant to any indenture or instrument governing such
Debt, nor the defeasance of any Debt pursuant to any indenture or instrument
governing such Debt, shall be deemed the incurrence, issue, assumption or
guarantee of Debt secured by a Lien for purposes of this Section.
Notwithstanding the foregoing, this Section shall neither limit nor be deemed or
construed as limiting the right of the Borrower or any Restricted Subsidiary to
incur, issue, assume or guarantee any Debt secured by any one or more of the
following: (1) Liens on property of, or on any shares of stock or Debt of, any
corporation existing at the time such corporation becomes a Restricted
Subsidiary of the Borrower; (2) Liens on property, shares of stock, other equity
interests, or Debt existing at the time of acquisition or repossession thereof
by the Borrower or any Restricted Subsidiary; (3) Liens on physical property (or
any Accounts Receivable arising in connection with the lease thereof), shares of
35
<PAGE>
<PAGE>
stock, other equity interests, or Debt acquired (or, in the case of physical
property, constructed) after the date hereof by the Borrower or any Restricted
Subsidiary, which Liens are created prior to, at the time of, or within one year
after such acquisition (or, in the case of physical property, the completion of
such construction or commencement of commercial operation of such property,
whichever is later) to secure any Debt issued, incurred, assumed or guaranteed
prior to, at the time of, or within one year after such acquisition (or such
completion or commencement, whichever is later) or to secure any other Debt
issued, incurred, assumed or guaranteed at any time thereafter for the purpose
of refinancing all or any part of such Debt; (4) Liens on Accounts Receivable of
the Borrower or any Restricted Subsidiary arising from or in connection with
transactions entered into by the Borrower or such Restricted Subsidiary after
the date hereof or on Accounts Receivable acquired by the Borrower or such
Restricted Subsidiary after such date from others, which Liens are created prior
to, at the time of, or within one year after such Accounts Receivable arise or
are acquired or, if later, the completion of the delivery or installation of the
equipment or goods or the rendering of the services or the advancement or
loaning of funds relating thereto (i) as a result of any guarantee, repurchase
or other contingent (direct or indirect) or recourse obligation of the Borrower
or such Restricted Subsidiary in connection with the discounting, sale,
assignment, transfer or other disposition of such Accounts Receivable or any
interest therein, or (ii) to secure or provide for the payment of all or any
part of the investment of the Borrower or such Restricted Subsidiary in any such
Accounts Receivable (whether or not such Accounts Receivable are the Accounts
Receivable on which such Liens are created) or the purchase price thereof or to
secure any debt (including, without limitation, Non- Recourse Debt) issued,
incurred, assumed or guaranteed for the purpose of financing or refinancing all
or any part of such investment or purchase price; (5) Liens in favor of the
Borrower or any Restricted Subsidiary; (6) Liens in favor of the United States
of America or any State thereof or the District of Columbia, or any agency,
department or other instrumentality thereof, to secure progress, advance or
other payments pursuant to any contract or provision of any statute; (7) Liens
securing the performance of letters of credit, bids, tenders, sales contracts,
purchase agreements, leases, surety and performance bonds, and other similar
obligations not incurred in connection with the borrowing of money; (8) Liens to
secure Non-Recourse Debt in connection with the Borrower or any Restricted
Subsidiary engaging in any leveraged or single-investor or other lease
transactions, whether (in the case of Liens on or relating
36
<PAGE>
<PAGE>
to leases or groups of leases or the particular properties subject thereto) such
Liens be on the particular properties subject to any leases involved in any of
such transactions and/or the rental or other payments or rights under such
leases or, in the case of any group of related or unrelated leases, on the
properties subject to the leases comprising such group and/or the rental or
other payments or rights under such leases, or on any direct or indirect
interest therein, and whether (in any case) (i) such Liens be created prior to,
at the time of, or at any time after the entering into of such lease
transactions and/or (ii) such leases be in existence prior to, or be entered
into by the Borrower or such Restricted Subsidiary at the time of or at any time
after, the purchase or other acquisition by the Borrower or such Restricted
Subsidiary of the properties subject to such leases; and (9) any extension,
renewal or replacement (or successive extensions, renewals or replacements), in
whole or in part, of any of the foregoing; provided, however, that any such
extension, renewal or replacement shall be limited to all or a part of the
property or assets which secured the Lien so extended, renewed or replaced (plus
any improvements on such property).
SECTION 5.06. Consolidations, Mergers and Sales of Assets. The
Borrower covenants that it will not merge or consolidate with any other
corporation or sell or convey all or substantially all of its assets to any
person (other than such a sale or conveyance to a Subsidiary or any successor
thereto (such a sale or conveyance being called an "Asset Drop-Down")), unless
(i) either the Borrower shall be the continuing corporation or the successor
corporation or the person which acquires by sale or conveyance substantially all
the assets of the Borrower (if other than the Borrower) shall be a corporation
organized under the laws of the United States of America or any State thereof
and shall expressly assume the due and punctual payment of the principal of and
interest on all the Notes according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Agreement to be performed or observed by the Borrower, by one or more
agreements, reasonably satisfactory in form to the Required Banks, executed and
delivered to the Agent by such corporation, and (ii) the Borrower or such
successor corporation, as the case may be, shall not, immediately after such
merger or consolidation, or such sale or conveyance, be in default in the
performance of any such covenant or condition. In the event of any Asset
Drop-Down after the date of this Agreement, any subsequent sale or conveyance of
assets by a Subsidiary to which assets were transferred in such Asset Drop-Down
(a "Drop-Down
37
<PAGE>
<PAGE>
Subsidiary") will be deemed to be a sale or conveyance of assets by the Borrower
for purposes of this Section 5.06.
SECTION 5.07. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrower for general corporate
purposes, including, without limitation, the repayment of maturing commercial
paper and other Debt of the Borrower. None of such proceeds will be used for the
purpose of buying or carrying any "margin stock" within the meaning of
Regulation U.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan, or shall fail to pay within five Domestic Business Days of the due
date thereof any interest on any Loan, any fees or any other amount
payable hereunder;
(b) the Borrower shall fail to observe or
perform any covenant contained in Section 5.02, 5.03, 5.04 or
5.06;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by
clause (a) or (b) above) for 30 days after notice thereof has been given
to the Borrower by the Agent at the request of the Required Banks;
(d) any representation or warranty made or deemed made by the
Borrower in this Agreement or in any certificate delivered pursuant to
this Agreement shall prove to have been materially incorrect when made
(or deemed made pursuant to Section 3.02);
(e) the Borrower shall fail to make any payment or payments, in
the aggregate in excess of $300,000,000, on principal of Debt of the
Borrower when due and such failure shall continue for 30 days after the
due date thereof or, if longer, beyond any applicable grace periods;
38
<PAGE>
<PAGE>
(f) any event or condition shall occur which results in the
acceleration of the maturity of the principal of any Debt of the
Borrower in the aggregate in excess of $300,000,000 which acceleration
shall not have been rescinded within 30 days;
(g) the Borrower shall commence a voluntary case seeking
liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case seeking such relief commenced against it under any such
law, or shall make a general assignment for the benefit of creditors, or
shall admit in writing its inability generally to pay its debts as they
become due;
(h) an order for relief shall be entered against the Borrower
under the federal bankruptcy laws as now or hereafter in effect in an
involuntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to it or its debts or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
decree or order shall remain undismissed and unstayed for a period of 20
days;
(i) both (i) a person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
other than AT&T shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 20% or more of the outstanding shares of
common stock of the Borrower and (ii) the Borrower shall have ceased to
be a Subsidiary of AT&T; provided that, notwithstanding clauses (i) and
(ii) above, no Event of Default shall occur under this paragraph (i) if
and for so long as both (x) officers, directors and employees of AT&T
constitute a majority of the Board of Directors of the Borrower and (y)
no person or group of persons has beneficial ownership of a greater
percentage of the outstanding shares of common stock of the Borrower
than does AT&T;
39
<PAGE>
<PAGE>
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Borrower declare the Notes (together with
accrued interest thereon) to be, and the Notes (together with accrued interest
thereon) shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in paragraph (g) or (h) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Agent or the Banks,
the Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do so by the
Required Banks and shall thereupon notify all the Banks thereof.
SECTION 6.03. Rescission. If at any time after termination of the
Commitments and/or acceleration of the maturity of the Loans pursuant to Section
6.01, the Borrower shall pay all arrears of interest and all payments on account
of principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal at the rates specified in this
Agreement) and all Defaults (other than nonpayment of principal of and accrued
interest on the Loans due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to Section 9.05, then upon the written consent of
the Required Banks and notice to the Borrower, such termination of the
Commitments and/or such acceleration and their consequences may be rescinded and
annulled; but such action shall not affect any subsequent Default or impair any
right or remedy consequent thereon. The provisions of the preceding sentence are
intended merely to bind the Banks to a decision which may be made at the
election of the Required Banks; they are not intended to benefit the Borrower
and do not give the Borrower the right to require the Banks to rescind or annul
any acceleration hereunder, even if the conditions set forth herein are met.
40
<PAGE>
<PAGE>
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company
of New York shall have the same rights and powers under this Agreement as any
other Bank and may exercise or refrain from exercising the same as though it
were not the Agent, and Morgan Guaranty Trust Company of New York and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any Subsidiary or affiliate of the
Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or (ii) in
the absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder; (ii) the performance
or observance of any of the covenants or agreements of the Borrower; (iii) the
satisfaction of any condition specified
41
<PAGE>
<PAGE>
in Article III, except receipt of items required to be delivered to the Agent;
or (iv) the validity, effectiveness or genuineness of this Agreement, the Notes
or any other instrument or writing furnished in connection herewith. The Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time
by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Borrower shall have the right to appoint a successor Agent from
among the Banks. If no successor Agent shall have been so appointed, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
42
<PAGE>
<PAGE>
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
SECTION 7.09. Agent's Fee. The Borrower shall
pay to the Agent for its own account fees in the amounts
and at the times previously agreed upon between the Borrower
and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any CD Loan,
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the CD Reference Banks or, under the
circumstances contemplated by the final sentence of the definition of
London Interbank Offered Rate, the Euro-Dollar Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to
such Reference Banks in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks having
50% or more of the aggregate principal amount of the affected Loans
advise the Agent that the Adjusted CD Rate or the London Interbank
Offered Rate, as the case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of funding their CD
Loans or Euro-Dollar Loans, as the case may be, for such Interest
Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, or to convert
outstanding Loans into CD Loans or Euro-Dollar Loans, as the case may be, shall
be suspended and (ii) each outstanding CD Loan or Euro-Dollar Loan, as the case
may be, shall be converted into a Base Rate Loan on the last day of the then
current Interest Period applicable thereto. Unless the Borrower notifies the
Agent at least one Domestic Business Day before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate
43
<PAGE>
<PAGE>
Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a
Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base Rate for such
day.
SECTION 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any change
in any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for any
Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans, or to convert outstanding Loans into Euro-Dollar Loans,
shall be suspended. Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar Lending Office if
such designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice
is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted
to a Base Rate Loan either (a) on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to
maintain and fund such Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and fund such Loan to
such day.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If on or after (x) the date hereof, in the case of
any Committed Loan or any obligation to make Committed Loans or (y) the date of
the related Money Market Quote, in the case of any Money Market Loan, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by
44
<PAGE>
<PAGE>
any Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding (i) with respect to any
CD Loan any such requirement included in an applicable Domestic Reserve
Percentage and (ii) with respect to any Euro-Dollar Loan any such requirement
with respect to which such Bank is entitled to compensation during the relevant
Interest Period under Section 2.15, special deposit, insurance assessment
(excluding, with respect to any CD Loan, any such requirement reflected in an
applicable Assessment Rate) or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Bank (or its Applicable
Lending Office) or shall impose on any Bank (or its Applicable Lending Office)
or on the United States market for certificates of deposit or the London
interbank market any other condition affecting its Fixed Rate Loans, its Note or
its obligation to make Fixed Rate Loans and the result of any of the foregoing
is to increase the cost to such Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum
received or receivable by such Bank (or its Applicable Lending Office) under
this Agreement or under its Note with respect thereto, by an amount deemed by
such Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then pursuant to paragraph (c) below, the
Borrower shall pay to such Bank such additional
45
<PAGE>
<PAGE>
amount or amounts as will compensate such Bank (or its Parent) for such
reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section. A certificate of a
Bank setting forth such amount or amounts (including computation of such amount
or amounts) as shall be necessary to compensate such Bank or its Parent as
specified in paragraph (a) or (b) above, as the case may be, shall be delivered
to the Borrower and such amount or amounts may be reviewed by the Borrower.
Unless the Borrower disagrees in good faith with the computation of the amount
or amounts in such certificate, the Borrower shall pay to such Bank, within 30
days after receipt by the Borrower of such certificate delivered by such Bank,
the amount shown as due on any such certificate. If the Borrower, after receipt
of any such certificate from a Bank, disagrees with such Bank on the computation
of the amount or amounts owed to such Bank pursuant to paragraph (a) or (b)
above, such Bank and the Borrower shall negotiate in good faith to promptly
resolve such disagreement. In either case, however, such Bank shall have a duty
to mitigate the damages that may arise as a consequence of paragraph (a) or (b)
above (including, without limitation, changing its Applicable Lending Office) to
the extent that such mitigation will not, in the judgment of such Bank, entail
any cost or disadvantage to such Bank that such Bank is not reimbursed or
compensated for by the Borrower.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower to
or for the account of any Bank or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings imposed by
the United States or any political subdivision or taxing authority thereof, and
all liabilities with respect thereto, excluding, in the case of each Bank and
the Agent, taxes imposed on its net income, and franchise taxes imposed on it,
by the United States or any political subdivision or taxing authority thereof
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Bank or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.04) such Bank or the Agent (as the case
46
<PAGE>
<PAGE>
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Note (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 8.04) paid by such Bank or the Agent (as the case may be) and
any liability (including penalties, interest and reasonable out-of-pocket
expenses) arising therefrom or with respect thereto (other than any such
liability that results from the gross negligence or willful misconduct of such
Bank and the Agent, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant taxing authority or other governmental
authority). This indemnification shall be made within 30 days from the date such
Bank or the Agent (as the case may be) makes written demand therefor. If any
Bank or the Agent receives a refund in respect of any Taxes or Other Taxes for
which such Bank or the Agent has received payment from the Borrower hereunder it
shall promptly repay such refund (including any interest received by such Bank
or the Agent from the taxing authority with respect to the refund with respect
to such Taxes or Other Taxes) to the Borrower, net of all reasonable
out-of-pocket expenses of such Bank; provided that the Borrower, upon the
request of such Bank or the Agent, agrees to return such refund (plus penalties,
interest or other charges) to such Bank or the Agent in the event such Bank or
the Agent is required to repay such refund.
(d) Each Bank organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if
47
<PAGE>
<PAGE>
requested in writing by the Borrower (but only so long as such Bank remains
lawfully able to do so), shall provide the Borrower with Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, duly executed by such Bank, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from "Taxes" as defined in Section 8.04(a).
(e) Each Bank further agrees to promptly notify the Borrower if
such Bank changes its Applicable Lending Office and, upon written request from
the Borrower, deliver forms 1001 or 4224 required pursuant to Section 8.04(d)
prior to the immediately following due date of any payment by the Borrower
hereunder.
(f) The Borrower shall not be required to pay any additional
amounts to any Bank or the Agent in respect of Taxes and Other Taxes pursuant to
paragraphs (a), (b) and (c) above if the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank or Agent to comply,
if required, with the provisions of paragraphs (d) and (e) above unless such
failure results from (i) a change in applicable law, regulation or official
interpretation thereof or (ii) an amendment, modification or revocation of any
applicable tax treaty or a change in official position regarding the application
or interpretation thereof, in each case after the date hereof or after such Bank
became a party hereto; provided, however, that should a Bank, which is otherwise
exempt from or subject to a reduced rate of withholding tax, become subject to
Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(g) Any Bank claiming any additional amounts payable under this
Section 8.04 shall (i) to the extent legally able to do so, upon reasonable
written request from the Borrower, file any certificate or document if such
filing would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue, and the Borrower shall not be obligated to
pay such additional
48
<PAGE>
<PAGE>
amounts if, after the Borrower's request, any Bank could have filed such
certificate or document and failed to do so; or (ii) consistent with legal and
regulatory restrictions, use reasonable efforts to change the jurisdiction of
its Applicable Lending Office if the making of such change would avoid the need
for or reduce the amount of any additional amounts which may thereafter accrue
and would not, in the judgment of such Bank, be otherwise disadvantageous to
such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03 or 8.04 with respect to its CD Loans or
Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business
Days' prior notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as (or
continued as or converted into) CD Loans or Euro-Dollar Loans, as the
case may be, shall instead be Base Rate Loans (on which interest and
principal shall be payable contemporaneously with the related Fixed Rate
Loans of the other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case
may be, has been repaid (or converted to a Base Rate Loan), all payments
of principal which would otherwise be applied to repay such Fixed Rate
Loans shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into a CD Loan or Euro-Dollar Loan, as the case may be, on the
first day of the next succeeding Interest Period applicable to the related CD
Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.06. Substitution of Bank. If any Bank (i) has demanded
compensation for increased costs pursuant to Section 8.03 or 8.04 or, (ii) has
determined that the making or continuation of any Euro-Dollar Rate Loan has
become unlawful or impermissible pursuant to Section 8.02 and similar additional
interest or compensation has not been
49
<PAGE>
<PAGE>
demanded by, or a similar determination has not been made by, all of the Banks,
the Borrower shall have the right to designate an Assignee which is not an
affiliate of the Borrower to purchase for cash, pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit G hereto, the
outstanding Loans and Commitment of such Bank and to assume all of such Bank's
other rights and obligations hereunder without recourse to or warranty by, or
expense to, such Bank, for a purchase price equal to the principal amount of all
of such Bank's outstanding Loans plus any accrued but unpaid interest thereon
and the accrued but unpaid facility fees in respect of that Bank's Commitment
hereunder plus such amount, if any, as would be payable pursuant to Section 2.13
if the outstanding Loans of such Bank were prepaid in their entirety on the date
of consummation of such assignment.
SECTION 8.07. Compensation. The Borrower shall not be liable for
compensating any Bank under Sections 2.13, 8.03 and 8.04 for any funding losses,
increased costs or taxes incurred by such Bank more than 30 days prior to such
Bank's written notice of its intention to demand payment therefor.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its address or telex or
facsimile number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or telex or facsimile number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other address
or telex or facsimile number as such party may hereafter specify for the purpose
by notice to the Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when received at the address
specified in this Section; provided that notices to the Agent under Article II
or Article VIII shall not be effective until received.
50
<PAGE>
<PAGE>
SECTION 9.02. No Waivers. No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agent, including reasonable
fees and disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Agent and each Bank, including reasonable fees and disbursements
of counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
reasonable out-of-pocket expenses of any kind (including, without limitation,
the reasonable fees and disbursements of counsel) which were actually incurred
by such Indemnitee in connection with any investigative, administrative or
judicial proceeding (whether or not such Indemnitee shall be designated a party
thereto) brought or threatened relating to or arising out of this Agreement or
any actual or proposed use of proceeds of Loans hereunder; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other
51
<PAGE>
<PAGE>
Banks, and such other adjustments shall be made, as may be required so that all
such payments of principal and interest with respect to the Notes held by the
Banks shall be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under the
Notes.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the scheduled maturity of any payment of
principal of or interest on any Loan or any fees hereunder or for termination of
any Commitment or (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement.
SECTION 9.06. 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 Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank 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 Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank 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
52
<PAGE>
<PAGE>
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of
Section 9.05 without the consent of the Participant. The Borrower agrees that
each Participant shall, to the extent provided in its participation agreement,
be entitled to the benefits of Sections 2.13 and 2.15 and Article VIII with
respect to its participating interest. An assignment or other transfer which is
not permitted by subsection (c) or (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 (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit G hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower and the Agent; provided that such assignment may, but
need not, include rights of the transferor Bank in respect of outstanding Money
Market Loans; and provided further that the interest of the Assignee shall be in
a minimum amount equivalent to an original Commitment of $15,000,000 and the
collective interest of the transferor Bank and its affiliates shall be in a
minimum amount equivalent to an original Commitment of $25,000,000 unless, in
the case of the transferor Bank and its affiliates, they have no Commitment
after giving effect to such assignment. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, a new Note is issued
to the Assignee. In connection with any such assignment, the transferor Bank
shall pay to the Agent an administrative fee for processing such assignment in
the amount of $2,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to the Borrower
and the Agent certification as to
53
<PAGE>
<PAGE>
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.06, disclose to the Assignee or Participant or proposed Assignee or
Participant any information relating to the Borrower or its Subsidiaries
furnished to such Bank by the Agent or by or on behalf of the Borrower; provided
that, prior to any such disclosure, such Assignee or Participant or proposed
Assignee or Participant shall agree to preserve in accordance with Section 9.11
the confidentiality of any confidential information described therein.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
54
<PAGE>
<PAGE>
SECTION 9.09. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Confidentiality. Subject to Section 9.06(f), the
Banks shall hold all nonpublic information obtained pursuant to the requirements
of this Agreement and identified as such by the Borrower in accordance with such
Bank's customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices and in any event may
make disclosure reasonably required by a bona fide offeree or transferee in
connection with the contemplated transfer, or as required or requested by any
governmental authority or representative thereof, or pursuant to legal process,
or to its accountants, lawyers and other advisors, and shall require any such
offeree or transferee to agree (and require any of its offerees, transferees or
participants to agree) to comply with this Section 9.11.
55
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
AT&T CAPITAL CORPORATION
By
------------------------------------
Title:
44 Whippany Road
Morristown, New Jersey 07962
Fax: (201) 397-3106
Commitments
- ------------
$40,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By
---------------------------------
Title:
$23,750,000 BARCLAYS BANK PLC
By ___________________________________
Title:
$23,750,000 THE CHASE MANHATTAN BANK, N.A.
By ___________________________________
Title:
<PAGE>
<PAGE>
Commitments
$23,750,000 CHEMICAL BANK
By ___________________________________
Title:
$23,750,000 CITIBANK, N.A.
By ___________________________________
Title:
$23,750,000 CREDIT LYONNAIS NEW YORK BRANCH
By ___________________________________
Title:
$23,750,000 THE FUJI BANK, LIMITED
By _____________________________________
Title:
$16,250,000 CREDIT SUISSE
By _____________________________________
Title:
By _____________________________________
Title:
<PAGE>
<PAGE>
Commitments
$16,250,000 DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By ___________________________________
Title:
By ___________________________________
Title:
$16,250,000 THE FIRST NATIONAL BANK OF
CHICAGO
By ___________________________________
Title:
$16,250,000 THE INDUSTRIAL BANK OF JAPAN,
LTD., NEW YORK BRANCH
By _____________________________________
Title:
$16,250,000 MELLON BANK
By ___________________________________
Title:
$16,250,000 NATIONSBANK OF NORTH
CAROLINA, N.A.
By ___________________________________
Title:
<PAGE>
<PAGE>
Commitments
$16,250,000 PNC BANK, NATIONAL ASSOCIATION
By ___________________________________
Title:
$16,250,000 ROYAL BANK OF CANADA
By _____________________________________
Title:
$16,250,000 SOCIETE GENERALE
By _____________________________________
Title:
$16,250,000 THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By ___________________________________
Title:
$16,250,000 SWISS BANK CORPORATION
By ___________________________________
Title:
By ___________________________________
Title:
<PAGE>
<PAGE>
Commitments
$8,750,000 ABN AMRO BANK N.V. NEW YORK
BRANCH
By ___________________________________
Title:
By __________________________________
Title:
$8,750,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By _____________________________________
Title:
$8,750,000 BANK OF BOSTON
By _____________________________________
Title:
$8,750,000 BANK OF HAWAII
By ___________________________________
Title:
$8,750,000 THE BANK OF NEW YORK
By ___________________________________
Title:
<PAGE>
<PAGE>
Commitments
$8,750,000 BANQUE PARIBAS
By ___________________________________
Title:
By ___________________________________
Title:
$8,750,000 CIBC INC.
By _____________________________________
Title:
$8,750,000 COMERICA BANK
By _____________________________________
Title:
$8,750,000 COMMERZBANK AKTIENGESELLSCHAFT
NEW YORK BRANCH
By ___________________________________
Title:
By ___________________________________
Title:
<PAGE>
<PAGE>
Commitments
$8,750,000 DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By ___________________________________
Title:
By ___________________________________
Title:
$8,750,000 THE NORTHERN TRUST COMPANY
By ___________________________________
Title:
$8,750,000 TRUST COMPANY BANK
By _____________________________________
Title:
$8,750,000 WACHOVIA BANK OF GEORGIA, N.A.
By _____________________________________
Title:
$6,250,000 BANCA COMMERCIALE ITALIANA SpA
By ___________________________________
Title:
<PAGE>
<PAGE>
Commitments
$6,250,000 BANCO CENTRAL HISPANOAMERICANO
S.A.
By ___________________________________
Title:
$6,250,000 THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED
By ___________________________________
Title:
$6,250,000 WESTPAC BANKING CORPORATION
By _____________________________________
Title:
_________________
$500,000,000
Total Commitments
_________________
_________________
<PAGE>
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By ___________________________________
Title:
60 Wall Street
New York, New York 10260-0060
Attention:
Telex number: 177615
<PAGE>
<PAGE>
EXHIBIT A
NOTE
New York, New York
, 19
For value received, AT&T Capital Corporation, a Delaware
corporation (the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the maturity date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Loan on the dates and at the rate or rates provided for in
the Credit Agreement. All such payments of principal and interest shall be made
in lawful money of the United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
<PAGE>
<PAGE>
This note is one of the Notes referred to in and subject to the
terms of the $500,000,000 Credit Agreement dated as of June 30, 1995 among the
Borrower, the banks party thereto and Morgan Guaranty Trust Company of New York,
as Agent (as the same may be amended from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the mandatory and
optional prepayment hereof and the acceleration of the maturity hereof.
AT&T CAPITAL CORPORATION
By________________________
Title:
2
<PAGE>
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Amount of
Amount of Type of Principal Notation
Date Loan Loan Repaid Made By
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
</TABLE>
3
<PAGE>
<PAGE>
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: AT&T Capital Corporation
Re: $500,000,000 Credit Agreement (as amended,
the "Credit Agreement") dated as of June 30,
1995 among the Borrower, the Banks party
thereto and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
<TABLE>
<CAPTION>
Principal Amount* Interest Period**
- ----------------- -----------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base rate
is the London Interbank Offered Rate.]
- --------
*Amount must be $5,000,000 or a larger multiple of $1,000,000.
**Not less than one month (LIBOR Auction) or not less than 14 days
(Absolute Rate Auction), subject to the provisions of the definition
of Interest Period.
1
<PAGE>
<PAGE>
Terms used herein have the meanings assigned to them in the
Credit Agreement.
AT&T CAPITAL CORPORATION
By________________________
Title:
<PAGE>
<PAGE>
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to AT&T
Capital Corporation (the "Borrower")
Pursuant to Section 2.03 of the $500,000,000 Credit Agreement (as
amended, the "Credit Agreement") dated as of June 30, 1995 among the Borrower,
the Banks parties thereto and the undersigned, as Agent, we are pleased on
behalf of the Borrower to invite you to submit Money Market Quotes to the
Borrower for the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
<TABLE>
<CAPTION>
Principal Amount Interest Period
- ---------------- ---------------
<S> <C>
$
</TABLE>
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base rate
is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [4:00 P.M.]
[9:30 A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in the
Credit Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By______________________
Authorized Officer
<PAGE>
<PAGE>
EXHIBIT D
Form of Money Market Quote
To: Morgan Guaranty Trust Company of New York,
as Agent
Re: Money Market Quote to AT&T Capital
Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following
Interest Periods and at the following rates:
<TABLE>
<CAPTION>
Principal Interest Money Market
Amount** Period*** [Margin****][Absolute Rate*****]
- --------- --------- ---------------------------------
<S> <C> <C>
$
$
</TABLE>
[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed
$____________.]**
- ----------
* As specified in the related Invitation.
** Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the individual
offers exceeds the amount the Bank is willing to lend. Bids must be made
for $5,000,000 or a larger multiple of $1,000,000.
<PAGE>
<PAGE>
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the
$500,000,000 Credit Agreement (as amended, the "Credit Agreement") dated as of
June 30, 1995 among the Borrower, the Banks party thereto and yourselves, as
Agent, irrevocably obligates us to make the Money Market Loan(s) for which any
offer(s) are accepted, in whole or in part.
Terms used herein have the meanings assigned to them in the
Credit Agreement.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
- ----------
*** Not less than one month or not less than 14 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined
for the applicable Interest Period. Specify percentage (to the nearest
1/10,000 of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
2
<PAGE>
<PAGE>
EXHIBIT E
OPINION OF
COUNSEL FOR THE BORROWER
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am [General Counsel] [Assistant General Counsel] of AT&T
Capital Corporation (the "Borrower"), and as such, have acted as counsel for the
Borrower in connection with the $500,000,000 Credit Agreement (the "Credit
Agreement") dated as of June 30, 1995 among the Borrower, the banks listed on
the signature pages thereof and Morgan Guaranty Trust Company of New York, as
Agent. Terms defined in the Credit Agreement are used herein as therein defined.
This opinion is being rendered to you at the request of the Borrower pursuant to
Section 3.01(b) of the Credit Agreement.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware, and has all corporate
power and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except those which the
failure to have would not have a Material Adverse Effect.
<PAGE>
<PAGE>
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate power, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the certificate of incorporation or by-laws of the Borrower
or of any material agreement, judgment, injunction, order, decree or other
material instrument binding upon the Borrower or result in the creation or
imposition of any Lien on any asset of the Borrower.
3. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and the Notes constitute valid and binding obligations of the
Borrower, in each case enforceable against the Borrower in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
4. There is no action, suit or proceeding pending against, or to
the best of my knowledge threatened against, the Borrower or any of its
Consolidated Subsidiaries before any court or arbitrator or any governmental
body, agency or official, in which there is a reasonable probability of an
adverse decision which would have a Material Adverse Effect or which in any
manner draws into question the validity of the Credit Agreement or the Notes.
5. Each of the Borrower's Consolidated Subsidiaries which is a
corporation is a corporation validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate power and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except those which the failure to have would
not have a Material Adverse Effect.
I am a member of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, I express no opinion as to
the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any
2
<PAGE>
<PAGE>
Bank is located which limits the rate of interest that such Bank may charge or
collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without my prior written consent.
Very truly yours,
3
<PAGE>
<PAGE>
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the $500,000,000
Credit Agreement (the "Credit Agreement") dated as of June 30, 1995 among AT&T
Capital Corporation, a Delaware corporation (the "Borrower"), the banks listed
on the signature pages thereof (the "Banks") and Morgan Guaranty Trust Company
of New York, as Agent (the "Agent"), and have acted as special counsel for the
Agent for the purpose of rendering this opinion pursuant to Section 3.01(c) of
the Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate power and
have been duly authorized by all necessary corporate action.
1
<PAGE>
<PAGE>
2. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and the Notes constitute valid and binding obligations of the
Borrower, in each case enforceable against the Borrower in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our prior written consent.
Very truly yours,
<PAGE>
<PAGE>
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), AT&T CAPITAL CORPORATION (the
"Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the $500,000,000 Credit Agreement dated as of June 30,
1995 among the Borrower, the Assignor and the other Banks party thereto, as
Banks, and the Agent (as amended, the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Committed Loans to the Borrower in an aggregate principal
amount at any time outstanding not to exceed $__________;
WHEREAS, [Committed] Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion of
its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding [Committed]
Loans, and the Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms
not otherwise defined herein shall have the respective
meanings set forth in the Credit Agreement.
<PAGE>
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
[Committed] Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Borrower and
the Agent and the payment of the amounts specified in Section 3 hereof required
to be paid on the date hereof (i) the Assignee shall, as of the date hereof,
succeed to the rights and be obligated to perform the obligations of a Bank
under the Credit Agreement with a Commitment in an amount equal to the Assigned
Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be
reduced by a like amount and the Assignor released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee. The assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them. It is
understood that commitment and/or facility fees accrued to the date hereof in
respect of the Assigned Amount are for the account of the Assignor and such fees
accruing from and including the date hereof are for the account of the Assignee.
Each of the Assignor and the Assignee hereby agrees that if it receives any
amount under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to the
extent of such other party's interest therein and shall promptly pay the same to
such other party.
SECTION 4. Consent of the Borrower and the Agent. This Agreement
is conditioned upon the consent of the Borrower and the Agent pursuant to
Section 9.06(c) of the Credit Agreement. The execution of this Agreement by the
Borrower and the Agent is evidence of this consent. Pursuant to Section 9.06(c)
the Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection
2
<PAGE>
<PAGE>
with, and shall have no responsibility with respect to, the solvency, financial
condition, or statements of the Borrower, or the validity and enforceability of
the obligations of the Borrower in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and without reliance on the
Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
AT&T CAPITAL CORPORATION
By__________________________
Title:
3
<PAGE>
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:
4
<PAGE>
<PAGE>
Exhibit 10(r)
Form 10-K for 1995
File No. 1-11237
$1,500,000,000
CREDIT AGREEMENT
dated as of
June 30, 1995
among
AT&T Capital Corporation
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE>
<PAGE>
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01 Definitions................................................ 1
1.02 Accounting Terms and Determinations........................ 12
1.03 Types of Borrowings........................................ 13
1.04 Basis for Ratings.......................................... 13
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend........................................ 13
2.02 Notice of Committed Borrowing.............................. 14
2.03 Money Market Borrowings.................................... 14
2.04 Notice to Banks; Funding of Loans.......................... 18
2.05 Notes...................................................... 19
2.06 Maturity of Loans; Termination of
Commitments.............................................. 20
2.07 Interest Rates............................................. 20
2.08 Facility Fees.............................................. 24
2.09 Optional Termination or
Reduction of Commitments................................. 24
2.10 Method of Electing Interest Rates.......................... 24
2.11 Optional Prepayments....................................... 26
2.12 General Provisions as to Payments.......................... 27
2.13 Funding Losses............................................. 28
2.14 Computation of Interest and Fees........................... 28
2.15 Regulation D Compensation.................................. 29
ARTICLE III
CONDITIONS
SECTION 3.01 Effectiveness. . . ........................................ 29
3.02 Borrowings................................................. 30
</TABLE>
- --------
*The Table of Contents is not a part of this Agreement.
i
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
SECTION 4.01 Corporate Existence and Power.............................. 30
4.02 Corporate and Governmental
Authorization; No Contravention.......................... 30
4.03 Binding Effect............................................. 30
4.04 Financial Information...................................... 32
4.05 Litigation................................................. 32
4.06 Subsidiaries............................................... 33
4.07 Not an Investment Company.................................. 33
4.08 Full Disclosure............................................ 33
ARTICLE V
COVENANTS
SECTION 5.01 Information................................................ 33
5.02 Maintenance of Existence................................... 34
5.03 Fixed Charge Coverage...................................... 34
5.04 Debt....................................................... 35
5.05 Limitation on Secured Debt................................. 35
5.06 Consolidations, Mergers and
Sales of Assets.......................................... 37
5.07 Use of Proceeds............................................ 38
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default.......................................... 38
6.02 Notice of Default.......................................... 40
6.03 Rescission................................................. 40
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization.............................. 41
7.02 Agent and Affiliates....................................... 41
7.03 Action by Agent............................................ 41
7.04 Consultation with Experts.................................. 41
7.05 Liability of Agent......................................... 41
7.06 Indemnification............................................ 42
</TABLE>
ii
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
7.07 Credit Decision............................................ 42
7.08 Successor Agent............................................ 42
7.09 Agent's Fee................................................ 43
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair................................ 43
8.02 Illegality.................................................... 44
8.03 Increased Cost and Reduced Return............................. 44
8.04 Taxes...................................................... 46
8.05 Base Rate Loans Substituted for
Affected Fixed Rate Loans................................ 49
8.06 Substitution of Bank....................................... 49
8.07 Compensation............................................... 50
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices.................................................... 50
9.02 No Waivers................................................. 51
9.03 Expenses; Indemnification.................................. 51
9.04 Sharing of Set-Offs........................................ 51
9.05 Amendments and Waivers..................................... 52
9.06 Successors and Assigns..................................... 52
9.07 Collateral................................................. 54
9.08 Governing Law; Submission to Juris-
diction.................................................. 54
9.09 Counterparts; Integration.................................. 55
9.10 WAIVER OF JURY TRIAL....................................... 55
9.11 Confidentiality............................................ 55
Exhibit A - Note
Exhibit B - Money Market Quote Request
Exhibit C - Invitation for Money Market Quotes
Exhibit D - Money Market Quote
</TABLE>
iii
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Exhibit E - Opinion of Counsel for the Borrower
Exhibit F - Opinion of Special Counsel for the
Agent
Exhibit G - Assignment and Assumption Agreement
</TABLE>
iv
<PAGE>
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of June 30, 1995 among AT&T CAPITAL
CORPORATION, the BANKS party hereto and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Agent.
W I T N E S S E T H :
WHEREAS, the Borrower (as defined below) has heretofore entered
into a $1,500,000,000 Credit Agreement dated as of July 11, 1994 with the banks
listed on the signature pages thereof and Morgan Guaranty Trust Company of New
York, as agent for such banks (the "Existing Credit Agreement"); and
WHEREAS, the Borrower wishes to enter into this
Agreement to replace the Existing Credit Agreement; and
WHEREAS, upon the effectiveness of this Agreement in accordance
with Section 3.01, the Existing Credit Agreement shall terminate;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms,
as used herein, have the following meanings:
"Absolute Rate Auction" means a solicitation of
Money Market Quotes setting forth Money Market Absolute
Rates pursuant to Section 2.03.
"Accounts Receivable" shall mean (i) any accounts receivable
(whether or not earned by performance), chattel paper, instruments, documents,
general intangibles, trade acceptances, any other rights to receive installment,
rental or other payments for, or relating to amounts due or to become due on
account of equipment or goods sold or leased or to be sold or leased or services
rendered or to be rendered or funds advanced or loaned or to be advanced or
loaned and other rights to payment of any kind, (ii) any proceeds of any of the
foregoing and (iii) any interest in
<PAGE>
<PAGE>
any property or asset of any kind (whether of the obligor under such Accounts
Receivable or any other Person) securing the payment of any item listed in
clause (i) hereof.
"Adjusted CD Rate" has the meaning set forth in Section 2.07(b).
"Administrative Questionnaire" means, with respect to each Bank,
an administrative questionnaire in the form prepared by the Agent and submitted
to the Agent (with a copy to the Borrower) duly completed by such Bank.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as agent for the Banks hereunder, and its successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Domestic Loans, its Domestic Lending Office, (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Applicable Margin" has the meaning set forth in Section 2.07(h).
"Assessment Rate" has the meaning set forth in Section 2.07(b).
"Asset Drop-Down" has the meaning set forth in Section 5.06.
"Assignee" has the meaning set forth in Section 9.06(c).
"AT&T" means American Telephone and Telegraph Company, a New York
corporation, and its successors.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means (i) a Committed Loan which bears interest
at the Base Rate pursuant to the applicable Notice of Committed Borrowing or
Notice of Interest Rate Election or the provisions of Article VIII or (ii) an
2
<PAGE>
<PAGE>
overdue amount which was a Base Rate Loan immediately before it became overdue.
"Borrower" means AT&T Capital Corporation, a Delaware corporation, and its
successors.
"Borrower's 1994 Form 10-K" means the Borrower's annual report on
Form 10-K for 1994, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Borrower's Latest Form 10-Q" means the Borrower's quarterly
report on Form 10-Q for the quarter ended March 31, 1995, as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Borrowing" has the meaning set forth in Section 1.03.
"CD Base Rate" has the meaning set forth in Section 2.07(b).
"CD Loan" means (i) a Committed Loan which bears interest at a CD
Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or (ii) an overdue amount which was a CD Loan immediately
before it became overdue.
"CD Rate" means a rate of interest determined pursuant to Section
2.07(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means Chemical Bank, Citibank, N.A. and
Morgan Guaranty Trust Company of New York.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.09 or changed
pursuant to Section 9.06(c).
"Committed Loan" means a loan made by a Bank pursuant to Section
2.01; provided that, if any such loan or loans (or portions thereof) are
combined or subdivided pursuant to a Notice of Interest Rate Election, the term
"Committed Loan" shall refer to the combined principal amount resulting from
such combination or to each of the separate principal amounts resulting from
such subdivision, as the case may be.
3
<PAGE>
<PAGE>
"Consolidated Debt" means at any date the Debt of the Borrower
and its Consolidated Subsidiaries, determined on a consolidated basis as of such
date.
"Consolidated EBIT" means, for any period, the sum of (i) the
consolidated net income from continuing operations of the Borrower and its
Consolidated Subsidiaries for such period before extraordinary items and without
giving effect to unusual non-recurring events plus (ii) to the extent deducted
in determining such consolidated net income from continuing operations, the sum
of Consolidated Interest Expense and the provision for income tax for such
period.
"Consolidated Interest Expense" means, for any period, the
interest expense of the Borrower and its Consolidated Subsidiaries determined on
a consolidated basis for such period.
"Consolidated Net Tangible Assets" means, at the date of any
determination, the total assets appearing on the consolidated balance sheet of
the Borrower and its Restricted Subsidiaries as at the end of the most recent
fiscal quarter of the Borrower for which such balance sheet is available,
prepared in accordance with generally accepted accounting principles, less (a)
all current liabilities (obligations whose liquidation is reasonably expected to
occur within twelve months), (b) investments in and advances to Subsidiaries of
the Borrower other than Restricted Subsidiaries or other entities accounted for
on the equity method of accounting, and (c) Intangible Assets.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Tangible Net Worth" means, at any date, the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries less Intangible Assets, all determined as of such date.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money and (ii) all obligations of
others for borrowed money guaranteed by such Person; provided, however, that any
recourse provided by any Person in connection with any sale, transfer or other
disposition by such Person of Accounts Receivable or of any subsidiary of such
Person substantially all the assets of which are Accounts Receivable which
4
<PAGE>
<PAGE>
constitutes a "sale" under generally accepted accounting principles (as in
effect at the time of such sale, transfer or other disposition) shall not, in
any event, constitute Debt.
"Default" means any condition or event which constitutes an Event
of Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City are authorized or
required by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Borrower and the Agent; provided that any Bank
may so designate separate Domestic Lending Offices for its Base Rate Loans, on
the one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.07(b).
"Drop-Down Subsidiary" has the meaning set forth in Section 5.06.
"Effective Date" means the date this Agreement becomes effective
in accordance with Section 3.01.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its
5
<PAGE>
<PAGE>
Euro-Dollar Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Committed Loan which bears
interest at a Euro-Dollar Rate pursuant to the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election or (ii) an overdue amount which
was a Euro-Dollar Loan immediately before it became overdue.
"Euro-Dollar Rate" means a rate of interest determined pursuant
to Section 2.07(c) on the basis of a London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London offices
of The Fuji Bank, Limited, Royal Bank of Canada and Morgan Guaranty Trust
Company of New York.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents).
"Event of Default" has the meaning set forth in Section 6.01.
"Existing Credit Agreement" has the meaning set forth in the
recitals hereto.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to Morgan Guaranty
6
<PAGE>
<PAGE>
Trust Company of New York on such day on such transactions as determined by the
Agent.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money
Market Loans (excluding Money Market LIBOR Loans bearing interest at the Base
Rate pursuant to Section 8.01(a)) or any combination of the foregoing.
"Group of Loans" means at any time a group of Loans consisting of
(i) all Committed Loans which are Base Rate Loans at such time or (ii) all
Committed Loans which are Fixed Rate Loans of the same type having the same
Interest Period at such time; provided that, if a Committed Loan of any
particular Bank is converted to or made as a Base Rate Loan pursuant to Section
8.02 or 8.05, such Loan shall be included in the same Group or Groups of Loans
from time to time as it would have been in if it had not been so converted or
made.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Intangible Assets" means the value (net of any applicable
reserves), as shown on or reflected in the Borrower's balance sheet, of: (i) all
trade names, trademarks, licenses, patents, copyrights and goodwill; (ii)
organization and development costs; (iii) deferred charges (other than prepaid
items such as insurance, taxes, interest, commissions, rents and similar items
and tangible assets being amortized); and (iv) unamortized debt discount and
expense, less unamortized premium.
"Interest Period" means: (1) with respect to each Euro-Dollar
Loan, a period commencing on the date of borrowing specified in the applicable
Notice of Borrowing or on the date specified in the applicable Notice of
Interest Rate Election and ending one, two, three or six months thereafter, as
the Borrower may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (c) below, be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day
7
<PAGE>
<PAGE>
in the calendar month at the end of such Interest Period) shall, subject
to clause (c) below, end on the last Euro-Dollar Business Day of a
calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each CD Loan, a period commencing on the date of borrowing
specified in the applicable Notice of Borrowing or on the date specified in the
applicable Notice of Interest Rate Election and ending 30, 60, 90 or 180 days
thereafter, as the Borrower may elect in the applicable notice; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (b) below, be
extended to the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(3) with respect to each Money Market LIBOR Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing and ending
such whole number of months thereafter as the Borrower may elect in accordance
with Section 2.03; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (c) below, be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case
such Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market Absolute Rate Loan, the period commencing
on the date of borrowing specified in
8
<PAGE>
<PAGE>
the applicable Notice of Borrowing and ending such number of days thereafter
(but not less than 14 days) as the Borrower may elect in accordance with Section
2.03; provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Euro-Dollar Business Day shall, subject to clause (b) below, be
extended to the next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Level I Status" exists at any date if, at such date, both (i)
the Borrower's outstanding senior unsecured long-term debt is rated both A+ or
higher by S&P and A1 or higher by Moody's and (ii) the Borrower's commercial
paper is rated both A1 or higher by S&P and P1 by Moody's.
"Level II Status" exists at any date if, at such date, (a) both
(i) the Borrower's outstanding senior unsecured long-term debt is rated both A-
or higher by S&P and A3 or higher by Moody's and (ii) the Borrower's commercial
paper is rated both A1 or higher by S&P and P1 by Moody's and (b) Level I Status
does not exist at such date.
"Level III Status" exists at any date if, at such date, (a) both
(i) the Borrower's outstanding senior unsecured long-term debt is rated both
BBB- or higher by S&P and Baa3 or higher by Moody's and (ii) the Borrower's
commercial paper is rated both A2 or higher by S&P and P2 or higher by Moody's
and (b) neither Level I Status nor Level II Status exists at such date.
"Level IV Status" exists at any date if, at such date, neither
Level I Status, Level II Status nor Level III Status exists.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.03.
"Lien" means any mortgage, pledge, security interest or lien.
"Loan" means a Domestic Loan or a Euro-Dollar Loan or a Money
Market Loan and "Loans" means Domestic Loans or
9
<PAGE>
<PAGE>
Euro-Dollar Loans or Money Market Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(c).
"Material Adverse Effect" means a material adverse effect on the
consolidated financial position of the Borrower and its subsidiaries.
"Money Market Absolute Rate" has the meaning set forth in Section
2.03(d).
"Money Market Absolute Rate Loan" means a loan made or to be made
by a Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Money Market Lending Office by notice to
the Borrower and the Agent; provided that any Bank may from time to time by
notice to the Borrower and the Agent designate separate Money Market Lending
Offices for its Money Market LIBOR Loans, on the one hand, and its Money Market
Absolute Rate Loans, on the other hand, in which case all references herein to
the Money Market Lending Office of such Bank shall be deemed to refer to either
or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan made or to be made by a
Bank pursuant to a LIBOR Auction (including such a loan bearing interest at the
Base Rate pursuant to Section 8.01(a)).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.03(d).
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.03.
"Moody's" means Moody's Investors Service, Inc. or any successor
rating agency acceptable to the Agent and the Borrower.
"Non-Recourse Debt" of the Borrower or any Restricted Subsidiary
means any indebtedness for borrowed money of the Borrower or any Restricted
Subsidiary, as the
10
<PAGE>
<PAGE>
case may be, which is secured by any Lien on or payable solely from the income
and proceeds of any property (including, without limiting the generality of such
term, any intangible assets), shares of stock, other equity interests or debt of
the Borrower or such Restricted Subsidiary, as the case may be, and which is not
a general obligation of the Borrower or such Restricted Subsidiary, as the case
may be.
"Notes" means promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
the Loans, and "Note" means any one of such promissory notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing (as
defined in Section 2.02) or a Notice of Money Market Borrowing (as defined in
Section 2.03(f)).
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.10.
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Quarterly Date" means the last Euro-Dollar Business Day of each
March, June, September and December.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 51% of
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes
11
<PAGE>
<PAGE>
evidencing at least 51% of the aggregate unpaid principal amount of the Loans.
"Restricted Subsidiary" means each Subsidiary of the Borrower
organized under the laws of any State of the United States or the District of
Columbia no substantial portion of the business of which is carried on outside
of the United States; provided that each Drop-Down Subsidiary (as defined in
Section 5.06) shall be a Restricted Subsidiary.
"S&P" means Standard & Poor's Ratings Group or any successor
rating agency acceptable to the Agent and the Borrower.
"Status" means, at any date, whichever of Level I Status, Level
II Status, Level III Status or Level IV Status exists at such date.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Borrower (or, if such term
is used with reference to any other Person, by such other Person).
"Termination Date" means June 28, 1996, or, if such day is not a
Euro-Dollar Business Day, the next preceding Euro-Dollar Business Day.
"United States" means the United States of America, including the
States thereof and the District of Columbia, but excluding its territories and
possessions.
"Wholly-Owned Restricted Subsidiary" means any Restricted
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with United States generally accepted accounting principles as in
effect from time to time, applied on a basis consistent (except for changes made
in consultation with the Borrower's independent public accountants) with the
most recent audited consolidated
12
<PAGE>
<PAGE>
financial statements of the Borrower and its subsidiaries delivered to the
Banks; provided that, if the Borrower notifies the Agent that the Borrower
wishes to amend any covenant in Article V to eliminate the effect of any change
in generally accepted accounting principles on the operation of such covenant
(or if the Agent notifies the Borrower that the Required Banks wish to amend
Article V for such purpose), then the Borrower's compliance with such covenant
shall be determined on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrower and the Required
Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on the same date, all of which Loans are of the same type
(subject to Article VIII) and, except in the case of Base Rate Loans, have the
same Interest Period or initial Interest Period. Borrowings are classified for
purposes of this Agreement either by reference to the pricing of Loans
comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing
comprised of Euro-Dollar Loans) or by reference to the provisions of Article II
under which participation therein is determined (i.e., a "Committed Borrowing"
is a Borrowing under Section 2.01 in which all Banks participate in proportion
to their Commitments, while a "Money Market Borrowing" is a Borrowing under
Section 2.03 in which the Bank participants are determined on the basis of their
bids in accordance therewith).
SECTION 1.04. Basis for Ratings. The credit ratings to be
utilized in the determination of a Status are the ratings assigned to unsecured
obligations of the Borrower without third party credit support. Ratings assigned
to any obligation which is secured or which has the benefit of third party
credit support shall be disregarded.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to make loans to the
Borrower pursuant to this Section from time to time on and after the Effective
Date and prior to the Termination Date in amounts such that
13
<PAGE>
<PAGE>
the aggregate principal amount of Committed Loans by such Bank at any one time
outstanding shall not exceed the amount of its Commitment. Each Borrowing under
this Section shall be in an aggregate principal amount of $50,000,000 or any
larger multiple of $5,000,000 (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.02(b)) and shall be made
from the several Banks ratably in proportion to their respective Commitments.
Within the foregoing limits, the Borrower may borrow under this Section, prepay
Loans to the extent permitted by Section 2.11, and reborrow at any time prior to
the Termination Date.
SECTION 2.02. Notice of Committed Borrowing. The Borrower shall
give the Agent notice (a "Notice of Committed Borrowing") not later than 10:30
A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y) the
second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(a) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(b) the aggregate amount of such Borrowing,
(c) whether the Loans comprising such Borrowing are to bear
interest initially at the Base Rate or at a CD Rate or a Euro-Dollar
Rate, and
(d) in the case of a Fixed Rate Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, the Borrower may, as set forth in this Section,
request the Banks to make offers to make Money Market Loans to the Borrower
prior to the Termination Date. The Banks may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to
request offers to make Money Market Loans under this Section, it shall transmit
to the Agent by telex
14
<PAGE>
<PAGE>
or facsimile transmission a Money Market Quote Request substantially in the form
of Exhibit B hereto so as to be received no later than 10:30 A.M. (New York City
time) on (x) the fourth Euro-Dollar Business Day prior to the date of Borrowing
proposed therein, in the case of a LIBOR Auction or (y) the Domestic Business
Day next preceding the date of Borrowing proposed therein, in the case of an
Absolute Rate Auction (or, in either case, such other time or date as the
Borrower and the Agent shall have mutually agreed and shall have notified to the
Banks not later than the date of the Money Market Quote Request for the first
LIBOR Auction or Absolute Rate Auction for which such change is to be effective)
specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day
in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$5,000,000 or a larger multiple of $1,000,000,
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth a
Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Borrower and the Agent may agree) of any other Money
Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of
a Money Market Quote Request, the Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank
may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each
15
<PAGE>
<PAGE>
Money Market Quote must comply with the requirements of this subsection (d) and
must be submitted to the Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 9.01 not later than (x) 4:00 P.M. (New York
City time) on the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Borrower and the Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective); provided that Money Market
Quotes submitted by the Agent (or any affiliate of the Agent) in the capacity of
a Bank may be submitted, and may only be submitted, if the Agent or such
affiliate notifies the Borrower of the terms of the offer or offers contained
therein not later than (x) one hour prior to the deadline for the other Banks,
in the case of a LIBOR Auction or (y) 15 minutes prior to the deadline for the
other Banks, in the case of an Absolute Rate Auction. Subject to Articles III
and VI, any Money Market Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which each
such offer is being made, which principal amount (w) may be greater than
or less than the Commitment of the quoting Bank, (x) must be $5,000,000
or a larger multiple of $1,000,000, (y) may not exceed the principal
amount of Money Market Loans for which offers were requested and (z) may
be subject to an aggregate limitation as to the principal amount of
Money Market Loans for which offers being made by such quoting Bank may
be accepted,
(C) in the case of a LIBOR Auction, the margin above or below the
applicable London Interbank Offered Rate (the "Money Market Margin")
offered for each such Money Market Loan, expressed as a percentage
(specified to the nearest 1/10,000th of 1%) to be added to or subtracted
from such base rate,
16
<PAGE>
<PAGE>
(D) in the case of an Absolute Rate Auction, the rate of interest
per annum (specified to the nearest 1/10,000th of 1%) (the "Money Market
Absolute Rate") offered for each such Money Market Loan, and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto or
does not specify all of the information required by subsection (d)(ii);
(B) except as provided in subsection (d)(ii)(B)(z) contains
qualifying, conditional or similar language;
(C) except as provided in subsection (d)(ii)(B)(z) proposes terms
other than or in addition to those set forth in the applicable
Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Agent shall promptly notify the
Borrower of the terms (x) of any Money Market Quote submitted by a Bank that is
in accordance with subsection (d) and (y) of any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Agent unless such
subsequent Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote. The Agent's notice to the Borrower shall specify
(A) the aggregate principal amount of Money Market Loans for which offers have
been received for each Interest Period specified in the related Money Market
Quote Request, (B) the respective principal amounts and Money Market Margins or
Money Market Absolute Rates, as the case may be, so offered and (C) if
applicable, limitations on the aggregate principal amount of Money Market Loans
for which offers in any single Money Market Quote may be accepted.
17
<PAGE>
<PAGE>
(f) Acceptance and Notice by Borrower. Not later than 10:30 A.M.
(New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrower and the Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept any Money Market
Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing
may not exceed the applicable amount set forth in the related Money
Market Quote Request,
(ii) the principal amount of each Money Market Borrowing must be
$5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of
ascending Money Market Margins or Money Market Absolute Rates, as the
case may be, and
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more Banks
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Agent among such Banks as nearly as possible (in multiples
of $1,000,000, as the Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determinations by the Agent of the amounts of
Money Market Loans shall be conclusive in the absence of manifest error.
SECTION 2.04. Notice to Banks; Funding of Loans.
18
<PAGE>
<PAGE>
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Bank of the contents thereof and of such Bank's share (if
any) of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of
each Borrowing, each Bank participating therein shall make available its share
of such Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 9.01. Unless the Agent
determines that any applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the Banks available to
the Borrower by 3:00 P.M. (New York City time) on the date of such Borrowing at
the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a Bank prior
to the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsection (b) of this Section 2.04 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and the Borrower severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at (i) in the
case of the Borrower, a rate per annum equal to the higher of the Federal Funds
Rate and the interest rate applicable thereto pursuant to Section 2.07 and (ii)
in the case of such Bank, the Federal Funds Rate. If such Bank shall repay to
the Agent such corresponding amount, such amount so repaid shall constitute such
Bank's Loan included in such Borrowing for purposes of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank shall be
evidenced by a single Note payable to the order of such Bank for the account of
its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such
19
<PAGE>
<PAGE>
Note shall be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of the relevant
type. Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(a),
the Agent shall forward such Note to such Bank. Each Bank shall record the date,
amount and type of each Loan made by it and the date and amount of each payment
of principal made by the Borrower with respect thereto, and may, if such Bank so
elects in connection with any transfer or enforcement of its Note, endorse on
the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding; provided
that the failure of any Bank to make any such recordation or endorsement or any
error in making the same shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans; Termination of Commitments. (a)
The Commitments shall terminate on the Termination Date, and all Committed Loans
shall mature, and the principal amount thereof shall be due and payable, on such
date.
(b) Each Money Market Loan included in any Money Market Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
SECTION 2.07. Interest Rates. (a) Each Base Rate Loan shall bear
interest on the outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable quarterly in arrears on each
Quarterly Date and on the Termination Date, and, with respect to the principal
amount of any Base Rate Loan converted to a CD Loan or a Euro-Dollar Loan, on
each date a Base Rate Loan is so converted. Any overdue principal of or interest
on any Base Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 1% plus the rate otherwise
applicable to Base Rate Loans for such day.
(b) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during
20
<PAGE>
<PAGE>
each Interest Period applicable thereto, at a rate per annum equal to the sum of
the Applicable Margin for such day plus the Adjusted CD Rate applicable to such
Interest Period; provided that if any CD Loan or any portion thereof shall, as a
result of clause (2)(b) of the definition of Interest Period, have an Interest
Period of less than 30 days, such portion shall bear interest during such
Interest Period at the rate applicable to Base Rate Loans during such period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 90 days, at intervals of 90 days
after the first day thereof. Any overdue principal of or interest on any CD Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 1% plus the rate applicable to Base Rate Loans for
such day.
The "Adjusted CD Rate" applicable to any Interest Period means a
rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
- ----------
* The amount in brackets being rounded upward, if necessary, to the next higher
1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate
of interest determined by the Agent to be the average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum bid
at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York certificate of deposit
dealers of recognized standing for the purchase at face value from each CD
Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the
21
<PAGE>
<PAGE>
Federal Reserve System (or any successor) for determining the maximum reserve
requirement (including without limitation any basic, supplemental or emergency
reserves) for a member bank of the Federal Reserve System in New York City with
deposits exceeding five billion dollars in respect of new non-personal time
deposits in dollars in New York City having a maturity comparable to the related
Interest Period and in an amount of $100,000 or more. The Adjusted CD Rate shall
be adjusted automatically on and as of the effective date of any change in the
Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.4(a) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during each Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin for such
day plus the London Interbank Offered Rate applicable to such Interest Period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest
Period means a rate of interest determined by the Agent on the basis of at least
two offered rates for deposits in United States dollars for a period equal to
such Interest Period commencing on the first day of such Interest Period
appearing on the Reuters Screen LIBO Page as of 11:00 A.M. (London time) on the
day that is two Euro-Dollar Business Days prior to the first day of such
Interest Period. If at least two such offered rates appear on the Reuters Screen
LIBO Page, the rate with respect to each Interest Period will be the arithmetic
average (rounded upwards to the next 1/16th of 1%) of such offered rates. If
fewer than two offered rates appear, the "London Interbank Offered Rate" in
respect of any Interest Period will be the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which
22
<PAGE>
<PAGE>
deposits in dollars are offered to each of the Euro-Dollar Reference
Banks in the London interbank market at approximately 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such Interest Period in an
amount approximately equal to the principal amount of the Euro-Dollar Loan of
such Euro-Dollar Reference Bank to which such Interest Period is to apply and
for a period of time comparable to such Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 1% plus the rate applicable to Base Rate Loans for
such day.
(e) Subject to Section 8.01(a), each Money Market LIBOR Loan
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the sum of the
London Interbank Offered Rate for such Interest Period (determined in accordance
with Section 2.07(c) as if the related Money Market LIBOR Borrowing were a
Committed Euro-Dollar Borrowing) plus (or minus) the Money Market Margin quoted
by the Bank making such Loan in accordance with Section 2.03.
Each Money Market Absolute Rate Loan shall bear interest on the outstanding
principal amount thereof, for the Interest Period applicable thereto, at a rate
per annum equal to the Money Market Absolute Rate quoted by the Bank making such
Loan in accordance with Section 2.03. Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than three months, at intervals of three months after the first day thereof. Any
overdue principal of or interest on any Money Market Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 1% plus the Base Rate for such day.
(f) The Agent shall determine each interest rate applicable to
the Loans hereunder. The Agent shall give prompt notice to the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation necessary to determine an interest rate in
accordance with this Section, the Agent shall determine the relevant interest
rate on the basis of the quotation or
23
<PAGE>
<PAGE>
quotations furnished by the remaining Reference Bank or Banks or, if none of
such quotations is available on a timely basis, the provisions of Section 8.01
shall apply.
(h) The "Applicable Margin" with respect to any Euro-Dollar Loan
or CD Loan at any date is the applicable percentage amount set forth in the
table below based on the Status on such date:
<TABLE>
==================================================================================================
<CAPTION>
Level I Level II Level III Level IV
Status Status Status Status
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Euro-Dollar Loans 0.2000% 0.2400% 0.3750% 0.5500%
- --------------------------------------------------------------------------------------------------
CD Loans 0.3250% 0.3650% 0.5000% 0.6750%
==================================================================================================
</TABLE>
SECTION 2.08. Facility Fees. The Borrower shall pay to the Agent
for the account of the Banks ratably a facility fee at the Facility Fee Rate.
Such facility fee shall accrue from and including the Effective Date to but
excluding the Termination Date (or earlier date of termination of the
Commitments in their entirety), on the daily aggregate amount of the Commitments
(whether used or unused). Accrued facility fees shall be payable quarterly on
each Quarterly Date and upon the date of termination of the Commitments in their
entirety.
The "Facility Fee Rate" at any date is: (i) 0.0500% if Level I
Status exists at such date, (ii) 0.0600% if Level II Status exists at such date,
(iii) 0.1250% if Level III Status exists at such date and (iv) 0.2000% if Level
IV Status exists at such date.
SECTION 2.09. Optional Termination or Reduction of Commitments.
The Borrower may, upon at least three Domestic Business Days' notice to the
Agent, (i) terminate the Commitments at any time, if no Loans are outstanding at
such time or (ii) ratably reduce from time to time by an aggregate amount of
$25,000,000 or any larger multiple of $5,000,000, the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans. The Agent shall promptly notify each Bank of any such notice received by
the Agent.
SECTION 2.10. Method of Electing Interest Rates. (a) The Loans
included in each Committed Borrowing shall bear interest initially at the type
of rate specified by the Borrower in the applicable Notice of Committed
Borrowing. Thereafter, the Borrower may from time to time elect to
24
<PAGE>
<PAGE>
change or continue the type of interest rate borne by each Group of Loans
(subject in each case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to CD Loans as of any Domestic Business Day or to
Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to convert
such Loans to Base Rate Loans or Euro-Dollar Loans or elect to continue
such Loans as CD Loans for an additional Interest Period, in each case
effective on the last day of the then current Interest Period applicable
to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or CD Loans or elect to continue
such Loans as Euro-Dollar Loans for an additional Interest Period, in
each case effective on the last day of the then current Interest Period
applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Agent at least three Euro-Dollar Business Days before the
conversion or continuation selected in such notice is to be effective (unless
the relevant Loans are to be converted from Domestic Loans to Domestic Loans of
the other type or continued as Domestic Loans of the same type for an additional
Interest Period, in which case such notice shall be delivered to the Agent at
least two Domestic Business Days before such conversion or continuation is to be
effective). A Notice of Interest Rate Election may, if it so specifies, apply to
only a portion of the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the Loans comprising
such Group and (ii) the portion to which such notice applies, and the remaining
portion to which it does not apply, are each $50,000,000 or any larger multiple
of $5,000,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Loans (or portion thereof) to
which such notice applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of subsection (a) above;
25
<PAGE>
<PAGE>
(iii) if the Loans comprising such Group are to be converted, the new
type of Loans and, if such new Loans are Fixed Rate Loans, the duration
of the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or Euro-Dollar
Loans for an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Agent shall promptly notify each
Bank of the contents thereof and such notice shall not thereafter be revocable
by the Borrower. If the Borrower fails to deliver a timely Notice of Interest
Rate Election to the Agent for any Group of Fixed Rate Loans, such Loans shall
be converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto.
SECTION 2.11. Optional Prepayments. (a) The Borrower may, upon at
least one Domestic Business Day's notice to the Agent, prepay the Group of Base
Rate Loans (or any Money Market Borrowing bearing interest at the Base Rate
pursuant to Section 8.01(a)) in whole at any time, or from time to time in part
in amounts aggregating $50,000,000 or any larger multiple of $5,000,000, by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such Group or
Borrowing.
(b) The Borrower may, upon at least three Domestic Business Days'
notice to the Agent, in the case of a Group of CD Loans or upon at least three
Euro-Dollar Business Days' notice to the Agent, in the case of a Group of
Euro-Dollar Loans, prepay the Loans comprising such a Group on the last day of
any Interest Period applicable to such Group, in whole at any time, or from time
to time in part in amounts aggregating $50,000,000 or any larger multiple of
$5,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Group.
(c) Except as provided in subsection (a) above, the Borrower may
not prepay all or any portion of the
26
<PAGE>
<PAGE>
principal amount of any Money Market Loan prior to the maturity thereof.
(d) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share (if any) of such prepayment and such notice shall
not thereafter be revocable by the Borrower.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of fees hereunder, not later than 12:00 Noon (New
York City time) on the date when due, in Federal or other funds immediately
available in New York City, to the Agent at its address referred to in Section
9.01. The Agent will promptly distribute to each Bank its ratable share of each
such payment received by the Agent for the account of the Banks. Whenever any
payment of principal of, or interest on, the Domestic Loans or of fees shall be
due on a day which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Dollar Loans or the Money
Market LIBOR Loans shall be due on a day which is not a Euro-Dollar Business
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. Whenever any payment of principal of, or
interest on, the Money Market Absolute Rate Loans shall be due on a day which is
not a Euro-Dollar Business Day, the date for payment thereof shall be extended
to the next succeeding Euro-Dollar Business Day. If the date for any payment of
principal is extended pursuant to this Agreement or by operation of law or
otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Bank on
such due date an amount equal to the amount then due such Bank. If and to the
extent that the Borrower shall not have so made such payment, each Bank shall
repay to the Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such
27
<PAGE>
<PAGE>
Bank until the date such Bank repays such amount to the Agent, at the Federal
Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment
of principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted to a Base Rate Loan (pursuant to Article VI or VIII or otherwise) on
any day prior to the last day of an Interest Period applicable thereto, or if
the Borrower fails to borrow, continue, convert or prepay any Fixed Rate Loans
after notice has been given to any Bank in accordance with Section 2.04(a),
2.10(c) or 2.11(d), the Borrower shall reimburse each Bank as provided in the
following paragraph for any resulting loss or expense incurred by it (or by a
Participant in the related Loan), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of the Applicable Margin or any other margin for the period after
any such payment or conversion or failure to borrow or prepay.
A certificate of each Bank setting forth such amount or amounts
(including the computation of such amount or amounts) as shall be necessary to
compensate such Bank or a Participant for the out-of-pocket expenses incurred by
such Bank shall be delivered to the Borrower and such amount or amounts may be
reviewed by the Borrower. If the Borrower, after receipt of any such certificate
from such Bank, disagrees in good faith with such Bank on the computation of the
amount or amounts owed to such Bank pursuant to this Section 2.13, such Bank and
the Borrower shall negotiate in good faith to promptly resolve such
disagreement. Any payment required to be paid to such Bank pursuant to this
Section 2.13 shall be paid within 30 days after demand is made therefor (or if
there is a disagreement, after such disagreement is resolved). Each Bank shall
have a duty to mitigate the damages to such Bank that may arise as a consequence
of such funding losses described above to the extent that such mitigation will
not, in the judgment of such Bank, entail any cost or disadvantage to such Bank
that such Bank is not reimbursed or compensated for by the Borrower.
SECTION 2.14. Computation of Interest and Fees. Interest based on
the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
28
<PAGE>
<PAGE>
SECTION 2.15. Regulation D Compensation. For so long as any Bank
maintains reserves against "Eurocurrency liabilities" (or any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of such Bank to United
States residents), and as a result the cost to such Bank (or its Applicable
Lending Office) of making or maintaining its Euro-Dollar Loans is increased,
then such Bank may require the Borrower to pay, contemporaneously with each
payment of interest on the Euro-Dollar Loans, additional interest on the related
Euro-Dollar Loan of such Bank at a rate per annum up to but not exceeding the
excess of (i)(A) the applicable London Interbank Offered Rate divided by (B) one
minus the Euro-Dollar Reserve Percentage over (ii) the rate specified in clause
(i)(A). Any Bank wishing to require payment of such additional interest (x)
shall so notify the Borrower, in which case such additional interest on the
Euro-Dollar Loans of such Bank shall be payable to such Bank at the rate and
place indicated in such notice with respect to each Interest Period commencing
at least three Euro- Dollar Business Days after the giving of such notice and
(y) shall furnish to the Borrower at least five Euro-Dollar Business Days prior
to each date on which interest is payable on the Euro-Dollar Loans an officers'
certificate setting forth the amount to which such Bank is then entitled under
this Section 2.15 (which shall be consistent with such Bank's good faith
estimate of the level at which the related reserves are maintained by it).
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become
effective on the date that each of the following conditions shall have been
satisfied (or waived in accordance with Section 9.05):
(a) receipt by the Agent of counterparts hereof signed by each of
the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex, facsimile transmission or
other written confirmation from such party of execution of a counterpart
hereof by such party);
29
<PAGE>
<PAGE>
(b) receipt by the Agent of a duly executed Note for the account
of each Bank dated on or before the Effective Date complying with the
provisions of Section 2.05;
(c) receipt by the Agent of evidence
satisfactory to it that no loans are outstanding under the
Existing Credit Agreement;
(d) receipt by the Agent of an opinion of the General Counsel or
any Assistant General Counsel of the Borrower, substantially in the form
of Exhibit E hereto;
(e) receipt by the Agent of an opinion of Davis Polk & Wardwell,
special counsel for the Agent, substantially in the form of Exhibit F
hereto; and
(f) receipt by the Agent of all documents the Agent may
reasonably request relating to the existence of the Borrower, the
corporate authority for and the validity of this Agreement and the
Notes, and any other matters relevant hereto, all in form and substance
satisfactory to the Agent;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
July 7, 1995. The Agent shall promptly notify the Borrower and the Banks of the
Effective Date, and such notice shall be conclusive and binding on all parties
hereto. The Banks that are parties to the Existing Credit Agreement, comprising
the "Required Banks" as defined therein, and the Borrower agree that the
commitments under the Existing Credit Agreement shall terminate in their
entirety simultaneously with and subject to the effectiveness of this Agreement
and that the Borrower shall be obligated to pay on the Effective Date the
accrued facility fees thereunder to but excluding the date of such
effectiveness.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of
Borrowing as required by Section 2.02 or 2.03, as the case may
be;
(b) immediately after such Borrowing, the aggregate outstanding
principal amount of the Loans
30
<PAGE>
<PAGE>
will not exceed the aggregate amount of the Commitments;
(c) immediately before and after such Borrowing,
no Default shall have occurred and be continuing; and
(d) the representations and warranties of the Borrower contained
in this Agreement (except the representations and warranties set forth
in Sections 4.04(c) and 4.05) shall be true in all material respects on
and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(b), (c) and (d) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted except those which the failure to have would not have a Material
Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's corporate power, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Borrower or
of any material agreement, judgment, injunction, order, decree or other material
instrument binding upon the Borrower or result in the creation or imposition of
any Lien on any asset of the Borrower.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid
and binding agreement of the Borrower
31
<PAGE>
<PAGE>
and the Notes, when executed and delivered in accordance with this Agreement,
will constitute valid and binding obligations of the Borrower, in each case
enforceable against the Borrower in accordance with their respective terms,
except as the same may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether considered
in a proceeding in equity or at law).
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
subsidiaries as of December 31, 1994 and the related consolidated statements of
income, changes in stockholders' equity and cash flows for the fiscal year then
ended, reported on by Cooper's & Lybrand and set forth in the Borrower's 1994
Form 10-K, a copy of which has been delivered to each of the Banks, present
fairly, in all material respects, the consolidated financial position of the
Borrower and its subsidiaries as of such date and the consolidated results of
their operations and cash flows for such fiscal year, in conformity with
generally accepted accounting principles.
(b) The unaudited consolidated balance sheet of the Borrower and
its subsidiaries as of March 31, 1995 and the related unaudited consolidated
statements of income and cash flows for the three months then ended, set forth
in the Borrower's Latest Form 10-Q, a copy of which has been delivered to each
of the Banks, present fairly, in all material respects, the consolidated
financial position of the Borrower and its subsidiaries as of such date and the
consolidated results of their operations and cash flows for such three-month
period, in conformity with generally accepted accounting principles for interim
financial information applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section.
(c) From March 31, 1995 through the Effective Date there has been
no material adverse change in the consolidated financial condition of the
Borrower and its subsidiaries.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower threatened against, the
Borrower or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable probability
of an adverse decision which would have a Material Adverse Effect, or which in
any manner draws
32
<PAGE>
<PAGE>
into question the validity or enforceability of this Agreement
or the Notes.
SECTION 4.06. Subsidiaries. Each of the Borrower's Consolidated
Subsidiaries which is a corporation is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate power and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except those which the failure to have would not have a Material
Adverse Effect.
SECTION 4.07. Not an Investment Company. The
Borrower is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 4.08. Full Disclosure. No written information heretofore
furnished by the Borrower to the Agent or any Bank pursuant to Section 4.04 is,
and no written information hereafter furnished by the Borrower to the Agent or
any Bank pursuant to Section 5.01 contains or will contain any material
misstatement of any material facts.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks:
(a) within 105 days after the end of each fiscal year of the
Borrower, a consolidated balance sheet of the Borrower and its
subsidiaries as of the end of such fiscal year and the related
consolidated statements of income, changes in stockholders' equity and
cash flows for such fiscal year, setting forth in each case in
comparative form the figures as of the end of and for the previous
fiscal year, all reported on in a manner acceptable to the Securities
and Exchange Commission by Coopers & Lybrand or other independent public
accountants of nationally recognized standing;
33
<PAGE>
<PAGE>
(b) within 60 days after the end of each of the first three
quarters of each fiscal year of the Borrower, a consolidated balance
sheet of the Borrower and its subsidiaries as of the end of such quarter
and the related consolidated statements of income for such quarter and
the related consolidated statements of income and cash flows for the
portion of the Borrower's fiscal year ended at the end of such quarter,
setting forth in the case of such statements of income in comparative
form the figures for the corresponding quarter and in the case of such
statements of income and cash flows the corresponding portion of the
Borrower's previous fiscal year, all certified as to fairness of
presentation, generally accepted accounting principles and consistency
by the chief financial officer or the chief accounting officer of the
Borrower, subject to normal year end adjustments;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of
the chief financial officer or the chief accounting officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance with the
requirements of Sections 5.03 and 5.04, inclusive, on the date of the
consolidated balance sheet included in such financial statements and
(ii) stating whether any Default exists on the date of such certificate
and, if any Default then exists, setting forth the details thereof and
the action which the Borrower is taking or proposes to take with respect
thereto;
(d) promptly after the mailing thereof to the shareholders of the
Borrower generally, copies of all financial statements, reports and
proxy statements so mailed; and
(e) promptly after the filing thereof, copies of all reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Borrower shall
have filed with the Securities and Exchange Commission.
SECTION 5.02. Maintenance of Existence. The Borrower will
preserve, renew and keep in full force and effect its corporate existence except
as otherwise permitted under Section 5.06.
SECTION 5.03. Fixed Charge Coverage. The ratio
34
<PAGE>
<PAGE>
of Consolidated EBIT to Consolidated Interest Expense will
not, for any period of four consecutive fiscal quarters, be
less than 1.15 to 1.
SECTION 5.04. Debt. Consolidated Debt determined at the end of
any fiscal quarter will not exceed 850% of Consolidated Tangible Net Worth
determined at the end of such fiscal quarter, and Consolidated Debt determined
at the end of any fiscal month which is not the last month of a fiscal quarter
will not exceed 850% of the greater of (i) Consolidated Tangible Net Worth
determined at the end of the most recently ended fiscal quarter or (ii)
Consolidated Tangible Net Worth determined at the end of such fiscal month.
SECTION 5.05. Limitation on Secured Debt. The Borrower will not,
nor will it permit any Restricted Subsidiary to, incur, issue, assume or
guarantee any Debt secured by any Lien on any property or assets of the Borrower
or any Restricted Subsidiary, or on any shares of stock or Debt of any
Restricted Subsidiary, without effectively providing that the principal of,
premium, if any, and interest, if any, on the Loans (together with, if the
Borrower so determines, any other Debt of the Borrower or such Restricted
Subsidiary, which is not subordinated to the Loans) shall be secured equally and
ratably with (or prior to) such Debt, so long as any such Debt shall be so
secured, unless, after giving effect thereto, the aggregate amount of all such
secured Debt of the Borrower and the Restricted Subsidiaries would not exceed
10% of Consolidated Net Tangible Assets of the Borrower and the Restricted
Subsidiaries; provided, however, that no Asset Drop Down shall, in any event,
constitute a Lien; and provided further that neither the satisfaction and
discharge of any Debt pursuant to any indenture or instrument governing such
Debt, nor the defeasance of any Debt pursuant to any indenture or instrument
governing such Debt, shall be deemed the incurrence, issue, assumption or
guarantee of Debt secured by a Lien for purposes of this Section.
Notwithstanding the foregoing, this Section shall neither limit nor be deemed or
construed as limiting the right of the Borrower or any Restricted Subsidiary to
incur, issue, assume or guarantee any Debt secured by any one or more of the
following: (1) Liens on property of, or on any shares of stock or Debt of, any
corporation existing at the time such corporation becomes a Restricted
Subsidiary of the Borrower; (2) Liens on property, shares of stock, other equity
interests, or Debt existing at the time of acquisition or repossession thereof
by the Borrower or any Restricted Subsidiary; (3) Liens on physical property (or
any Accounts Receivable arising in connection with the lease thereof), shares of
35
<PAGE>
<PAGE>
stock, other equity interests, or Debt acquired (or, in the case of physical
property, constructed) after the date hereof by the Borrower or any Restricted
Subsidiary, which Liens are created prior to, at the time of, or within one year
after such acquisition (or, in the case of physical property, the completion of
such construction or commencement of commercial operation of such property,
whichever is later) to secure any Debt issued, incurred, assumed or guaranteed
prior to, at the time of, or within one year after such acquisition (or such
completion or commencement, whichever is later) or to secure any other Debt
issued, incurred, assumed or guaranteed at any time thereafter for the purpose
of refinancing all or any part of such Debt; (4) Liens on Accounts Receivable of
the Borrower or any Restricted Subsidiary arising from or in connection with
transactions entered into by the Borrower or such Restricted Subsidiary after
the date hereof or on Accounts Receivable acquired by the Borrower or such
Restricted Subsidiary after such date from others, which Liens are created prior
to, at the time of, or within one year after such Accounts Receivable arise or
are acquired or, if later, the completion of the delivery or installation of the
equipment or goods or the rendering of the services or the advancement or
loaning of funds relating thereto (i) as a result of any guarantee, repurchase
or other contingent (direct or indirect) or recourse obligation of the Borrower
or such Restricted Subsidiary in connection with the discounting, sale,
assignment, transfer or other disposition of such Accounts Receivable or any
interest therein, or (ii) to secure or provide for the payment of all or any
part of the investment of the Borrower or such Restricted Subsidiary in any such
Accounts Receivable (whether or not such Accounts Receivable are the Accounts
Receivable on which such Liens are created) or the purchase price thereof or to
secure any debt (including, without limitation, Non- Recourse Debt) issued,
incurred, assumed or guaranteed for the purpose of financing or refinancing all
or any part of such investment or purchase price; (5) Liens in favor of the
Borrower or any Restricted Subsidiary; (6) Liens in favor of the United States
of America or any State thereof or the District of Columbia, or any agency,
department or other instrumentality thereof, to secure progress, advance or
other payments pursuant to any contract or provision of any statute; (7) Liens
securing the performance of letters of credit, bids, tenders, sales contracts,
purchase agreements, leases, surety and performance bonds, and other similar
obligations not incurred in connection with the borrowing of money; (8) Liens to
secure Non-Recourse Debt in connection with the Borrower or any Restricted
Subsidiary engaging in any leveraged or single-investor or other lease
transactions, whether (in the case of Liens on or relating
36
<PAGE>
<PAGE>
to leases or groups of leases or the particular properties subject thereto)
such Liens be on the particular properties subject to any leases involved in any
of such transactions and/or the rental or other payments or rights under such
leases or, in the case of any group of related or unrelated leases, on the
properties subject to the leases comprising such group and/or the rental or
other payments or rights under such leases, or on any direct or indirect
interest therein, and whether (in any case) (i) such Liens be created prior to,
at the time of, or at any time after the entering into of such lease
transactions and/or (ii) such leases be in existence prior to, or be entered
into by the Borrower or such Restricted Subsidiary at the time of or at any time
after, the purchase or other acquisition by the Borrower or such Restricted
Subsidiary of the properties subject to such leases; and (9) any extension,
renewal or replacement (or successive extensions, renewals or replacements), in
whole or in part, of any of the foregoing; provided, however, that any such
extension, renewal or replacement shall be limited to all or a part of the
property or assets which secured the Lien so extended, renewed or replaced (plus
any improvements on such property).
SECTION 5.06. Consolidations, Mergers and Sales of Assets. The
Borrower covenants that it will not merge or consolidate with any other
corporation or sell or convey all or substantially all of its assets to any
person (other than such a sale or conveyance to a Subsidiary or any successor
thereto (such a sale or conveyance being called an "Asset Drop-Down")), unless
(i) either the Borrower shall be the continuing corporation or the successor
corporation or the person which acquires by sale or conveyance substantially all
the assets of the Borrower (if other than the Borrower) shall be a corporation
organized under the laws of the United States of America or any State thereof
and shall expressly assume the due and punctual payment of the principal of and
interest on all the Notes according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Agreement to be performed or observed by the Borrower, by one or more
agreements, reasonably satisfactory in form to the Required Banks, executed and
delivered to the Agent by such corporation, and (ii) the Borrower or such
successor corporation, as the case may be, shall not, immediately after such
merger or consolidation, or such sale or conveyance, be in default in the
performance of any such covenant or condition. In the event of any Asset
Drop-Down after the date of this
Agreement, any subsequent sale or conveyance of assets by a Subsidiary to which
assets were transferred in such Asset Drop-Down (a "Drop-Down
37
<PAGE>
<PAGE>
Subsidiary") will be deemed to be a sale or conveyance of assets by the Borrower
for purposes of this Section 5.06.
SECTION 5.07. Use of Proceeds. The proceeds of the Loans made
under this Agreement will be used by the Borrower for general corporate
purposes, including, without limitation, the repayment of maturing commercial
paper and other Debt of the Borrower. None of such proceeds will be used for the
purpose of buying or carrying any "margin stock" within the meaning of
Regulation U.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Loan, or shall fail to pay within five Domestic Business Days of the due
date thereof any interest on any Loan, any fees or any other amount
payable hereunder;
(b) the Borrower shall fail to observe or
perform any covenant contained in Section 5.02, 5.03, 5.04 or
5.06;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by
clause (a) or (b) above) for 30 days after notice thereof has been given
to the Borrower by the Agent at the request of the Required Banks;
(d) any representation or warranty made or deemed made by the
Borrower in this Agreement or in any certificate delivered pursuant to
this Agreement shall prove to have been materially incorrect when made
(or deemed made pursuant to Section 3.02);
(e) the Borrower shall fail to make any payment or payments, in
the aggregate in excess of $300,000,000, on principal of Debt of the
Borrower when due and such failure shall continue for 30 days after the
due date thereof or, if longer, beyond any applicable grace periods;
38
<PAGE>
<PAGE>
(f) any event or condition shall occur which results in the
acceleration of the maturity of the principal of any Debt of the
Borrower in the aggregate in excess of $300,000,000 which acceleration
shall not have been rescinded within 30 days;
(g) the Borrower shall commence a voluntary case seeking
liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case seeking such relief commenced against it under any such
law, or shall make a general assignment for the benefit of creditors, or
shall admit in writing its inability generally to pay its debts as they
become due;
(h) an order for relief shall be entered against the Borrower
under the federal bankruptcy laws as now or hereafter in effect in an
involuntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to it or its debts or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and such
decree or order shall remain undismissed and unstayed for a period of 20
days;
(i) both (i) a person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
other than AT&T shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 20% or more of the outstanding shares of
common stock of the Borrower and (ii) the Borrower shall have ceased to
be a Subsidiary of AT&T; provided that, notwithstanding clauses (i) and
(ii) above, no Event of Default shall occur under this paragraph (i) if
and for so long as both (x) officers, directors and employees of AT&T
constitute a majority of the Board of Directors of the Borrower and (y)
no person or group of persons has beneficial ownership of a greater
percentage of the outstanding shares of common stock of the Borrower
than does AT&T;
39
<PAGE>
<PAGE>
then, and in every such event, the Agent shall (i) if requested by Banks having
more than 50% in aggregate amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon terminate, and (ii) if
requested by Banks holding Notes evidencing more than 50% in aggregate principal
amount of the Loans, by notice to the Borrower declare the Notes (together with
accrued interest thereon) to be, and the Notes (together with accrued interest
thereon) shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the Events of
Default specified in paragraph (g) or (h) above with respect to the Borrower,
without any notice to the Borrower or any other act by the Agent or the Banks,
the Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower.
SECTION 6.02. Notice of Default. The Agent shall give notice to
the Borrower under Section 6.01(c) promptly upon being requested to do so by the
Required Banks and shall thereupon notify all the Banks thereof.
SECTION 6.03. Rescission. If at any time after termination of the
Commitments and/or acceleration of the maturity of the Loans pursuant to Section
6.01, the Borrower shall pay all arrears of interest and all payments on account
of principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal at the rates specified in this
Agreement) and all Defaults (other than nonpayment of principal of and accrued
interest on the Loans due and payable solely by virtue of acceleration) shall be
remedied or waived pursuant to Section 9.05, then upon the written consent of
the Required Banks and notice to the Borrower, such termination of the
Commitments and/or such acceleration and their consequences may be rescinded and
annulled; but such action shall not affect any subsequent Default or impair any
right or remedy consequent thereon. The provisions of the preceding sentence are
intended merely to bind the Banks to a decision which may be made at the
election of the Required Banks; they are not intended to benefit the Borrower
and do not give the Borrower the right to require the Banks to rescind or annul
any acceleration hereunder, even if the conditions set forth herein are met.
40
<PAGE>
<PAGE>
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Notes as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty Trust Company
of New York shall have the same rights and powers under this Agreement as any
other Bank and may exercise or refrain from exercising the same as though it
were not the Agent, and Morgan Guaranty Trust Company of New York and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any Subsidiary or affiliate of the
Borrower as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Agent shall not be required to take any action
with respect to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or (ii) in
the absence of its own gross negligence or willful misconduct. Neither the Agent
nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or representation made in
connection with this Agreement or any borrowing hereunder; (ii) the performance
or observance of any of the covenants or agreements of the Borrower; (iii) the
satisfaction of any condition specified
41
<PAGE>
<PAGE>
in Article III, except receipt of items required to be delivered to the Agent;
or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex, facsimile transmission or similar
writing) believed by it to be genuine or to be signed by the proper party or
parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement or any action
taken or omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time
by giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Borrower shall have the right to appoint a successor Agent from
among the Banks. If no successor Agent shall have been so appointed, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $50,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
42
<PAGE>
<PAGE>
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
SECTION 7.09. Agent's Fee. The Borrower shall
pay to the Agent for its own account fees in the amounts
and at the times previously agreed upon between the Borrower
and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any CD Loan,
Euro-Dollar Loan or Money Market LIBOR Loan:
(a) the Agent is advised by the CD Reference Banks or, under the
circumstances contemplated by the final sentence of the definition of
London Interbank Offered Rate, the Euro-Dollar Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to
such Reference Banks in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks having
50% or more of the aggregate principal amount of the affected Loans
advise the Agent that the Adjusted CD Rate or the London Interbank
Offered Rate, as the case may be, as determined by the Agent will not
adequately and fairly reflect the cost to such Banks of funding their CD
Loans or Euro-Dollar Loans, as the case may be, for such Interest
Period,
the Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, or to convert
outstanding Loans into CD Loans or Euro-Dollar Loans, as the case may be, shall
be suspended and (ii) each outstanding CD Loan or Euro-Dollar Loan, as the case
may be, shall be converted into a Base Rate Loan on the last day of the then
current Interest Period applicable thereto. Unless the Borrower notifies the
Agent at least one Domestic Business Day before the date of any Fixed Rate
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, (i) if such Fixed Rate
43
<PAGE>
<PAGE>
Borrowing is a Committed Borrowing, such Borrowing shall instead be made as a
Base Rate Borrowing and (ii) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing shall
bear interest for each day from and including the first day to but excluding the
last day of the Interest Period applicable thereto at the Base Rate for such
day.
SECTION 8.02. Illegality. If, on or after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any change
in any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for any
Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans, or to convert outstanding Loans into Euro-Dollar Loans,
shall be suspended. Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar Lending Office if
such designation will avoid the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. If such notice
is given, each Euro-Dollar Loan of such Bank then outstanding shall be converted
to a Base Rate Loan either (a) on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan if such Bank may lawfully continue to
maintain and fund such Loan to such day or (b) immediately if such Bank shall
determine that it may not lawfully continue to maintain and fund such Loan to
such day.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If on or after (x) the date hereof, in the case of any Committed Loan
or any obligation to make Committed Loans or (y) the date of the related Money
Market Quote, in the case of any Money Market Loan, the adoption of any
applicable law, rule or regulation, or any change in anyapplicable law, rule or
regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
44
<PAGE>
<PAGE>
any Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding (i) with respect to any
CD Loan any such requirement included in an applicable Domestic Reserve
Percentage and (ii) with respect to any Euro-Dollar Loan any such requirement
with respect to which such Bank is entitled to compensation during the relevant
Interest Period under Section 2.15, special deposit, insurance assessment
(excluding, with respect to any CD Loan, any such requirement reflected in an
applicable Assessment Rate) or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Bank (or its Applicable
Lending Office) or shall impose on any Bank (or its Applicable Lending Office)
or on the United States market for certificates of deposit or the London
interbank market any other condition affecting its Fixed Rate Loans, its Note or
its obligation to make Fixed Rate Loans and the result of any of the foregoing
is to increase the cost to such Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the amount of any sum
received or receivable by such Bank (or its Applicable Lending Office) under
this Agreement or under its Note with respect thereto, by an amount deemed by
such Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then pursuant to paragraph (c) below, the
Borrower shall pay to such Bank such additional
45
<PAGE>
<PAGE>
amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section. A certificate of a
Bank setting forth such amount or amounts (including computation of such amount
or amounts) as shall be necessary to compensate such Bank or its Parent as
specified in paragraph (a) or (b) above, as the case may be, shall be delivered
to the Borrower and such amount or amounts may be reviewed by the Borrower.
Unless the Borrower disagrees in good faith with the computation of the amount
or amounts in such certificate, the Borrower shall pay to such Bank, within 30
days after receipt by the Borrower of such certificate delivered by such Bank,
the amount shown as due on any such certificate. If the Borrower, after receipt
of any such certificate from a Bank, disagrees with such Bank on the computation
of the amount or amounts owed to such Bank pursuant to paragraph (a) or (b)
above, such Bank and the Borrower shall negotiate in good faith to promptly
resolve such disagreement. In either case, however, such Bank shall have a duty
to mitigate the damages that may arise as a consequence of paragraph (a) or (b)
above (including, without limitation, changing its Applicable Lending Office) to
the extent that such mitigation will not, in the judgment of such Bank, entail
any cost or disadvantage to such Bank that such Bank is not reimbursed or
compensated for by the Borrower.
SECTION 8.04. Taxes. (a) Any and all payments by the Borrower to
or for the account of any Bank or the Agent hereunder or under any Note shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings imposed by
the United States or any political subdivision or taxing authority thereof, and
all liabilities with respect thereto, excluding, in the case of each Bank and
the Agent, taxes imposed on its net income, and franchise taxes imposed on it,
by the United States or any political subdivision or taxing authority thereof
(all such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note to any Bank or the Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.04) such Bank or the Agent (as the case
46
<PAGE>
<PAGE>
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note or
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Note (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 8.04) paid by such Bank or the Agent (as the case may be) and
any liability (including penalties, interest and reasonable out-of-pocket
expenses) arising therefrom or with respect thereto (other than any such
liability that results from the gross negligence or willful misconduct of such
Bank and the Agent, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant taxing authority or other governmental
authority). This indemnification shall be made within 30 days from the date such
Bank or the Agent (as the case may be) makes written demand therefor. If any
Bank or the Agent receives a refund in respect of any Taxes or Other Taxes for
which such Bank or the Agent has received payment from the Borrower hereunder it
shall promptly repay such refund (including any interest received by such Bank
or the Agent from the taxing authority with respect to the refund with respect
to such Taxes or Other Taxes) to the Borrower, net of all reasonable
out-of-pocket expenses of such Bank; provided that the Borrower, upon the
request of such Bank or the Agent, agrees to return such refund (plus penalties,
interest or other charges) to such Bank or the Agent in the event such Bank or
the Agent is required to repay such refund.
(d) Each Bank organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if
47
<PAGE>
<PAGE>
requested in writing by the Borrower (but only so long as such Bank remains
lawfully able to do so), shall provide the Borrower with Internal Revenue
Service form 1001 or 4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, duly executed by such Bank, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from "Taxes" as defined in Section 8.04(a).
(e) Each Bank further agrees to promptly notify the Borrower if
such Bank changes its Applicable Lending Office and, upon written request from
the Borrower, deliver forms 1001 or 4224 required pursuant to Section 8.04(d)
prior to the immediately following due date of any payment by the Borrower
hereunder.
(f) The Borrower shall not be required to pay any additional
amounts to any Bank or the Agent in respect of Taxes and Other Taxes pursuant to
paragraphs (a), (b) and (c) above if the obligation to pay such additional
amounts would not have arisen but for a failure by such Bank or Agent to comply,
if required, with the provisions of paragraphs (d) and (e) above unless such
failure results from (i) a change in applicable law, regulation or official
interpretation thereof or (ii) an amendment, modification or revocation of any
applicable tax treaty or a change in official position regarding the application
or interpretation thereof, in each case after the date hereof or after such Bank
became a party hereto; provided, however, that should a Bank, which is otherwise
exempt from or subject to a reduced rate of withholding tax, become subject to
Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(g) Any Bank claiming any additional amounts payable under this
Section 8.04 shall (i) to the extent legally able to do so, upon reasonable
written request from the Borrower, file any certificate or document if such
filing would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue, and the Borrower shall not be obligated to
pay such additional
48
<PAGE>
<PAGE>
amounts if, after the Borrower's request, any Bank could have filed such
certificate or document and failed to do so; or (ii) consistent with legal and
regulatory restrictions, use reasonable efforts to change the jurisdiction of
its Applicable Lending Office if the making of such change would avoid the need
for or reduce the amount of any additional amounts which may thereafter accrue
and would not, in the judgment of such Bank, be otherwise disadvantageous to
such Bank.
SECTION 8.05. Base Rate Loans Substituted for Affected Fixed Rate
Loans. If (i) the obligation of any Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 8.02 or (ii) any Bank has demanded
compensation under Section 8.03 or 8.04 with respect to its CD Loans or
Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business
Days' prior notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as (or
continued as or converted into) CD Loans or Euro-Dollar Loans, as the
case may be, shall instead be Base Rate Loans (on which interest and
principal shall be payable contemporaneously with the related Fixed Rate
Loans of the other Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case
may be, has been repaid (or converted to a Base Rate Loan), all payments
of principal which would otherwise be applied to repay such Fixed Rate
Loans shall be applied to repay its Base Rate Loans instead.
If such Bank notifies the Borrower that the circumstances giving rise to such
notice no longer apply, the principal amount of each such Base Rate Loan shall
be converted into a CD Loan or Euro-Dollar Loan, as the case may be, on the
first day of the next succeeding Interest Period applicable to the related CD
Loans or Euro-Dollar Loans of the other Banks.
SECTION 8.06. Substitution of Bank. If any Bank (i) has demanded
compensation for increased costs pursuant to Section 8.03 or 8.04 or, (ii) has
determined that the making or continuation of any Euro-Dollar Rate Loan has
become unlawful or impermissible pursuant to Section 8.02 and similar additional
interest or compensation has not been
49
<PAGE>
<PAGE>
demanded by, or a similar determination has not been made by, all of the Banks,
the Borrower shall have the right to designate an Assignee which is not an
affiliate of the Borrower to purchase for cash, pursuant to an Assignment and
Assumption Agreement substantially in the form of Exhibit G hereto, the
outstanding Loans and Commitment of such Bank and to assume all of such Bank's
other rights and obligations hereunder without recourse to or warranty by, or
expense to, such Bank, for a purchase price equal to the principal amount of all
of such Bank's outstanding Loans plus any accrued but unpaid interest thereon
and the accrued but unpaid facility fees in respect of that Bank's Commitment
hereunder plus such amount, if any, as would be payable pursuant to Section 2.13
if the outstanding Loans of such Bank were prepaid in their entirety on the date
of consummation of such assignment.
SECTION 8.07. Compensation. The Borrower shall not be liable for
compensating any Bank under Sections 2.13, 8.03 and 8.04 for any funding losses,
increased costs or taxes incurred by such Bank more than 30 days prior to such
Bank's written notice of its intention to demand payment therefor.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its address or telex or
facsimile number set forth on the signature pages hereof, (y) in the case of any
Bank, at its address or telex or facsimile number set forth in its
Administrative Questionnaire or (z) in the case of any party, such other address
or telex or facsimile number as such party may hereafter specify for the purpose
by notice to the Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid or (iii) if given by any other means, when received at the address
specified in this Section; provided that notices to the Agent under Article II
or Article VIII shall not be effective until received.
50
<PAGE>
<PAGE>
SECTION 9.02. No Waivers. No failure or delay by the Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses of the Agent, including reasonable
fees and disbursements of special counsel for the Agent, in connection with the
preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Agent and each Bank, including reasonable fees and disbursements
of counsel, in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
reasonable out-of-pocket expenses of any kind (including, without limitation,
the reasonable fees and disbursements of counsel) which were actually incurred
by such Indemnitee in connection with any investigative, administrative or
judicial proceeding (whether or not such Indemnitee shall be designated a party
thereto) brought or threatened relating to or arising out of this Agreement or
any actual or proposed use of proceeds of Loans hereunder; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct.
SECTION 9.04. Sharing of Set-Offs. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other
51
<PAGE>
<PAGE>
Banks, and such other adjustments shall be made, as may be required so that all
such payments of principal and interest with respect to the Notes held by the
Banks shall be shared by the Banks pro rata; provided that nothing in this
Section shall impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness under the
Notes.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the scheduled maturity of any payment of
principal of or interest on any Loan or any fees hereunder or for termination of
any Commitment or (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any action under this
Section or any other provision of this Agreement.
SECTION 9.06. 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 Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Agent, such Bank 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 Bank in connection with such Bank's rights
and obligations under this Agreement. Any agreement pursuant to which any Bank
may grant such a participating interest shall provide that such Bank 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
52
<PAGE>
<PAGE>
or waiver of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i), (ii) or (iii) of
Section 9.05 without the consent of the Participant. The Borrower agrees that
each Participant shall, to the extent provided in its participation agreement,
be entitled to the benefits of Sections 2.13 and 2.15 and Article VIII with
respect to its participating interest. An assignment or other transfer which is
not permitted by subsection (c) or (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 (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and such Assignee
shall assume such rights and obligations, pursuant to an Assignment and
Assumption Agreement in substantially the form of Exhibit G hereto executed by
such Assignee and such transferor Bank, with (and subject to) the subscribed
consent of the Borrower and the Agent; provided that such assignment may, but
need not, include rights of the transferor Bank in respect of outstanding Money
Market Loans; and provided further that the interest of the Assignee shall be in
a minimum amount equivalent to an original Commitment of $15,000,000 and the
collective interest of the transferor Bank and its affiliates shall be in a
minimum amount equivalent to an original Commitment of $25,000,000 unless, in
the case of the transferor Bank and its affiliates, they have no Commitment
after giving effect to such assignment. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the Borrower
shall make appropriate arrangements so that, if required, a new Note is issued
to the Assignee. In connection with any such assignment, the transferor Bank
shall pay to the Agent an administrative fee for processing such assignment in
the amount of $2,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to the Borrower
and the Agent certification as to
53
<PAGE>
<PAGE>
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.03 or
8.04 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Borrower's prior
written consent or by reason of the provisions of Section 8.02, 8.03 or 8.04
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.06, disclose to the Assignee or Participant or proposed Assignee or
Participant any information relating to the Borrower or its Subsidiaries
furnished to such Bank by the Agent or by or on behalf of the Borrower; provided
that, prior to any such disclosure, such Assignee or Participant or proposed
Assignee or Participant shall agree to preserve in accordance with Section 9.11
the confidentiality of any confidential information described therein.
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance with
the laws of the State of New York. The Borrower hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Borrower irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
54
<PAGE>
<PAGE>
SECTION 9.09. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Confidentiality. Subject to Section 9.06(f), the
Banks shall hold all nonpublic information obtained pursuant to the requirements
of this Agreement and identified as such by the Borrower in accordance with such
Bank's customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices and in any event may
make disclosure reasonably required by a bona fide offeree or transferee in
connection with the contemplated transfer, or as required or requested by any
governmental authority or representative thereof, or pursuant to legal process,
or to its accountants, lawyers and other advisors, and shall require any such
offeree or transferee to agree (and require any of its offerees, transferees or
participants to agree) to comply with this Section 9.11.
55
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
AT&T CAPITAL CORPORATION
By ___________________________________
Title:
44 Whippany Road
Morristown, New Jersey 07962
Fax: (201) 397-3106
Commitments
$120,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By ___________________________________
Title:
$71,250,000 BARCLAYS BANK PLC
By ___________________________________
Title:
$71,250,000 THE CHASE MANHATTAN BANK, N.A.
By ___________________________________
Title:
<PAGE>
<PAGE>
Commitments
$71,250,000 CHEMICAL BANK
By ___________________________________
Title:
$71,250,000 CITIBANK, N.A.
By ___________________________________
Title:
$71,250,000 CREDIT LYONNAIS NEW YORK BRANCH
By ___________________________________
Title:
$71,250,000 THE FUJI BANK, LIMITED
By _____________________________________
Title:
$48,750,000 CREDIT SUISSE
By _____________________________________
Title:
By _____________________________________
Title:
<PAGE>
<PAGE>
Commitments
$48,750,000 DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By ___________________________________
Title:
By ___________________________________
Title:
$48,750,000 THE FIRST NATIONAL BANK OF
CHICAGO
By ___________________________________
Title:
$48,750,000 THE INDUSTRIAL BANK OF JAPAN,
LTD., NEW YORK BRANCH
By _____________________________________
Title:
<PAGE>
<PAGE>
Commitments
$48,750,000 MELLON BANK
By ___________________________________
Title:
$48,750,000 NATIONSBANK OF NORTH
CAROLINA, N.A.
By ___________________________________
Title:
$48,750,000 PNC BANK, NATIONAL ASSOCIATION
By ___________________________________
Title:
$48,750,000 ROYAL BANK OF CANADA
By _____________________________________
Title:
$48,750,000 SOCIETE GENERALE
By _____________________________________
Title:
<PAGE>
<PAGE>
Commitments
$48,750,000 THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By ___________________________________
Title:
$48,750,000 SWISS BANK CORPORATION
By ___________________________________
Title:
By ___________________________________
Title:
$26,250,000 ABN AMRO BANK N.V. NEW YORK
BRANCH
By ___________________________________
Title:
By __________________________________
Title:
$26,250,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By _____________________________________
Title:
$26,250,000 BANK OF BOSTON
By _____________________________________
Title:
<PAGE>
<PAGE>
Commitments
$26,250,000 BANK OF HAWAII
By ___________________________________
Title:
$26,250,000 THE BANK OF NEW YORK
By ___________________________________
Title:
$26,250,000 BANQUE PARIBAS
By ___________________________________
Title:
By ___________________________________
Title:
$26,250,000 CIBC INC.
By _____________________________________
Title:
$26,250,000 COMERICA BANK
By _____________________________________
Title:
<PAGE>
<PAGE>
Commitments
$26,250,000 COMMERZBANK AKTIENGESELLSCHAFT
NEW YORK BRANCH
By ___________________________________
Title:
By ___________________________________
Title:
$26,250,000 DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By ___________________________________
Title:
By ___________________________________
Title:
$26,250,000 THE NORTHERN TRUST COMPANY
By ___________________________________
Title:
$26,250,000 TRUST COMPANY BANK
By _____________________________________
Title:
$26,250,000 WACHOVIA BANK OF GEORGIA, N.A.
By _____________________________________
Title:
<PAGE>
<PAGE>
Commitments
$18,750,000 BANCA COMMERCIALE ITALIANA SpA
By ___________________________________
Title:
$18,750,000 BANCO CENTRAL HISPANOAMERICANO
S.A.
By ___________________________________
Title:
$18,750,000 THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED
By ___________________________________
Title:
$18,750,000 WESTPAC BANKING CORPORATION
By _____________________________________
Title:
_________________
Total Commitments
$1,500,000,000
_________________
_________________
<PAGE>
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By ___________________________________
Title:
60 Wall Street
New York, New York 10260-0060
Attention:
Telex number: 177615
<PAGE>
<PAGE>
EXHIBIT A
NOTE
New York, New York
, 19
For value received, AT&T Capital Corporation, a Delaware
corporation (the "Borrower"), promises to pay to the order of
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the maturity date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Loan on the dates and at the rate or rates provided for in
the Credit Agreement. All such payments of principal and interest shall be made
in lawful money of the United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New York, 60 Wall
Street, New York, New York.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding may be endorsed by the Bank on the schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
<PAGE>
<PAGE>
This note is one of the Notes referred to in and subject to the
terms of the $1,500,000,000 Credit Agreement dated as of June 30, 1995 among the
Borrower, the banks party thereto and Morgan Guaranty Trust Company of New York,
as Agent (as the same may be amended from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the mandatory and
optional prepayment hereof and the acceleration of the maturity hereof.
AT&T CAPITAL CORPORATION
By________________________
Title:
2
<PAGE>
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Notation
Date Loan Loan Repaid Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE>
<PAGE>
EXHIBIT B
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York
(the "Agent")
From: AT&T Capital Corporation
Re: $1,500,000,000 Credit Agreement (as amended,
the "Credit Agreement") dated as of June 30,
1995 among the Borrower, the Banks party
thereto and the Agent
We hereby give notice pursuant to Section 2.03 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount* Interest Period**
$
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base rate
is the London Interbank Offered Rate.]
- --------
* Amount must be $5,000,000 or a larger multiple of $1,000,000.
** Not less than one month (LIBOR Auction) or not less than 14 days
(Absolute Rate Auction), subject to the provisions of the definition
of Interest Period.
1
<PAGE>
<PAGE>
Terms used herein have the meanings assigned to them in the
Credit Agreement.
AT&T CAPITAL CORPORATION
By________________________
Title:
<PAGE>
<PAGE>
EXHIBIT C
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to AT&T
Capital Corporation (the "Borrower")
Pursuant to Section 2.03 of the $1,500,000,000 Credit Agreement
(as amended, the "Credit Agreement") dated as of June 30, 1995 among the
Borrower, the Banks parties thereto and the undersigned, as Agent, we are
pleased on behalf of the Borrower to invite you to submit Money Market Quotes to
the Borrower for the following proposed Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
$
Such Money Market Quotes should offer a Money
Market [Margin] [Absolute Rate]. [The applicable base rate
is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [4:00 P.M.]
[9:30 A.M.] (New York City time) on [date].
Terms used herein have the meanings assigned to them in the
Credit Agreement.
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By______________________
Authorized Officer
<PAGE>
<PAGE>
EXHIBIT D
Form of Money Market Quote
To: Morgan Guaranty Trust Company of New York,
as Agent
Re: Money Market Quote to AT&T Capital
Corporation (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the
following principal amounts, for the following
Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
$
$
[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed
$____________.]**
- ----------
* As specified in the related Invitation. ** Principal amount bid for each
Interest Period may not exceed principal amount requested. Specify aggregate
limitation if the sum of the individual offers exceeds the amount the Bank is
willing to lend. Bids must be made for $5,000,000 or a larger multiple of
$1,000,000.
1
<PAGE>
<PAGE>
We understand and agree that the offer(s) set forth above,
subject to the satisfaction of the applicable conditions set forth in the
$1,500,000,000 Credit Agreement (as amended, the "Credit Agreement") dated as of
June 30, 1995 among the Borrower, the Banks party thereto and yourselves, as
Agent, irrevocably obligates us to make the Money Market Loan(s) for which any
offer(s) are accepted, in whole or in part.
Terms used herein have the meanings assigned to them in the
Credit Agreement.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
- ----------
*** Not less than one month or not less than 14 days, as specified in the
related Invitation. No more than five bids are permitted for each Interest
Period.
**** Margin over or under the London Interbank Offered Rate determined
for the applicable Interest Period. Specify percentage (to the nearest 1/10,000
of 1%) and specify whether "PLUS" or "MINUS".
***** Specify rate of interest per annum (to the nearest 1/10,000th of 1%).
<PAGE>
<PAGE>
EXHIBIT E
OPINION OF
COUNSEL FOR THE BORROWER
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I am [General Counsel] [Assistant General Counsel] of AT&T
Capital Corporation (the "Borrower"), and as such, have acted as counsel for the
Borrower in connection with the $1,500,000,000 Credit Agreement (the "Credit
Agreement") dated as of June 30, 1995 among the Borrower, the banks listed on
the signature pages thereof and Morgan Guaranty Trust Company of New York, as
Agent. Terms defined in the Credit Agreement are used herein as therein defined.
This opinion is being rendered to you at the request of the Borrower pursuant to
Section 3.01(b) of the Credit Agreement.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware, and has all corporate
power and all governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except those which the
failure to have would not have a Material Adverse Effect.
<PAGE>
<PAGE>
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate power, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the certificate of incorporation or by-laws of the Borrower
or of any material agreement, judgment, injunction, order, decree or other
material instrument binding upon the Borrower or result in the creation or
imposition of any Lien on any asset of the Borrower.
3. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and the Notes constitute valid and binding obligations of the
Borrower, in each case enforceable against the Borrower in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
4. There is no action, suit or proceeding pending against, or to
the best of my knowledge threatened against, the Borrower or any of its
Consolidated Subsidiaries before any court or arbitrator or any governmental
body, agency or official, in which there is a reasonable probability of an
adverse decision which would have a Material Adverse Effect or which in any
manner draws into question the validity of the Credit Agreement or the Notes.
5. Each of the Borrower's Consolidated Subsidiaries which is a
corporation is a corporation validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate power and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted, except those which the failure to have would
not have a Material Adverse Effect.
I am a member of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, I express no opinion as to
the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without my prior written consent.
Very truly yours,
3
<PAGE>
<PAGE>
EXHIBIT F
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENT
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the $1,500,000,000
Credit Agreement (the "Credit Agreement") dated as of June 30, 1995 among AT&T
Capital Corporation, a Delaware corporation (the "Borrower"), the banks listed
on the signature pages thereof (the "Banks") and Morgan Guaranty Trust Company
of New York, as Agent (the "Agent"), and have acted as special counsel for the
Agent for the purpose of rendering this opinion pursuant to Section 3.01(c) of
the Credit Agreement. Terms defined in the Credit Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate power and
have been duly authorized by all necessary corporate action.
1
<PAGE>
<PAGE>
2. The Credit Agreement constitutes a valid and binding agreement
of the Borrower and the Notes constitute valid and binding obligations of the
Borrower, in each case enforceable against the Borrower in accordance with their
respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware. In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other person without our prior written consent.
Very truly yours,
2
<PAGE>
<PAGE>
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), AT&T CAPITAL CORPORATION (the
"Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the $1,500,000,000 Credit Agreement dated as of June 30,
1995 among the Borrower, the Assignor and the other Banks party thereto, as
Banks, and the Agent (as amended, the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Committed Loans to the Borrower in an aggregate principal
amount at any time outstanding not to exceed $__________;
WHEREAS, [Committed] Loans made to the Borrower by the Assignor
under the Credit Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion of
its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding [Committed
Loans], and the Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms
not otherwise defined herein shall have the respective
meanings set forth in the Credit Agreement.
<PAGE>
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the corresponding portion of the principal amount of the
[Committed] Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Borrower and
the Agent and the payment of the amounts specified in Section 3 hereof required
to be paid on the date hereof (i) the Assignee shall, as of the date hereof,
succeed to the rights and be obligated to perform the obligations of a Bank
under the Credit Agreement with a Commitment in an amount equal to the Assigned
Amount, and (ii) the Commitment of the Assignor shall, as of the date hereof, be
reduced by a like amount and the Assignor released from its obligations under
the Credit Agreement to the extent such obligations have been assumed by the
Assignee. The assignment provided for herein shall be without recourse to the
Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them. It is
understood that commitment and/or facility fees accrued to the date hereof in
respect of the Assigned Amount are for the account of the Assignor and such fees
accruing from and including the date hereof are for the account of the Assignee.
Each of the Assignor and the Assignee hereby agrees that if it receives any
amount under the Credit Agreement which is for the account of the other party
hereto, it shall receive the same for the account of such other party to the
extent of such other party's interest therein and shall promptly pay the same to
such other party.
SECTION 4. Consent of the Borrower and the Agent. This Agreement
is conditioned upon the consent of the Borrower and the Agent pursuant to
Section 9.06(c) of the Credit Agreement. The execution of this Agreement by the
Borrower and the Agent is evidence of this consent. Pursuant to Section 9.06(c)
the Borrower agrees to execute and deliver a Note payable to the order of the
Assignee to evidence the assignment and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection
2
<PAGE>
<PAGE>
with, and shall have no responsibility with respect to, the solvency, financial
condition, or statements of the Borrower, or the validity and enforceability of
the obligations of the Borrower in respect of the Credit Agreement or any Note.
The Assignee acknowledges that it has, independently and without reliance on the
Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By_________________________
Title:
[ASSIGNEE]
By__________________________
Title:
AT&T CAPITAL CORPORATION
By__________________________
Title:
3
<PAGE>
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By__________________________
Title:
4
<PAGE>
<PAGE>
EXHIBIT 10(t)
Form 10-K for 1995
File No. 1-11237
As Amended
on October 21, 1994
AT&T CAPITAL CORPORATION
1993 DEFERRED COMPENSATION PLAN
1. PURPOSE OF PLAN. The purpose of the AT&T Capital Corporation
1993 Deferred Compensation Plan (the "Plan") is to permit each eligible employee
of AT&T Capital Corporation, a Delaware corporation (the "Company"), and its
Subsidiaries (as defined in Section 11 below) to defer receipt of all or a
portion of certain incentive compensation payable to such employee by the
Company or such Subsidiaries until the time set forth herein.
2. PARTICIPATION.
(a) ELIGIBILITY: Each employee who is a "Participant" in the AT&T
Capital Corporation 1993 Share Performance Incentive Plan (the "SPIP") or who is
granted a performance unit award under the Company's 1993 Long Term Incentive
Plan ("LTIP") during any Deferral Year (as defined below) and any other employee
or class of employees designated by the Committee (as defined below) shall be
entitled to elect to participate in this Plan in respect of all or a portion of
his compensation earned during such Deferral Year pursuant to a performance unit
award granted under the 1993 Annual Incentive Plan, the 1995 Annual Incentive
Plan, the 1995 Senior Executive Annual Incentive Plan (collectively, the "AIP"),
the LTIP, the SPIP, and any other incentive compensation plan selected by the
Committee (collectively, the "Incentive Plans"). A "Deferral Year" for the
purposes hereof shall mean the period beginning on the Effective Date of this
Plan pursuant to Section 15 below and ending on December 31, 1993 and each
twelve-month period beginning on January 1, 1994 or on any subsequent January 1
during the term of this Plan.
-1-
<PAGE>
<PAGE>
(b) EMPLOYEE DEFERRALS. Each employee who is eligible to
participate in this Plan for a Deferral Year pursuant to paragraph (a) of this
Section 2 may do so by filing an election to defer the receipt of all or a
portion of any compensation to be earned for such Deferral Year under any or all
Incentive Plans. Such election shall be made on a form provided by and filed
with the Committee (or its designated agent) not later than:
(i) in the case of compensation payable with respect to a three
year performance period under the SPIP or in connection with the
applicable performance period regarding a performance unit awarded under
the LTIP, no later than December 31 of the calendar year ending
immediately before the end of such performance period;
(ii) in the case of compensation payable under the AIP, no later
than September 30 of the year for which such compensation is payable;
(iii) in the case of compensation payable under any other
performance based Incentive Plan, at such time prior to the time when
such compensation can be accurately calculated as the Committee shall
determine; and
(iv) in the case of compensation payable under any other
Incentive Plan, the day immediately preceding the first day of each
Deferral Year for which such compensation is to be earned.
Such election shall specify the amount or percentage of such compensation to be
deferred. An election to defer compensation once made, may not be revoked or
changed by the employee. Notwithstanding the foregoing, an election to defer
compensation shall not be applicable to any amount of compensation which becomes
payable pursuant to an Incentive Plan on account of or after a "Change in
Control" of the Company as defined in such Incentive Plan.
3. DEFERRED COMPENSATION ACCOUNT. Compensation deferred by an
employee under Section 2 shall be credited to a deferred compensation
bookkeeping account, established on the Company's books on behalf of the
employee (a "Deferred Compensation Account"), as of the first day of the month
coinciding with or next following the day on which, but for the election under
such Section 2, such compensation would have been payable to the employee. As of
the last day of each Deferral Year, an amount in respect of interest at (i) a
rate of six per cent (6%) per annum (or, if higher, the applicable Federal rate
for an
-2-
<PAGE>
<PAGE>
obligation with a term of seven years determined under Section 1274(d) of the
Internal Revenue Code of 1986, as amended, in effect for the month in which
occurs the later of (A) the Effective Date, and (B) the date on which the
employee first becomes eligible to participate in the Plan), or (ii) such other
rate as the Committee may from time to time determine, shall be credited to the
balance of each Deferred Compensation Account. In addition, an employee's
Deferred Compensation Account shall be charged with any payments made to the
employee out of such account during such Deferral Year pursuant to Section 4(d).
Each employee who has elected to defer compensation hereunder shall receive
written notice of his Deferred Compensation Account balance as soon as
practicable following the last day of each Deferral Year.
4. PAYMENT OF DEFERRED COMPENSATION. Amounts credited to an
employee's Deferred Compensation Account shall be distributed by the Company to
or on behalf of the employee as provided in this Section.
(a) IN GENERAL. Except as otherwise provided herein, the balance
of an employee's Deferred Compensation Account shall be distributed to or on
behalf of the employee on the first to occur of (i) the date certain, if any,
specified by the employee in the employee's deferral election pursuant to
Section 2 and (ii) at such time as the Committee shall determine following the
termination of the employee's employment by the Company and its Subsidiaries,
but not later than March 15th of the calendar year next following the calendar
year in which such termination of employment occurs. If an employee makes more
than one election to defer compensation pursuant to Section 2, the employee may
specify in any such election a different date certain for distribution of the
amounts deferred pursuant to such election that is different from the date
certain specified in any other such election and, if such a different date
certain is specified, the Company shall establish a separate Deferred
Compensation Account (which shall be credited and charged in accordance with the
applicable provisions of this Plan) in respect of the amounts deferred with
respect to each such date.
(b) DISTRIBUTIONS UPON DEATH. If an employee's employment by the
Company and its Subsidiaries is terminated by reason of the employee's death,
the value of the employee's Deferred Compensation Account shall be distributed,
at the time specified in paragraph (a) above, to the employee's estate, provided
that, if so determined by the Committee, an employee may, in the manner
established by the Committee, designate a beneficiary to exercise the rights of
the employee under this Plan upon the death of the employee.
-3-
<PAGE>
<PAGE>
(c) MANNER OF PAYMENT. Amounts credited to an employee's Deferred
Compensation Account shall be paid in one lump sum payment on the date described
in paragraph (a) above, unless such employee elects no later than the last day
of the calendar year prior to the calendar year in which such employee's
termination of employment occurs to receive payment in not less than two nor
more than 10 annual installments. The amount of each installment shall be
determined by dividing the amount credited to the employee's Deferred
Compensation Account as of the date of distribution (but before reduction by the
amount of the current distribution) by the number of then remaining installments
(including the current installment). Such election shall be irrevocable, except
as provided in paragraph (d) below. In the event the employee's termination of
employment is by reason of the employee's death, the employee's beneficiary
shall receive distribution of the balance of the employee's Deferred
Compensation Account in one lump sum payment, unless the employee made an
election otherwise pursuant to this Section.
(d) HARDSHIP. An employee with a Deferred Compensation Account
may request at any time a withdrawal of part or all of the amount then credited
to the employee's Deferred Compensation Account on account of "hardship" (as
defined below) by submitting a written request to the Vice President - Human
Resources accompanied by evidence that his or her financial condition
constitutes a hardship. The Vice President - Human Resources shall review the
employee's request and determine the extent, if any, to which such request is
justified. Any such withdrawal shall be limited to an amount reasonably
necessary to meet the hardship, but not more than the amount of benefit to which
the employee would be entitled if his or her employment were terminated.
(e) CHANGE IN CONTROL. Notwithstanding any provision of the Plan
to the contrary, upon the occurrence of a "Change in Control" of the Company (as
defined below), the balance of each Deferred Compensation Account shall be
determined pursuant to Section 3 as if such date were the last day of a Deferral
Year and the amount thereof shall be paid as soon as is practicable thereafter,
but not more than three (3) business days after the occurrence of such Change in
Control.
(f) ALTERNATE DISTRIBUTEES. Any distribution to a person who at
the time of payment is under legal disability or who is in the judgment of the
Company unable to care for his or her affairs because of illness or accident may
be distributed to the spouse or any child or personal representatives of such
person or to any other individual or entity deemed by the Company to have
-4-
<PAGE>
<PAGE>
incurred expenses for such person. Any such distribution shall be a complete
discharge of the Company for such payment under this Plan.
5. NATURE OF THE COMPANY'S OBLIGATIONS. The amounts deferred
hereunder will be unfunded for purposes of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Employee Retirement Income Security Act of 1974 as
amended ("ERISA"). In any event, the Company's obligation hereunder shall
constitute a general, unsecured obligation, payable solely out of its general
assets, and no employee or other person shall have any right to any specific
assets. This Plan is intended to be an unfunded plan primarily for the benefit
of a select group of management or highly compensated employees within the
meaning of Title I of ERISA.
6. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. The
Committee shall have full power and authority to: (i) interpret and administer
this Plan and any instrument or agreement entered into under this Plan; (ii)
establish such rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of this Plan; (iii) make any other
determination and take any other action that the Committee deems necessary or
desirable for administration of this Plan, including the exclusion of any
employee or employees from participation if the Committee believes such
exclusion is necessary for this Plan to be primarily for the benefit of a select
group of management or highly compensated employees within the meaning of Title
I of ERISA.
(b) Decisions of the Committee shall be final, conclusive and
binding upon all persons, including the Company, any stockholder of the Company,
and any employee of the Company or of any Subsidiary.
(c) The Committee may employ attorneys, consultants, accountants
or other persons (who may be attorneys, consultants, accountants or persons
performing other services for the Company or any affiliate), and the Committee,
the Company and its officers and directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. No member of the Company's
Board of Directors or the Committee, nor any officer, director or employee of
the Company or any Subsidiary acting on behalf of the Board of Directors or the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to this Plan, and all
members of the Company's Board of Directors and the Committee
-5-
<PAGE>
<PAGE>
and each officer or employee of the Company or a Subsidiary acting on their
behalf shall be fully indemnified and protected by the Company in respect of any
such action, determination or interpretation.
7. UNFUNDED STATUS. The claims of any employee hereunder shall be
solely those of a general unsecured creditor of the Company or any Subsidiary.
This Plan constitutes a mere promise by the Company and its Subsidiaries to make
benefit payments in the future. The Company or any Subsidiary may, in its sole
discretion, choose to invest its assets in one or more life insurance policies
insuring the lives of any employee with a Deferred Compensation Account, and, if
so, such employee shall, as a condition of the employee's participation in this
Plan, take any action as shall be reasonably requested by the Company or such
Subsidiary, including submitting to a physical examination requested by an
insurance company, to enable the Company or such Subsidiary to obtain any such
life insurance policy. Any such life insurance policy shall be and remain the
property of the Company or such Subsidiary. Nothing in this Plan shall be
construed as granting any employee any interest in any such insurance policy or
in any other asset of the Company or any Subsidiary.
8. NONASSIGNABILITY. The rights of employees and other persons
hereunder may not be sold, transferred, assigned, pledged, hypothecated or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process, otherwise than by will or by the
laws of descent and distribution or as otherwise provided in Section 4(b).
9. AMENDMENT TO THE PLAN. the Company may, in its sole discretion
and without the consent of any employee or beneficiary, amend this Plan at any
time; provided, however, that no amendment shall reduce the balance of the
Deferred Compensation Account of any employee as of the date immediately before
the adoption of such amendment.
10. NO EMPLOYMENT CONTRACT. Nothing in this Plan shall be
interpreted as conferring any right on any employee to remain employed by the
Company or any Subsidiary for any stated period of time or otherwise change the
employee's employment relationship with the Company or such Subsidiary from an
employment at will relationship.
-6-
<PAGE>
<PAGE>
11. MEANING OF CERTAIN TERMS. For the purposes hereof, the
following terms shall have the meanings set forth below:
"Change in Control" shall mean the occurrence of any of the
following events:
(i) An acquisition (other than in a non-control transaction, as
defined in clause (iii) below) of any shares of capital stock or other
securities of the Company that are generally entitled to vote in
elections for directors ("Voting Securities") by any "person" or "group"
of persons (as such terms are used in Sections 13 and 14 of the
Securities Exchange Act or 1934, as amended), other than the Company,
any Subsidiary or any employee benefit plan (or a trust forming a part
thereof) maintained by the Company or any Subsidiary as a result of
which such person or group becomes the "beneficial owner" (as such term
is used in Section 13 of the Securities Exchange Act of 1934, as
amended) of Voting Securities representing fifteen percent (15%) or more
of the combined voting power of all Voting Securities then outstanding;
provided that no such acquisition shall be deemed to give rise to a
Change in Control so long as, after giving effect to such acquisition,
AT&T Corp. (formerly American Telephone and Telegraph Company), a New
York corporation, remains the beneficial owner of Voting Securities
representing a greater percentage of the combined voting power of all
Voting Securities then outstanding than is represented by the Voting
Securities beneficially owned by such person or group; provided,
further, that an acquisition of Voting Securities directly from the
Company or any Subsidiary shall not be deemed to give rise to a Change
in Control if, immediately prior to such acquisition, no person or group
is directly or indirectly in "control" of the Company (as such term is
defined in Rule 405 under the Securities Act of 1933, as amended);
(ii) The individuals who, as of the date of the first sale of
shares of the Company's common stock, $.01 par value ("Shares") in the
1993 initial public offering of the Company, are members of the
Company's Board of Directors (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the Board; provided,
however, that if the election, or nomination for election by the
Company's stockholders, of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall, for
the purposes of this definition, be considered a member of the Incumbent
Board; provided, further, however, that no individual shall be
considered a member of the Incumbent Board if
-7-
<PAGE>
<PAGE>
such individual initially assumed office as a result of either an actual
or threatened "election contest" (as described in Rule 14a-11 under the
Securities Exchange Act of 1934, as amended) or other actual or
threatened solicitation of proxies or consents by or on behalf of any
person or group other than the Board (a "proxy contest"), including by
reason of any agreement intended to avoid or settle any election contest
or proxy contest; or
(iii) The approval by the requisite vote of the Company's
stockholders of:
(A) a merger, consolidation or reorganization
involving the Company, unless (1) the stockholders of the
Company, immediately before such merger, consolidation or
reorganization, own, directly or indirectly immediately following
such merger, consolidation or reorganization, at least sixty
percent (60%) of the combined voting power of the outstanding
voting securities of the corporation surviving such merger,
consolidation or reorganization (the "surviving corporation") in
substantially the same proportion as their ownership of the
Voting Securities of the Company immediately prior to such
merger, consolidation or reorganization, (2) the individuals who
were members of the Incumbent Board immediately prior to the
execution of the agreement providing for such merger,
consolidation or reorganization constitute at least two-thirds of
the members of the board of directors of the surviving
corporation and (3) no person (other than the Company, any
Subsidiary any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the surviving corporation or
any Subsidiary Company, or any person who, immediately prior to
such merger, consolidation or reorganization had beneficial
ownership of fifteen percent (15%) or more of the then
outstanding Voting Securities of the Company) has beneficial
ownership of fifteen percent (15%) or more of the combined voting
power of the surviving corporation's then outstanding voting
securities (a transaction meeting the criteria set forth in the
foregoing clauses (1) through (3) being sometimes referred to
herein as a "non-control transaction");
(B) A complete liquidation or dissolution of the
Company; or
-8-
<PAGE>
<PAGE>
(C) An agreement for the sale or other disposition
of all or substantially all of the assets of the Company to any
person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred solely because any person or group becomes the beneficial owner of more
than the permitted amount of the outstanding Voting Securities of the Company as
a result of an acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of Voting Securities owned by such person or group, provided that if (i)
a Change in Control would have been deemed to have occurred but for the
operation of this sentence as a result of such acquisition of Voting Securities
by the Company and (ii) such person or group thereupon or thereafter becomes the
beneficial owner of any additional Voting Securities resulting in an increase in
the percentage of the then outstanding Voting Securities beneficially owned by
such person or group (and which percentage is in excess of fifteen percent
(15%)), then a Change in Control shall be deemed to have occurred at the time of
such acquisition of beneficial ownership of such additional Voting Securities by
such person or group.
"Committee" shall mean the Compensation Committee of the Board of
Directors of the Company; provided that the Board of Directors may otherwise
appoint (i) the Board of Directors or (ii) a committee consisting of two or more
members of the Board of Directors, to act as the Committee, and provided further
that upon a Change in Control of the Company, the Committee shall be the
Committee as in existence immediately before the occurrence of such Change in
Control.
"Hardship" shall mean a severe financial hardship to an employee
resulting from a sudden and unexpected illness or accident of the employee or a
dependent (within the meaning of Section 152(a) of the Internal Revenue Code of
1986, as amended (the "Code")) of the employee, loss of the employee's property
due to casualty, or other similar extraordinary and unforeseeable circumstances,
arising from events beyond the employee's control. Whether circumstances
constitute a hardship depends on the facts of each case, but in any case does
not include a hardship that may be relieved:
(i) through reimbursement or compensation by insurance or
otherwise;
-9-
<PAGE>
<PAGE>
(ii) by liquidation of the employee's assets to the extent that
liquidation itself would not cause such a severe financial hardship; or
(iii) by ceasing to defer receipt of any compensation not yet
earned.
The need to send an employee's child to college and the desire to purchase a
home shall not constitute hardships.
"Subsidiary" shall mean (i) any individual, corporation,
partnership, association, joint stock company, trust or unincorporated
organization which is controlled by the Company and (ii) any other such entity,
association or organization in which the Company has a significant equity
interest, as determined by the Committee.
As used herein, employment by the Company shall include employment by any
Subsidiary. References in this Agreement to sections of the Code or ERISA shall
be deemed to refer to any successor section of the Code or ERISA or any
successor law.
12. SUCCESSORS. This Plan shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of any employee, acquire any rights hereunder.
13. GOVERNING LAW. This Plan shall be governed by, and
interpreted in accordance with, the internal laws of the State of New Jersey.
14. TERMINATION OF THE PLAN. The Company may, in its sole
discretion without the consent of any employee or beneficiary, terminate the
Plan at any time by giving written notice thereof to each employee with a
Deferred Compensation Account. All amounts credited to Deferred Compensation
Accounts shall be paid to the persons entitled thereto at such time and in such
manner as the Company shall determine, but not later than payments would have
been made had the Plan not been terminated.
15. EFFECTIVE DATE. This Plan shall be effective as of the date
that shares of the Company's common stock, $.01 par value, are first offered for
sale to the public.
-10-
<PAGE>
<PAGE>
EXHIBIT 10(y)
Form 10-K for 1995
File No. 1-11237
AT&T CAPITAL CORPORATION
EXECUTIVE BENEFIT PLAN
(As Amended and Restated
Effective as of December 4, 1995)
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION
EXECUTIVE BENEFIT PLAN
(As Amended and Restated Effective as of December 4, 1995)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE I
ESTABLISHMENT AND PURPOSES
1.1 Establishment................................................. 1
1.2 Purpose....................................................... 1
ARTICLE II
DEFINITIONS
2.1 Accrued Retirement Benefit.................................... 2
2.2 Actuarial Assumptions......................................... 2
2.3 Actuarial Equivalent.......................................... 3
2.4 Affiliate..................................................... 3
2.5 Annual Offset Benefits........................................ 4
2.6 AT&T Pension Plans............................................ 4
2.7 Automatic Joint and Surviving Spouse
Annuity...................................................... 4
2.8 AT&T Capital.................................................. 4
2.9 Board......................................................... 4
2.10 Cause......................................................... 5
2.11 Change in Control............................................. 6
2.12 CLT........................................................... 10
2.13 Code.......................................................... 10
2.14 Commencement Date............................................. 10
2.15 Committee..................................................... 10
2.16 Credited Service.............................................. 10
2.17 Date of Termination .......................................... 11
2.18 Deferral Date................................................. 11
2.19 Early Commencement Date....................................... 11
2.20 Early Retirement Date......................................... 11
2.21 Effective Date CEO............................................ 11
2.22 Excess Plans.................................................. 11
2.23 Final Annual Pay.............................................. 11
2.24 Good Reason................................................... 13
2.25 Gross Annual Benefit.......................................... 16
2.26 Married Participant........................................... 16
2.27 Nonqualifying Termination..................................... 16
2.28 Normal Retirement Date........................................ 16
2.29 Participant................................................... 17
</TABLE>
-i-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
2.30 Plan Administrator............................................ 17
2.31 Plan Year..................................................... 17
2.32 Retirement Benefits........................................... 17
2.33 RSP........................................................... 17
2.34 SBL........................................................... 17
2.35 SBU........................................................... 17
2.36 SERP.......................................................... 17
2.37 Single Life Annuity........................................... 17
2.38 Spouse........................................................ 17
2.39 Subsidiary.................................................... 18
2.40 Survivor Benefit.............................................. 18
2.41 Tier 1 Participant............................................ 18
2.42 Tier 2 Participant............................................ 18
2.43 Tier 3 Participant............................................ 18
2.44 Vested Participant............................................ 18
2.45 Vested Retirement Date........................................ 18
2.46 Vesting Event................................................. 18
2.47 Voting Securities............................................. 19
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility................................................... 19
3.2 Maintaining Participant Status................................ 20
ARTICLE IV
RETIREMENT BENEFITS
4.1 Eligibility for Retirement Benefits........................... 20
4.2 Amount of Retirement Benefits................................. 21
4.3 Commencement.................................................. 23
ARTICLE V
ALTERNATIVE FORMS OF PAYMENT
5.1 Automatic Joint and Surviving Spouse Annuity.................. 24
5.2 Other Optional Forms of Payment............................... 28
ARTICLE VI
DEATH BENEFITS
6.1 Preretirement Surviving Spouse Benefits....................... 29
6.2 Amount........................................................ 30
6.3 Commencement.................................................. 31
</TABLE>
-ii-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE VII
RIGHTS OF PARTICIPANTS
7.1 Vesting....................................................... 32
7.2 Change in Control and Involuntary Termination Provisions...... 33
7.3 Contractual Obligation........................................ 34
7.4 Unsecured Interest............................................ 34
7.5 Employment.................................................... 35
ARTICLE VIII
NONTRANSFERABILITY
8.1 Nontransferability............................................ 35
ARTICLE IX
ADMINISTRATION
9.1 Administration................................................ 35
9.2 Severability.................................................. 36
9.3 Expenses...................................................... 36
ARTICLE X
APPLICABLE LAW
10.1 Applicable Law................................................. 36
10.2 Successors and Assigns......................................... 36
ARTICLE XI
WITHHOLDING OF TAXES
11.1 Tax Withholding............................................... 38
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification............................................... 39
ARTICLE XIII
CLAIMS PROCEDURE
</TABLE>
-iii-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
13.1 Claims Procedure.............................................. 39
</TABLE>
-iv-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 Amendment and Termination..................................... 41
APPENDICES
A Tier 1 Participants......................................... A-1
B AT&T Unisex Table............................................ B-1
C AT&T Active Table............................................ C-1
-v-
</TABLE>
<PAGE>
<PAGE>
AT&T CAPITAL CORPORATION
EXECUTIVE BENEFIT PLAN
(As Amended and Restated Effective as of December 4, 1995)
ARTICLE I
ESTABLISHMENT AND PURPOSES
1.1 Establishment. AT&T Capital Corporation (hereinafter "AT&T Capital")
heretofore established and presently maintains an unfunded supplemental
executive retirement plan, known as the "AT&T CAPITAL CORPORATION EXECUTIVE
BENEFIT PLAN" (hereinafter referred to as the "Plan"). The Plan which was
initially effective as of January 1, 1994, is hereby amended and restated,
effective as of December 4, 1995, to reflect recent design changes, including
the addition of change-in-control provisions.
1.2 Purpose. AT&T Capital desires to provide supplemental retirement
benefits for certain individuals who have been in the employ of AT&T Capital and
who are now serving as executive officers of AT&T Capital. AT&T Capital believes
it is in its best interest that such individuals' services be retained. In order
to induce such individuals to continue in the employ of AT&T Capital and in
recognition of such individuals' service, and in order to attract qualified
executives to AT&T Capital, AT&T Capital hereby amends and restates the Plan as
set forth herein.
The Plan is an unfunded pension plan for a "select group of management
and highly-compensated Participants"
<PAGE>
<PAGE>
within the meaning of sections 201(2), 301(3), and 401(a)(1) of the Employee
Retirement Income Security Act of 1974, as amended.
ARTICLE II
DEFINITIONS
Except where otherwise indicated by the context, any masculine
terminology used herein shall also include the feminine gender, and the
definition of any term herein in the singular shall also include the plural.
Whenever used herein, the following terms shall have the meaning set forth
below:
2.1 "Accrued Retirement Benefit" shall mean, as of any given date, the
monthly amount of Retirement Benefits payable to a Participant, determined in
accordance with Section 4.2, based on the Participant's actual Credited Service
and Final Annual Pay as of such given date.
2.2 "Actuarial Assumptions" means, for purposes of determining amounts
under Sections 4.2 and 6.2(b), with respect to the RSP and the Excess Plans, (i)
assuming a hypothetical uniform points allocation account ("Hypothetical
Account") consisting solely of the uniform points allocation contributions made
under the RSP or the Excess Plans, as applicable, (ii) assuming contributions to
the Hypothetical Account are made at the same time as the uniform points
allocation contributions are actually made to
-2-
<PAGE>
<PAGE>
the Participant's accounts in the RSP or the Excess Plans, as applicable, (iii)
determining the accumulated value of the Hypothetical Account as of the
Commencement Date, assuming a rate of return for the Hypothetical Account in any
given year predicated on the annual yield on a ten-year U.S. Treasury Bond,
recalculated as of the first day of such year (regardless of how a Participant's
uniform points allocations are actually invested in the RSP and the Excess
Plans), and (iv) converting the accumulated value of the Hypothetical Account
into an Actuarial Equivalent Single Life Annuity based on a discount rate of six
(6) percent and the AT&T Unisex Table in effect as of the Participant's Date of
Termination.
2.3 "Actuarial Equivalent" as used with respect to a stated benefit
shall mean a benefit or amount which has the same present value on the date
payment commences as such stated benefit. Where no specifically applicable
factor or Actuarial Assumptions are set forth for determining an Actuarial
Equivalent value, the determinations of actuarial equivalence shall be based on
a discount rate of six (6) percent, the AT&T Unisex Table for determining
post-termination mortality, and the AT&T Active Table (with male rates and
female rates calculated separately) for determining pre-termination mortality,
both in effect as of the Participant's Date of Termination.
-3-
<PAGE>
<PAGE>
2.4 "Affiliate" means any corporation, trade, or business if it and AT&T
Capital are members of a controlled group of corporations, or under common
control, or are members of an affiliated service group (within the meaning of
sections 414(b), 414(c), and 414(m) of the Code, respectively).
2.5 "Annual Offset Benefits" shall have the meaning set forth in Section
4.2.
2.6 "AT&T Pension Plans" mean (i) the AT&T Management Pension Plan (the
"AT&T MPP"), (ii) the AT&T Pension Plan, and (iii) the NCR Corporation Pension
Plan, each as in effect on December 31, 1993.
2.7 "Automatic Joint and Surviving Spouse Annuity" means a contingent
annuity that provides a level unreduced monthly benefit to the Participant for
his lifetime and, upon his death, an annuity for the life of his surviving
Spouse in a monthly amount equal to 45 percent of the monthly amount payable to
the Participant during his life.
2.8 "AT&T Capital" means AT&T Capital Corporation and its successors and
assigns. The term "AT&T Capital" as used herein shall also include any
wholly-owned Subsidiary of AT&T Capital unless such Subsidiary is specifically
excluded from participation under the Plan in a resolution adopted by the Board.
-4-
<PAGE>
<PAGE>
2.9 "Board" means the Board of Directors of AT&T Capital.
2.10 "Cause" means any of the following:
(a) A determination by the Board that a Participant has
committed a material breach of the duties and responsibilities of the
Participant that has caused significant adverse harm to AT&T Capital,
which breach is (1) demonstrably willful and deliberate, (2) committed
in bad faith or without reasonable belief that such breach is in the
best interests of AT&T Capital and (3) not remedied within a reasonable
period of time after receipt of written notice from AT&T Capital
specifying such breach;
(b) The determination by the Board that the Participant has
defrauded AT&T Capital; or
(c) The Participant's conviction of, or plea of guilty or nolo
contendere to, a felony.
Cause may be determined by the Committee if such authority is expressly given in
writing to the Committee by the Board. Cause shall not exist unless and until
AT&T Capital has delivered to the Participant a copy of a resolution duly
adopted by three-quarters (3/4) of the Board (or a majority of the Committee) at
a meeting of the Board (or the Committee) called and held for such purpose
(after reasonable notice to the Participant and an opportunity for
-5-
<PAGE>
<PAGE>
the Participant, together with counsel, to be heard before the Board or the
Committee, as the case may be), finding that in the good faith opinion of the
Board (or the Committee) the Participant was guilty of the conduct set forth in
this Section 2.10 and specifying the particulars thereof in detail.
-6-
<PAGE>
<PAGE>
2.11 "Change in Control" means any of the following events:
-7-
<PAGE>
<PAGE>
(a) An acquisition (other than in a "non-control transaction",
as defined in clause (c) below) of any Voting Securities by any "person"
or "group" of persons (as such terms are used in Sections 13 and 14 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than AT&T Capital, any Subsidiary or any employee benefit plan (or
a trust forming a part thereof) maintained by AT&T Capital or any
Subsidiary, as a result of which such person or group becomes, directly
or indirectly, the "beneficial owner" (as such term is used in Section
13 of the Exchange Act) of Voting Securities representing fifteen
percent (15%) or more of the combined voting power of all Voting
Securities then outstanding; provided that no such acquisition shall be
deemed to give rise to a Change in Control so long as, after giving
effect to such acquisition, AT&T remains the beneficial owner of Voting
Securities representing a greater percentage of the combined voting
power of all Voting Securities then outstanding than is represented by
the Voting Securities beneficially owned by such person or group;
provided, however, that an acquisition of Voting Securities directly
from AT&T Capital or any Subsidiary shall not be deemed to give rise to
a Change in Control if, immediately prior to such acquisition, no person
or
-8-
<PAGE>
<PAGE>
group is directly or indirectly in "control" of AT&T Capital (as such
term is defined in Rule 405 under the Securities Act of 1933, as
amended);
(b) The individuals who, as of January 1, 1995, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the Board; provided, however, that if the election
or nomination for election by AT&T Capital's stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for the purposes of this definition, be
considered a member of the Incumbent Board; provided, further, however,
that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of either an
actual or threatened "election contest" (as described in Rule 14a-11
under the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of any person or group other than
the Board (a "proxy contest"), including by reason of any agreement
intended to avoid or settle any election contest or proxy contest;
-9-
<PAGE>
<PAGE>
(c) The approval by the requisite vote of AT&T Capital's
shareholders of:
-10-
<PAGE>
<PAGE>
(i) a merger, consolidation or reorganization involving
AT&T Capital, unless (A) the stockholders of AT&T Capital,
immediately before such merger, consolidation or reorganization,
own, directly or indirectly, immediately following such merger,
consolidation or reorganization, at least sixty percent (60%) of
the combined voting power of the outstanding voting securities
of the corporation surviving such merger, consolidation or
reorganization (the "surviving corporation") in substantially
the same proportion as their ownership of the Voting Securities
of AT&T Capital immediately prior to such merger, consolidation
or reorganization, (B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members of
the board of directors of the surviving corporation and (C) no
person (other than AT&T Capital, any Subsidiary, any employee
benefit plan (or any trust forming a part thereof) maintained by
AT&T Capital, the surviving corporation or any Subsidiary, or
any person who, immediately prior to such merger, consolidation
or reorganization
-11-
<PAGE>
<PAGE>
had beneficial ownership of fifteen percent (15%) or more of the
then outstanding Voting Securities of AT&T Capital) has
beneficial ownership of fifteen percent (15%) or more of the
combined voting power of the surviving corporation's then
outstanding voting securities (a transaction meeting the
criteria set forth in the foregoing clauses (A) through (C)
being sometimes referred to herein as a "non-control
transaction");
(ii) a complete liquidation or dissolution of AT&T
Capital; or
(iii) an agreement for the sale or other disposition of
all or substantially all of the assets of AT&T Capital to any
person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred solely because any person or group becomes the beneficial owner of more
than the permitted amount of the outstanding Voting Securities of AT&T Capital
as a result of an acquisition of Voting Securities by AT&T Capital which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of Voting Securities owned by such person or group, provided that if (i)
a Change in Control would have been deemed to have occurred but for the
operation of this
-12-
<PAGE>
<PAGE>
sentence as a result of such acquisition of Voting Securities by AT&T Capital
and (ii) such person or group thereupon or thereafter becomes the beneficial
owner of any additional Voting Securities resulting in an increase in the
percentage of the then outstanding Voting Securities beneficially owned by such
person or group (and which percentage is in excess of fifteen percent (15%)),
then a Change in Control shall be deemed to have occurred at the time of such
acquisition of beneficial ownership of such additional Voting Securities by such
person or group.
2.12 "CLT" means the AT&T Capital Corporate Leadership Team, and any
successor thereto.
2.13 "Code" means the Internal Revenue Code of 1986, as amended.
2.14 "Commencement Date" shall have the meaning set forth in Section
4.2.
2.15 "Committee" means the Compensation Committee of the Board.
2.16 "Credited Service" means a Participant's period of employment, in
complete years only (each period of 12 months of continuous employment
constitutes a complete year), with any and all of the following:
(a) AT&T Capital; (b) any Subsidiary of AT&T Capital after AT&T
Capital acquired at least 50 percent ownership of the Subsidiary; and
(c) to the extent such period occurred prior to January 1, 1994, AT&T
Corp. or any subsidiary of AT&T Corp. after AT&T Corp.
-13-
<PAGE>
<PAGE>
acquired at least 80 percent ownership interest in such subsidiary.
Notwithstanding the foregoing, the Committee shall expressly have the authority,
by adopting a written resolution, to include any period of employment with a
Subsidiary of AT&T Capital prior to AT&T Capital's acquisition of at least a 50
percent ownership of such Subsidiary.
2.17 "Date of Termination" means the date as of which the Participant
ceases his employment with AT&T Capital and all Affiliates.
2.18 "Deferral Date" shall have the meaning set forth in Section 4.2.
2.19 "Early Commencement Date" shall have the meaning set forth in
Section 4.3(b).
2.20 "Early Retirement Date" means the date on which a Participant
attains age 58; provided that with respect to the Effective Date CEO, "Early
Retirement Date" shall mean the date on which he attains age 55.
2.21 "Effective Date CEO" means the Chief Executive Officer of AT&T
Capital as of December 4, 1995.
2.22 "Excess Plans" means the AT&T Capital Corporation Excess Benefit
Plan, and the AT&T Capital Corporation Compensation Limit Excess Plan as amended
from time to time.
2.23 "Final Annual Pay" means the higher of (1) the sum of (i) a
Participant's then current annual rate of
-14-
<PAGE>
<PAGE>
base salary as of his Date of Termination, (ii) 110% of the Participant's target
annual incentive for the year in which his Date of Termination occurs (not
taking into account any reductions which would constitute Good Reason
hereunder), and (iii) commissions actually paid during the twelve (12) months
immediately preceding the Date of Termination, and (2) the quotient equal to (A)
the sum of (i) a Participant's annual rate of base salary (not taking into
account any reductions which would constitute Good Reason hereunder), (ii)
actual incentive payments earned (including any deferred amounts), and (iii)
commissions actually paid, each during the three (3) consecutive calendar years
preceding the Participant's Date of Termination in which such Participant had
the greatest aggregate earnings, divided by (B) three (3) ("Average Earnings").
In the event that a Participant has less than three (3) calendar years of
employment with AT&T Capital, the Participant's Average Earnings shall be the
average amount of such Participant's annual rate of base salary (prorated for
any partial calendar year), actual incentive payments earned, and actual
commissions paid, for the relevant period. For purposes of determining Final
Annual Pay prior to a Participant's Date of Termination, the date as of which
the Accrued Retirement Benefit is being calculated shall be substituted for the
Participant's Date of Termination.
-15-
<PAGE>
<PAGE>
2.24 "Good Reason" means the occurrence, without a Participant's express
written consent, of any of the following events:
(a) A reduction in a Participant's base salary or target annual
incentive as in effect immediately prior to a Change in Control, or as
the same may be increased from time to time thereafter;
(b) A change in the Participant's work location to a location
more than twenty-five (25) miles from the facility where the Participant
is located at the time of the Change in Control;
(c) A requirement that a Participant travel on AT&T Capital
business to an extent substantially more burdensome than the travel
obligations of the Participant immediately prior to a Change in Control;
(d) The assignment to the Participant of any duties inconsistent
in any material adverse respect with the Participant's position(s),
duties, responsibilities or status with AT&T Capital immediately prior
to a Change in control;
(e) A material adverse change in the Participant's reporting
responsibilities, titles or offices with AT&T Capital as in effect
immediately prior to a Change in Control;
-16-
<PAGE>
<PAGE>
(f) The removal of the Participant from, or failure to reelect
the Participant to, any position with AT&T Capital held by the
Participant immediately prior to a Change in Control or the removal of
the Participant from, or the failure to nominate the Participant for
re-election to, any position on the Board held by the Participant prior
to a Change in Control (except, in each case, in connection with such
Participant's promotion or termination for Cause or in the case of
retirement, death or permanent disability);
(g) The failure of AT&T Capital to (i) continue in effect any
employee benefit plan or compensation plan in which the Participant is
participating immediately prior to a Change in Control (unless AT&T
Capital substitutes comparable plans that would not materially reduce
the Participant's benefits as were in effect for the Participant
immediately prior to the Change in Control) or (ii) provide the
Participant and the Participant's dependents with welfare benefits
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) in accordance
with the most favorable plans, practices, programs and policies of AT&T
Capital and its affiliated companies in effect
-17-
<PAGE>
<PAGE>
for the Participant immediately prior to a Change in Control; or
(h) Any event or fact that would be deemed a "Good Reason" under
AT&T Capital's 1993 Leveraged Stock Purchase Plan ("LSPP") or would be
grounds for a termination of employment by a Participant for one or more
of the reasons described in the definition of "Qualifying Termination"
in the LSPP.
For purposes of this Plan, any good faith determination of Good Reason made by a
Participant shall be conclusive so long as the Participant terminates employment
within one hundred and eighty (180) days following the Participant's actual
knowledge of the event constituting Good Reason; provided, however, that a
Participant who terminates his employment for Good Reason pursuant to the
immediately preceding sentence shall not be required to terminate his employment
prior to the date that is one hundred and eighty (180) days following an actual
Change in Control; and provided, further, that an isolated, insubstantial and
inadvertent action taken in good faith and which is remedied by AT&T Capital
promptly after receipt of notice thereof given by a Participant shall not
constitute Good Reason. In the event that upon a Change in Control, AT&T Capital
ceases to be a publicly traded corporation, such event will not, in and of
itself, constitute Good Reason unless one of the
-18-
<PAGE>
<PAGE>
reasons set forth in paragraphs (a) through (h) above occurs. Any event or
condition described in this Section 2.24 (a) through (h) which occurs within the
one-year period prior to a Change in Control, but was at the request of a third
party or otherwise occurred in connection with, or in anticipation of, a Change
in Control, shall constitute Good Reason following a Change in Control for
purposes of this Plan notwithstanding that it occurred prior to the Change in
Control.
2.25 "Gross Annual Benefit" shall have the meaning set forth in Section
4.2.
2.26 "Married Participant" shall have the meaning set forth in Section
5.1(a).
2.27 "Nonqualifying Termination" means termination of a Participant's
employment--
(i) by AT&T Capital for Cause, or
(ii) by the Participant for any reason other than Good Reason;
provided, however, that a Nonqualifying Termination shall not include a
termination of employment due to permanent disability or death. For
purposes of the preceding sentence, "permanent disability" shall mean a
determination by the Committee that such Participant has become
"disabled" within the meaning of AT&T Capital's long term disability
plan, as
-19-
<PAGE>
<PAGE>
in effect at the time of such termination of employment.
2.28 "Normal Retirement Date"Normal Retirement Date" means the first day
of the month coincident with or next following the date on which a Participant
attains age 60.
2.29 "Participant" means a Tier 1 Participant, a Tier 2 Participant or a
Tier 3 Participant, and shall include any former Participant (and the eligible
surviving Spouse of any deceased Married Participant) until such Participant's
Retirement Benefits under the Plan, if any, have been fully distributed.
2.30 "Plan Administrator" means AT&T Capital. The Plan is administered
on behalf of AT&T Capital by the Vice-President, Human Resources of AT&T
Capital.
2.31 "Plan Year" means the calendar year.
2.32 "Retirement Benefits" means the benefits payable pursuant to
Article IV.
2.33 "RSP" means the AT&T Capital Corporation Retirement and Savings
Plan, as amended from time to time.
2.34 "SBL" means a Strategic Business Leader of an SBU.
2.35 "SBU" means a subsidiary business unit of AT&T Capital, as
designated by the Board.
2.36 "SERP" means the AT&T Capital Corporation Supplemental Executive
Retirement Plan, as amended from time to time.
-20-
<PAGE>
<PAGE>
2.37 "Single Life Annuity" means an annuity providing equal monthly
payments for the lifetime of the recipient with no survivor benefits.
2.38 "Spouse" means any person who is legally recognized under
applicable law as the spouse of a Participant, provided that such person has
been the Participant's spouse for the continuous one-year period ending on the
earlier of:
(a) the Participant's Commencement Date, or
(b) the Participant's date of death.
2.39 "Subsidiary" means (i) any person that is directly or indirectly
controlled by AT&T Capital or (ii) any other person in which AT&T Capital has a
significant equity interest, as determined by the Committee
2.40 "Survivor Benefit" shall have the meaning set forth in Section 6.1.
2.41 "Tier 1 Participant" shall have the meaning set forth in Section
3.1(a).
2.42 "Tier 2 Participant" shall have the meaning set forth in Section
3.1(b).
2.43 "Tier 3 Participant" shall have the meaning set forth in Section
3.1(c).
2.44 "Vested Participant" shall have the meaning set forth in Section
7.1.
-21-
<PAGE>
<PAGE>
2.45 "Vested Retirement Date" shall have the meaning set forth in Section
7.1 or Section 7.2, as applicable.
2.46 "Vesting Event" shall have the meaning set forth in Section 7.2.
2.47 "Voting Securities" means any shares of the capital stock or other
securities of AT&T Capital that are generally entitled to vote in elections for
directors.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility.
(a) Tier 1 Participants. Each person listed on Appendix A shall
be a "Tier 1 Participant" as of January 1, 1995.
(b) Tier 2 Participants. Each member of AT&T Capital who becomes
a member of the CLT after January 1, 1995 shall become a "Tier 2
Participant" as of the date he is selected to participate in the Plan by
the Committee. Such member shall cease to be a Tier 2 Participant if
such member ceases to be a member of the CLT prior to the earlier of (i)
his Date of Termination, or (ii) his Vested Retirement Date.
(c) Tier 3 Participants. Each member of AT&T Capital who is an
SBL on January 1, 1995 or who is
-22-
<PAGE>
<PAGE>
designated as an SBL subsequent to January 1, 1995, and who is not
listed on Appendix A, shall become a "Tier 3 Participant" as of the date
that he has been selected to participate in the Plan by the Committee,
except that a foreign national SBL of an SBU headquartered outside of
the United States shall not become a Tier 3 Participant hereunder. Such
member shall cease to be a Tier 3 Participant if such member ceases to
be an SBL prior to the earlier of (i) his Date of Termination, or (ii)
his Vested Retirement Date. Notwithstanding the foregoing, a Tier 3
Participant may become a Tier 2 Participant pursuant to Section 3.1(b)
upon appointment to the CLT, at which time status as a Tier 3
Participant shall cease.
3.2 Maintaining Participant StatusMaintaining Participant Status.
Notwithstanding the provisions of Sections 3.1(b) or 3.1(c), a Vested
Participant shall not cease to be a Participant, and shall be deemed to remain
either a Tier 2 Participant or a Tier 3 Participant, as applicable, if his
position is reduced under circumstances which would constitute Good Reason
hereunder.
-23-
<PAGE>
<PAGE>
ARTICLE IV
RETIREMENT BENEFITS
4.1 Eligibility for Retirement BenefitsEligibility for Retirement
Benefits. A Participant whose Date of Termination is on or after his Vested
Retirement Date shall be eligible to receive, beginning on the Commencement Date
determined pursuant to Section 4.3, his Accrued Retirement Benefit as of his
Date of Termination. Subject to Section 5.2, the Accrued Retirement Benefit
shall be payable in the form of a Single Life Annuity; provided, however, that
for a Married Participant, the form of benefit shall be determined under Section
5.1.
4.2 Amount of Retirement BenefitsAmount of Retirement Benefits. Subject
to Section 4.3(b), the monthly amount of a Participant's Accrued Retirement
Benefit shall equal one-twelfth of the excess, if any, of the "Gross Annual
Benefit" over the sum of the "Annual Offset Benefits". For purposes of this
Section 4.2, "Gross Annual Benefit" means--
(a) with respect to a Tier 1 Participant (other than any Tier 1
Participant who is an SBL), the product of 4.0 percent of the
Participant's Final Annual Pay multiplied by the Participant's Credited
Service (not exceeding 10 years);
(b) with respect to a Tier 2 Participant, the product of 2.67
percent of the Participant's Final
-24-
<PAGE>
<PAGE>
Annual Pay multiplied by the Participant's Credited Service (not
exceeding 15 years);
(c) with respect to a Tier 3 Participant or any Tier 1
Participant who is an SBL, the product of 1.9 percent of the
Participant's Final Annual Pay multiplied by the Participant's Credited
Service (not exceeding 20 years).
For purposes of this Section 4.2, "Annual Offset Benefits" shall mean the
following items (d) through (h) (each individually an "Annual Offset Benefit"):
(d) the annual amount, if any, paid or payable to the
Participant with respect to the RSP, but solely attributable to the
Hypothetical Account (as defined in Section 2.2), calculated using the
Actuarial Assumptions;
(e) the annual amount, if any, paid or payable to the
Participant with respect to the Excess Plans, but solely attributable to
the Hypothetical Account (as defined in Section 2.2), calculated using
the Actuarial Assumptions;
(f) the annual amount, if any, paid or payable from the SERP to
the Participant, converted if necessary to an Actuarial Equivalent
Single Life Annuity;
-25-
<PAGE>
<PAGE>
(g) the annual amount, if any, paid or payable under any of the
AT&T Pension Plans to the Participant, but only to the extent such
benefits were accrued for the period prior to January 1, 1994, and
converted if necessary to an Actuarial Equivalent Single Life Annuity;
(h) the annual amount, if any, paid or payable to the
Participant under any other AT&T Capital nonqualified pension plan, or,
to the extent benefits were accrued for the period prior to January 1,
1994, payable under any other nonqualified AT&T pension plan, converted
if necessary to an Actuarial Equivalent Single Life Annuity.
Subject to Section 5.2, in the event that any Annual Offset Benefit is
not yet payable as of the date on which Retirement Benefits are scheduled to
commence under the Plan (the "Commencement Date"), but is payable at a later
date ("Deferral Date"), then such Annual Offset Benefit shall be deemed to be $0
when determining the Participant's initial Accrued Retirement Benefit commencing
as of the Commencement Date. In such event, the Participant's Accrued Retirement
Benefit as determined in accordance with the preceding sentence shall then be
recalculated, commencing with the payment as of the Deferral Date, by taking
into account the amount of such Annual Offset Benefit then payable to the
Participant.
4.3 Commencement.
(a) Subject to Sections 4.3(b) and 5.2, the Accrued Retirement
Benefits payable under this Article IV shall begin as of the later of
the Participant's (i) Date of Termination, or (ii) Normal Retirement
Date.
(b) A participant whose Date of Termination precedes his Normal
Retirement Date may elect to receive a reduced Accrued Retirement
Benefit, commencing on the first day of any month coincident with or
following his Early Retirement Date but not later than his Normal
Retirement Date ("Early Commencement Date"). No such election (or
revocation of any such election) shall be honored unless made more than
one (1) year prior to the Participant's Early Commencement Date. The
amount of such reduced Accrued Retirement Benefit shall be determined by
applying the provisions of Section 4.2, except that the Gross Annual
Benefit shall be reduced by one percent of Final Annual Pay for each
year (or portion of a year) by which the Early Commencement Date
precedes such Participant's Normal Retirement Date. For example, the
Accrued Retirement Benefit payable at age 60 to a Tier 1 Participant
with at least 10 years of Credited Service
-27-
<PAGE>
<PAGE>
is based on a Gross Annual Benefit equal to forty (40%) percent of Final
Annual Pay, and the Accrued Retirement Benefit for the same Tier 1
Participant who elects an Early Commencement Date of age 58 shall be
based on a Gross Annual Benefit equal to thirty-eight (38%) of Final
Annual Pay.
ARTICLE V
ALTERNATIVE FORMS OF PAYMENT
5.1 Automatic Joint and Surviving Spouse Annuity.
(a) General Rule. Subject to Section 5.2, and unless elected
otherwise pursuant to paragraph (b) below, the Retirement Benefits
payable under Article IV to a Participant who has a Spouse (a "Married
Participant") shall be payable in the form of an Automatic Joint and
Surviving Spouse Annuity.
(b) Election Procedures.
(1) General Rule. A Married Participant may elect in
writing, on a form supplied by the Plan Administrator, to waive
an Automatic Joint and Surviving Spouse Annuity, and to receive
his Retirement Benefits in the form of a Single Life Annuity or
in accordance with an optional form of payment described in
Section 5.2. Any election pursuant to this paragraph (1) must be
filed with
-28-
<PAGE>
<PAGE>
the Plan Administrator during the time described in paragraph
(5). For such an election to be effective--
(A) the Spouse must consent in writing to such
election; and
(B) such Spouse's consent must be withnessed by a
notary public.
(2) Exception to Consent Requirement. The consent of the
Spouse shall not be required where:
(A) the Married Participant elects an Automatic
Joint and Surviving Spouse Annuity under Section 5.2;
(B) the Plan Administrator determines that the
required consent cannot be obtained
-29-
<PAGE>
<PAGE>
because there is no Spouse or the Spouse cannot be
located;
(C) the Plan Administrator determines that the
Married Participant is legally separated;
(D) the Plan Administrator determines that the
Married Participant has been abandoned within the
meaning of local law and there is a court order to that
effect; or
(E) there exists any other circumstance (as
determined by the Plan Administrator) which excepts the
Married Participant from the consent requirement.
(3) Revocation and Modification. An election, pursuant
to paragraph (1), to waive an Automatic Joint and Surviving
Spouse Annuity may be revoked by the Married Participant, in
writing, without the consent of his Spouse at any time during
the election period. Any subsequent election to waive an
Automatic Joint and Surviving Spouse Annuity, or any subsequent
modification of a prior election (other than a revocation of a
waiver of an Automatic Joint and Surviving Spouse Annuity), must
comply with the requirements set forth in paragraph (1) above,
unless a "general
-30-
<PAGE>
<PAGE>
consent" has been executed by the Spouse. A Spouse's consent
shall be considered a "general consent" if the following
requirements are satisfied--
(A) the consent permits the Married Participant to
waive the Automatic Joint and Surviving Spouse Annuity;
(B) the consent permits the Married Participant to
change the optional form of Retirement Benefit payment
without any requirement of further consent by the
Spouse; and
(C) the Spouse acknowledges in the consent that--
(i) he has the right to limit consent to
a specific optional form of benefit, and
(ii) he voluntarily relinquishes such
right.
(4) Validity of Spousal Consent. Any consent or election
under this Section shall be valid only with respect to the
Spouse who signs the consent or, if the Spouse's consent is
excused by the Plan Administrator pursuant to paragraph
-31-
<PAGE>
<PAGE>
(2) above, the Spouse so excused, but shall be irrevocable once
made.
(5) Timing of election.
(A) A Married Participant who elects to receive
his Retirement Benefits in the form of a lump sum
payment must elect to waive the Automatic Joint and
Survivor Annuity at the same time he makes the election
under Section 5.2(a) to receive his Retirement Benefits
in the form of a lump sum payment.
(B) A Married Participant who elects to receive
an optional form of payment other than a lump sum
payment must so elect within the 90-day period ending on
the Participant's Commencement Date.
-32-
<PAGE>
<PAGE>
5.2 Other Optional Forms of Payment.
(a) A Participant may elect to receive his Retirement Benefit in
the form of a single Actuarial Equivalent lump sum payment; provided,
however, that the discount rate for purposes of this Section 5.2(a)
shall be 6.0 percent. In such event, the Actuarial Equivalent lump sum
value shall be determined assuming that the Participant's Retirement
Benefits would otherwise have commenced from this Plan on the date which
would have been the Participant's Early Retirement Date (i.e., on a
reduced basis), and such lump sum payment shall be paid within 30 days
following the Participant's Date of Termination. For a Participant to
receive his Retirement Benefits in a single lump sum payment, such
Participant must so elect, on a form provided by the Plan Administrator
for such purpose, at least one year prior to the Participant's Date of
Termination; provided, however, that such an election by a Tier 1
Participant made during 1995 shall be valid without regard to such Tier
1 Participant's Date of Termination. Elections which do not satisfy such
requirements will not be honored. Any revocation of a lump sum election
will be honored only if made at least one year prior to the
Participant's Date of Termination.
-33-
<PAGE>
<PAGE>
(b) Subject to the provisions of Section 5.1, the Committee may,
in its sole discretion, make available to Participants other optional
forms of payment which are the Actuarial Equivalent of the Retirement
Benefits otherwise payable to the Participant under the Plan. Any such
optional forms of payment which may be offered to Participants shall be
elected by the Participant on a form provided by the Plan Administrator
for such purpose.
ARTICLE VI
DEATH BENEFITS
6.1 Preretirement Surviving Spouse Benefits. If a Married Participant who
is either (i) a Tier 1 Participant, or (ii) a Vested Participant, dies before
his Commencement Date, the surviving Spouse of such Married Participant, if any,
shall be eligible to receive a surviving spouse annuity benefit determined under
Section 6.2 (the "Survivor Benefit"), commencing as of the date determined under
Section 6.3. Notwithstanding any election which may have been made by the
Participant with respect to the form or commencement of his Retirement Benefits,
the Survivor Benefit shall be distributed in accordance with Section 6.3.
-34-
<PAGE>
<PAGE>
6.2 Amount.
(a) Determination of Benefit. The monthly amount of the Survivor
Benefit payable to an eligible Spouse pursuant to Section 6.1 shall
equal one-twelfth of the excess, if any, of (1) over (2) below:
(1) 45 percent of the amount of the Gross Annual Benefit
determined as of the Participant's date of death, reduced
pursuant to Section 4.3(b) (if the commencement date of the
Survivor Benefit determined under Section 6.3 is earlier than
the date which would have been the Participant's Normal
Retirement Date);
(2) the offset amounts determined under Section 6.2(b).
(b) Determination of Offsets. The amount of offset shall be the
sum of the annual amounts of the Actuarial Equivalent of the
preretirement surviving Spouse benefits, if any, payable to the
surviving Spouse under the RSP, the Excess Plans, the SERP, the AT&T
Pension Plans, the Nonqualified AT&T Pension Plan, or any other AT&T
Capital nonqualified pension plan, payable as a Single Life Annuity as
of the surviving Spouse's Commencement Date. For purposes of this
Section 6.2(b), the preretirement surviving Spouse benefit, if any,
payable under the RSP or the Excess
-35-
<PAGE>
<PAGE>
Plans, means the amount payable to the surviving Spouse with respect to
the RSP or the Excess Plan, but solely attributable to the Hypothetical
Account (defined under Section 2.2), calculated using the Actuarial
Assumptions. In addition, the methodology underlying the last paragraph
of Section 4.2 shall apply with respect to any offsets under this
Section 6.2(b) which may not be payable until after the surviving
Spouse's Commencement Date determined in accordance with Section 6.3.
6.3 Commencement.
(a) Subject to Section 6.3(b), the Survivor Benefit shall be
payable as a Single Life Annuity commencing as of the first day of the
month coincident with or next following the Participant's death;
provided, however, that payments shall not be made to a surviving Spouse
any earlier than the date which would have been the Participant's Early
Retirement Date.
(b) Notwithstanding Section 6.3(a), the Committee may in its
sole discretion direct that the Survivor Benefit be paid to the
surviving Spouse, within 30 days following the Participant's date of
death, in a single lump sum payment of Actuarial Equivalent value,
determined assuming that the deceased Participant's Retirement Benefits
would otherwise have commenced from
-36-
<PAGE>
<PAGE>
this Plan on the date which would have been the Participant's Early
Retirement Date (i.e., on a reduced basis).
ARTICLE VII
RIGHTS OF PARTICIPANTS
7.1 Vesting. Subject to Section 7.2, a Participant who has reached his
Vested Retirement Date (a "Vested Participant") shall have a nonforfeitable
right to his Accrued Retirement Benefit on his Date of Termination. The term
"Vested Retirement Date" shall have the meaning given such term under paragraph
(a), (b), (c) or (d) below, as applicable.
(a) Tier 1 Participants. With respect to any Tier 1 Participant
(other than the Effective Date CEO), "Vested Retirement Date" shall mean
January 1, 1999.
(b) Effective Date CEO. The "Vested Retirement Date" for the
Effective Date CEO shall mean the date on which he attains age 55.
(c) Tier 2 Participants. With respect to any Tier 2 Participant,
"Vested Retirement Date" shall mean the earlier of (i) the date on which
such Participant attains age 60, or (ii) the date on which such
Participant completes fifteen (15) years of Credited Service.
-37-
<PAGE>
<PAGE>
(d) Tier 3 Participants. With respect to any Tier 3 Participant,
"Vested Retirement Date" shall mean the earlier of (i) the date on which
such Participant attains age 60, or (ii) the date on which such
Participant completes twenty (20) years of Credited Service.
7.2 Change in Control and Involuntary Termination ProvisionsChange in
Control and Involuntary Termination Provisions. In the event of a Change in
Control or upon a Participant's Date of Termination (other than as a result of a
Nonqualifying Termination) (a "Vesting Event"), paragraphs (a) and (b) of
Section 7.1 shall be superseded to the extent provided in the following
sentence. If any Tier 1 Participant has not already become a Vested Participant,
then the date of such Vesting Event shall be deemed to be such Tier 1
Participant's Vested Retirement Date, and for all purposes under the Plan such
Tier 1 Participant shall have a nonforfeitable right to his Accrued Retirement
Benefit.
-38-
<PAGE>
<PAGE>
7.3 Contractual Obligation.
(a) General Rule. It is intended that AT&T Capital is under a
contractual obligation to pay Retirement Benefits payable under the Plan
when due. Payment of Retirement Benefits under the Plan shall be made
out of AT&T Capital's general assets or, at the discretion of the Board,
from a grantor trust established by AT&T Capital to pay Retirement
Benefits hereunder.
(b) Statement of AT&T Capital Intention. Notwithstanding
anything in paragraph (a) to the contrary, AT&T Capital shall establish
an irrevocable grantor trust and fully fund, upon or prior to a
potential Change in Control, the potential Retirement Benefits of Tier 1
Participants (based upon the actuarial assumptions herein and assuming
increases in Final Annual Pay), whether or not such Retirement Benefits
have vested under the provisions of this Article VII or have been
accrued as of such date.
7.4 Unsecured Interest.Unsecured Interest. Notwithstanding anything in
Section 7.3 to the contrary, no Participant or Spouse shall have any interest
whatsoever in any specific asset of AT&T Capital. To the extent that any person
acquires a right to receive payments under the Plan (or if a grantor trust is
established and funded pursuant to Sections 7.3, under such grantor trust), such
right shall be no greater
-39-
<PAGE>
<PAGE>
than the right of any unsecured general creditor of AT&T Capital.
7.5 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of AT&T Capital to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of
AT&T Capital.
ARTICLE VIII
NONTRANSFERABILITY
8.1 Nontransferability. In no event shall AT&T Capital make any payment
under the Plan to any assignee or creditor of a Participant or Spouse. Prior to
the time of payment hereunder, a Participant or Spouse shall have no rights by
way of anticipation or may otherwise dispose of any interest under the Plan nor
shall such rights be assigned or transferred by operation of law.
-40-
<PAGE>
<PAGE>
ARTICLE IX
ADMINISTRATION
9.1 Administration. Except where powers are specifically conferred in the
Board or the Committee in the Plan, the Plan shall be administered by the Plan
Administrator. The Plan Administrator may from time to time establish rules for
the administration of the Plan that are consistent with the intent and purposes
of the Plan, and which will aid in the prompt and efficient administration of
the Plan.
9.2 Severability. If any provision of this Plan or the application of
any such provision to any Participant or circumstances shall be determined by
any court of competent jurisdiction or duly authorized arbitration tribunal to
be invalid, illegal or unenforceable to any extent, the remainder of this Plan
or such provision or the application of such provision to such Participant or
circumstances, other than those to which it is so determined to be invalid,
illegal or unenforceable, shall remain in full force and effect to the fullest
extent permitted by law and shall not be affected thereby, unless such a
construction would be unreasonable.
9.3 Expenses. The cost of providing benefits from the Plan and the
expenses of administering the Plan shall be borne by AT&T Capital.
-41-
<PAGE>
<PAGE>
ARTICLE X
APPLICABLE LAW
10.1 Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the State of New Jersey and the United States of
America.
10.2 Successors and Assigns.
(a) This Plan shall not be terminated by any merger or
consolidation of AT&T Capital whereby AT&T Capital is or is not the
surviving or resulting corporation or as a result of any transfer of all
or substantially all of the assets of AT&T Capital or a purchase of the
securities of AT&T Capital. In the event of any such merger,
consolidation, transfer of assets or purchase, the provisions of this
Plan shall be binding upon the surviving or resulting corporation or the
person or entity to which such assets are transferred.
(b) AT&T Capital agrees that concurrently with any merger,
consolidation, transfer of assets or purchase of the securities of AT&T
Capital referred to in paragraph (a) of this Section 10.2, it will cause
any successor or transferee unconditionally to assume all of the
obligations of AT&T Capital hereunder.
-42-
<PAGE>
<PAGE>
(c) This Plan shall inure to the benefit of and be enforceable
by each Participant's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If a Participant shall die while any amounts would be payable to the
Participant hereunder had the Participant continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Plan to such person or persons appointed in
writing by the Participant to receive such amounts or, if no person is
so appointed, to the Participant's estate.
(d) AT&T Capital's obligation to make any payments provided for
by this Plan to a Participant and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which AT&T Capital
may have against the Participant or others.
ARTICLE XI
WITHHOLDING OF TAXES
11.1 Tax WithholdingTax Withholding. AT&T Capital shall have the right
to deduct from all payments made from the Plan any federal, state, or local
taxes required by law to be withheld with respect to such payments.
-43-
<PAGE>
<PAGE>
To the extent a Participant is subject to FICA taxes with respect to
Retirement Benefits accrued but not yet payable under the Plan pursuant to Code
section 3121(v), as a condition of participation hereunder, each such
Participant shall direct AT&T Capital to withhold from his current salary
amounts thereby due and payable.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification. To the extent permitted by law, the Plan
Administrator and all agents and representatives of the Plan Administrator,
shall be indemnified by AT&T Capital against any claims, and the expenses of
defending against such claims, resulting from any action or conduct relating to
the administration of the Plan.
ARTICLE XIII
CLAIMS PROCEDURE
13.1 Claims Procedure.
(a) Submission of Claims. Claims for benefits under the Plan
shall be submitted in writing to the Plan Administrator.
(b) Denial of Claim. If any claim for benefits is wholly or
partially denied, the claimant shall be
-44-
<PAGE>
<PAGE>
given written notice within 90 days following the date on which the
claim is filed, which notice shall set forth--
(1) the specific reason or reasons for the denial;
(2) specific references to pertinent Plan provisions
upon which the denial is based;
(3) a description of any additional material or
information necessary for the claimant to perfect the claim and
an explanation of why such material or information is necessary;
and
(4) an explanation of the Plan's claim review procedure.
If special circumstances require an extension of time for
processing the claim, written notice of an extension shall be furnished
to the claimant prior to the end of the initial period of 90 days
following the date on which the claim is filed. Such an extension may
not exceed a period of 90 days beyond the end of said initial period.
If the claim has not been granted, and if written notice of the
denial of the claim is not furnished within 90 days following the date
on which the claim is filed, the claim shall be deemed denied for the
purpose of proceeding to the claim review procedure.
-45-
<PAGE>
<PAGE>
(c) Claim Review Procedure. The claimant or his authorized
representative shall have 60 days after receipt of written notification
of denial of a claim to request a review by the Committee of the denial
by making written request to the Plan Administrator, and may review
pertinent documents and submit issues and comments in writing within
such 60-day period. Not later than 60 days after receipt of the request
for review, the Plan Administrator shall render and furnish to the
claimant a written decision of the Committee which shall include
specific reasons for the decision, and shall make specific references to
pertinent Plan provisions upon which it is based. If special
circumstances require an extension of time for processing, the decision
shall be rendered as soon as possible, but not later than 120 days after
receipt of the request for review, provided that written notice and
explanation of the delay are given to the claimant prior to commencement
of the extension. If a decision on review is not furnished to a claimant
within the specified time period, the claim shall be deemed to have been
denied on review.
-46-
<PAGE>
<PAGE>
ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 Amendment and Termination.
(a) This Plan, as amended and restated, shall be in effect as of
December 4, 1995 and shall continue until terminated by AT&T Capital as
provided in paragraph (b) of this Section 14.1.
(b) AT&T Capital shall have the right prior to a Change in
Control, in its sole discretion, pursuant to action by the Board or the
Committee, to approve the termination or amendment of this Plan;
provided, however, that no such action which would adversely affect the
rights or potential rights of Participants shall be taken by the Board
or the Committee (i) during any period of time when the Board or the
Committee, as the case may be, has knowledge that any person (including
AT&T Capital) has taken steps reasonably calculated to effect a Change
in Control (a "Possible Change in Control") until, in the opinion of the
Board or the Committee, such Change in Control is no longer a reasonable
possibility, or (ii) within twelve (12) months following the date that
such Possible Change in Control ceases to exist; provided, further, that
in no event shall this Plan be terminated or amended (i) within the
two-year period following a Change in
-47-
<PAGE>
<PAGE>
Control in any manner which would adversely affect the rights or
potential rights of Tier 1 Participants; or (ii) at any time, in any
manner which would adversely affect the Accrued Retirement Benefit
(including if applicable the vesting thereof) of either a Tier 1
Participant or a Vested Participant, as of the date of such termination
or amendment.
-48-
<PAGE>
<PAGE>
APPENDIX A
Tier 1 Participants
Wajnert, T.*
Dwyer, E.
McCarthy D.
Morey, R.
Rothman, I.
Van Sickle, C.
Andrews, E.
* Effective Date CEO.
A-1
<PAGE>
<PAGE>
APPENDIX B
AT&T Unisex Retiree Mortality
<TABLE>
<CAPTION>
Unisex Unisex
Age Rate Age Rate
<S> <C> <C> <C>
45 0.0056 78 0.0502
46 0.0058 79 0.0550
47 0.0060 80 0.0602
48 0.0063 81 0.0658
49 0.0065 82 0.0718
50 0.0068 83 0.0780
51 0.0071 84 0.0847
52 0.0074 85 0.0916
53 0.0077 86 0.0990
54 0.0081 87 0.1069
55 0.0084 88 0.1152
56 0.0088 89 0.1241
57 0.0093 90 0.1339
58 0.0097 91 0.1448
59 0.0103 92 0.1568
60 0.0109 93 0.1697
61 0.0116 94 0.1839
62 0.0123 95 0.1999
63 0.0132 96 0.2167
64 0.0143 97 0.2340
65 0.0155 98 0.2527
66 0.0169 99 0.2730
67 0.0185 100 0.2954
68 0.0203 101 0.3202
69 0.0224 102 0.3476
70 0.0247 103 0.3782
71 0.0270 104 0.4136
72 0.0293 105 0.4557
73 0.0320 106 0.5063
74 0.0348 107 0.5672
75 0.0381 108 0.6402
76 0.0417 109 0.7275
77 0.0458 110 0.8874
</TABLE>
B-1
<PAGE>
<PAGE>
APPENDIX C
AT&T ACTIVE MORTALITY
<TABLE>
<CAPTION>
Male Female
Annual Rate Annual Rate
Age of Mortality Age of Mortality
<S> <C> <C> <C>
22 0.0009 22 0.0004
23 0.0008 23 0.0004
24 0.0008 24 0.0004
25 0.0008 25 0.0004
26 0.0008 26 0.0004
27 0.0008 27 0.0004
28 0.0007 28 0.0005
29 0.0007 29 0.0005
30 0.0007 30 0.0006
31 0.0007 31 0.0006
32 0.0007 32 0.0007
33 0.0007 33 0.0007
34 0.0008 34 0.0008
35 0.0008 35 0.0008
36 0.0009 36 0.0008
37 0.0011 37 0.0009
38 0.0012 38 0.0009
39 0.0013 39 0.0010
40 0.0015 40 0.0010
41 0.0016 41 0.0011
42 0.0018 42 0.0012
43 0.0021 43 0.0013
44 0.0024 44 0.0015
45 0.0027 45 0.0017
46 0.0030 46 0.0019
47 0.0034 47 0.0021
48 0.0038 48 0.0022
49 0.0041 49 0.0024
50 0.0045 50 0.0025
51 0.0050 51 0.0026
52 0.0055 52 0.0027
53 0.0061 53 0.0030
54 0.0068 54 0.0033
55 0.0075 55 0.0037
56 0.0083 56 0.0040
57 0.0092 57 0.0044
58 0.0102 58 0.0049
59 0.0111 59 0.0053
60 0.0121 60 0.0058
61 0.0132 61 0.0063
62 0.0143 62 0.0068
63 0.0154 63 0.0074
64 0.0165 64 0.0080
65 0.0177 65 0.0086
66 0.0190 66 0.0093
67 0.0202 67 0.0101
68 0.0215 68 0.0110
69 0.0228 69 0.0119
</TABLE>
C-1
<PAGE>
<PAGE>
EXHIBIT 10(z)
Form 10-K for 1995
File No. 1-11237
AT&T CAPITAL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
1. Purpose. The Plan is designed to provide
supplemental retirement benefits on termination of employment for a select group
of management or highly compensated employees of the Company. The Plan is
intended to ease the transition for eligible employees from coverage under a
Frozen Plan to coverage under the RSP.
2. Definitions. The following words and phrases as
used herein shall have the following meanings:
(a) "Accumulated Value" means the value of the
Hypothetical Company Account as of the Participant's Date of Termination.
(b) "Actuarial Equivalent" means, with respect to a stated
benefit or amount, a benefit or amount which has the same present value
on the date payment commences as such stated benefit.
(c) "Actuarial Equivalent Factor" means the applicable
factor based on a discount rate of 8% and the Unisex AT&T Retiree
Mortality Table.
<PAGE>
<PAGE>
(d) "Administrative Committee" means the Administrative
Committee of AT&T Capital Corporation.
(e) "Assumed Retirement Benefit" means the benefit which
would have been payable to the Participant under the applicable Frozen
Plan (converted, if necessary, from the normal form of benefit payable
under such Frozen Plan to an Actuarial Equivalent single life annuity
benefit, payable monthly, using the method of actuarial equivalence used
in the applicable Frozen Plan) had the Participant remained covered by
such Frozen Plan from December 31, 1993 through the Participant's Date
of Termination; provided, however, that the Assumed Retirement Benefit
shall not reflect any special enhancements (e.g., early retirement
window programs) to the benefit formula under such Frozen Plan.
(f) "AT&T" means AT&T Corp.
(g) "Company" means AT&T Capital Corporation and its
subsidiaries.
(h) "Company Benefit" means the sum of the Frozen
Benefit and the RSP/EBP Benefit.
(i) "Date of Termination" means the date on which a
Participant leaves the employ of the Company.
(j) "Frozen Benefit" means the benefit payable to the
Participant as of the Participant's Date of Termination (or at the
earliest possible date of
-2-
<PAGE>
<PAGE>
commencement, if later than such Participant's Date of Termination)
under the terms of the applicable Frozen Plan, converted (if necessary)
from the normal form of benefit payable under such Frozen Plan to an
Actuarial Equivalent single life annuity benefit, payable monthly,
using the method of actuarial equivalence used in the applicable Frozen
Plan.
(k) "Frozen Plan" means the AT&T Management Pension Plan
(the "AT&T MPP"), the AT&T Pension Plan, or the NCR Corporation Pension
Plan, as applicable.
(l) "Hypothetical Company Account" means a hypothetical
account consisting solely of the sum of the Company contributions
(excluding any matching contributions) credited to the Participant's
accounts through the Participant's Date of Termination, under the RSP,
the AT&T Capital Corporation Excess Benefit Plan, and the AT&T Capital
Corporation Compensation Limit Benefit Plan, assuming that for each
calendar year interest is credited to the Hypothetical Company Account
at a rate equal to the annual yield as of the last day of the prior
calendar year on the 10-year U.S. Treasury Bond.
(m) "Participant" means a member of the Company who has
met the requirements of Section 3.
(n) "Pay" means cash compensation from the Company before
reductions for taxes or pre-tax
-3-
<PAGE>
<PAGE>
contributions to any of the Company's employee benefit plans, including
base salary, commissions, short term bonuses, and awards and payments
under the Company's 1993 Annual Incentive Plan (or any successor plan)
to the extent includible in taxable income, but excludes awards or
payments under the Company's long term incentive award programs such as
the Share Performance Incentive Plan.
(o) "Plan" means this AT&T Capital Corporation
Supplemental Executive Retirement Plan.
(p) "Plan Administrator" means AT&T Capital Corporation.
(q) "RSP" means the AT&T Capital Corporation Retirement
and Savings Plan.
(r) "RSP/EBP Benefit" means the benefit payable to the
Participant from the Accumulated Value of the Hypothetical Company
Account, expressed in the form of an Actuarial Equivalent single life
annuity, payable monthly. The conversion of such Accumulated Value into
an Actuarial Equivalent single life annuity shall be determined by
using the same method of actuarial equivalence used in the RSP for the
purpose of converting a Participant's account balance into a benefit
payable in the form of a single life annuity.
-4-
<PAGE>
<PAGE>
(s) "Social Security Wage Base" means the contribution
and benefit base under Section 230 of the Social Security Act.
3. Eligibility to Participate. A member shall be a
Participant in the Plan if such member was a participant in a Frozen Plan as of
December 31, 1993, and either:
(a) was a member of the Capital Corporate Leadership Forum as
of December 31, 1993, or
(b) (i) as of December 31, 1993, was employed by the Company
and either (x) had at least ten (10) years of AT&T, AT&T
Capital Corporation, or NCR Corporation service, or (y)
was within ten (10) years of service pension eligibility
under the terms of the AT&T MPP (for this purpose, service
with a company acquired by AT&T or AT&T Capital
Corporation is included); and
(ii) either (x) had 1993 Pay of at least $115,200, or (y)
had average Pay for the thirty-six (36) months immediately
prior to the member's Date of Termination of at least two
times the Social Security Wage Base in effect for the year
of termination.
4. SERP Benefit. A Participant shall be eligible to
receive a Supplemental Executive Retirement Plan Benefit ("SERP Benefit") if the
Participant meets the requirements for service pension eligibility under the
AT&T MPP, under the terms of the AT&T MPP as in effect in the year of the
Participant's Date of Termination (provided, however, that if the AT&T MPP is
terminated prior to the Participant's Date of Termination, the requirements for
service pension eligibility under the AT&T MPP
-5-
<PAGE>
<PAGE>
shall refer to the terms of the AT&T MPP in effect immediately prior to its
termination), assuming for such purpose that the Participant had been covered by
the AT&T MPP for the Participant's entire period of employment with the Company.
The amount of a Participant's SERP Benefit payable under the Plan, if any, shall
be determined as a monthly amount equal to the excess of:
(a) 95% of the Assumed Retirement Benefit, over
(b) the Company Benefit.
If the Participant terminates employment with the Company prior
to attaining age 60, the Participant's SERP Benefit shall be reduced to reflect
the early commencement of benefits under Section 5 by multiplying the SERP
Benefit by the appropriate Actuarial Equivalent Factor (such reduced amount
shall for any affected Participant hereafter be considered the SERP Benefit for
all purposes under the Plan). In the event that the Frozen Benefit is not
immediately payable to the Participant as of the Participant's Date of
Termination, the calculation of the SERP Benefit shall assume that the amount of
the Frozen Benefit is $0. In such event, the Participant's SERP Benefit shall be
later reduced (by the amount of the Frozen Benefit so payable) as of the date on
which the Frozen Benefit is in fact payable to the Participant.
5. Payment of SERP Benefit. The SERP Benefit shall be
payable monthly, commencing as of the first day of
-6-
<PAGE>
<PAGE>
the month following the month in which the Date of Termination occurs.
6. Source of Payments. The benefits provided under
the Plan shall be paid by the Company from a grantor trust established by the
Company for the purpose of paying the benefits under the Plan, at the time and
in the manner provided herein. To the extent that there are insufficient assets
in such trust to pay benefits under the Plan, then the Company shall pay the
benefits out of the general assets of the Company.
7. Nontransferability of Benefits. Benefits payable
under the Plan shall not be subject to any manner of assignment, pledge,
alienation or anticipation by a Participant.
8. Administration. The Plan shall be administered on
behalf of the Plan Administrator by the Vice President of Human Resources
("VPHR"). The VPHR may from time to time establish rules for the administration
of the Plan that are consistent with the intent and purposes of the Plan, and
which will aid in the prompt and efficient administration of the Plan. The VPHR
and the Administrative Committee shall have complete discretionary authority to
determine conclusively for all parties, and in accordance with the terms of the
documents or instruments governing the Plan, any and all questions arising from
administration of the Plan and interpretation of all plan provisions,
-7-
<PAGE>
<PAGE>
determination of all questions relating to participation of eligible members and
eligibility for benefits, determination of all relevant facts, the amount and
type of benefits payable to any participant, and construction of all terms of
the Plan. To the extent permitted by law, the Plan Administrator, the VPHR, and
all agents and representatives of either of the foregoing shall be indemnified
by the Company against any claims, and the expenses of defending against such
claims, resulting from any action or conduct relating to the administration of
the Plan.
9. Amendment and Termination. AT&T Capital Corporation
reserves the right to modify, suspend, change, or amend the Plan from time to
time, prospectively or retroactively, and may terminate the Plan in its entirety
at any time. AT&T Capital Corporation does not guarantee the continuation of any
benefits during employment, nor does it guarantee any specific level of
benefits. Nothing in the Plan shall interfere with or limit in any way the right
of AT&T Capital Corporation to terminate any Participant's employment at any
time, or confer upon any Participant any right to continue in the employ of the
Company.
10. Withholding. The Company shall have the right to
deduct from any payment under the Plan any amount required to satisfy its
obligation to withhold federal, state and local taxes.
-8-
<PAGE>
<PAGE>
11. Governing Law. The Plan shall be governed and
construed in accordance with the laws of the State of New Jersey.
12. Effective Date. The Plan shall be effective as of
January 1, 1994.
-9-
<PAGE>
<PAGE>
Exhibit A
AT&T Unisex Retiree Mortality
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Unisex Unisex
Age Rate Age Rate
<S> <C> <C> <C>
45 0.0056 78 0.0502
46 0.0058 79 0.0550
47 0.0060 80 0.0602
48 0.0063 81 0.0658
49 0.0065 82 0.0718
50 0.0068 83 0.0780
51 0.0071 84 0.0847
52 0.0074 85 0.0916
53 0.0077 86 0.0990
54 0.0081 87 0.1069
55 0.0084 88 0.1152
56 0.0088 89 0.1241
57 0.0093 90 0.1339
58 0.0097 91 0.1448
59 0.0103 92 0.1568
60 0.0109 93 0.1697
61 0.0116 94 0.1839
62 0.0123 95 0.1999
63 0.0132 96 0.2167
64 0.0143 97 0.2340
65 0.0155 98 0.2527
66 0.0169 99 0.2730
67 0.0185 100 0.2954
68 0.0203 101 0.3202
69 0.0224 102 0.3476
70 0.0247 103 0.3782
71 0.0270 104 0.4136
72 0.0293 105 0.4557
73 0.0320 106 0.5063
74 0.0348 107 0.5672
75 0.0381 108 0.6402
76 0.0417 109 0.7275
77 0.0458 110 0.8874
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 10(aa)
Form 10-K for 1995
File No. 1-11237
AT&T CAPITAL CORPORATION
COMPENSATION LIMIT EXCESS PLAN
1. Purpose. The Plan is designed to provide additional
benefits to certain Members of the Company whose compensation is in excess of
the limitations imposed by Section 401(a)(17) of the Code, and who otherwise
would not be able to receive benefits under the retirement program of the
Company which are based on their total compensation.
2. Definitions. The following words and phrases as
used herein shall have the following meanings:
(a) "Account" shall have the meaning set forth in
Section 6(a).
(b) "Administrative Committee" means the committee
described in Section 10.
(c) "AT&T" means AT&T Corp.
(d) "AT&T Capital" means AT&T Capital Corporation.
<PAGE>
<PAGE>
(e) "Board" means the Board of Directors of AT&T
Capital.
(f) "Break in Service" means a continuous period of at
least 12 consecutive months during which a Member is not employed by an
Employer. In the case of an individual who is absent from work for
maternity or paternity reasons, the 12-consecutive month period
beginning on the first anniversary of the first date of such absence
shall not constitute a Break in Service. An absence from work for
maternity or paternity reasons means an absence (i) by reason of the
pregnancy of the individual, (ii) by reason of the birth of a child of
the individual, (iii) by reason of the placement of a child with the
individual in connection with the adoption of such child by the
individual, or (iv) for purposes of caring for such child for a period
immediately following such birth or placement.
(g) "Code" means the Internal Revenue Code of 1986, as
amended.
(h) "Committee" means the Compensation Committee of
the Board.
-2-
<PAGE>
<PAGE>
(i) "Company" means AT&T Capital and its subsidiaries.
(j) "Compensation" means cash compensation, as defined
in the RSP, from the Company.
(k) "Date of Termination" means the date on which a
Participant leaves the employ of the Company.
(l) "Determination Year" shall have the meaning set
forth in Section 3(b).
(m) "Employer" means any corporation which is included in
a controlled group of corporations which includes the Company, any trade
or business (whether or not incorporated) which is under common control
with the Company, and any organization (whether or not incorporated)
included in the same affiliated service group as the Company, and any
other entity required to be aggregated with the Company, pursuant to
Code Sections 414(b), (c), (m), and (o) respectively.
(n) "Excess Compensation" means Compensation in excess
of the limitations imposed by Section 401(a)(17) of the Code.
-3-
<PAGE>
<PAGE>
(o) "Excess Deferral" shall have the meaning set forth
in Section 4(b).
(p) "Fiscal Year" means the 12-month period ending on the
last day of February. For example, the 1995 Fiscal Year means the period
beginning on March 1, 1994 and ending on February 28, 1995.
(q) "Hour of Service" means each hour for which a Member
is paid or entitled to payment for the performance of duties for the
Employer.
(r) "Interest" shall have the meaning set forth in
Section 6(a).
(s) "Matching Contribution" shall have the meaning set
forth in Section 4(b).
(t) "Member" means any individual employed by an Employer
and any individual treated as an employee of the Employer under Code
Section 414(n).
(u) "Participant" means a Member of the Company who
has at any time met the requirements of Section 3.
(v) "Participation Year" shall have the meaning set
forth in Section 3(a).
-4-
<PAGE>
<PAGE>
(w) "Plan" means this AT&T Capital Corporation
Compensation Limit Excess Plan.
(x) "Plan Administrator" means AT&T Capital.
(y) "Recordkeeper" means Merrill Lynch Group Employee
Services.
(z) "RSP" means the AT&T Capital Corporation
Retirement and Savings Plan.
(aa) "Spouse" means any person who is legally recognized under
applicable law as the spouse of a participant, provided that such person
has been the participant's spouse for the continuous one-year period
ending on the earlier of the Participant's (i) benefit commencement
date, or (ii) date of death.
(ab) "Vested Account" shall have the meaning set forth
in Section 5.
(ac) "Year of Service" means the completion of 12
consecutive months of service. For purposes of determining a Year of
Service, a Member shall receive credit for the aggregate of all time
periods commencing with the Member's first day of employment or
reemployment and ending on the date a Break in Service
-5-
<PAGE>
<PAGE>
begins, and shall include service with the following: (A) the Company
(including service at Encore International, Inc., Eaton Financial
Corporation, United States Leasing International, Inc., and U.S.
Instrument Rental prior to their acquisition by the Company), (B) AT&T,
or any other entity while it was considered as a single employer with
AT&T under Code Sections 414(b), (c), (m), or (o), before 1994, (C)
AT&T Global Information Solutions Company before it was acquired by
AT&T, and (D) any Employer after 1993. The first day of employment or
reemployment is the first day the Member performs an Hour of Service
for the Employer.
3. Eligibility to Participate.
(a) Uniform Points Participant. A Member shall become a
"Uniform Points Participant", and shall be entitled to receive an
"Excess UPA Contribution" for any calendar year (a "Participation Year")
in which such Member (i) is eligible to receive a uniform points
contribution under the RSP, and (ii) has Excess
-6-
<PAGE>
<PAGE>
Compensation during the Fiscal Year ending in such Participation Year.
(b) Matching Participant. A Member shall become a
"Matching Participant", and shall be entitled to make Excess Deferrals
and receive Matching Contributions in respect of any calendar year (a
"Determination Year") in which such Member (i) is eligible to contribute
to the RSP, (ii) has Excess Compensation, and (iii) had Excess
Compensation during the calendar year immediately preceding such
Determination Year.
4. Determination of Benefits.
(a) Excess UPA Contributions. A Uniform Points Participant
shall be eligible to receive a Company Uniform Points Allocation
Contribution (an "Excess UPA") for any Participation Year in an amount
equal to the product of (i) the Uniform Points Participant's uniform
points percentage under the RSP for such Participation Year, and (ii)
the Uniform Points Participant's Excess Compensation for the Fiscal Year
ending in such Participation Year.
-7-
<PAGE>
<PAGE>
(b) Excess Deferrals and Matching Contributions. In any
Determination Year, a Matching Participant may elect (on a form
provided by the Plan Administrator for this purpose) to defer a portion
of his Excess Compensation received during such Determination Year (an
"Excess Deferral"). The amount of the Excess Deferral for any
Determination Year shall be an integral percentage of such Excess
Compensation, provided that the amount is no less than one (1%) percent
and no more than six (6%) percent of such Excess Compensation. For any
Determination Year in which a Matching Participant makes an Excess
Deferral, the Company shall also contribute to the Account of the
Participant an amount (a "Matching Contribution") equal to 66-2/3 cents
for every dollar of such Excess Deferral.
5. Vesting. Participant shall be entitled to receive a
distribution of the vested value of his Account ("Vested Account") as set forth
in Section 6 above. If a Participant leaves the employ of the Company before he
-8-
<PAGE>
<PAGE>
becomes fully vested, such Participant will forfeit the value of the non-vested
portion of his Account.
(a) Excess Deferrals. A Participant is at all times
100% vested in the value of a Participant's Excess Deferrals (and
related Interest).
(b) Matching Contributions. Every Participant who was a
Member of the Company as of December 31, 1993 shall be 100% vested at
all times in the value of the Matching Contributions (and related
Interest) credited to his Account. Every other Participant shall become
100% vested in the value of the Matching Contributions (and related
Interest) credited to his Account as follows:
(1) If the Participant became a Member of the Company
before July 1 of the year in which he became a Member, then he shall be
100% vested on December 31 of such year (provided he is a Member on
such date);
(2) If the Participant became a Member of the Company on
or after July 1 of the year in which he became a Member, he
-9-
<PAGE>
<PAGE>
shall be 100% vested on December 31 of the following year, (provided
that he is a Member on such date).
(c) Excess UPAs. Every Participant shall become vested in
the value of the Excess UPAs (and related Interest) credited to his
Account as follows:
(1) If the Participant became a Member of the Company
before July 1 of the year in which he became a Member, then he shall be
20% vested on December 31 of such year (provided he is a Member on such
date);
(2) If the Participant became a Member of the Company on
or after July 1 of the year in which he became a Member, he shall be
20% vested on December 31 of the following year, (provided that he is a
Member on such date);
(3) Thereafter, the Participant shall become vested in an
additional 20% on the December 31 following the completion of each
additional Year of Service.
-10-
<PAGE>
<PAGE>
(d) Special Events. Notwithstanding paragraphs (a), (b),
and (c) of this Section 5, a Participant shall become 100% vested in
the value of his Account if the Plan is terminated, if there is a
partial termination affecting such Participant, or if the Company
permanently ceases contributions to the Plan, or upon a Change in
Control of the Company as defined in the RSP.
6. Payment of Benefits.
(a) Establishment of Account. The Recordkeeper shall
establish an notional account on the books of the Company (the
"Account") for each Participant under the Plan, and shall value each
Account, in U.S. dollars, on a daily basis. All Excess UPAs, Excess
Deferrals, and Matching Contributions made under the Plan shall be
credited to the Participant's Account. Each Account shall be credited by
the Administrative
-11-
<PAGE>
<PAGE>
Committee with interest at a rate equal to the rate of return on
investments in the Merrill Lynch Government Fund, or any similar fund
as determined by the Administrative Committee ("Interest"); provided,
however, that upon a Participant's payment commencement date, Interest
shall be fixed during any installment payment period.
(b) Method of Payment. The value of the Participant's
Vested Account shall be paid in cash to the Participant in 60 equal
monthly installments, commencing on the first day of the month following
the later of (i) the date on which the Participant attains age 65, and
(ii) the Participant's Date of Termination. Notwithstanding the previous
sentence, AT&T Capital may, in its sole discretion, distribute the value
of a Participant's Vested Account in any form available under the RSP.
In addition, if a Participant's Date of Termination precedes the date on
which the Participant attains age 65, AT&T Capital may, in its sole
discretion, commence distribution of the value of such Participant's
Vested Account as of the first day of any month after the Participant's
Date of Termination.
7. Death Benefits. Notwithstanding the provisions of
Section 5, a Participant who dies while employed by the Company shall become
automatically 100%
-12-
<PAGE>
<PAGE>
vested in the value of his Account. If a Participant dies before he has received
the full value of his Vested Account, the balance of the Vested Account shall be
paid in cash in a single lump sum payment to the Participant's Spouse, or if the
Participant does not have a Spouse, to the Participant's beneficiary under the
RSP.
8. Source of Payments. The benefits provided under the
Plan shall be paid by the Company from a grantor trust established by the
Company for the purpose of paying the benefits under the Plan, at the time and
in the manner provided herein. To the extent that there are insufficient assets
in such trust to pay benefits under the Plan, then the Company shall pay the
benefits out of the general assets of the Company.
9. Nontransferability of Benefits. Benefits payable under
the Plan shall not be subject to any manner of assignment, pledge, alienation or
anticipation by a Participant, Spouse, or any other beneficiary.
10. Administration. Except where powers are specifically
conferred in the Board or the Committee in the Plan, the Plan shall be
administered on behalf of the Plan
-13-
<PAGE>
<PAGE>
Administrator by the Administrative Committee. The Administrative Committee may
from time to time establish rules for the administration of the Plan that are
consistent with the intent and purposes of the Plan, and which will aid in the
prompt and efficient administration of the Plan. The Administrative Committee
shall have complete discretionary authority to determine conclusively for all
parties, and in accordance with the terms of the documents or instruments
governing the Plan, any and all questions arising from administration of the
Plan and interpretation of all plan provisions, determination of all questions
relating to participation of eligible members and eligibility for benefits,
determination of all relevant facts, the amount and type of benefits payable to
any participant, and construction of all terms of the Plan. To the extent
permitted by law, the Plan Administrator, the Administrative Committee and all
agents and representatives of either of the foregoing shall be indemnified by
the Company against any claims, and the expenses of defending against such
claims, resulting from any action or conduct (not taken in bad faith) relating
to the administration of the Plan.
-14-
<PAGE>
<PAGE>
11. Amendment and Termination. The Committee reserves the
right to modify, suspend, change, amend or terminate the Plan at any time.
Subject to Section 5 with respect to Vested Accounts, AT&T Capital does not
guarantee the continuation of any benefits during employment, nor does it
guarantee any specific level of benefits. Nothing in the Plan shall interfere
with or limit in any way the right of AT&T Capital to terminate any
Participant's employment at any time, or confer upon any Participant any right
to continue in the employ of the Company.
12. Withholding. The Company shall have the right to
deduct from any payment under the Plan any amount required to satisfy its
obligation to withhold federal, state and local taxes.
13. Governing Law. The Plan shall be governed and
construed in accordance with the laws of the State of New Jersey.
14. Effective Date. The Plan shall be effective as of
January 1, 1995.
-15-
<PAGE>
<PAGE>
EXHIBIT 10(ab)
Form 10-k for 1995
File 1-11237
FIRST AMENDMENT TO THE
AT&T CAPITAL CORPORATION
COMPENSATION LIMIT EXCESS PLAN
WHEREAS, AT&T Capital Corporation (the "Company") adopted the
AT&T Capital Corporation Compensation Limit Excess Plan (the "Plan"), effective
as of January 1, 1995;
WHEREAS, Section 11 of the Plan provides that the Compensation
Committee of the Board (the "Committee") may amend the Plan at any time and from
time to time; and
WHEREAS, the Committee has approved this amendment to the Plan;
NOW, THEREFORE, the Plan is hereby amended in the following
respects, effective as of October 2, 1995;
1. Section 5 of the Plan is amended by adding the following new
paragraph (e):
"(e) Notwithstanding anything to the contrary in this Section 5,
upon a Change in Control (as defined below) a Participant shall have a fully
vested interest in the Matching Contributions (and related Interest) and Excess
UPAs credited to his or her Account. For purposes of this paragraph (e), the
following terms shall be defined as follows:
"AT&T Capital" means AT&T Capital Corporation and its successors and
assigns.
"Change in Control" means any of the following events:
<PAGE>
<PAGE>
(1) An acquisition (other than in a "non-control transaction", as
defined in clause (3) below) of any Voting Securities by any "person" or "group"
of persons (as such terms are used in Sections 13 and 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than AT&T Capital,
any Subsidiary or any employee benefit plan (or a trust forming a part thereof)
maintained by AT&T Capital or any Subsidiary, as a result of which such person
or group becomes, directly or indirectly, the "beneficial owner" (as such term
is used in Section 13 of the Exchange Act) of Voting Securities representing
fifteen percent (15%) or more of the combined voting power of all Voting
Securities then outstanding; provided that no such acquisition shall be deemed
to give rise to a Change in Control so long as, after giving effect to such
acquisition, AT&T Corp. remains the beneficial owner of Voting Securities
representing a greater percentage of the combined voting power of all Voting
Securities then outstanding than is represented by the Voting Securities
beneficially owned by such person or group; provided, however, that an
acquisition of Voting Securities directly from AT&T Capital or any Subsidiary
shall not be deemed to give rise to a Change in Control if, immediately prior to
such acquisition, no person or group is directly or indirectly in "control" of
AT&T Capital (as such term is defined in Rule 405 under the Securities Act of
1933, as amended);
(2) The individuals who, as of January 1, 1995, are members of the Board
of Directors of AT&T Capital (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the Board of the Directors of AT&T Capital;
provided, however, that if the election or nomination for election by AT&T
Capital's stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for the purposes of
this definition, be considered a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "election contest" (as described in Rule 14a-11
under the Exchange Act) or other actual or threatened solicitation of proxies or
-2-
<PAGE>
<PAGE>
consents by or on behalf of any person or group other than the Board of the
Directors of AT&T Capital (a "proxy contest"), including by reason of any
agreement intended to avoid or settle any election contest or proxy contest;
(3) The consummation of:
(i) a merger, consolidation or reorganization involving AT&T
Capital, unless (A) the stockholders of AT&T Capital, immediately before
such merger, consolidation or reorganization, own, directly or
indirectly, immediately following such merger, consolidation or
reorganization, at least sixty percent (60%) of the combined voting
power of the outstanding voting securities of the corporation surviving
such merger, consolidation or reorganization (the "surviving
corporation") in substantially the same proportion as their ownership of
the Voting Securities of AT&T Capital immediately prior to such merger,
consolidation or reorganization, (B) the individuals who were members of
the Incumbent Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization constitute at
least two-thirds of the members of the board of directors of the
surviving corporation and (C) no person (other than AT&T Capital, any
Subsidiary, any employee benefit plan (or any trust forming a part
thereof) maintained by AT&T Capital, the surviving corporation or any
Subsidiary, or any person who, immediately prior to such merger,
consolidation or reorganization had beneficial ownership of fifteen
percent (15%) or more of the then outstanding Voting Securities of AT&T
Capital) has beneficial ownership of fifteen percent (15%) or more of
the combined voting power of the surviving corporation's then
outstanding voting securities (a transaction meeting the criteria set
forth in the foregoing clauses (A) through (C) being sometimes referred
to herein as a "non-control transaction");
(ii) a complete liquidation or dissolution of AT&T Capital; or
-3-
<PAGE>
<PAGE>
(iii) an agreement for the sale or other disposition of all or
substantially all of the assets of AT&T Capital to any person (other
than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred solely because any person or group becomes the beneficial owner of more
than the permitted amount of the outstanding Voting Securities of AT&T Capital
as a result of an acquisition of Voting Securities by AT&T Capital which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of Voting Securities owned by such person or group; provided, that if (i)
a Change in Control would have been deemed to have occurred but for the
operation of this sentence as a result of such acquisition of Voting Securities
by AT&T Capital and (ii) such person or group thereupon or thereafter becomes
the beneficial owner of any additional Voting Securities resulting in an
increase in the percentage of the then outstanding Voting Securities
beneficially owned by such person or group (and which percentage is in excess of
fifteen percent (15%)), then a Change in Control shall be deemed to have
occurred at the time of such acquisition of beneficial ownership of such
additional Voting Securities by such person or group.
"Subsidiary" means (i) any person that is directly or indirectly controlled by
AT&T Capital or (ii) any other person in which AT&T Capital has a significant
equity interest, as determined by the Committee.
"Voting Securities" means any shares of the capital stock or other securities of
AT&T Capital that are generally entitled to vote in elections for directors."
-4-
<PAGE>
<PAGE>
SEPARATION AGREEMENT AND GENERAL RELEASE
For purposes of this Separation Agreement and General Release, the "Company"
shall mean AT&T Capital Corporation, and its respective subsidiaries and
affiliated companies.
In consideration of the fact that I, __________________ (the "Member") have
voluntarily and of my own free will, elected to accept an enhanced payment (the
"Enhanced Payment") and the Company has agreed to pay me an Enhanced Payment, I
acknowledge and agree to the following:
1. I understand that as of ___________ (the "Date of Termination") my
employment with the Company will terminate.
2. I have been advised by the Company that I am being terminated from the
payroll pursuant to the terms of the AT&T Capital Corporation Leadership
Severance Plan and that I am entitled to a severance payment, in
addition to other post-employment benefits.
I have also been told by the Company, and I understand, that I may
elect, at my option, to receive an Enhanced Payment, but that my
election to receive the Enhanced Payment is expressly conditioned upon
my signing this Separation Agreement and General Release.
The amount of the Enhanced Payment to be paid will be calculated by
multiplying my Severance Payment by twenty percent (20%).
I have elected to receive the Enhanced Payment in return for signing
this Separation Agreement and General Release. I understand that the
Enhanced Payment is being paid as consideration for my signing this
Separation Agreement and General Release.
3. I also understand that [, PURSUANT TO THE OLDER WORKERS BENEFIT
PROTECTION ACT OF 1990,] I have the right and am encouraged to consult
with an attorney before signing this Separation Agreement and General
Release, I have [45] [21] days to consider the General Release before
signing it, and I may revoke the General Release within seven calendar
days after signing it. I acknowledge that the Company has informed me of
my rights set forth in the immediately preceding sentence. For
revocation to be effective, written notice must be received by the
Company no later than the close of business on the seventh day after I
sign this Separation Agreement and General Release. I understand that
this revocation can be made by delivering the written notice
<PAGE>
<PAGE>
of revocation to the AT&T Capital Corporation, Director of Human
Resources, 44 Whippany Road, Morristown, New Jersey 07960.
4. Subject to paragraph 5 below and in consideration of the Enhanced
Payment provided for in this Separation Agreement and General Release,
on behalf of myself, my heirs, executors, administrators, successors and
assigns, I release and discharge the Company, its successors, assigns,
subsidiaries, affiliates, directors, officers, representatives, agents
and employees ("Releasees") from any and all debts, obligations, claims,
including claims for attorney's fees and costs, charges, demands,
judgments, actions and causes of action with respect to, or arising out
of, my employment or termination of employment with the Company
(collectively "Claims"). This includes, but is not limited to, Claims
arising under federal, state, or local laws prohibiting age, color,
race, gender, sexual preference/orientation, marital status, national
origin, mental or physical disability, religious affiliation or veteran
status or any other forms of discrimination including but not limited to
Title VII of the Civil Rights Act of 1964, and the Age Discrimination in
Employment Act, as amended, or Claims growing out of the Company's
termination of its members. The Claims released also include all claims
arising under the United States or any state constitutions; all claims
arising under any Executive Order or derived from or based upon any
federal regulations; all common law claims including claims for wrongful
discharge, public policy claims, claims for breach of an express or
implied contract, claims for breach of an implied covenant of good faith
and fair dealing, whistleblower claims, claims for intentional
infliction of emotional distress, negligent and/or intentional
misrepresentation, defamation, and tortious interference with contract
or prospective economic advantage; all claims for any compensation
including back wages, front pay, fringe benefits, liquidated damages, or
any other form of economic loss; and all claims for damages due to
personal injury, including damages for mental anguish, emotional
distress, pain and suffering, humiliation, and punitive damages. With
respect to any charges that have been or may be filed concerning events
or actions relating to my employment or the termination of my employment
and which occurred on or before the date of this Agreement, I
additionally waive and release any right I may have to recover in any
lawsuit or proceeding brought by me, any administrative agency, or any
other person on my behalf or which includes me in any class. I
acknowledge that this Separation Agreement and General Release includes
Claims that are both known and unknown,
<PAGE>
<PAGE>
anticipated and unanticipated. If I breach this paragraph, I understand
that I will be liable for all expenses, including costs and reasonable
attorney's fees, incurred by any Releasee in defending the lawsuit or
charge of discrimination, regardless of the outcome. I agree to pay such
expenses within thirty (30) calendar days of written demand. This
paragraph is not intended to limit me from instituting legal action for
the sole purpose of enforcing this Agreement.
[I FURTHER AGREE THAT AS PART OF THE CONSIDERATION AND INDUCEMENT FOR
THE EXECUTION OF THIS AGREEMENT, I SPECIFICALLY WAIVE THE PROVISIONS OF
SECTION 1542 OF THE CALIFORNIA CIVIL CODE WHICH READS AS FOLLOWS:
THE GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED SETTLEMENT WITH THE DEBTOR.
NOTWITHSTANDING THE PROVISIONS OF SECTION 1542, AND FOR THE PURPOSE OF
IMPLEMENTING A FULL AND COMPLETE RELEASE AND DISCHARGE OF THE COMPANY, I
ACKNOWLEDGE THAT THIS SEPARATION AGREEMENT AND GENERAL RELEASE IS
INTENDED TO INCLUDE, WITHOUT LIMITATION, MY CLAIMS WHICH ARE KNOWN,
ANTICIPATED OR DISCLOSED AS WELL AS MY CLAIMS THAT ARE UNKNOWN,
UNANTICIPATED AND UNDISCLOSED.]
5. I understand that this Separation Agreement and General Release in no
way affects any rights I may have for benefits under any applicable
Company benefit plan.
6. In accordance with my existing and continuing obligations to the
Company, I have returned or will immediately return to the Company, on
or before the Date of Termination, all Company property, including, but
not limited to, notes, keys, card keys or security passes, Company
identification cards, credit or phone cards, files, records, computer
access codes, computer programs, instruction manuals, business plans,
and other property relating to the business of the Company. I understand
and agree that after the Date of Termination, I will no longer be
authorized to incur any expenses, obligations or liabilities on behalf
of the Company. I will submit any claims or vouchers for reimbursement
of business expenses on or before the Date of Termination.
7. I affirm my obligation to keep all proprietary or confidential Company
information or work product
<PAGE>
<PAGE>
confidential and not to disclose it to any third party in the
future. I understand that the term "proprietary Company information"
includes, but is not necessarily limited to, information which is
technical, marketing (including customer lists), business, financial
pricing or other information which constitutes trade secret information
or information not available to competitors of the Company, the use or
disclosure of which might reasonably be construed to be contrary to the
interest of the Company.
8. I understand that the Company will pay to an outplacement services
provider reasonable and documented fees for outplacement services
rendered to me.
9. The construction, interpretation and performance of this Separation
Agreement and General Release shall be governed by the laws of the state
in which I am working on the Date of Termination.
10. I understand and agree that money damages are not a sufficient remedy
for any actual or threatened breach of this Separation Agreement and
General Release by me, and that, in addition to all other remedies, the
Company will be entitled to specific performance and injunctive or other
equitable relief as a remedy for any such breach.
11. In the event that any one or more of the provisions contained in this
Separation Agreement and General Release shall for any reason be held to
be unenforceable in any respect under the law of any state or of the
United States of America, such unenforceability shall not affect any
other provision but, with respect only to that jurisdiction holding the
provision to be unenforceable, this Separation Agreement and General
Release shall then be construed as if such unenforceable provision or
provisions had never been contained herein.
12. This Separation Agreement and General Release contains the entire
agreement between the Company and me and fully supersedes any and all
prior agreements or understandings pertaining to the subject matter
hereof. I represent and acknowledge that in executing this Separation
Agreement and General Release I have not relied upon any representation
or statement not set forth herein made by any of the Releasees or by any
of the Releasee's agents, representatives or attorneys with regard to
the subject matter hereof.
BY SIGNING THIS SEPARATION AGREEMENT AND GENERAL RELEASE, I STATE THAT; I HAVE
READ IT; I UNDERSTAND IT AND KNOW THAT I AM GIVING
<PAGE>
<PAGE>
UP IMPORTANT RIGHTS; I AGREE WITH EVERYTHING IN IT; I AM AWARE OF MY RIGHT TO
CONSULT AN ATTORNEY BEFORE SIGNING IT; AND I HAVE SIGNED IT KNOWINGLY AND
VOLUNTARILY.
- --------- --------------------------
Date: Member Signature
--------------------------
Member Name Printed
<PAGE>
<PAGE>
SEPARATION AGREEMENT AND GENERAL RELEASE-OTHER ELIGIBLE TERMINATION
For purposes of this Separation Agreement and General Release, the "Company"
shall mean AT&T Capital Corporation, and its respective subsidiaries and
affiliated companies.
In consideration of the fact that I, __________________ (the "Member") have
voluntarily and of my own free will, elected to accept an enhanced payment (the
"Enhanced Payment") and the Company has agreed to pay me an Enhanced Payment, I
acknowledge and agree to the following:
1. I understand that as of ___________ (the "Date of Termination") my
employment with the Company will terminate.
2. I have been advised by the Company that I am being terminated from the
payroll pursuant to an "other eligible termination" under the terms of
the AT&T Capital Corporation Leadership Severance Plan and that I am
entitled to a severance payment (the "Severance Payment"), in addition
to other post-employment benefits.
I have also been told by the Company, and I understand, that I may
elect, at my option, to receive an Enhanced Payment, but that my
election to receive the Enhanced Payment is expressly conditioned upon
my signing this Separation Agreement and General Release.
The amount of the Enhanced Payment to be paid will be calculated by
multiplying my Severance Payment by forty percent (40%).
I have elected to receive the Enhanced Payment in return for signing
this Separation Agreement and General Release. I understand that the
Enhanced Payment is being paid as consideration for my signing this
Separation Agreement and General Release.
3. I also understand that [, PURSUANT TO THE OLDER WORKERS BENEFIT
PROTECTION ACT OF 1990,] I have the right and am encouraged to consult
with an attorney before signing this Separation Agreement and General
Release, I have 21 days to consider the General Release before signing
it, and I may revoke the General Release within seven calendar days
after signing it. I acknowledge that the Company has informed me
<PAGE>
<PAGE>
of my rights set forth in the immediately preceding sentence. For
revocation to be effective, written notice must be received by the
Company no later than the close of business on the seventh day after I
sign this Separation Agreement and General Release. I understand that
this revocation can be made by delivering the written notice of
revocation to the AT&T Capital Corporation, Director of Human Resources,
44 Whippany Road, Morristown, New Jersey 07960.
4. Subject to paragraph 5 below and in consideration of the Enhanced
Payment provided for in this Separation Agreement and General Release,
on behalf of myself, my heirs, executors, administrators, successors and
assigns, I release and discharge the Company, its successors, assigns,
subsidiaries, affiliates, directors, officers, representatives, agents
and employees ("Releasees") from any and all debts, obligations, claims,
including claims for attorney's fees and costs, charges, demands,
judgments, actions and causes of action with respect to, or arising out
of, my employment or termination of employment with the Company
(collectively "Claims"). This includes, but is not limited to, Claims
arising under federal, state, or local laws prohibiting age, color,
race, gender, sexual preference/orientation, marital status, national
origin, mental or physical disability, religious affiliation or veteran
status or any other forms of discrimination including but not limited to
Title VII of the Civil Rights Act of 1964, and the Age Discrimination in
Employment Act, as amended, or Claims growing out of the Company's
termination of its members. The Claims released also include all claims
arising under the United States or any state constitutions; all claims
arising under any Executive Order or derived from or based upon any
federal regulations; all common law claims including claims for wrongful
discharge, public policy claims, claims for breach of an express or
implied contract, claims for breach of an implied covenant of good faith
and fair dealing, whistleblower claims, claims for intentional
infliction of emotional distress, negligent and/or intentional
misrepresentation, defamation, and tortious interference with contract
or prospective economic advantage; all claims for any compensation
including back wages, front pay, fringe benefits, liquidated damages, or
any other form of economic loss; and all claims for damages due to
personal injury, including damages for mental anguish, emotional
distress,
<PAGE>
<PAGE>
pain and suffering, humiliation, and punitive damages. With respect to
any charges that have been or may be filed concerning events or actions
relating to my employment or the termination of my employment and which
occurred on or before the date of this Agreement, I additionally waive
and release any right I may have to recover in any lawsuit or proceeding
brought by me, any administrative agency, or any other person on my
behalf or which includes me in any class. I acknowledge that this
Separation Agreement and General Release includes Claims that are both
known and unknown, anticipated and unanticipated. If I breach this
paragraph, I understand that I will be liable for all expenses,
including costs and reasonable attorney's fees, incurred by any Releasee
in defending the lawsuit or charge of discrimination, regardless of the
outcome. I agree to pay such expenses within thirty (30) calendar days
of written demand. This paragraph is not intended to limit me from
instituting legal action for the sole purpose of enforcing this
Agreement.
[I FURTHER AGREE THAT AS PART OF THE CONSIDERATION AND INDUCEMENT FOR
THE EXECUTION OF THIS AGREEMENT, I SPECIFICALLY WAIVE THE PROVISIONS OF
SECTION 1542 OF THE CALIFORNIA CIVIL CODE WHICH READS AS FOLLOWS:
THE GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED SETTLEMENT WITH THE DEBTOR.
NOTWITHSTANDING THE PROVISIONS OF SECTION 1542, AND FOR THE PURPOSE OF
IMPLEMENTING A FULL AND COMPLETE RELEASE AND DISCHARGE OF THE COMPANY, I
ACKNOWLEDGE THAT THIS SEPARATION AGREEMENT AND GENERAL RELEASE IS
INTENDED TO INCLUDE, WITHOUT LIMITATION, MY CLAIMS WHICH ARE KNOWN,
ANTICIPATED OR DISCLOSED AS WELL AS MY CLAIMS THAT ARE UNKNOWN,
UNANTICIPATED AND UNDISCLOSED.]
5. I understand that this Separation Agreement and General Release in no
way affects any rights I may have for benefits under any applicable
Company benefit plan.
6. In accordance with my existing and continuing obligations to the
Company, I have returned or will immediately return to the Company, on
or before the Date of Termination, all
<PAGE>
<PAGE>
Company property, including, but not limited to, notes, keys, card keys
or security passes, Company identification cards, credit or phone cards,
files, records, computer access codes, computer programs, instruction
manuals, business plans, and other property relating to the business of
the Company. I understand and agree that after the Date of Termination,
I will no longer be authorized to incur any expenses, obligations or
liabilities on behalf of the Company. I will submit any claims or
vouchers for reimbursement of business expenses on or before the Date of
Termination.
7. I affirm my obligation to keep all proprietary or confidential Company
information or work product confidential and not to disclose it to any
third party in the future. I understand that the term "proprietary
Company information" includes, but is not necessarily limited to,
information which is technical, marketing (including customer lists),
business, financial pricing or other information which constitutes trade
secret information or information not available to competitors of the
Company, the use or disclosure of which might reasonably be construed to
be contrary to the interest of the Company.
8. I understand that the Company will pay to an outplacement services
provider reasonable and documented fees for outplacement services
rendered to me.
9. The construction, interpretation and performance of this Separation
Agreement and General Release shall be governed by the laws of the state
in which I am working on the Date of Termination.
10. I understand and agree that money damages are not a sufficient remedy
for any actual or threatened breach of this Separation Agreement and
General Release by me, and that, in addition to all other remedies, the
Company will be entitled to specific performance and injunctive or other
equitable relief as a remedy for any such breach.
11. In the event that any one or more of the provisions contained in this
Separation Agreement and General Release shall for any reason be held to
be unenforceable in any respect under the law of any state or of the
United States of America, such unenforceability shall not affect any
other provision but, with respect only to that jurisdiction
<PAGE>
<PAGE>
holding the provision to be unenforceable, this Separation Agreement and
General Release shall then be construed as if such unenforceable
provision or provisions had never been contained herein.
12. This Separation Agreement and General Release contains the entire
agreement between the Company and me and fully supersedes any and all
prior agreements or understandings pertaining to the subject matter
hereof. I represent and acknowledge that in executing this Separation
Agreement and General Release I have not relied upon any representation
or statement not set forth herein made by any of the Releasees or by any
of the Releasee's agents, representatives or attorneys with regard to
the subject matter hereof.
BY SIGNING THIS SEPARATION AGREEMENT AND GENERAL RELEASE, I STATE THAT; I HAVE
READ IT; I UNDERSTAND IT AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS; I AGREE
WITH EVERYTHING IN IT; I AM AWARE OF MY RIGHT TO CONSULT AN ATTORNEY BEFORE
SIGNING IT; AND I HAVE SIGNED IT KNOWINGLY AND VOLUNTARILY.
- --------- --------------------------
Date: Member Signature
--------------------------
Member Name Printed
<PAGE>
<PAGE>
EXHIBIT 10(ac)
Form 10-K for 1995
File No. 1-11237
AT&T CAPITAL CORPORATION LEADERSHIP SEVERANCE PLAN
The purpose of the AT&T Capital Corporation Leadership Severance
Plan is to provide severance benefits to certain of the management employees of
AT&T Capital Corporation (the "Company") and its Subsidiaries. The Compensation
Committee of the Board of Directors of the Company has also determined that it
is in the best interests of the Company and its stockholders to secure the
continued services and dedication and objectivity of its management employees in
light of the potential occurrence of a Change in Control (as defined in Section
1(d)) of the Company, without concern as to whether such employees might be
hindered or distracted by personal uncertainties and risks created by any such
potential Change in Control.
1. Definitions. As used in this Plan, the following terms shall
have respective meanings set forth below:
-1-
<PAGE>
<PAGE>
(a) "AT&T" means AT&T Corp., a New York corporation.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means (i) a Participant's commission or conviction of
a felony (or guilty or nolo contendere plea in connection therewith); (ii) a
determination by the Board or the Committee that a Participant has defrauded the
Company; or (iii) a determination by the Board or the Committee that a
Participant has committed a material breach of the duties and responsibilities
of the Participant that has caused significant adverse harm to the Company,
which breach is (A) demonstrably willful and deliberate, (B) committed in bad
faith or without reasonable belief that such breach is in the best interests of
the Company and (C) not remedied within a reasonable period of time after
receipt of written notice from the Company specifying such breach.
(d) "Change in Control" means any of the following:
-2-
<PAGE>
<PAGE>
(i) An acquisition (other than in a non-control transaction, as
defined in clause (iii) below) of any Voting Securities by any "person"
or "group" of persons (as such terms are used in Sections 13 and 14 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than the Company, any Subsidiary or any employee benefit plan (or
a trust forming a part thereof) maintained by the Company or any
Subsidiary, as a result of which such person or group becomes, directly
or indirectly, the "beneficial owner" (as such term is used in Section
13 of the Exchange Act) of Voting Securities representing fifteen
percent (15%) or more of the combined voting power of all Voting
Securities then outstanding; provided that no such acquisition shall be
deemed to give rise to a Change in Control so long as, after giving
effect to such acquisition, AT&T remains the beneficial owner of Voting
Securities representing a greater percentage of the combined voting
power of all Voting Securities then outstanding than is represented by
the Voting
-3-
<PAGE>
<PAGE>
Securities beneficially owned by such person or group; and provided,
further, that an acquisition of Voting Securities directly from the
Company or any Subsidiary shall not be deemed to give rise to a Change
in Control if, immediately prior to such acquisition, no person or group
is directly or indirectly in "control" of the Company (as such term is
defined in Rule 405 under the Securities Act of 1933, as amended).
-4-
<PAGE>
<PAGE>
(ii) The individuals who, as of the Effective Date, are members
of the Board (the "Incumbent Board"), cease for any reason to constitute
at least two-thirds of the Board; provided, however, that if the
election or nomination for election by the Company's stockholders, of
any new director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for the purposes of this
definition, be considered a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result
of either an actual or threatened "election contest" (as described in
Rule 14a-11 under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of any person or
group other than the Board (a "proxy contest"), including by reason of
any agreement intended to avoid or settle any election contest or proxy
contest;
-5-
<PAGE>
<PAGE>
(iii) The approval by the requisite vote of the Company's
stockholders of:
-6-
<PAGE>
<PAGE>
(A) a merger, consolidation or reorganization involving
the Company, unless (1) the stockholders of the Company,
immediately before such merger, consolidation or reorganization,
own, directly or indirectly immediately following such merger,
consolidation or reorganization, at least sixty percent (60%) of
the combined voting power of the outstanding voting securities
of the corporation surviving such merger, consolidation or
reorganization (the "surviving corporation") in substantially
the same proportion as their ownership of the Voting Securities
of the Company immediately prior to such merger, consolidation
or reorganization, (2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members
-7-
<PAGE>
<PAGE>
of the board of directors of the surviving corporation and (3)
no person (other than the Company, any Subsidiary, any employee
benefit plan (or any trust forming a part thereof) maintained by
the Company, the surviving corporation or any Subsidiary, or any
person who, immediately prior to such merger, consolidation or
reorganization had beneficial ownership of fifteen percent (15%)
or more of the then outstanding Voting Securities of the
Company) has beneficial ownership of fifteen percent (15%) or
more of the combined voting power of the surviving corporation's
then outstanding voting securities (a transaction meeting the
criteria set forth in the foregoing clauses (1) through (3)
being sometimes referred to herein as a "non-control
transaction");
(B) a complete liquidation or dissolution of the
Company; or
-8-
<PAGE>
<PAGE>
(C) an agreement for the sale or other disposition of
all or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred solely because any person or group becomes the beneficial owner of more
than the permitted amount of the outstanding Voting Securities of the Company as
a result of an acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of Voting Securities owned by such person or group, provided that if (i)
a Change in Control would have been deemed to have occurred but for the
operation of this sentence as a result of such acquisition of Voting Securities
by the Company and (ii) such person or group thereupon or thereafter becomes the
beneficial owner of any additional Voting Securities resulting in an increase in
the percentage of the then outstanding Voting Securities beneficially owned by
such person or group (and which percentage is in excess of
-9-
<PAGE>
<PAGE>
fifteen percent (15%)), then a Change in Control shall be deemed to have
occurred at the time of such acquisition of beneficial ownership of such
additional Voting Securities by such person or group.
(e) "Committee" means the Compensation Committee of the Board.
(f) "Company" means AT&T Capital Corporation, a Delaware
corporation.
(g) "Compensation" means a Participant's then current annual rate
of base salary as of his Date of Termination and his target annual incentive
award for the year in which his Date of Termination occurs (not taking into
account any reductions that would constitute a reason for a Qualifying
Termination) and commissions actually paid during the twelve (12) months
immediately preceding the Date of Termination.
(h) "Continuous Service" means the Participant's continuous
service with the Company (and any of its Subsidiaries), plus any periods of
continuous service with AT&T or NCR Corporation (or AT&T Global Information
Solutions, Inc.)
-10-
<PAGE>
<PAGE>
prior to January 1, 1994 and any periods of prior service that have been
designated as "vesting service" under the AT&T Capital Corporation Retirement
and Savings Plan. For purposes of the Plan, Continuous Service shall be measured
as of a Participant's Date of Termination, including any notice period provided
for in Section 8 of the Plan.
(i) "Date of Termination" means the date on which a Participant's
employment with the Company terminates.
(j) "Disability" means, with respect to a Participant, a
determination by the Committee that such Participant has become "disabled"
within the meaning of the Company's long-term disability plan as in effect at
the time.
(k) "Effective Date" means October 2, 1995.
(l) "Final Annual Pay" means the higher of (i) the sum of a
Participant's then current rate of annual base salary as of his Date of
Termination and 110% of target annual incentive for the year in which a Date of
Termination occurs (not taking into account any reduction that would constitute
a basis for a Qualifying Termination) and
-11-
<PAGE>
<PAGE>
commissions actually paid during the twelve (12) months immediately preceding
the Date of Termination and (ii) the quotient equal to (A) the sum of a
Participant's (1) annual rate of base salary (not taking into account any
reduction that would constitute a basis for a Qualifying Termination), (2)
actual annual incentive payment earned and (3) commissions actually paid during
the three (3) consecutive calendar years preceding the Participant's Date of
Termination in which he had the greatest aggregate earnings, divided by (B)
three (3) ("Average Earnings"). If a Participant has less than three (3)
calendar years of employment with the Company, his Average Earnings shall be the
average amount of his annual rate of base salary (prorated for any partial
calendar year) and actual annual incentive payment earned and commissions
actually paid for the relevant employment period.
(m) "Other Eligible Termination" means a termination of a
Participant's employment by the Company (other than for Cause, Disability or
Retirement), that is not an RIF Termination.
-12-
<PAGE>
<PAGE>
(n) "Participant" means each employee of the Company or any
Subsidiary who is classified as a "strategic system" member (other than a
Corporate Leadership Team member or a Leadership Forum member) or any equivalent
classification as determined from time to time by the Corporate Leadership Team
(or any successor organization) of the Company (a "Strategic Member"), a
Leadership Forum member or a Corporate Leadership Team member (or any successor
classifications to such classifications) who has not been given a written notice
of termination prior to the Effective Date. Payments and benefits under the Plan
will be determined based upon such classification as of the Participant's Date
of Termination (not taking into account any reduction of classification at any
time following the Effective Date which, if such reduction occurred during the
two (2) year period following a Change in Control, would constitute a reason for
a Qualifying Termination under the Plan). Attached as Exhibit A is a list of
Participants as of the Effective Date.
-13-
<PAGE>
<PAGE>
(o) "Plan" means the AT&T Capital Corporation Leadership
Severance Plan.
(p) "Qualifying Termination" of the employment of a Participant
with the Company and any relevant Subsidiaries in connection with a Change in
Control means any of the following:
(i) A termination of a Participant's employment by the Company
and its Subsidiaries within two (2) years after a Change in Control,
other than a termination for Cause;
(ii) A termination of employment by a Participant within two (2)
years after such Change in Control for one or more of the following
reasons:
(A) The assignment to such Participant of any duties
inconsistent, in a way significantly adverse to such Participant, with
such Participant's positions, duties, responsibilities and status with
the Company and its Subsidiaries immediately prior to such Change in
Control, or a significant reduction in the duties and responsibilities
held by such Participant
-14-
<PAGE>
<PAGE>
immediately prior to such Change in Control; a change in such
Participant's reporting responsibilities, title or offices as in effect
immediately prior to such Change in Control that is significantly
adverse to the Participant; or any removal of such Participant from or
any failure to re-elect such Participant to any position with the
Company or any such Subsidiary that such Participant held immediately
prior to such Change in Control except in connection with such
Participant's promotion or a termination of employment for Cause (or in
the case of Retirement, death or Disability); or
(B) A reduction by the Company or its Subsidiaries in such
Participant's annual base salary or target annual incentive as in effect
immediately prior to such Change in Control, or as the same may be
increased from time to time thereafter; the failure by the Company and
such Subsidiaries to continue in effect any employee benefit plan or
compensation plan in which such Participant was participating
immediately prior to such Change in Control unless such Participant is
-15-
<PAGE>
<PAGE>
permitted to participate in other plans providing substantially
comparable benefits to such Participant; or the taking of any action by
the Company or its Subsidiaries that which would adversely affect such
Participant's participation in or materially reduce such Participant's
benefits under any such plan; or
(C) The Company or its Subsidiaries requiring such Participant to
be based anywhere other than such Participant's present work location or
a location within twenty-five (25) miles from such present location; or
the Company or its Subsidiaries requiring such Participant to travel on
company business to an extent substantially more burdensome than such
Participant's travel obligations immediately prior to such Change in
Control;
provided that, in the case of any such termination of employment by the
Participant pursuant to paragraphs (A), (B) or (C), above, such termination
shall not be deemed to be a Qualifying Termination unless notice of such
termination occurs within ninety (90) days after the
-16-
<PAGE>
<PAGE>
Participant receives notice of the occurrence of the events constituting the
reason for such termination; or
(iii) A termination of a Participant's employment by the Company or
its Subsidiaries or by the Participant pursuant to one of the reasons
for termination set forth in paragraph (ii) above within one (1) year
prior to such Change in Control, other than a termination for Cause, if
the Participant can demonstrate that such termination or reason for
termination (A) was at the request of a third party with which AT&T or
its subsidiaries (other than the Company and its Subsidiaries to the
extent that they are not directly or indirectly controlled by AT&T at
the time) had entered into negotiations or an agreement with regard to
such Change in Control or (B) otherwise occurred in connection with, or
in anticipation of, such Change in Control, provided that, in either
such case, such Change in Control actually occurs, and provided,
further, that the reason for termination set forth in paragraph (ii)
above occurred on or subsequent to the Effective Date.
-17-
<PAGE>
<PAGE>
In the event that upon a Change in Control the Company ceases to be a publicly
traded corporation, such event will not, in and of itself, constitute a reason
for a Qualifying Termination under paragraph (ii) above unless one of the
reasons set forth in paragraphs (A), (B) or (C), above occurs. For purposes of
this Plan, a termination of a Participant's employment by the Company or the
Participant on account of the Participant's death, Disability or Retirement
shall not constitute a Qualifying Termination.
(q) "Retirement" means the voluntary retirement of a Participant
pursuant to a retirement plan of the Company or any relevant Subsidiary.
(r) "RIF Termination" means the termination of a Participant's
employment (i) by the Company as a result of a reduction in force, change in
operations, facility relocation or closing, or other job elimination, whether or
not related to a Change in Control, or (ii) pursuant to a Qualifying
Termination.
(s) "Subsidiary" means (i) any person that is directly or
indirectly controlled by the Company or (ii) any
-18-
<PAGE>
<PAGE>
other person in which the Company has a significant equity interest, as
determined by the Committee.
(t) "Voting Securities" means any shares of the capital stock or
other securities of the Company that are generally entitled to vote in elections
for directors.
2. Payments and Benefits Upon an RIF Termination. In the event a
Participant's employment is terminated as a result of an RIF Termination, the
Company will provide to such Participant the following payments and benefits:
-19-
<PAGE>
<PAGE>
(a) Within five (5) days following the Participant's Date of
Termination, the Company will pay to such Participant a lump sum cash payment
equal to the greater of (i) two (2) weeks' Compensation for each full year of
Continuous Service and (ii) the percentage of such Participant's Final Annual
Pay set forth below (the "Severance Payments"):
(A) for Strategic Members (other than Leadership Forum members),
100% of Final Annual Pay;
(B) for Leadership Forum members (other than Corporate Leadership
Team members), 150% of Final Annual Pay; and
(C) for Corporate Leadership Team members, 200% of Final Annual
Pay.
(b) (i) Within five (5) days following the Participant's Date of
Termination, the Company shall provide to the Participant a lump sum cash
payment (the "Benefits Payments") in an amount equal to 135% of the
Participant's premium (determined as of the Date of Termination) required to
obtain "COBRA" continued health and dental coverage
-20-
<PAGE>
<PAGE>
(under Section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code")) for the "continuation periods" set forth below (each continuation
period shall begin on the first day of the calendar month following the month in
which such Participant's Date of Termination occurs); provided, however, that if
such continuation period exceeds the period of continuation coverage provided
pursuant to COBRA, the Participant shall receive as part of such lump sum
payment the cost of the remaining months' coverage as it would be calculated had
COBRA applied:
<TABLE>
<S> <C>
============================================== ================
Strategic Members 12 months
============================================== ================
Leadership Forum Members 18 months
============================================== ================
Corporate Leadership Team Members 24 months
============================================== ================
</TABLE>
(ii) In addition, during the continuation periods indicated
above, (A) the Company shall provide life insurance coverage in the amount of
one (1) times Pay (as such term is defined in the Company's Life and Accidental
Loss Insurance Plan, or any comparable definition contained in a replacement or
successor plan (the "Life Insurance
-21-
<PAGE>
<PAGE>
Plan")) to the Participant ("Basic Life Insurance"), and (B) if a Participant
was receiving prior to his Date of Termination supplemental life insurance
coverage under the Life Insurance Plan in addition to Basic Life Insurance
("Supplemental Life Insurance"), such Participant may elect to continue such
Supplemental Life Insurance by paying the difference between the cost of
providing Supplemental Life Insurance and the cost of providing Basic Life
Insurance. If a Participant elects to continue Supplemental Life Insurance, the
cost will be deducted from such Participant's Benefits Payments hereunder. All
benefits granted, payable or otherwise available to Leadership Forum members and
Corporate Leadership Team members under the Company's Financial Counseling Plan
and Executive Car Plan shall continue for a period of one (1) year from the
Participant's Date of Termination.
-22-
<PAGE>
<PAGE>
(c) Within five (5) days following the Participant's Date of
Termination, the Company will pay to such Participant a lump sum cash payment
equal to the sum of (i) the Participant's base salary to the extent earned but
not theretofore paid, (ii) any earned, but unpaid, bonus, (iii) the value of
such Participant's accrued, but unused, vacation, personal days and floating
holidays (including days permitted to be carried forward from the prior year)
and (iv) any other amounts due and owing to the Participant by the Company.
3. Payments and Benefits Upon an Other Eligible Termination. In
the event a Participant's employment is terminated as a result of an Other
Eligible Termination, the Company will provide to such Participant the following
payments and benefits:
(a) Within five (5) days following the Participant's Date of
Termination, the Company will pay to such Participant a lump sum cash payment
equal to the greater of (i) one (1) week's Compensation for each full year of
Continuous Service and (ii) the percentage of such
-23-
<PAGE>
<PAGE>
Participant's Final Annual Pay set forth below (the "Severance Payments"):
(A) for Strategic Members (other than Leadership Forum members),
50% of Final Annual Pay;
(B) for Leadership Forum members (other than Corporate Leadership
Team members), 100% of Final Annual Pay; and
(C) for Corporate Leadership Team members, 150% of Final Annual
Pay.
(b) (i) Within five (5) days following the Participant's date of
Termination, the Company shall provide to the Participant a lump sum cash
payment (the "Benefits Payments") in an amount equal to 135% of the
Participant's premium (determined as of the Date of Termination) required to
obtain "COBRA" continued health and dental coverage (under Section 4980B of the
Code) for the following "continuation periods" (each continuation period shall
begin on the first day of the calendar month following the month in which such
Participant's Date of Termination occurs):
-24-
<PAGE>
<PAGE>
<TABLE>
<S> <C>
================================================ ==============
Strategic Members 6 months
================================================ ==============
Leadership Forum Members 12 months
================================================ ==============
Corporate Leadership Team Members 18 months
================================================ ==============
</TABLE>
(ii) In addition, during the continuation periods indicated
above, (A) the Company shall provide Basic Life Insurance to the Participant and
(B) if a Participant was receiving Supplemental Life Insurance coverage prior to
his Date of Termination, such Participant may elect to continue such
Supplemental Life Insurance by paying the difference between the cost of
providing Basic Life Insurance and the cost of providing Supplemental Life
Insurance. If a Participant elects to continue Supplemental Life Insurance, the
cost will be deducted from such Participant's Benefits Payments hereunder.
(c) Within five (5) days following the Participant's Date of
Termination, the Company will pay to such Participant a lump sum cash payment
equal to the sum of (i) the Participant's base salary to the extent earned but
not theretofore paid, (ii) any earned, but unpaid, bonus,
-25-
<PAGE>
<PAGE>
(iii) the value of such Participant's accrued, but unused, vacation, personal
days and floating holidays (including days permitted to be carried forward from
the prior year) and (iv) any other amounts due and owing to the Participant by
the Company.
4. Events Prior to and Unrelated to a Change in Control.
Notwithstanding anything contained herein to the contrary, in the event of a
sale of a division or unit of the Company prior to a Change in Control, provided
that such sale is not made at the request of a third party with which AT&T or
its subsidiaries (other than the Company and its Subsidiaries to the extent that
they are not directly or indirectly controlled by AT&T at the time) had entered
into negotiations or an agreement with regard to a Change in Control, or has not
otherwise occurred in connection with, or in anticipation of, a Change in
Control, such sale shall not result in an RIF Termination or an Other Eligible
Termination with respect to any affected Participant, and no such Participant
shall be eligible to receive the Severance Payments or benefits provided under
Section 2 or 3 of
-26-
<PAGE>
<PAGE>
the Plan if such Participant is offered another reasonably comparable position
with reasonably comparable compensation with the acquiring or resulting company
in the same general geographic area as such Participant's then current position
("Comparable Employment"). Notwithstanding the foregoing, if such Participant's
Comparable Employment with the acquiring or resulting company is terminated by
such company (other than pursuant to a reason which would constitute Cause,
Disability or Retirement hereunder) within six (6) months from his Date of
Termination with respect to the Company, the Company will provide (a) any
Severance Payments (less the amount of salary, bonuses, commissions and
severance payments paid by the acquiring or resulting company) and (b) Benefits
Payments and continued Basic Life Insurance (less the number of months he was
provided with such benefits by the acquiring or resulting company) that the
Participant would have been entitled to on his Date of Termination.
5. Certain Additional Payments by the Company and Payment
Limitations. (a) Anything in this Plan to the
-27-
<PAGE>
<PAGE>
contrary notwithstanding, in the event it shall be determined that any payment
or distribution by the Company or any of its affiliates to or for the benefit of
a Participant who is a Corporate Leadership Team member or Leadership Forum
member (whether paid or payable or distributed or distributable pursuant to the
terms of this Plan, any of the Company's other compensation, severance, share
ownership or benefit plans or otherwise, but determined without regard to any
additional payments required under this Section 5) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or imposed by any
other taxing authority, or any interest or penalties are incurred by the
Participant with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Participant shall be entitled to receive an additional
payment (a "Gross-Up Payment"), no later than twenty (20) days following such
Payment in an amount such that after payment by the Participant of all taxes
(and any interest and penalties imposed with respect
-28-
<PAGE>
<PAGE>
thereto) including, without limitation, any income and employment taxes and
Excise Tax, imposed upon the Gross-Up Payment, the Participant retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. All
federal, state and local income and employment tax calculations shall be based
upon the maximum marginal rates then in effect.
(b) All determinations required to be made under this Section 5
shall be made by the Company's public accounting firm that is performing such
services immediately prior to a Change in Control. Such determination shall be
made no later than fifteen (15) days following any Payment. Such accounting firm
shall provide its determination to the Participant and the Company. If the
accounting firm determines that no Excise Tax is payable by the Participant, it
shall furnish the Participant with a written opinion to such effect.
(c) Notwithstanding the foregoing, in the event that the amount
of the Participant's Excise Tax liability is subsequently determined to be
greater than the Excise Tax
-29-
<PAGE>
<PAGE>
liability with respect to which the Gross-Up Payment under Section 5(a) was
made, the Company shall pay to the Participant an additional Gross-Up Payment
with respect to such additional Excise Tax (and any interest and penalties
thereon) at the time that the amount of the actual Excise Tax liability is
finally determined.
(d) The Participant and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax and
the expenses of any such proceedings shall be borne solely by the Company.
(e) While the foregoing provisions of Section 5(a)-(d) do not
apply to Strategic Members, all payments made under this Plan to Strategic
Members shall be subject to the provisions of the AT&T Capital Corporation
Employee Compensation Adjustment Plan, as in effect from time to time.
6. Enhanced Payments. Any Participant who signs a Separation
Agreement and General Release prepared by the
-30-
<PAGE>
<PAGE>
Company (substantially in the form attached hereto as Annex A) in connection
with a termination of employment under this Plan shall receive an additional
lump sum payment, within thirty (30) days following such Participant's execution
of a Separation Agreement and General Release, equal to (a) in the event of an
RIF Termination, 20% of the Severance Payment to which such Participant is
entitled or (b) in the event of an Other Eligible Termination, 40% of the
Severance Payment to which such Participant is entitled.
7. Outplacement Services. The Company will provide Participants
with reasonable outplacement services commensurate with such Participant's
position in the event of an RIF Termination or an Other Eligible Termination.
8. Notice of Termination.
(a) RIF Termination. Each Participant who is entitled to a
Severance Payment in connection with an RIF Termination shall receive written
notice of termination from the Company at least ninety (90) days prior to the
Participant's Date of Termination.
-31-
<PAGE>
<PAGE>
(b) Other Eligible Termination. Each Participant who is entitled
to a Severance Payment pursuant to an Other Eligible Termination shall receive
written notice of termination from the Company at least four (4) weeks prior to
the Date of Termination.
(c) Certain Terminations by Participants. A Participant who is
terminating employment pursuant to one of the reasons set forth in Section
1(p)(ii) shall provide the Company with written notice of termination of at
least fifteen (15), but no more than ninety (90), days. Such notice shall be
provided at any time during the 90-day period set forth in Section 1(p)(ii).
(d) Termination by the Company Following a Change in Control.
Notwithstanding anything to the contrary contained in paragraphs (a) and (b)
above, following a Change in Control, the minimum applicable notice period for
termination of employment by the Company or any of its Subsidiaries for any
reason (or without reason) for (i) Corporate Leadership Team members, (ii)
Leadership Forum members as of the Effective Date and (iii) any other person
-32-
<PAGE>
<PAGE>
who becomes a Leadership Forum member after the Effective Date but prior to the
date of the Change in Control, shall be the greater of (A) 90 days prior to such
Participant's Date of Termination or (B) the number of days from such notice
through September 2, 1996.
(e) Payment in Lieu of Notice. Notwithstanding the foregoing, the
Company may, in its sole discretion, remove the Participant from the Company's
payroll (and such date of removal shall be the Participant's Date of
Termination) and provide the following payments in lieu of providing notice
hereunder or receiving the Participant's notice: (i) an amount equal to the sum
of (A) the Participant's base salary as of his Date of Termination (not taking
into account any reductions that would constitute a reason for a Qualifying
Termination) for the remaining applicable notice period and (B) (1) commissions
actually earned by the Participant for the twelve (12) months immediately
preceding the Participant's Date of Termination, divided by (2) 52.2, and (3)
multiplied by the applicable number of weeks of notice, and (ii) in addition to
any
-33-
<PAGE>
<PAGE>
Benefits Payments owed hereunder, 100% of such Participant's COBRA premiums
(determined as of the Date of Termination) for the applicable period of notice.
Notwithstanding anything to the contrary set forth in this Section 8(e) above,
this provision shall not apply prior to September 3, 1996 to any termination of
employment of any of the Participants described in Section 8(d)(i), (ii) or
(iii) following a Change in Control.
(f) General. Each notice of termination under the Plan shall
specify the category of such termination (i.e., an RIF Termination or an Other
Eligible Termination) and shall be provided (by mail, hand delivery or
facsimile) to the Participant at his last known address in the Company's records
or at his place of employment or to the Company at its corporate headquarters
(attention Vice President, Human Resources), as the case may be. Each
Participant on a leave of absence or on disability leave during the applicable
notice period will remain on the Company's payroll for a minimum of thirty (30)
days following such Participant's return from such leave. In the event
-34-
<PAGE>
<PAGE>
that, following the delivery of a notice of termination by a Participant or the
Company, the Participant's employment terminates for a reason other than that
specified in the applicable notice of termination, the Participant's right to
receive any applicable Severance Payment or Benefits Payment described in
Section 2 or 3 of the Plan shall be based upon the reason specified in the
original notice of termination of employment, and the Company shall have no
obligation to continue the Participant on its payroll after such Participant's
Date of Termination.
9. Transfers. If a Participant accepts a transfer to a position
within the Company or any Subsidiary within the notification period of Section
8, such Participant will not be treated as being terminated pursuant to an RIF
Termination or Other Eligible Termination.
10. Withholding Taxes. The Company may withhold from all payments
due to a Participant (or his beneficiary or estate) hereunder all taxes which,
by applicable federal, state, local or other law, the Company is required to
withhold therefrom.
-35-
<PAGE>
<PAGE>
11. Reimbursement of Expenses. If any contest or dispute shall
arise under this Plan involving termination of a Participant's employment with
the Company, and it is finally determined by a court of competent jurisdiction
that the Company failed or refused to perform fully in accordance with the terms
hereof, the Company shall reimburse the Participant for all reasonable legal
fees and expenses incurred by the Participant in connection with such contest or
dispute, together with interest in an amount equal to the prime rate of
Citibank, N.A. from time to time in effect, but in no event higher than the
maximum legal rate permissible under applicable law. Such interest shall accrue
from the date the Company receives the Participant's statement for such fees and
expenses through the date of payment therefor.
12. Termination or Amendment of Plan.
(a) This Plan shall be in effect as of the Effective Date and
shall continue until terminated by the Company as provided in paragraph (b) of
this Section 12.
-36-
<PAGE>
<PAGE>
(b) The Company shall have the right prior to a Change in
Control, in its sole discretion, pursuant to action by the Board or the
Committee, to approve the termination or amendment of this Plan; provided,
however, that no such action which would adversely affect the rights or
potential rights of Participants shall be taken by the Board or the Committee
(i) during any period of time when the Board or the Committee, as the case may
be, has knowledge that any person (including AT&T) has taken steps reasonably
calculated to effect a Change in Control of the Company (a "Possible Change in
Control") until in the opinion of the Board or the Committee such Possible
Change in Control is no longer a reasonable possibility or (ii) within twelve
(12) months following the date that such Change in Control ceases to exist; and
provided, further, that in no event shall this Plan be terminated or amended
within the twenty-seven (27) month period following a Change in Control in any
manner which would adversely affect the rights or potential rights of
Participants.
-37-
<PAGE>
<PAGE>
13. Scope of Plan. Nothing in this Plan shall be deemed to
entitle any Participant to continued employment with the Company or its
Subsidiaries.
14. Successors; Binding Obligation.
(a) This Plan shall not be terminated by any merger or
consolidation of the Company whereby the Company is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially all
of the assets of the Company or a purchase of the securities of the Company. In
the event of any such merger, consolidation, transfer of assets or purchase, the
provisions of this Plan shall be binding upon the surviving or resulting
corporation or the person or entity to which such assets are transferred.
(b) The Company agrees that concurrently with any merger,
consolidation, transfer of assets or purchase of the securities of the Company
referred to in paragraph (a) of this Section 14, it will cause any successor or
transferee unconditionally to assume all of the obligations of the Company
hereunder.
-38-
<PAGE>
<PAGE>
(c) This Plan shall inure to the benefit of and be enforceable by
each Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If a Participant shall
die while any amounts would be payable to the Participant hereunder had the
Participant continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Plan to such person
or persons appointed in writing by the Participant to receive such amounts or,
if no person is so appointed, to the Participant's estate.
15. Full Settlement; Resolution of Disputes.
-39-
<PAGE>
<PAGE>
(a) The Company's obligation to make any payments provided for by
this Plan to a Participant and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Participant or
others. In no event shall a Participant be obligated to seek other employment or
take other action by way of mitigation of the amounts payable to the Participant
under any of the provisions of this Plan and such amounts shall not be reduced
whether or not the Participant obtains other employment.
(b) If there shall be any dispute between the Company and a
Participant in the event of any termination of the Participant's employment then
unless and until there is a judgment by a court of competent jurisdiction
declaring that such termination was for Cause, that the determination by the
Participant of the existence of a basis for a Qualifying Termination was not
made in good faith, or that the Company was not otherwise obligated to pay any
amount or provide any benefit to the Participant and his dependents or
-40-
<PAGE>
<PAGE>
other beneficiaries, as the case may be, as a result of an RIF Termination or
Other Eligible Termination, the Company shall pay all amounts, and provide all
benefits, to the Participant and his dependents or other beneficiaries, as the
case may be, that the Company would be required to pay or provide under the Plan
as though such termination were by the Company without Cause, or by the
Participant pursuant to a Qualifying Termination and/or as a result of an RIF
Termination or Other Eligible Termination, as the case may be. The Company shall
not, however, be required to pay any disputed amounts pursuant to this paragraph
except upon receipt of an undertaking by or on behalf of the Participant to
repay all such amounts to which the Participant is ultimately adjudged by such
court not to be entitled.
16. Employment with Subsidiaries. Employment with the Company for
purposes of this Plan shall include employment with any of its Subsidiaries.
17. Other Severance Payments. All Severance Payments due under
the Plan (whether related to an RIF Termination or an Other Eligible
Termination) shall be in
-41-
<PAGE>
<PAGE>
addition to any other amounts payable under any other plan of the Company, but
shall be reduced by the present value of any severance payments required to be
paid to a member whose work location is outside the United States pursuant to
any non-U.S. statute, regulation, law or plan.
18. Governing Law; Validity. The interpretation, construction and
performance of this Plan shall be governed by and construed and enforced in
accordance with the internal laws of the State of New Jersey without regard to
the principle of conflicts of laws. The invalidity or unenforceability of any
provision of this Plan shall not affect the validity or enforceability of any
other provision of this Plan, which other provisions shall remain in full force
and effect.
19. Administration. The Company shall be the "Plan Administrator"
of the Plan, but the Plan shall be administered on the Company's behalf by the
Company's Vice President--Human Resources and General Counsel. The Plan
Administrator shall make the rules and regulations necessary to administer the
Plan and shall have the responsibility and
-42-
<PAGE>
<PAGE>
discretionary authority to interpret the terms of the Plan, determine
eligibility for benefits and to determine the amounts of such benefits. Appeals
of decisions and interpretations by the Plan Administrator may be made by
Participants to the Company's Corporate Leadership Team (the "Committee") or any
designated subcommittee thereof. In the event a decision must be made with
respect to a specific claim or benefit of either the Vice President-Human
Resources or the General Counsel, such person shall not be involved in any such
decision. No member of the Committee shall participate in any appeal with
respect to his benefits hereunder. To the extent permitted by law, all agents
and representatives of the Plan Administrator shall be indemnified by the
Company against any claims, and the expenses of defending against such claims,
resulting from by action or conduct (not taken in bad faith) relating to the
administration of the Plan.
-43-
<PAGE>
<PAGE>
AT&T Capital Corporation EXHIBIT A
Leadership Severance Plan Participants Page 1 of 4
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
UNIT TITLE/DEPT. GROUP NAME
- ----------------------------------------------------------------
- ----------------------------------------------------------------
<S> <C> <C> <C>
Capital CEO CLT Wajnert, Tom
---------------------------------------------
---------------------------------------------
CBL CLT Rothman, Irv
---------------------------------------------
---------------------------------------------
CBL CLT Van Sickle, Charles
---------------------------------------------
---------------------------------------------
CSL CLT Dwyer, Ed
---------------------------------------------
---------------------------------------------
CSL CLT Morey, Ruth
---------------------------------------------
---------------------------------------------
CSL CLT McCarthy, Dan
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
---------------------------------------------
CSUs Corp. Comm. LF Zachary, Carolyn
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Corp. Dev. LF Sadeghi, Mani
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Finance LF Gerard, Valerie
---------------------------------------------
---------------------------------------------
Finance LF Hesselink, Ann
---------------------------------------------
---------------------------------------------
Finance LF Oliu, Ray
---------------------------------------------
---------------------------------------------
Finance LF Pfister, Judy
---------------------------------------------
---------------------------------------------
Finance LF Votek, Glenn
---------------------------------------------
---------------------------------------------
Finance Cornelison, Rich
---------------------------------------------
---------------------------------------------
Finance Doomany, Rich
---------------------------------------------
---------------------------------------------
Finance Greco, George
---------------------------------------------
---------------------------------------------
Finance Kettenstock, Liz
---------------------------------------------
---------------------------------------------
---------------------------------------------
HR LF McAuley, Sara
---------------------------------------------
---------------------------------------------
HR Hays, Jake
---------------------------------------------
---------------------------------------------
HR Smith, Janet
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
IMM Dell, Brent
---------------------------------------------
---------------------------------------------
IMM LF Miltenberger, Ken
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
OD LF Henry, Ann
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Risk Management LF DeBernardi, Mike
---------------------------------------------
---------------------------------------------
Risk Management LF Ingato, Bob
---------------------------------------------
---------------------------------------------
Risk Management LF Law, Lyn
---------------------------------------------
---------------------------------------------
Risk Management LF Lucas, Bill
---------------------------------------------
---------------------------------------------
Risk Management Nosofsky, Joe
---------------------------------------------
---------------------------------------------
Risk Management Storrs, Dave
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Automotive LF Chadwick, Skeet
---------------------------------------------
---------------------------------------------
Hare, Greg
---------------------------------------------
---------------------------------------------
Kagan, Eric
---------------------------------------------
---------------------------------------------
Laleker, Bill
---------------------------------------------
---------------------------------------------
Noonan, Jim
---------------------------------------------
---------------------------------------------
Steger, Pete
---------------------------------------------
---------------------------------------------
Taibi, Charlie
---------------------------------------------
---------------------------------------------
</TABLE>
<PAGE>
<PAGE>
AT&T Capital Corporation EXHIBIT A
Leadership Severance Plan Participants Page 2 of 4
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
UNIT TITLE/DEPT. GROUP NAME
- ----------------------------------------------------------------
- ----------------------------------------------------------------
<S> <C> <C> <C>
Business Finance LF Canning, John
---------------------------------------------
---------------------------------------------
Bennett, Joe
---------------------------------------------
---------------------------------------------
Chobot, John
---------------------------------------------
---------------------------------------------
Huston, Julie
---------------------------------------------
---------------------------------------------
Lam, Danny
---------------------------------------------
---------------------------------------------
Langworthy, Rich
---------------------------------------------
---------------------------------------------
Neagle, Bob
---------------------------------------------
---------------------------------------------
Rumpolo, Joe
---------------------------------------------
---------------------------------------------
Seidenwar, Paul
---------------------------------------------
---------------------------------------------
Taylor, Gary
---------------------------------------------
---------------------------------------------
Wilkinson, Judy
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Capital Markets LF Andrews, Ed
---------------------------------------------
---------------------------------------------
Brown, Charlie
---------------------------------------------
---------------------------------------------
Fontana, Louis
---------------------------------------------
---------------------------------------------
Geraghty, John
---------------------------------------------
---------------------------------------------
Golding, Rob
---------------------------------------------
---------------------------------------------
Gromek, Ed
---------------------------------------------
---------------------------------------------
Miller, Jeff
---------------------------------------------
---------------------------------------------
Olson, Rich
---------------------------------------------
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
Credit - CS LF Gold, Gerri
---------------------------------------------
---------------------------------------------
Adams, Tom
---------------------------------------------
---------------------------------------------
Darensbourg, Rodney
---------------------------------------------
---------------------------------------------
Delacruz, Carol
---------------------------------------------
---------------------------------------------
Hadicke, Bill
---------------------------------------------
---------------------------------------------
Haggerty, Marybeth
---------------------------------------------
---------------------------------------------
Kendall, Keith
---------------------------------------------
---------------------------------------------
Martin, Gail
---------------------------------------------
---------------------------------------------
Sena, Arlene
---------------------------------------------
---------------------------------------------
Teucke, Jeff
---------------------------------------------
---------------------------------------------
Thomas, Bret
---------------------------------------------
---------------------------------------------
Trump, Doug
---------------------------------------------
---------------------------------------------
Vukas, Chris
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Credit - GIS LF Deehan, George
---------------------------------------------
---------------------------------------------
Boone, Gary
---------------------------------------------
---------------------------------------------
Carroll, Jim
---------------------------------------------
---------------------------------------------
Kammerer, Gerry
---------------------------------------------
---------------------------------------------
Miller, Earl
---------------------------------------------
---------------------------------------------
</TABLE>
<PAGE>
<PAGE>
AT&T Capital Corporation EXHIBIT A
Leadership Severance Plan Participants Page 3 of 4
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
UNIT TITLE/DEPT. GROUP NAME
- ----------------------------------------------------------------
- ----------------------------------------------------------------
<S> <C> <C> <C>
Leasing Services LF Tenner, Jim
---------------------------------------------
---------------------------------------------
Burke, Bill
---------------------------------------------
---------------------------------------------
Driscoll, Donna
---------------------------------------------
---------------------------------------------
Fikse, Sheryl
---------------------------------------------
---------------------------------------------
Herlihy, Thomas
---------------------------------------------
---------------------------------------------
Kelly, Mark
---------------------------------------------
---------------------------------------------
Langstaff, Michele
---------------------------------------------
---------------------------------------------
Larson, Karen
---------------------------------------------
---------------------------------------------
McCarthy, Rob
---------------------------------------------
---------------------------------------------
Pfeiffenberger,
John
---------------------------------------------
---------------------------------------------
Roose, Tom
---------------------------------------------
---------------------------------------------
Viscomi, Ralph
---------------------------------------------
---------------------------------------------
Wilton, Keith
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
---------------------------------------------
Systems Leasing LF Cherney, Ed
---------------------------------------------
---------------------------------------------
Baker, Ron
---------------------------------------------
---------------------------------------------
Bruchanski, Ken
---------------------------------------------
---------------------------------------------
Callaghan, Pat
---------------------------------------------
---------------------------------------------
Callahan, Pat
---------------------------------------------
---------------------------------------------
Cowan, Ken
---------------------------------------------
---------------------------------------------
Lochow, Harold
---------------------------------------------
---------------------------------------------
Marks, Lloyd
---------------------------------------------
---------------------------------------------
Ostroski, John
---------------------------------------------
---------------------------------------------
Pinkerton, Bill
---------------------------------------------
---------------------------------------------
Recker, Jim
---------------------------------------------
---------------------------------------------
Schultz, George
---------------------------------------------
---------------------------------------------
Stroscheim, Jim
---------------------------------------------
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
Asia Pacific LF Soper, Derek,
---------------------------------------------
---------------------------------------------
Chan, Don
---------------------------------------------
---------------------------------------------
Cain, Jim
---------------------------------------------
---------------------------------------------
Leach, Adrian
---------------------------------------------
---------------------------------------------
Li, Daniel
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
---------------------------------------------
Canada LF Hammill, Tim
---------------------------------------------
---------------------------------------------
Bartley, Ken
---------------------------------------------
---------------------------------------------
Dionne, J. Harold
---------------------------------------------
---------------------------------------------
Goldstein, Tammi
---------------------------------------------
---------------------------------------------
Harding, Richard
---------------------------------------------
---------------------------------------------
Howe, Rob
---------------------------------------------
---------------------------------------------
Kidd, Peter
---------------------------------------------
---------------------------------------------
Korylak, John
---------------------------------------------
---------------------------------------------
LaLeggia, Joe
---------------------------------------------
---------------------------------------------
Parkinson, Alan
---------------------------------------------
---------------------------------------------
Traunero, Ezio
---------------------------------------------
---------------------------------------------
</TABLE>
<PAGE>
<PAGE>
AT&T Capital Corporation EXHIBIT A
Leadership Severance Plan Participants Page 4 of 4
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
UNIT TITLE/DEPT. GROUP NAME
- ----------------------------------------------------------------
- ----------------------------------------------------------------
<S> <C> <C> <C>
Europe LF Fatum, Arthur
---------------------------------------------
---------------------------------------------
Grice, Dennis
---------------------------------------------
---------------------------------------------
Guichard, Antoine
---------------------------------------------
---------------------------------------------
Harrison, Ian
---------------------------------------------
---------------------------------------------
Hughes, Michael
---------------------------------------------
---------------------------------------------
Jansen, Frans
---------------------------------------------
---------------------------------------------
Jones, Rick
---------------------------------------------
---------------------------------------------
Kainradl, Peter
---------------------------------------------
---------------------------------------------
Murray, Stuart
---------------------------------------------
---------------------------------------------
Paganelli, Federico
---------------------------------------------
---------------------------------------------
Reilly, Julie
---------------------------------------------
---------------------------------------------
Spendeck, Horst
---------------------------------------------
---------------------------------------------
White, Mark
---------------------------------------------
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
Latin America LF Bridges, Bill
---------------------------------------------
---------------------------------------------
Guerrero, Arturo
---------------------------------------------
---------------------------------------------
- ----------------------------------------------------------------
</TABLE>
EXHIBIT 10(ad)
Form 10-k for 1995
File No. 1-11237
Execution Copy
AGREEMENT
AGREEMENT, dated as of January 5, 1996 (this "Agreement"),
between AT&T CORP., a New York corporation ("AT&T"), and AT&T CAPITAL
CORPORATION, a Delaware corporation ("Capital").
WHEREAS, the Board of Directors of AT&T has determined that it is
in the best interest of AT&T to separate AT&T's existing businesses into three
independent businesses;
WHEREAS, as part of the foregoing, AT&T Global Information
Solutions, Inc., ("GIS") and NS-MPG Inc. ("NS-MPG") will enter into a Separation
and Distribution Agreement with AT&T which provides, among other things, for the
separation of the assets and liabilities of such companies, and the distribution
and the execution and the delivery of certain other agreements in order to
facilitate and provide for the foregoing;
WHEREAS, to consummate the spin-off of NS-MPG, AT&T will (i)
contribute or otherwise convey or cause to be conveyed certain of its assets to
NS-MPG, (ii) NS-MPG will sell to the public, pursuant to an initial public
offering (the "NS-MPG IPO"), approximately 15% of its common equity and (iii) in
a separate transaction following the NS-MPG IPO, AT&T will spin-off its entire
interest in NS-MPG to its shareholders (such transactions or any other
transaction or series of transactions (including a sale of stock or assets of
NS-MPG to an unrelated Person or Persons or a merger of NS-MPG into another
Person) which result in the businesses and assets of the Divisions being owned
by a Person or Persons (other than AT&T) that is not a Subsidiary of AT&T, are
collectively referred to as the "NS-MPG Spin-Off Transactions");
WHEREAS, to consummate the spin-off of GIS, AT&T will spin-off
GIS to its shareholders (such transaction or any other transaction or series of
transactions (including an initial public offering, a sale of stock or assets of
GIS and its Subsidiaries to an unrelated Person or Persons or a merger of GIS
into another Person) which result in the businesses and assets of GIS and its
Subsidiaries being owned by a Person or Persons (other than AT&T) that is not a
Subsidiary of AT&T, are collectively referred to as the "GIS Spin-Off
Transactions" and together with the NS-MPG Spin-Off Transactions, the "Spin-Off
Transactions");
WHEREAS, Capital entered into an Operating Agreement dated as of
June 25, 1993 (as amended from time to time, the "AT&T Operating Agreement")
with AT&T;
<PAGE>
<PAGE>
WHEREAS, pursuant to Section 8.3 of the AT&T Operating Agreement,
Capital has requested AT&T to cause (i) NS-MPG to enter into a Comparable
Operating Agreement (as contemplated by Section 8.3 of the AT&T Operating
Agreement) that is substantially similar in scope and terms to the AT&T
Operating Agreement (the "NS-MPG Operating Agreement") and (ii) GIS or such
other Person acquiring the business of GIS and its Subsidiaries in the GIS
Spin-Off Transactions (GIS or such Person being referred to herein as "GIS") to
enter into a Comparable Operating that is substantially similar in scope and
terms to the AT&T Operating Agreement (the "GIS Operating Agreement" and
together with the NS-MPG Operating Agreement, the "New Operating Agreements");
WHEREAS, it is the intention of the parties hereto that AT&T
shall be obligated under the terms of this Agreement to cause (i) GIS to enter
into the GIS Operating Agreement in the form of Exhibit A hereto (ii) NS-MPG to
enter into the NS-MPG Operating Agreement in the form of Exhibit B hereto; and
(iii) use its best efforts to have NS-MPG and GIS, as applicable, execute such
New Operating Agreements by January 31, 1996; but in no event later than as
provided for in Section 8.3 of the AT&T Operating Agreement (I.E., no later than
the day prior to the date of consummation of any of the Spin-Off Transactions).
NOW, THEREFORE, in consideration of the mutual promises herein
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the conditions and
upon the terms hereof, the parties hereto hereby agree as follows:
Section 1. Definitions. Unless the context indicates otherwise,
references to Articles, Sections, Exhibits and Schedules will refer to the
corresponding articles and sections in and exhibits and schedules to this
Agreement and references to the parties shall mean the parties to this
Agreement. Capitalized terms used herein without definition will have a meaning
correlative to the defined term in either or both of the New Operating
Agreements, as applicable.
Section 2. Execution by GIS. (a) AT&T agrees to (i) cause GIS to
enter into the GIS Operating Agreement, in the form of Exhibit A hereto; and
(ii) use its best efforts to have GIS execute such GIS Operating Agreement by
January 31, 1996, but in no event later than as provided for in Section 8.3 of
the AT&T Operating Agreement (I.E., no later than the day prior to the date of
consummation of any of the Spin-Off Transactions.)
-2-
<PAGE>
<PAGE>
(b) Until GIS becomes a party to the GIS Operating Agreement and
the Spin-Off Date has occurred, Capital shall have no obligation under the GIS
Operating Agreement to GIS or any other AT&T Entity, it being understood that
the relationship between the Capital Entities and GIS and any other AT&T Entity
with respect to the subject matter of such agreement shall continue to be
governed by the AT&T Operating Agreement prior to the consummation of the GIS
Spin-Off Transactions.
Section 3. Execution by NS-MPG. (a) AT&T agrees to (i) cause
NS-MPG to enter into the NS-MPG Operating Agreement, substantially in the form
of Exhibit B hereto; and (ii) use its best efforts to have NS-MPG execute such
NS-MPG Operating Agreement by January 31, 1996, but in no event later than as
provided for in Section 8.3 of the AT&T Operating Agreement (I.E., no later than
the day prior to the date of consummation of any of the Spin-Off Transactions.)
(b) Until NS-MPG becomes a party to the NS-MPG Operating
Agreement and the Spin-Off Date has occurred, Capital shall have no obligation
under the NS-MPG Operating Agreement to NS-MPG, the Divisions or any other AT&T
Entity, it being understood that the relationship between the Capital Entities
and NS-MPG, the Divisions and any other AT&T Entity with respect to the subject
matter of such agreement shall continue to be governed by the AT&T Operating
Agreement prior to the consummation of the NS-MPG Spin-Off Transactions.
Section 4. Miscellaneous.
Section 4.1. Variation of Terms; Amendments. This Agreement
cannot be amended or terminated orally, but only by a writing duly executed by
or on behalf of the parties hereto.
Section 4.2. Successors and Assigns; Third Parties.
(a) This Agreement will be binding upon and inure to the benefit
of the parties hereto and their Affiliates and their respective successors and
assigns.
(b) Nothing in this Agreement, expressed or implied, is intended
or will be construed to confer upon any Person other than the parties hereto and
their successors and assigns any right, remedy or claim under or by reason of
this Agreement.
Section 4.3. Severability. If any provision of this Agreement or
the application of any such provision to any party or circumstances will be
determined by any court of competent jurisdiction or duly authorized arbitration
tribunal to be invalid, illegal or unenforceable to any extent, the remainder of
this Agreement or such provision or the application of such provision to such
party or circumstances, other than those to which it is so determined to be
invalid, illegal or unenforceable, will remain in
-3-
<PAGE>
<PAGE>
full force and effect to the fullest extent permitted by law and will not be
affected thereby, unless such a construction would be unreasonable.
Section 4.4. Notices. All notices, consents, deliveries, demands,
requests, approvals and other communications which are required or may be given
hereunder shall be made in accordance with Section 13.5 of the AT&T Operating
Agreement.
Section 4.5. Governing Law. This Agreement will be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to the choice of law provisions of its conflicts of law rules.
Section 4.6. Headings. The article headings and the section
headings and subheadings contained in this Agreement are intended solely for the
convenience of reference and will not affect in any manner the meaning or
interpretation of this Agreement.
Section 4.7. Counterparts. This Agreement may be executed in one
or more counterparts, each of which will be deemed an original instrument, but
all of which together will constitute one and the same agreement, and will
become binding when one or more counterparts have been executed and delivered by
each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
AT&T CAPITAL CORPORATION AT&T CORP.
BY: G. Daniel McCarthy BY: S. Lawrence Prendergast
--------------------------- --------------------------------
NAME: G. Daniel McCarthy NAME: S. Lawrence Prendergast
Senior Vice President Vice President and Treasurer
TITLE: General Counsel, TITLE:
Secretary
-4-
<PAGE>
<PAGE>
Exhibit A
NCR OPERATING AGREEMENT
Dated as of _________________, 1996
Between
NCR CORPORATION, a Maryland corporation,
And
AT&T CAPITAL CORPORATION,
a Delaware corporation
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS .............................................. 2
ARTICLE II
FINANCING RELATED SERVICES TO BE PROVIDED BY CAPITAL......................... 10
2.1. Financing Related Services - Objectives and Commitments....................... 10
2.2. Training of Company Personnel................................................. 12
2.3. Providing Company with Information as to Financings and Finance
Markets..................................................................... 13
2.4. Subsidized and Guaranteed Financings and Ancillary Services................... 13
2.5. Advisory Services............................................................. 14
2.6. No Obligation or Commitment................................................... 14
2.7. Alternative Financing and Recourse Arrangements............................... 15
ARTICLE III
PREFERRED PROVIDER STATUS ...................................... 17
3.1. Support of the Capital Entities............................................... 17
3.2. Preferred Provider Status..................................................... 18
3.3. Right to Choose Alternative Providers......................................... 20
3.4. Finance Marketing Support..................................................... 21
3.5. Personnel Support............................................................. 21
3.6. Information Support........................................................... 22
3.7. Activities of the Company Entities............................................ 22
ARTICLE IV
NON-COMPETITION ............................................ 22
4.1. Covenant Not to Compete....................................................... 22
4.2. Use of a Permitted Captive Financing Source................................... 25
4.3. Financing Operations of Acquired Entities..................................... 26
ARTICLE V
PROTOCOLS AND PROCEDURES AND RELATED MATTERS .............................. 27
5.1. Protocols and Procedures; Pilot Programs...................................... 27
5.2. Systems Interface............................................................. 28
</TABLE>
-i-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI
REMARKETING OF PRODUCTS ......................................... 29
6.1. In General ................................................................... 29
6.2. Deinstallation, Refurbishment and Re-Certification of Remarketed Products..... 30
6.3. Rights to Use Software........................................................ 30
ARTICLE VII
CERTAIN ALLOCATIONS OF RISK; LITIGATION AND REPOSSESSION........................ 31
7.1. Representations, Warranties and Covenants..................................... 31
7.2. Allocation of Certain Risks................................................... 33
7.3. Collection and Repossession Actions........................................... 34
7.4. Actions Against Significant Accounts.......................................... 35
ARTICLE VIII
SCOPE OF APPLICATION OF AGREEMENT .................................... 35
8.1. Attribution of Actions of Subsidiaries to Their Parents....................... 35
8.2. Application of Agreement to Certain Joint Ventures and Other Minority
Investments of the Company.................................................. 36
8.3. Sale, Public Offering or Spin-Off of a Significant Products Entity ........... 37
8.4. New Products and Company Entities............................................. 38
8.5. Geographic Scope of Agreement................................................. 38
ARTICLE IX
INDEMNIFICATION ............................................. 39
9.1. Capital Indemnity............................................................. 39
9.2. Company Indemnity............................................................. 40
9.3. Procedure .................................................................... 41
ARTICLE X
DISPUTE RESOLUTION ........................................... 42
10.1. Resolution of Disputes....................................................... 42
10.2. Resolution of Disputes Using Best Efforts.................................... 42
10.3. Arbitration ................................................................. 43
10.4. Continuity of Service and Performance........................................ 45
10.5. Disputes as to Sales Site Protocols and Procedures........................... 45
</TABLE>
-ii-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE XI
TERM AND TERMINATION .......................................... 45
11.1. Initial Term and Renewal..................................................... 45
11.2. Termination ................................................................. 46
11.3. Effect of Termination........................................................ 47
ARTICLE XII
CONFIDENTIALITY ........................................... 47
ARTICLE XIII
MISCELLANEOUS ............................................. 48
13.1. Variation of Terms; Amendments............................................... 48
13.2. No Partnership............................................................... 49
13.3. Successors and Assigns; Third Parties........................................ 49
13.4. Severability ................................................................ 49
13.5. Notices ..................................................................... 49
13.6. Governing Law................................................................ 50
13.7. Headings .................................................................... 50
13.8. Counterparts ................................................................ 51
SCHEDULES AND EXHIBITS
Schedule A--Location Support Agreement
Schedule B--Description of Certain Past Practices of the Company
Relating to Interim Financings
Schedule C--General Allocation of Responsibilities
</TABLE>
-iii-
<PAGE>
<PAGE>
NCR OPERATING AGREEMENT
NCR OPERATING AGREEMENT dated as of ________________, 1996 (this
"Agreement") between NCR CORPORATION, a Maryland corporation (the "Company"),
and AT&T CAPITAL CORPORATION, a Delaware corporation ("Capital").
W I T N E S S E T H
:
WHEREAS, the Board of Directors of AT&T Corp.("AT&T") has
determined that it is in the best interest of AT&T to separate AT&T's existing
businesses into three independent businesses;
WHEREAS, as part of the foregoing, NS-MPG Inc. and the Company
will enter into a Separation and Distribution Agreement with AT&T which
provides, among other things, for the separation of the Company assets and the
Company liabilities;
WHEREAS, in connection with such reorganization, AT&T intends to
spin-off its entire interest in the Company to its shareholders (such
transaction, including any initial public offering of the capital stock of the
Company prior to a spin-off, a sale of stock or assets of the Company and its
Subsidiaries to an unrelated Person or a merger of the Company into another
Person is referred to as the "Spin-Off Transaction");
WHEREAS, Capital entered into an Operating Agreement dated as of
June 25, 1993 (as amended from time to time, the "AT&T Operating Agreement")
with AT&T;
WHEREAS, pursuant to Section 8.3 of the AT&T Operating Agreement,
Capital has requested AT&T to cause the Company to enter into a Comparable
Operating Agreement (as defined in Section 8.3 of the AT&T Operating Agreement)
relating to the businesses of the Company that is substantially similar in scope
and terms to the AT&T Operating Agreement;
WHEREAS, AT&T and Capital have entered into an Agreement dated as
of January 5, 1996 pursuant to which AT&T has agreed to use its best efforts to
cause NCR Corporation to enter into this Agreement by January 31, 1996 (but in
any event no later than the date required pursuant to Section 8.3 of the AT&T
Operating Agreement);
WHEREAS, it is the intention of the parties hereto that (i) this
Agreement constitute a Comparable Operating Agreement relating to the businesses
of the Company and (ii) this Agreement shall govern the relationship between the
Company and its Subsidiaries,
<PAGE>
<PAGE>
on the one hand, and Capital and its Subsidiaries, on the other hand, after the
consummation of the Spin-Off Transaction as to the matters set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the conditions and
upon the terms hereof, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms will have the
following meanings, applicable both to the singular and the plural forms of the
terms defined:
"AAA" has the meaning ascribed thereto in Section 10.3(g).
"Acquired Entity" has the meaning ascribed thereto in Section
4.3.
"Acquired Entity Financing Source" has the meaning ascribed
thereto in Section 4.3.
"Active Service Area" has the meaning ascribed thereto in Section
8.5.
"Adjusted Financeable Product Sales" means, with respect to any
calendar year, the aggregate purchase price (net of any discounts) paid by
Customers, Authorized Dealers or the Capital Entities (or, with respect to
periods prior to March 31, 1993, Capital Holdings and its Subsidiaries) to the
Company Entities, together with any related sales taxes and installation and
similar costs, for Financeable Products sold by the Company Entities during such
calendar year and each of the two preceding calendar years. In the event that
during any three-year period for which Adjusted Financeable Product Sales is
calculated, there has occurred a disposition, termination or phase-out by any
Company Entity of any significant Financeable Product line, the Adjusted
Financeable Product Sales amount with respect to such three-year period shall be
reduced by the amounts attributable to sales of such Financeable Products during
such three-year period and any related sales taxes and installation and similar
costs. In the event that during any three-year period for which Adjusted
Financeable Products Sales is calculated, there has been introduced or has
occurred a phase-in or an acquisition by any Company Entity of any significant
Financeable Product line, the Adjusted Financeable Product Sales amount with
respect to such three-year period shall be adjusted such that the aggregate
purchase price (net of discounts) of and any related sales taxes and
installation and similar costs for such significant Financeable Product line
shall be (x) with respect to each full calendar year within such three-year
period during which such
-2-
<PAGE>
<PAGE>
Financeable Product line has been sold by the Company Entities
(each such year, a "Full Sales Year"), the actual aggregate purchase price
(net of discounts) of and any related sales taxes and installation and
similar costs for Financeable Products constituting part of such Financeable
Products line that are sold within such Full Sales Year and (y) with respect to
each calendar year within such three-year period during or prior to which such
Financeable Product line was introduced, phased-in or acquired (each such year,
a "Partial Sales Year"), an assumed amount equal to the amount calculated
pursuant to clause (x) above for the first Full Sales Year following such
Partial Sales Year. Notwithstanding the foregoing, there shall be excluded from
the foregoing calculations Financeable Product lines the introduction, phase-in
or acquisition of which was effected in the calendar year with respect to which
Adjusted Financeable Products Sales is being calculated together with, in each
case, any related sales taxes and installation and similar costs. The foregoing
adjustments to Adjusted Financeable Product Sales for any period shall be
calculated on a basis that is consistent with the basis on which adjustments to
Adjusted Financing Amount for such period are calculated.
"Adjusted Financing Amount" means, with respect to any calendar
year, the aggregate amount of Financings provided by the Capital Entities (or,
with respect to periods prior to March 31, 1993, Capital Holdings and its
Subsidiaries) for Financeable Products sold by the Company Entities during such
calendar year and each of the two preceding calendar years, together with the
aggregate amount of Financings of any related sales taxes and installation and
similar costs. In the event that during any three-year period for which Adjusted
Financing Amount is calculated, there has occurred a disposition, termination or
phase-out by any Company Entity of any significant Financeable Product line, the
Adjusted Financing Amount with respect to such three-year period shall be
reduced by the amount attributable to Financings of Financeable Products
constituting part of such Financeable Product line during such three-year period
or to Financings of any related sales taxes and installation and similar costs.
In the event that during any three-year period for which Adjusted Financing
Amount is calculated, there has been introduced or has occurred a phase-in or an
acquisition by any Company Entity of any significant Financeable Product line,
the Adjusted Financing Amount with respect to such three year period shall be
adjusted such that the amount of Financings for such significant Financeable
Product line shall be (x) with respect to each Full Sales Year (as defined in
the definition of "Adjusted Financeable Product Sales"), the aggregate amount of
such Financings (together with the aggregate amount of Financings of any related
sales tax and installation and similar costs) for Financeable Products
constituting part of such Financeable Product line that are sold within such
Full Sales Year and (y) with respect to any Partial Sales Year (as defined in
the definition of "Adjusted Financeable Product Sales"), an assumed amount equal
to the amount calculated pursuant to clause (x)
-3-
<PAGE>
<PAGE>
above for the first Full Sales Year following such Partial Sales Year.
Notwithstanding the foregoing, there shall be excluded from the foregoing
calculations Financings provided by the Capital Entities for Financeable
Products lines the introduction, phase-in or acquisition of which was
effected in the calendar year with respect to which Adjusted Financing
Amount is being calculated together with, in each case, Financings of any
related sales taxes and installation and similar costs.
"Advisory Services" has the meaning ascribed thereto in Section
2.5.
"Affiliate" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to vote a majority of the securities having voting power for the
election of directors (or other Persons acting in similar capacities) of such
Person or otherwise to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"After-Tax Basis" means, with respect to any payment to be
received or accrued by any Person, the amount of such payment supplemented by a
further payment or payments (which shall be payable either simultaneously with
the initial payment or, in the event that taxes resulting from the receipt or
accrual of such initial payment are not payable in the year of receipt or
accrual, at the time or times such taxes become payable) so that the sum of all
such initial and supplemental payments, after deduction of all taxes imposed by
any taxing authority (after taking into account any credits or deductions or
other tax benefits arising therefrom to the extent such are currently utilized)
resulting from the receipt or accrual of such payments (whether or not such
taxes are payable in the year of receipt or accrual) will be equal to the
initial payment to be so received or accrued.
"Agreement" has the meaning ascribed thereto in the preamble
hereto, as such agreement is amended and supplemented from time to time in
accordance with its terms.
"Alternative Ancillary Services" means Ancillary Services offered
or provided to the Company Entities, Customers or Authorized Dealers by an
Alternative Provider.
"Alternative Financing Program" means a Financing program offered
or provided to the Company Entities, Customers or Authorized Dealers by an
Alternative Provider.
-4-
<PAGE>
<PAGE>
"Alternative Provider" means a Person (other than an Affiliate of
the Company or Capital) that offers financings or other services competitive
with Financings or Ancillary Services offered by the Capital Entities hereunder.
"Ancillary Services" means (i) the provision of property,
casualty or similar types of insurance with respect to Products, (ii) asset
monitoring, recovery and remarketing services of a type provided by the Capital
Entities to the Company Entities or their Customers or Authorized Dealers on or
prior to the date hereof and (iii) any other value-added services relating to
Products or Financings offered by the Capital Entities from time to time and
agreed to by the parties to be treated as Ancillary Services for purposes of
this Agreement.
"AT&T" has the meaning ascribed thereto in the preamble.
"AT&T Entities" means AT&T and all Persons that constitute
Subsidiaries of AT&T (other than Subsidiaries that constitute Capital Entities)
from time to time.
"AT&T Operating Agreement" has the meaning ascribed thereto in
the preamble.
"Authorized Dealer" means any Person that is authorized or
permitted by any Company Entity to acquire Products directly from such Company
Entity for resale on a wholesale or retail basis.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banking institutions in New Jersey are authorized or required
by law to be closed.
"Capital" means AT&T Capital Corporation, a Delaware corporation,
and its successors and permitted assigns.
"Capital Entities" means Capital and all Persons that constitute
Subsidiaries of Capital from time to time.
"Capital Entities' Financing Penetration Rate" means, as of the
end of any calendar year, the Adjusted Financing Amount for such year and the
two preceding calendar years expressed as a percentage of the Adjusted
Financeable Product Sales for such year and the two preceding calendar years.
"Capital Holdings" means AT&T Capital Holdings, Inc., a Delaware
corporation.
"Captive Financing Trigger Event" has the meaning ascribed
thereto in Section 4.2.
"Company" has the meaning ascribed thereto in the preamble.
-5-
<PAGE>
<PAGE>
"Company Entities" means the Company and all Persons that
constitute Subsidiaries of the Company from time to time.
"Company Receivables Agreement" means the Operating Agreement
dated as of November 7, 1983 between the Company and NCR Credit, as such
agreement is amended and supplemented from time to time in accordance with its
terms.
"Company Responsibility" has the meaning ascribed thereto in
Section 7.2(b).
"Comparable Operating Agreement" has the meaning ascribed thereto
in Section 8.3.
"Credit" means AT&T Credit Corporation, a Delaware corporation
that is a wholly-owned Subsidiary of Capital and was previously named "AT&T
Captive Finance, Inc.".
"Credit Holdings" means AT&T Credit Holdings, Inc., a Delaware
corporation that is a wholly-owned Subsidiary of Capital Holdings and was
previously named "AT&T Credit Corporation".
"Credit Receivables Agreement" means the Operating Agreement
dated as of January 1, 1985, among AT&T and Credit Holdings and certain of their
Affiliates, as such agreement is amended and supplemented from time to time in
accordance with its terms.
"Customer" means any Person that is an actual (or, if the context
so indicates, potential) acquirer or user of Products, other than an Authorized
Dealer.
"Customer Financing" means any direct or indirect financing of
the sale, lease or other furnishing of Products by any Company Entity (or
Authorized Dealer) to Customers, and will include, without limitation, (i)
entering into leases, secured loans, installment sales contracts or conditional
sales contracts directly with such Customers, (ii) the purchase or financing of
receivables arising from such sales, leases or other furnishings of Products by
any Company Entity (or Authorized Dealer), and (iii) the issuance of charge or
credit cards (such as Capital's Products Plus Card) primarily intended for the
financing of purchases of Products.
"Customer Outsourcing Program" means any program of the Company
Entities for the acquisition, maintenance and/or operation by the Company
Entities of telecommunications, computer, data and/or information networks or
operations for Customers under what is generally referred to in the industry as
an outsourcing or network management contract ("Outsourcing Contract") between
the applicable Customer and the applicable Company Entities, under which program
financing of the products and other equipment and software (which may include,
but are not necessarily limited to, Products) used in connection with the
-6-
<PAGE>
<PAGE>
Outsourcing Contract is provided by a financing source other than the internal
or budgeted funds of the Company Entities offering such program.
"Dealer Financing" means any direct or indirect (i) financing of
the purchase or lease by Authorized Dealers of Products from the Company
Entities for resale or re-lease to Customers, including, without limitation,
floor planning loans and other forms of inventory financing and (ii) provision
of other types of secured loans to such Authorized Dealers.
"Dollars" and "$" mean the lawful money of the United States.
"Financeable Products" means all Products (other than Products
constituting consumables or maintenance, service or similar contracts) sold by
the Company Entities to Customers or Authorized Dealers within the Active
Service Areas that (i) have been Financed by the Capital Entities or (ii) are
types of Products for which it is customary in the equipment finance industry
within the Active Service Areas for third-party, "non-captive" equipment
financing companies to provide Financing.
"Financed Products" means Products with respect to which
Financing has been provided.
"Finance Marketing Support" has the meaning ascribed thereto in
Section 3.1(i).
"Financing" means Customer Financing, Dealer Financing or
Outsource Financing.
"First Tier Transfer of Control" means a transaction or series of
transactions that has the effect of reducing AT&T's direct or indirect ownership
interest of Capital's voting securities, such that Capital is no longer a
Subsidiary of AT&T.
"Information Support" has the meaning ascribed thereto in Section
3.1(v).
"Initial Term" has the meaning ascribed thereto in Section 11.1.
"Intercompany Agreement" means the Intercompany Agreement dated
as of the date hereof between the Company and Capital, as such agreement is
amended and supplemented from time to time in accordance with its terms.
"Location Support" has the meaning ascribed thereto in Section
3.1(iii).
"Location Support Agreement" has the meaning ascribed thereto in
Section 3.1(iii).
-7-
<PAGE>
<PAGE>
"NCR Credit" means NCR Credit Corp., a Delaware corporation that
is a wholly-owned Subsidiary of Capital.
"NCR Portfolio" has the meaning ascribed thereto in Section
4.1(b).
"Outsource Financing" means any direct or indirect financing
(including, without limitation, through secured loans and leases) of or with
respect to any Customer Outsourcing Program.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government (and any department
or agency thereof) or other entity.
"Personnel Support" has the meaning ascribed thereto in Section
3.1(ii).
"Products" means any products (including, without limitation,
Software, but not including any real estate) and related installation and
maintenance services provided, furnished, manufactured, sold or marketed, as the
case may be, by the Company Entities from time to time.
"Products Capacity" means the capacity of a Significant Products
Entity to manufacture, market or provide Products (including, to the extent
appropriate, the related manufacturing capacity, distribution and marketing
capacity and Product development and support systems).
"Protocols and Procedures" has the meaning ascribed thereto in
Section 5.1(a).
"Protocol Standards" has the meaning ascribed thereto in Section
5.1(a).
"Renewal Period" has the meaning ascribed thereto in Section
11.1.
"Sales Site" means any site, office or location from which any
Company Entity or SBU conducts the sale or marketing of Products.
"SBU" means a division of a Company Entity involved in the
manufacture, sale, provision or marketing of Products.
"Significant Account" means a customer (which may be an
Authorized Dealer or a Customer) of a Company Entity (i) which has acquired
Products with an aggregate purchase price exceeding $10,000,000 in the most
recent calendar year or which can reasonably be expected to acquire Products
with an aggregate purchase price exceeding such amount in the current calendar
year
-8-
<PAGE>
<PAGE>
and (ii) has been designated by such Company Entity as a "Significant
Account" by written notice to Capital.
"Significant Products Entity" means a Company Entity or SBU (x)
which is in the business of manufacturing, marketing or providing Products and
(y) which has annual sales revenues in excess of $200,000,000 for the calendar
year immediately preceding the calendar year during which the applicable
transaction referred to in Section 8.3 is proposed or effected.
"Software" means any intellectual property commonly or
generically known as software, together with related storage disks and
instructional and other documents, the acquisition or use of which by any Person
is customarily financed by the Capital Entities or relates to or is used in
connection with equipment financed by the Capital Entities.
"Spin-Off Date" means the date of the consummation of the
Spin-Off Transaction.
"Spin-Off Transaction" has the meaning ascribed thereto in the
preamble.
"Standard Documents" means standardized forms of documents
prepared (and from time to time revised) by the Capital Entities in connection
with the offering of various types of Financings and Ancillary Services,
including forms of leases, loan agreements, security agreements, guarantees,
financing statements and other documents necessary or appropriate for the
conducting of the Capital Entities' business of providing Financing and
Ancillary Services.
"Subsequent Transfers of Control" means any transaction or series
of events or transactions, in which Capital becomes a Subsidiary of any Person
other than the Person (or an Affiliate of the Person) which acquired Capital in
the First Tier Transfer of Control.
"Subsidiary" means, with respect to any Person, any other Person
which is directly or indirectly controlled by such Person. For purposes of this
definition, "control", as applied to any Person, means the possession, directly
or indirectly, of the power to vote a majority of the securities having voting
power for the election of directors (or other Persons acting in similar
capacities) of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Systems Support" has the meaning ascribed thereto in Section
3.1(iv).
Unless the context indicates otherwise, references to Articles,
Sections and Schedule will refer to the corresponding
-9-
<PAGE>
<PAGE>
articles and sections in and schedule to this Agreement and references to
the parties shall mean the parties to this Agreement. Capitalized terms
used herein without definition (such as "Financed") that have correlative
defined terms (such as "Financing") will have a meaning correlative to the
defined term. References to "consistent with past practice" shall refer to the
past practices of the Capital Entities and the businesses of the Company
and its Subsidiaries prior to June 25, 1995.
ARTICLE II
FINANCING RELATED SERVICES TO BE PROVIDED BY CAPITAL
Section 2.1. Financing Related Services -- Objectives and
Commitments.
(a) It is the mutual objective of the parties to this Agreement
that Capital will, during the term of this Agreement and within the Active
Service Areas, either directly or through its Subsidiaries:
(i) make available to Customers of the Company Entities and
Authorized Dealers appropriate forms of Customer Financings for the
purchase, lease or other acquisition of Products (such as, but not
necessarily including with respect to each type of Product, leases,
secured loans, installment sales contracts and conditional sales
contracts), and otherwise provide the Company Entities and Authorized
Dealers with Customer Financing in the form of purchases or financings of
receivables arising from the sale, lease or other furnishing by the
Company Entities or Authorized Dealers of Products to Customers;
(ii) make available to Authorized Dealers appropriate forms of
Dealer Financing and make available to the Company Entities appropriate
forms of Outsource Financing; and
(iii) make available to the Company Entities, Customers and
Authorized Dealers, where appropriate, various types of Ancillary
Services offered from time to time by Capital and its Subsidiaries.
(b) In furtherance of the objectives described in paragraph (a)
above, Capital shall, during the term of this Agreement and within the Active
Service Areas, either directly or through its Subsidiaries:
(i) generally continue the Financing and Ancillary Services
programs under which Capital Holdings and its Subsidiaries (and, as
successors to the "captive" financing businesses thereof, Capital and its
Subsidiaries) have heretofore been providing Financings and Ancillary
Services to the Company Entities, Customers and Authorized Dealers
(subject to Capital's right to modify, revise or terminate particular
programs as appropriate to accommodate changes in market conditions or
the marketing requirements of the
-10-
<PAGE>
<PAGE>
Company Entities, Customers and Authorized Dealers and other
relevant developments);
(ii) as the Company Entities introduce new Products, use its good
faith efforts, in cooperation with the Company, to modify existing or
devise new Financing and Ancillary Service programs, where appropriate,
to support the sale, lease or other furnishings of such Products;
(iii) make any new Ancillary Services offered by the Capital
Entities available to the Company Entities, Customers and Authorized
Dealers, as appropriate;
(iv) cooperate with the Company Entities and Authorized Dealers
in promoting and advertising the availability of the Financings and
Ancillary Services to Customers, including providing their sales and
marketing personnel with information with respect to such Financings and
Ancillary Services and by generally responding to inquiries made by
Customers or the employees of such Company Entities or Authorized Dealers
with respect to such Financings and Ancillary Services;
(v) jointly with the Company, establish and implement and, where
appropriate, revise from time to time Protocols and Procedures for the
furnishing of such Financings and Ancillary Services in accordance with
the provisions of Section 5.1;
(vi) prepare Standard Documents for use in connection with
standardized types of Financings and maintain the capacity to (A) modify
such Standard Documents in order to document particular Financings and
Ancillary Services and (B) prepare appropriate documentation for any
customized Financings and Ancillary Services that Capital may offer to
particular Customers or Authorized Dealers pursuant to this Agreement;
(vii) cooperate with the Company Entities and Authorized Dealers
to facilitate Financings (including, where appropriate, extensions,
renewals or modifications of existing Financings) of replacements or
upgrades of Financed Products or additions of Products to previously
Financed Products (subject to adequate protection of the interests of the
Capital Entities in any Financings that would be affected thereby);
(viii) maintain the capacity to, and employ (or have ready access
to) personnel having the requisite financial, legal and other skills to,
respond to requests of Customers or Authorized Dealers with respect to
unusual, specialized or complex Financings and Ancillary Services;
-11-
<PAGE>
<PAGE>
(ix) endeavor to maintain good relations with Customers and
Authorized Dealers and, by offering courteous, efficient and informed
Financing services and Ancillary Services, promote and support the
efforts of the Company Entities and Authorized Dealers to sell,
distribute and market the Products;
(x) keep appropriate employees of the Capital Entities informed
of business developments at the Company Entities, the characteristics of
Products and their usages, developments of new Products, Product
migration and marketing strategies and the Product-related business plans
of the Company Entities by disseminating the information provided to the
Capital Entities by the Company Entities pursuant to Section 3.6;
(xi) generally keep informed of developments in the equipment
financing industry and of the development of new types of financings; and
(xii) at appropriate intervals, review the types of Financings
and Ancillary Services offered and provided for the Products, the types
of Financings and Ancillary Services requested by the Company Entities,
Customers and Authorized Dealers and other available information so as to
assess the responsiveness of the Financings and Ancillary Services
offered by the Capital Entities to the financing and related needs of
such Company Entities, Customers and Authorized Dealers, and use its good
faith efforts to develop new Financing techniques or products and new
types of Ancillary Services that would enhance or facilitate the sale,
lease or other furnishings of Products to Customers and Authorized
Dealers.
(c) In connection with the activities described in paragraph (b)
above, Capital shall, during the term of this Agreement and within the Active
Service Areas, either directly or through its Subsidiaries:
(i) employ and train appropriate personnel and maintain, adapt
and upgrade its telecommunications, information-processing and
record-keeping systems as it deems necessary or appropriate for the
purpose of carrying out such activities; and
(ii) obtain and maintain such franchises, licenses and permits as
it deems necessary or appropriate for the purpose of carrying out such
activities.
Section 2.2. Training of Company Personnel . The Capital Entities
shall, consistent with past practice, conduct training programs for attendance
by appropriate sales personnel employed by the Company Entities and Authorized
Dealers at which such individuals shall be trained in the proper documentation
of
-12-
<PAGE>
<PAGE>
Financings, the techniques of using Financings and Ancillary Services offered
by the Capital Entities as sales tools and the particulars of such Financings
and Ancillary Services. The Capital Entities shall also provide appropriate
training and assistance, consistent with past practice, to the Company Entities'
operational and office support personnel with respect to the implementation of
the Protocols and Procedures (including, without limitation, processing of
applications for and documentation of Financings and Ancillary Services), the
electronic systems interfaces between the Company Entities' and Capital
Entities' computer systems and related matters.
Section 2.3. Providing the Company with Information as to
Financings and Finance Markets . The Capital Entities shall, consistent with
past practice, provide to the appropriate Company Entities on a periodic basis
information concerning levels of applications for and approvals of Financings
and Ancillary Services, turn-around times for processing applications for
Financings and Ancillary Services, levels of completed and outstanding
Financings and, where requested, payment and delinquency histories with respect
to Financings and Ancillary Services, and other appropriate information with
respect to Financings and Ancillary Services provided under this Agreement. Upon
request and to the extent permitted by applicable law, the Capital Entities
shall also provide to the Company Entities appropriate information within the
possession or control of such Capital Entities that is relevant to an analysis
of the credit standing of any Customer or Authorized Dealer that has directly or
indirectly received or applied for Financing or Ancillary Services from the
Capital Entities. The Capital Entities shall also provide to the Company
Entities, (i) on a periodic basis, appropriate information concerning
competitive lease and other financing products and market conditions for
financing products and (ii) on a regular and timely basis, the development and
marketing plans and strategies of the Capital Entities with regard to Financings
and Ancillary Services. The Capital Entities shall, in a manner consistent with
past practice, comply with all reasonable requests of the Company Entities for
information with respect to the Capital Entities' business plans and results and
programs for financings and ancillary services that are relevant to the
activities contemplated under this Agreement (whether or not relating to the
Active Service Areas).
Section 2.4. Subsidized and Guaranteed Financings and Ancillary
Services . In the event that any Company Entity at any time desires that a
Capital Entity provide a proposed Financing or Ancillary Service that has
previously been rejected by or is otherwise unacceptable to such Capital Entity
because of the level of credit, residual or other risk proposed to be borne by
such Capital Entity in the provision of such Financing or Ancillary Service, or
if any Company Entity at any time desires that a Capital Entity provide
Financing or an Ancillary Service to a Customer or Authorized Dealer at a yield
rate or price that is more favorable to such Customer or Authorized Dealer than
the
-13-
<PAGE>
<PAGE>
rate or price such Capital Entity is otherwise willing to offer, Capital
shall use its best efforts to work out arrangements with such Company Entity
such that the Company might, directly or indirectly, (x) subsidize such
Financing or Ancillary Service (for instance, by agreeing to pay supplemental
rent, premiums or interest or accepting a greater than usual discount) and/or
(y) provide credit support with respect to such Financing or Ancillary Service
(for instance, by guaranteeing payments due and/or the residual under a lease)
so as to permit such Capital Entity to offer such Financing or Ancillary Service
to the Customer or Authorized Dealer on the terms contemplated by such Company
Entity. Capital shall use its best efforts to (x) respond in a timely manner to
any proposal by any Company Entity with respect to the subsidization or
guarantee of any such Financing or Ancillary Service and (y) identify to the
Company Entities in advance, where it is reasonably practicable to do so, the
types of Financings and Ancillary Services that Capital would be willing to
provide on a subsidized or guaranteed basis. It is understood by Capital that
the provision by the Company of any guarantee or subsidy with respect to any
Financing or Ancillary Service is in the sole discretion of the Company.
Section 2.5. Advisory Services . Capital shall (to the extent it
is permitted to do so under applicable laws without the requirement of obtaining
regulatory approvals or licenses in addition to those the Capital Entities may
possess at the relevant time) use its good faith best efforts to provide, either
directly or through its Subsidiaries, the Company Entities with financial
advisory and syndication services ("Advisory Services") upon request in areas in
which the Capital Entities have expertise, such as the structuring of Financings
for certain Products not covered by the Capital Entities' general Financing
programs and the arranging of securitizations of financial assets (other than
financial assets subject to Financings by Capital). Such Advisory Services shall
be provided by Capital pursuant to commercially reasonable arrangements to be
agreed upon by the Company and Capital and will involve the payment to the
relevant Capital Entities of advisory fees in an amount to be agreed upon. The
utilization by the Company Entities of the Capital Entities for provision of
such Advisory Services shall be in the sole discretion of the Company Entities.
Section 2.6. No Obligation or Commitment. (a) The Capital
Entities shall use their good faith efforts to provide Financings and Ancillary
Services for sales, leases and other furnishings of Products by the Company
Entities within the Active Service Areas, subject to compliance with Capital's
credit and documentation standards and the availability of funding sources.
However, the provisions of this Agreement are not intended to and will not be
interpreted so as to obligate or commit the Capital Entities to provide
Financings or Ancillary Services with respect to any particular Company Entity,
Customer, Authorized Dealer or Product, and the Capital Entities will retain
full discretion
-14-
<PAGE>
<PAGE>
with respect to the circumstances in which it will provide, and the terms
of, such Financings and Ancillary Services.
(b) Although the Capital Entities are entitled, in their
discretion, to modify or discontinue programs for Financings and Ancillary
Services, the Capital Entities shall, consistent with past practice, prior to
discontinuing or making a significant modification of any such program, inform
the SBUs that would be affected by such discontinuance or modification and use
reasonable efforts, in consultation with such SBUs, to minimize, as far as
practicably possible, any disruptive effect of such discontinuance or
modification on such SBU's sale, lease or other furnishings of Products.
Section 2.7. Alternative Financing and Recourse Arrangements .
(a) The Company Entities and Capital Entities may, in their discretion, choose
to enter into arrangements or programs from time to time with respect to
Financings and Ancillary Services that have terms and conditions that vary from
those contemplated in this Agreement. Any such alternative arrangements and
programs will not be construed to amend this Agreement, which may be amended
solely in accordance with the terms of Section 13.1. The parties further
acknowledge and agree that, except to the extent otherwise provided herein, (i)
any recourse or other similar arrangements with respect to Financings or
Ancillary Services (whether written or oral) in effect on the date of this
Agreement between any Capital Entity (as successor to Capital Holdings or any
Subsidiary thereof or otherwise), on the one hand, and any AT&T Entity, on the
other hand, will remain in effect in accordance with their terms and (ii) on the
Spin-Off Date the Company will succeed to the rights and assume the obligations
of the AT&T Entities in accordance with Section 8.1(a) (it being understood that
no AT&T Entity shall be released from its obligations under any such recourse or
similar arrangements entered into prior to the Spin-Off Date).
(b) The Company acknowledges and agrees, on behalf of the Company
Entities that are parties to the Company Receivables Agreement, and Capital
acknowledges and agrees, on behalf of the Capital Entities (including NCR
Credit) that are parties to the Company Receivables Agreement, that (i) the
Company Receivables Agreement is in full force and effect and shall remain in
full force and effect with respect to all "receivables", "goods" and "services"
(as such terms are used therein) purchased or deemed to have been purchased
according to the terms thereof by NCR Credit on or prior to the date hereof and
all other obligations under the Company Receivables Agreement of the parties
thereto incurred thereunder prior to the date hereof, (ii) the obligations of
the parties thereto under the Company Receivables Agreement with respect to the
purchase and sale of "receivables", "goods" and "services" (as such terms are
used therein) and all other obligations of the parties thereto under the Company
Receivables Agreement (other than the receivables, goods and services and other
obligations referred to in clause (i) above)
-15-
<PAGE>
<PAGE>
shall be and hereby are terminated and of no force and effect, (iii) to
the extent of the survival and effectiveness of the Company Receivables
Agreement, the terms and conditions of this Agreement shall apply to
the transactions contemplated in or effected pursuant to the Company
Receivables Agreement to the extent that such terms and conditions are
not inconsistent with the terms and conditions of the Company Receivables
Agreement and, to the extent of any such inconsistency, the terms
and conditions set forth in the Company Receivables Agreement shall apply and be
controlling with respect to the transactions contemplated in or effected
pursuant to the Company Receivables Agreement and (iv) after the obligations
under the Company Receivables Agreement of the parties thereto with respect to
the receivables, goods and services referred to in clause (i) above and all
other obligations of the parties thereto incurred thereunder prior to the date
hereof shall have been satisfied and discharged, the Company Receivables
Agreement shall terminate and be of no force and effect. Notwithstanding any of
the foregoing, the provisions of Article VII shall apply with respect to the
receivables, goods and services to which the Company Receivables Agreement shall
continue to apply as provided in this paragraph (b) and, to the extent of any
inconsistency between the terms and conditions of Article VII and the terms and
conditions of the Company Receivables Agreement, the terms and conditions set
forth in Article VII shall apply and be controlling. Any disputes arising under
the Company Receivables Agreement shall be resolved pursuant to the provisions
of Article X.
(c) The Company acknowledges and agrees, on behalf of itself and
the other Company Entities that are parties to the Credit Receivables Agreement,
and Capital acknowledges and agrees, on behalf of the Capital Entities that are
parties to the Credit Receivables Agreement, that (i) Credit has succeeded to
the rights and assumed the obligations of Credit Holdings in and under the
Credit Receivables Agreement, (ii) the Credit Receivables Agreement shall
continue in full force and effect except that (A) the term "Affiliates" (as such
term is used therein), as it applies to affiliates of the Company, shall include
all the Company Entities but shall not include the Capital Entities and (B) the
rights and obligations of Credit thereunder may be exercised or performed by any
Capital Entity (including NCR Credit) and (iii) the terms and conditions of this
Agreement shall apply to the transactions contemplated in or effected pursuant
to the Credit Receivables Agreement to the extent that such terms and conditions
are not inconsistent with the terms and conditions of the Credit Receivables
Agreement and, to the extent of any such inconsistency, the terms and conditions
set forth in the Credit Receivables Agreement shall apply and be controlling
with respect to the transactions contemplated in or effected pursuant to the
Credit Receivables Agreement. Any disputes arising under the Credit Receivables
Agreement shall be resolved pursuant to the provisions of Article X.
-16-
<PAGE>
<PAGE>
ARTICLE III
PREFERRED PROVIDER STATUS
Section 3.1. Support of the Capital Entities . The Company agrees
that during the term of this Agreement the Company Entities shall, within the
Active Service Areas, in connection with the offering or provision of Financings
or Ancillary Services by the Capital Entities:
(i) promote the utilization by Customers and Authorized Dealers
of Customer Financings and Dealer Financings, as appropriate, and
Ancillary Services made available by the Capital Entities (which type of
support is described more fully in Section 3.4 and is referred to herein
as "Finance Marketing Support");
(ii) (A) support the efforts of the Capital Entities to make
available Customer Financings and Dealer Financings, as appropriate, and
Ancillary Services to Customers and Authorized Dealers and (B) consistent
with past practice, provide training to appropriate personnel employed by
the Capital Entities with respect to the Products and the sales and
marketing thereof (which type of support is described more fully in
Section 3.5 and is referred to herein as "Personnel Support");
(iii) provide appropriate personnel of the Capital Entities with
office space at Sales Sites and appropriate office support services on
the terms and conditions set forth in Schedule A attached hereto and made
a part hereof (the "Location Support Agreement") (which type of support
is referred to herein as "Location Support");
(iv) permit and facilitate linkages between the Capital Entities'
and the Company Entities' computer and telecommunications systems for the
purpose of retrieving and transmitting between the systems information
and documentation in connection with the offering, documentation and
monitoring of Financings and Ancillary Services and otherwise
facilitating the efficient implementation of the relationships and
activities contemplated in this Agreement (which type of support is
described more fully in Section 5.2 and is referred to herein as "Systems
Support"); and
(v) provide to the Capital Entities information with respect to
the Company Entities' product development and marketing plans, consistent
with past practice, for the purposes of permitting the Capital Entities
to more effectively design appropriate programs for Financings and
Ancillary Services and to determine the likely residual values of
Products (which type of support is described more fully in Section 3.6
and is referred to herein as "Information Support").
-17-
<PAGE>
<PAGE>
In addition to the foregoing, the Company Entities shall provide
to the Capital Entities such assistance as the Capital Entities may reasonably
request in order to facilitate the Capital Entities' financing activities
relating to the provision of Financings and Ancillary Services. Such assistance
may include matters such as structuring and documenting arrangements (including
purchase, payment and invoicing arrangements) between the Company Entities and
the Capital Entities or between the Company Entities and Customers and
Authorized Dealers for purposes of facilitating receivables financings, leases
and other financing transactions effected by the Capital Entities.
Section 3.2. Preferred Provider Status. (a) The Company Entities
shall provide the Capital Entities with an opportunity to propose a Financing
program or Financings and, where applicable, Ancillary Services, with respect to
all sales, leases or other furnishings of Products directly by Company Entities
to Customers and Authorized Dealers and all Customer Outsourcing Programs within
the Active Service Areas. However, the Company Entities shall have the right to
utilize or promote an Alternative Financing Program or Alternative Ancillary
Services with respect to particular sales, leases or other furnishings of
Products or Customer Outsourcing Programs subject to the following conditions:
(i) the Company Entities shall not utilize any Alternative
Financing Program or Alternative Ancillary Services if the Capital
Entities have offered to provide Financings or Ancillary Services on the
same or better terms, conditions and standards of service overall as
those offered by the Alternative Provider (it being understood, however,
that the Company Entities will not be obligated to provide the Capital
Entities with a "last look" with respect to the terms, conditions and
standards of service offered by such Alternative Provider, provided that
they do not provide any such Alternative Provider with information
concerning the terms, conditions and standards of service offered by the
Capital Entities);
(ii) the Company Entities shall not provide to any such
Alternative Provider any benefits, inducements or information in
connection with any proposed Alternative Financing Program or Alternative
Ancillary Services unless the same or comparable benefits, inducements or
information have been offered or provided to the Capital Entities, and
shall not give any Alternative Provider preferential treatment in any
respect with respect to any Alternative Financing Program or Alternative
Ancillary Services; and
(iii) the Company Entities shall not provide to any such
Alternative Provider, for purposes of facilitating or promoting any
Alternative Financing Program or Alternative Ancillary Services: (A) any
confidential information with
-18-
<PAGE>
<PAGE>
respect to any Products (including, without limitation,
information relating to Product development and marketing
plans, but excluding any specific technical information with respect to
the Products being financed necessary for the implementation of the
Alternative Financing Program), (B) any commitments to repurchase or
remarket Products, (C) the right to directly or indirectly provide
incentive compensation to any sales or other personnel employed by the
Company Entities, (D) any computer or other technological systems
interfaces between the Company Entities (on the one hand) and such
Alternative Provider (on the other hand) or (E) the opportunity or right
to base or locate any Alternative Provider personnel at any Sales Site.
(b) Except as provided in this Section 3.2, the Company Entities
shall not provide any support similar to the Finance Marketing Support, Location
Support or Systems Support to any Alternative Provider that provides or proposes
to provide, in any Active Service Area, Alternative Financing Programs or
Alternative Ancillary Services to the Company Entities, Customers or Authorized
Dealers.
(c) In the event that (i) the Capital Entities decline (or do not
bid) to provide, in any Active Service Area, any particular type of Financings
or Ancillary Services or Financings or Ancillary Services for any particular
line of new Products or Products for which the Capital Entities do not have
programs for the provision of Financings or Ancillary Services, in each such
case on such conditions and specifications as are communicated by a Company
Entity to the Capital Entities and any Alternative Provider, and (ii) such
Company Entity makes an arrangement with any such Alternative Provider to
provide an Alternative Financing Program or Alternative Ancillary Services with
respect to such particular type of Financings or Ancillary Services or
Financings or Ancillary Services for such particular line of Products on the
conditions and specifications so communicated to the Capital Entities and such
Alternative Provider, the provisions of paragraphs (a) and (b) above shall not
apply solely with respect to such Alternative Financing Program or Alternative
Ancillary Services. It is understood by the parties that the provisions of this
paragraph (c) are intended solely to permit the Company to extend the benefits
set forth in paragraphs (a) and (b) above to Alternative Providers in
circumstances in which the Capital Entities do not provide or offer to provide
certain Financings or Ancillary Services.
(d) Notwithstanding the other provisions of this Article III, the
Company Entities may but shall not be required to provide to the Capital
Entities any (i) Finance Marketing Support in connection with any Customer
Outsourcing Program, (ii) Location Support or Systems Support in connection with
any Customer Outsourcing Program in addition to that currently provided by the
Company Entities, and (iii) Information Support in connection with any Customer
Outsourcing Program except that
-19-
<PAGE>
<PAGE>
the Company Entities shall provide information to the Capital Entities
relating to the specific Products being Financed by the Capital
Entities in connection with any Customer Outsourcing Program. In
addition to the foregoing, the Company Entities may, in connection with any
Customer Outsourcing Program with any Customer, without providing a right to bid
thereon to the Capital Entities, (x) guarantee or assume the payment obligations
of such Customer under financings for products provided to such Customer by any
financing source that is unaffiliated to the Company Entities or Capital
Entities to the extent that such financings are in effect at the time that the
Company Entities enter into such Customer Outsourcing Program with such Customer
and (y) finance, through the financing program or arrangement in effect with
such alternative financing source, upgrades or add-ons to the products that have
been so financed through such alternative financing program or arrangement.
(e) In the event that a Company Entity reasonably believes that
any Financings and Ancillary Services provided by the Capital Entities at any
Sales Site are not being provided substantially and generally in accordance with
the applicable Protocols and Procedures, such Company Entity shall provide
notice thereof to the appropriate Capital Entities (which notice shall set forth
in reasonable detail the basis of such belief of the Company Entity). The
Capital Entities shall have 60 days after receipt of such notice to cure such
deficiencies and provide Financing and Ancillary Services substantially and
generally in accordance with the applicable Protocols and Procedures. If the
Capital Entities fail to cure such deficiencies within such 60 day period, the
Company Entities may, notwithstanding the provisions of Section 3.1 and this
Section 3.2, make arrangements with an Alternative Provider to provide at such
Sales Site Alternative Financing Programs and/or Alternative Ancillary Programs
of the type not being provided by the Capital Entities at such Sales Site
substantially and generally in accordance with the applicable Protocols and
Procedures.
Section 3.3. Right to Choose Alternative Providers . Capital
acknowledges that Customers and Authorized Dealers are entitled to choose not to
Finance the acquisition or use of Products or to choose to make arrangements for
obtaining Financings for the acquisition or use of Products or Ancillary
Services from Alternative Providers. Capital further acknowledges that the
provisions of this Agreement (including the Company's commitment in Section 3.2
to promote the use of Financings and Ancillary Services offered by the Capital
Entities) do not require the Company Entities to condition the sale or
furnishing of Products on the choice by Customers or Authorized Dealers of
Financings or Ancillary Services offered by the Capital Entities or otherwise
require Customers or Authorized Dealers to utilize such Financings or Ancillary
Services. Nothing set forth in this Agreement will be construed so as to
prohibit any sales representative of any Company Entity from cooperating with a
Customer or Authorized Dealer in obtaining
-20-
<PAGE>
<PAGE>
Financing or Ancillary Services from an Alternative Provider where
the Customer or Authorized Dealer has independently decided not to
obtain such Financing or Ancillary Services from Capital; provided,
however, that the ability of such Company Entities to cooperate with
such Alternative Provider will be subject to the limitations set forth
in Section 3.2(a) and Section 3.2(b).
Section 3.4. Finance Marketing Support . The Company Entities'
sales representatives engaged in the sale or marketing of Products of a type for
which the Capital Entities offer Customer Financings or Dealer Financings or
Ancillary Services shall be provided by the Company Entities with promotional
and informational literature concerning such Financings and Ancillary Services
and, where appropriate, Standard Documents that are in each case provided by the
Capital Entities to the Company Entities. Such sales representatives shall make
the Financing options offered by the Capital Entities known to Customers and
Authorized Dealers interested in Financing the purchase, lease or other
acquisition of Products and, where appropriate, shall make the Ancillary
Services offered by the Capital Entities known to such Customers and Authorized
Dealers. In addition, such sales representatives shall generally use their good
faith best efforts to promote the use of such Financings and Ancillary Services
by such Customers and Authorized Dealers.
Section 3.5. Personnel Support. (a) Consistent with past
practice, the Company Entities shall, in a manner deemed appropriate by the
Company in its discretion, make available employees of such Company Entities
with the requisite position, knowledge, skill and experience to coordinate the
Company Entities' marketing and sales strategies with the Capital Entities'
marketing and Financing and Ancillary Services strategies, to coordinate the
actual marketing and sale of Products by such Company Entities with the offering
and documentation of Financings and Ancillary Services by the Capital Entities,
to receive and disseminate within each SBU within each such Company Entity and
provide timely responses to communications, requests and information from the
Capital Entities to such SBU, to coordinate cash management, accounting and
systems interfaces between the Company Entities and the Capital Entities and to
otherwise comply with such Company Entities' obligations to Capital hereunder.
(b) The Company Entities shall provide training to appropriate
personnel of the Capital Entities with respect to Products and their
characteristics and usages, the interrelationships among Product lines, the
potential for Product upgrades and add-ons, the products of other manufacturers
competitive with the Products, Product marketing and sales strategies and
similar technical or marketing matters that could be of use to such personnel in
designing and pricing appropriate types of Financings and Ancillary Services,
including the determination of appropriate residual values.
-21-
<PAGE>
<PAGE>
Section 3.6. Information Support . The Company Entities shall, in
a manner consistent with past practice, comply with all reasonable requests of
the Capital Entities for information with respect to the Company Entities'
business plans and results and Products that are relevant to the activities
contemplated under this Agreement (whether or not relating to the Active Service
Areas). Without limiting the foregoing, the Company Entities shall keep the
Capital Entities informed on a regular and timely basis of their Product
development and marketing plans and results to the extent relevant to the
activities contemplated under this Agreement. The Company Entities shall also
provide the Capital Entities appropriate information within the possession or
control of such Company Entities that is relevant to an analysis of the credit
standing of any Customer or Authorized Dealer proposed to directly or indirectly
receive Financing or Ancillary Services from the Capital Entities, and shall
provide the Capital Entities such Product information as may be useful in
connection with the pricing of Financings and Ancillary Services and the
determination of appropriate residual values (such as information as to Product
remarketing prices, Product pricing analyses, Product aging and replacement
reports and analyses and Product migration strategies).
Section 3.7. Activities of the Company Entities . The "preferred
provider" rights and benefits conferred on the Capital Entities and the
obligations of the Company Entities under this Article III shall not be
applicable to or restrict or limit the rights of the Company Entities to engage
in Financing and Ancillary Service activities to the extent the Company Entities
are expressly permitted to engage in such activities pursuant to Article IV;
provided, however, that the Company Entities shall not transfer or assign
(except to other Company Entities) such rights to any other Person.
ARTICLE IV
NON-COMPETITION
Section 4. Covenant Not to Compete. (a) In furtherance of the
"preferred provider" status accorded by the Company to the Capital Entities
under Section 3.2, the Company covenants and agrees that the Company shall not,
and shall not permit the other Company Entities to, directly or indirectly, at
any time during the term of this Agreement (whether as stockholder, principal,
agent, independent contractor, partner or otherwise) maintain an ownership
interest in, manage, operate, control or participate in a business involving (i)
the Financing of Products or the offering of Ancillary Services anywhere within
any Active Service Area (which activities the parties agree shall be deemed to
be in direct competition with the Capital Entities), or (ii) the financing of
products or services manufactured, sold, furnished provided or marketed by
Persons that are not Company Entities, or the offering of ancillary services
similar to the
-22-
<PAGE>
<PAGE>
Ancillary Services with respect to such products or services, or
the providing of secured financing to any Person (whether or not such
competition relates to the services offered by the Capital Entities under this
Agreement) anywhere within any Active Service Area (it being acknowledged that
the prohibited activities are not limited to any particular region within the
Active Service Areas because the prohibited activities may be engaged in
effectively in competition with the Capital Entities' business from any location
within the United States or within any other Active Service Area), except as
provided in paragraph (b) below and Section 4.2.
(b) Notwithstanding the provisions of paragraph (a) above:
(i) the Company Entities may acquire and own, individually or
collectively, in the aggregate, (A) except as provided in clause (ii)
below, not in excess of 5% of any class of stock of any financial
institution if such stock is publicly traded and listed on any national
or regional stock exchange or reported on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) and (B) ownership
interests in any company that has an equipment leasing subsidiary or
division to the extent that by ownership of such equity interests or
otherwise the Company Entities do not "control" (as described in the
definition of Subsidiary) such company, provided that the Company
Entities shall not assist such equipment leasing subsidiary or division
in competing with the Capital Entities and shall not provide such
subsidiary or division with any "preferred provider" rights of the type
set forth in Section 3.2;
(ii) the Company Entities may acquire or establish and own a
bank, insurance company, savings and loan association or similar
financial institution that does not (or, following such acquisition,
ceases to) offer programs for equipment leasing or other types of
equipment Financing with respect to Products, asset remarketing or
Finance-related equipment insurance in connection with Products that
compete with programs for such services offered by the Capital Entities;
(iii) the Company Entities may issue credit cards; provided that
the Company Entities shall not use such credit cards to offer programs
for equipment leasing or other types of equipment Financing with respect
to Products, asset remarketing or Finance-related equipment insurance in
connection with Products that compete with programs for such services
offered by the Capital Entities (it being understood that for purposes of
this clause (iii) "Products" shall include Products (as defined in the
AT&T Operating Agreement or any Comparable Operating Agreement entered
into pursuant to, and as defined in, the AT&T Operating Agreement);
-23-
<PAGE>
<PAGE>
(iv) the Company Entities may, in a manner consistent with past
practice (such past practice being more fully described on Schedule B
attached hereto and made a part hereof) or as otherwise agreed by the
Company and Capital from time to time, provide interim Financings for
Products in the form of sales-type leases, installment sales contracts or
conditional sales contracts to Customers or Authorized Dealers to Finance
the acquisition by them of Products; provided that the Company Entities
shall offer to the Capital Entities an opportunity to purchase the
receivables resulting from such Financings on terms consistent with past
practice and, where applicable, subject to the terms of the Credit
Receivables Agreement or the Company Receivables Agreement;
(v) the Company and its Subsidiaries may, pursuant to the terms
of the agreement of the parties with respect to the NCR Portfolio (as
such term is defined in the Intercompany Agreement) contemplated in the
Intercompany Agreement, provide Financings for Products manufactured or
provided by the Company or its Subsidiaries that are marketed in the
United Kingdom, France or Germany to Customers located in the United
Kingdom, France or Germany, which Financings shall be managed and
administered by Capital pursuant to the terms of such agreement of the
parties with respect to the NCR Portfolio;
(vi) the Company Entities may finance the sale or other
disposition of real estate owned by the Company Entities from time to
time;
(vii) Acquired Entity Financing Sources may conduct the financing
activities that such entities are permitted to conduct under Section 4.3;
(viii) the Company Entities may provide short-term trade credits
to Customers and Authorized Dealers in connection with the acquisition of
Products by such Customers and Authorized Dealers; and
(ix) the Company Entities may provide services to lessees
involving (A) inspection of leased equipment and analysis of related
leases with a view towards reducing ongoing lease expenses, (B) provision
of recommendations to reduce current and future costs related to
equipment and the related leases or (C) negotiation with lessors with
respect to matters such as credits for returned equipment, purchase by
lessees of equipment and consolidation of equipment leases.
It is the intent and understanding of the parties hereto that if,
in any action before any court, agency or tribunal legally empowered to enforce
this Section 4.1, any term, restriction, covenant or promise in this Section 4.1
is found to
-24-
<PAGE>
<PAGE>
be invalid, illegal or unenforceable, then such term, restriction,
covenant or promise will be deemed modified to the extent necessary to make it
valid, legal or enforceable by such court, agency or tribunal.
Section 4.2. Use of a Permitted Captive Financing Source . If at
any time a Captive Financing Trigger Event (as defined below) occurs, the
Company may, upon at least 120 days' prior notice to Capital given not later
than 30 days after the date of the determination that such Captive Financing
Trigger Event exists, elect to (i) provide, or to cause another Company Entity
to provide Financings with respect to future sales, leases or other furnishings
of Products and related Ancillary Services and (ii) terminate the "preferred
provider" rights and benefits provided to the Capital Entities pursuant to
Section 3.2.
A "Captive Financing Trigger Event" shall be deemed to have
occurred if, and only if, the Capital Entities' Financing Penetration Rate as of
the end of any calendar year declines by ten (10) percentage points or more
relative to the Capital Entities' Financing Penetration Rate as of the end of
the preceding calendar year (for instance, the requirements of this clause (ii)
shall be satisfied for calendar year 1997 in the event that the Capital
Entities' Financing Penetration Rate for calendar year 1997 were 44% and the
Capital Entities' Financing Penetration Rate for calendar year 1996 were 55%
since such 1996 Financing Penetration Rate would have exceeded such 1997
Financing Penetration Rate by 11 percentage points); provided that any decline
in such Financing Penetration Rate as of the end of any calendar year that is
attributable to a breach or violation by a Company Entity or an employee of a
Company Entity of this Agreement (whether or not such breach or violation gives
rise to a right of termination of this Agreement) shall be excluded from the
calculation of such Capital Entities' Financing Penetration Rate. In comparing
the Capital Entities' Financing Penetration Rate for any two three-year periods,
the adjustments to the Adjusted Financing Amount and Adjusted Financeable
Product Sales contemplated in the definitions thereof for calculation of such
Capital Entities' Financing Penetration Rates shall be effected on a consistent
basis (for instance, if the Adjusted Financing Amount and Adjusted Financeable
Product Sales for calendar year 1997 are adjusted downwards to reflect a
phase-out in calendar year 1997 of a significant Products line, the Adjusted
Financing Amount and Adjusted Financeable Products Sales for calendar year 1996
shall also be correspondingly adjusted downwards as if the phase-out of the
significant Products line occurred in calendar year 1996).
The Company and Capital shall, as part of the Protocols and Procedures,
establish procedures and parameters for determining whether or not a Captive
Financing Trigger Event has occurred as of the end of any calendar year.
-25-
<PAGE>
<PAGE>
Section 4.3. Financing Operations of Acquired Entities. (a) In
the event that the Company Entities at any time acquire equity interests in or
the assets of any Person or business (such entity or the entity holding such
acquired assets being sometimes referred to herein as an "Acquired Entity") that
thereby becomes a Subsidiary of the Company or a division of any Company Entity
and which engages, directly or through an Affiliate, in the financing of
products or services manufactured, marketed or provided by such Acquired Entity
(the division or Affiliate that provides such financing being sometimes referred
to herein as an "Acquired Entity Financing Source"), the Company shall use
reasonable efforts to facilitate one or more of the following transactions by
Capital, in Capital's discretion: (i) acquisition by Capital of the capital
stock or substantially all the assets of such Acquired Entity Financing Source
for an amount equal to the fair market value thereof (not to exceed the portion
of the total consideration paid by the Company Entities for the acquired equity
interests or assets that is allocable to such assets or stock of such Acquired
Entity Financing Source); (ii) acquisition by Capital of the capital stock or
substantially all of the assets of such Acquired Entity Financing Source, other
than its portfolio of existing financings, for an amount equal to the fair
market value of such acquired assets (subject to the same limiting principle as
in the preceding clause (i)) and execution by Capital of an exclusive agreement
with such Acquired Entity Financing Source for Capital to service such existing
portfolio (including any future additions to such portfolio) for a reasonable,
market-based fee; or (iii) without the acquisition of such capital stock or
assets or portfolio, the execution by Capital of an exclusive agreement with
such Acquired Entity Financing Source for Capital to service such portfolio
(including any future additions to such portfolio) for a reasonable,
market-based fee.
(b) In the event that Capital does not acquire the capital stock
or substantially all the assets of any such Acquired Entity Financing Source as
provided in paragraph (a) above, such Acquired Entity Financing Source may, so
long as it continues to be, or continues to be a division or unit of, a direct
or indirect Subsidiary of the Company, continue to provide financing for: (A)
products or related services manufactured, marketed, furnished or provided by
the related Acquired Entity as of the date of the acquisition thereof by the
Company Entities, together with any new generations of such products or
services; provided, that such products and services will nonetheless be deemed
to be "Products" for the purposes of this Agreement and Capital will also have a
right to offer Financings and Ancillary Services with respect to such Products
in accordance with the terms of Article III (except that the "preferred
provider" provisions of Section 3.2 shall not restrict the Company Entities from
providing any rights or benefits to such Acquired Entity Financing Source with
respect to such Products); and (B) products or related services manufactured,
marketed or provided by Persons that do not constitute Company Entities so long
as the scope and
-26-
<PAGE>
<PAGE>
nature of such financing activities are restricted to the scope and nature
of such financing activities of such Acquired Entity Financing Source
as of the date of the acquisition thereof by the Company Entities (it being
understood and agreed that such Acquired Entity Financing Source shall not
provide Financings for Products (other than the Products permitted to be
Financed pursuant to clause (A) above) except to the extent that such other
Products are incorporated in or integral to the products and services permitted
to be financed pursuant to this clause (B) and which do not constitute more than
40% of the value of such products or services and such Financings of Products do
not occur as a course of dealing with respect to any Customer or Customer
segment). At the request of either party, the parties shall set forth in writing
the specific scope, nature and extent of the financing activities of any such
Acquired Entity Financing Source that are permitted under the terms of this
Section 4.3.
ARTICLE V
PROTOCOLS AND PROCEDURES AND RELATED MATTERS
Section 5.1. Protocols and Procedures; Pilot Programs . (a) The
Company and Capital acknowledge that there are presently in effect certain
protocols and procedures governing certain aspects of the business relationship
between the Capital Entities (or their predecessors) and the Company Entities
(collectively, "Protocols and Procedures") that were agreed to between such
Company Entities and Capital Entities (or their predecessors) for the purposes
of (A) on the one hand, promoting efficiency in the identification,
communication and processing of requirements of Customers and Authorized Dealers
for Financings and Ancillary Services and the provision and monitoring of such
Financings and Ancillary Services and (B) on the other hand, improving the
Capital Entities' Financing Penetration Rate while maintaining the profitability
to the Capital Entities of the provision of Financings and Ancillary Services
(the "Protocol Standards"). Such Protocols and Procedures will continue to
remain in effect between the appropriate Company Entities and Capital Entities,
and the Company Entities and Capital Entities shall conduct the activities
contemplated in the Protocols and Procedures to be conducted by the Company
Entities and Capital Entities, as the case may be, substantially and generally
in accordance with the terms thereof (it being understood that complete and
consistent compliance by the parties with the Protocols and Procedures is not
practical). It is the intention of the parties that the Protocols and Procedures
will not supersede or modify the agreements of the parties set forth in the
Location Support Agreement or other written agreements between the parties
relating to the provision of products or services by one party to the other
party.
(b) The appropriate Company Entities and Capital Entities shall
review the Protocols and Procedures on a periodic basis to determine if it would
be appropriate or necessary to
-27-
<PAGE>
<PAGE>
modify or supplement the Protocols and Procedures in order for the
Protocols and Procedures to comport more closely with the Protocol
Standards or for the Protocols and Procedures to take into account new types
of Financings or Ancillary Services or other changes in circumstances in a
manner consistent with the Protocol Standards. The appropriate Company Entities
and Capital Entities may also suggest modifications or supplements to the
Protocols and Procedures at any time and from time to time that are consistent
with the Protocol Standards. The Company Entities may, consistent with past
practice, in determining whether the Protocols and Procedures are to be modified
or updated, take into account relevant benchmarking and other methods of
evaluating the Financing programs offered by the Capital Entities whereunder
such programs would be compared to substantially similar (as to scope and
nature) financing programs offered by other financing sources for equipment and
products that do not constitute Products. Where applicable, the appropriate
Company Entities and Capital Entities shall, in any such circumstances,
negotiate in good faith to appropriately modify or supplement the Protocols and
Procedures.
(c) The Capital Entities and the Company Entities shall,
consistent with past practice, cooperate with each other to institute pilot
Financing programs by the Capital Entities which are mutually satisfactory to
the Company Entities and the Capital Entities.
Section 5.2. Systems Interface . (a) The Company and Capital
agree to maintain in effect the existing telecommunications and computer
linkages (including, without limitation, telecommunications and computer
linkages relating to voice messaging, electronic written messaging, remote
terminal document retrieval, and data storage and retrieval) between the Company
Entities and Capital Entities that facilitate (x) the accessing by the Capital
Entities of information with respect to Customer and Authorized Dealer
locations, Product delivery, location, installation and servicing, SBU sales
force performance and related matters, (y) the accessing by the Company Entities
and the SBUs of information with respect to terms of or rates for Financings and
Ancillary Services, acceptance, billing and payment status and credit and
collection information and, to the extent such information is available to the
Capital Entities, information with respect to Customer and Authorized Dealer
locations and Product delivery, location, installation and servicing, and (z)
the integration of funds transfers between the Company Entities and Capital
Entities with their respective invoicing and accounting systems in connection
with the provision by the Capital Entities of Financings and Ancillary Services
with respect to Products.
-28-
<PAGE>
<PAGE>
(b) The appropriate Company Entities and Capital Entities shall
review the foregoing telecommunications and computer linkages on a periodic
basis to determine if it would be appropriate or necessary to improve, expand,
modify or supplement such linkages in order to comply with the Protocols and
Procedures, integrate more efficient technology, improve and expand data
retrieval and usage and improve the sales of Products and the utilization of
Financings and Ancillary Services offered by the Capital Entities or to take
into account new types of Financings or Ancillary Services or other changes in
circumstances. The appropriate Company Entities and Capital Entities may also
suggest improvements, expansions, modifications or supplements to such
telecommunications and computer linkages at any time and from time to time that
are consistent with the foregoing standards. If necessary or appropriate, the
appropriate Company Entities and Capital Entities shall, in any such
circumstances, take appropriate actions to effect such improvements, expansions,
modifications or supplements to such telecommunications and computer linkages.
(c) The Company Entities shall bear the costs of maintaining and
improving, expanding, modifying or supplementing the computer and
telecommunications systems owned by them and the costs of telecommunication and
other services utilized by them. The Capital Entities shall bear the costs of
maintaining and improving, expanding, modifying or supplementing the computer
and telecommunication systems owned by them and the costs of telecommunication
and other services utilized by them. The costs of designing and implementing the
interfaces between the Company Entities' and Capital Entities' computer and
telecommunications systems and the costs of related telecommunications and other
services shall be shared equally between the Company and Capital.
ARTICLE VI
REMARKETING OF PRODUCTS
Section 6.1. In General . (a) The Company Entities and the
Capital Entities and the SBUs shall, in a manner consistent with past practice
but subject to the terms hereof, coordinate their strategies with respect to the
disposition or re-lease (whether by extension of the existing lease or by a new
lease to a third party) of leased Products (whether at the end of the lease term
or upon the return or repossession of the leased Product prior to the end of
such term), with the objective of both maintaining the relevant Customers and
Authorized Dealers as purchasers and users of Products, on the one hand, and
protecting the Capital Entities' reasonable expectations concerning the
realization of profits from end of term residuals, on the other hand. Unless
otherwise agreed to by the Capital Entities in connection with particular
Financings or Financing programs, Capital will not be restricted in terms of its
right to sell, re-lease or otherwise dispose of returned or repossessed Products
(including Products that have been leased by or subject to
-29-
<PAGE>
<PAGE>
security interests or other claims in favor of any Capital Entity). Except as
otherwise agreed in writing, the Company Entities shall not be deemed to have
represented or warranted to the Capital Entities that the Capital Entities
will obtain any minimum proceeds or rate of return upon the resale, re-lease
or other disposition of returned or repossessed Products.
(b) The Company Entities and Capital Entities may from time to
time enter into agreements with respect to the disposition or re-lease of
Products. The Company acknowledges and agrees, on behalf of itself and the other
Company Entities parties thereto, and Capital acknowledges and agrees, on behalf
of itself and other Capital Entities parties thereto, that (i) Credit has
succeeded to the rights and assumed the obligations of Credit Holdings under
each and any agreement in effect on the date hereof between any AT&T Entity and
Credit Holdings with respect to the disposition or re-lease of Products and (ii)
on the Spin-Off Date the Company shall succeed to the rights and assume the
obligations of the AT&T Entities in accordance with Section 8.1(a) under each
and any agreement in effect on the date hereof between any AT&T Entity and any
Capital Entity with respect to the disposition or re-lease of Products shall
remain in full force and effect (it being understood that no AT&T Entity shall
be released from its obligations under any such agreement entered into prior to
the Spin-Off Date). The terms and conditions of this Agreement shall apply to
the disposition or re-lease of any Products with respect to which an agreement
of the type referred to in this paragraph (b) is in effect at any time to the
extent that such terms and conditions are not inconsistent with the terms and
conditions of any such agreement and, to the extent of any such inconsistency,
the terms and conditions set forth in such agreement shall apply and be
controlling.
Section 6.2. Deinstallation, Refurbishment and Re-Certification
of Remarketed Products . In the event that any Product subject to a Financing is
returned to a Capital Entity (or the right to possession of such Product
otherwise reverts to a Capital Entity), at the request of such Capital Entity,
the Company shall cause the relevant Company Entity to deinstall, refurbish,
recertify, store and/or redeliver such Product in accordance with the reasonable
instructions of such Capital Entity. Such Capital Entity shall pay such Company
Entity for such services at the most competitive rates customarily charged by
such Company Entity to Authorized Dealers and other Product dealers for such
services. Nothing contained herein shall be construed as limiting in any way the
right of the Capital Entities to obtain any of the foregoing services from
Persons other than Company Entities.
Section 6.3. Rights to Use Software . The Company hereby grants,
on behalf of itself and any other applicable Company Entity, a license to the
Capital Entities to use any and all Software, which license shall with respect
to any such
-30-
<PAGE>
<PAGE>
Software be effective automatically and immediately upon Financing
by the Capital Entities of such Software or any other Products in connection
with which such Software is to be used. Except as provided herein, the scope of
the license granted to the Capital Entities shall be consistent with the scope
of the license granted by the applicable Company Entity in its standard form of
license agreement with respect to such Software. The Capital Entities shall (i)
not be required to pay any license fee for such Software or otherwise comply
with the terms of any applicable license agreement for so long as the Capital
Entities are merely providing Financing for such Software or any related
Products or have foreclosed on or otherwise repossessed or re-acquired such
Software in connection with a default under or expiration or termination of the
related Financing but are not using such Software (except for purposes of
testing or demonstrating such Software in connection with any proposed
disposition of such Software) and (ii) be entitled to assign their license to
any other Person, provided that if such Person is not a Capital Entity and the
applicable Company Entity's standard form of license agreement for such Software
requires the prior consent of a Company Entity to assign such license, the
Capital Entities shall assign such license only upon execution and delivery by
the assignee of the applicable Company Entity's standard form of license
agreement for such Software and agreement by such assignee to pay, at the
then-prevailing rate, any fees required to be paid by a licensee of such
Software to the applicable Company Entity pursuant to the terms of such license
agreement.
ARTICLE VII
CERTAIN ALLOCATIONS OF RISK; LITIGATION AND REPOSSESSION
Section 7.1. Representations, Warranties and Covenants. (a)
Unless otherwise agreed with respect to particular Financings or Ancillary
Services or programs with respect thereto, the Company and any other appropriate
Company Entity will be deemed to make the following representations, warranties
and covenants to Capital and any other appropriate Capital Entity each time that
a Capital Entity provides, extends or renews a Financing or Ancillary Service
with respect to a Product (to the extent such representations, warranties or
covenants are applicable to the particular Financing or Ancillary Service):
(i) the appropriate Capital Entity will, upon payment of the
purchase price of any Product that is being Financed by such Capital
Entity pursuant to a lease or other arrangement in which such Capital
Entity retains title to the Product, receive (A) title to the Product
(other than Products constituting Software) free and clear of any lien or
charge thereon created by or through any Company Entity and (B) to the
extent any portion of such Product is not manufactured or developed by a
Company Entity and with
-31-
<PAGE>
<PAGE>
respect to which a Company Entity has received a warranty or indemnity
from another Person, an assignment by such Company Entity of any such
applicable warranty, express or implied, and indemnity rights applicable
to such Product to the extent that such warranty and indemnity rights are
by their terms assignable (and if any such warranty or indemnity rights
are not by their terms so assignable, such Company Entity will hold any
such warranty and indemnity rights for the benefit of such Capital Entity
and will, at the direction and expense of such Capital Entity, take all
such actions as such Capital Entity may reasonably request to enforce all
or any part of such warranty and indemnity rights);
(ii) neither any Company Entity nor any employees or agents of
any such Company Entity will knowingly participate in, or fail to
disclose to the appropriate Capital Entity any knowledge of, any
fraudulent or illegal act in connection with the Financing or Ancillary
Service;
(iii) the Product Financed by the Capital Entity will be
delivered to the Customer or Authorized Dealer named in the applicable
Financing application and installed at the location indicated in the
applicable Financing application in accordance with such Company Entity's
normal operating practices and the terms of the contract with the
Customer or Authorized Dealer, and the appropriate Company Entity will
honor all express and implied warranties and agreements, representations
and/or assurances made by such Company Entity to any Customer or
Authorized Dealer with respect to any such Product; and
(iv) the Company Entities and their employees will not, without
the appropriate Capital Entity's express consent, make any
representation, warranty or covenant on behalf of such Capital Entity to
a Customer or Authorized Dealer with respect to the Financing, the
Standard Documents or other documents provided by the Capital Entities,
the Ancillary Service or the Financed Product.
(b) Unless otherwise agreed with respect to particular
Financings, Ancillary Services or programs with respect thereto, Capital and any
other appropriate Capital Entity will be deemed to make the following
representations, warranties and covenants to the Company and any other
appropriate Company Entity each time that a Capital Entity resells a Financed
Product to a Company Entity or a Capital Entity provides, extends or renews a
Financing or Ancillary Service with respect to a Product (to the extent such
representations, warranties or covenants are applicable to the particular
Financing or Ancillary Service):
-32-
<PAGE>
<PAGE>
(i) the appropriate Company Entity will, upon payment of the
purchase price of any Financed Product that is sold by the appropriate
Capital Entity to such Company Entity, receive (A) title to the Product
free and clear of any lien or charge thereon created by or through any
Capital Entity and (B) to the extent any portion of such Product is not
manufactured or developed by a Company Entity and with respect to which
any Capital Entity has received a warranty or indemnity from a Person
other than a Company Entity, an assignment by such Capital Entity of any
such applicable warranty, express or implied, and indemnity rights
applicable to such Product to the extent that such warranty and indemnity
rights are by their terms assignable (and if any such warranty or
indemnity rights are not by their terms so assignable, such Capital
Entity will hold any such warranty and indemnity rights for the benefit
of such Company Entity and will, at the direction and expense of such
Company Entity, take all such actions as such Company Entity reasonably
will request to enforce all or any part of such warranty and indemnity
rights);
(ii) neither any Capital Entity nor any employees or agents of
such Capital Entity will knowingly participate in, or fail to disclose to
the appropriate Company Entity any knowledge of, any fraudulent or
illegal act in connection with the Financing or Ancillary Service; and
(iii) the Capital Entities and their employees will not, without
the appropriate Company Entity's express consent, make any
representation, warranty or covenant on behalf of a Company Entity to a
Customer or Authorized Dealer with respect to the Financing, Ancillary
Service or Financed Product.
Section 7.2. Allocation of Certain Risks. (a) The Capital
Entities shall assume responsibility for and bear the risks of delinquency,
default and non-payment under any Financings provided by them unless (i) the
relevant Company Entity and the relevant Capital Entity agree or have agreed
otherwise, (ii) a Company Entity has provided the relevant Capital Entity with a
full or partial guaranty or indemnity pursuant to Section 2.4 or Section 2.7,
(iii) Capital is entitled to indemnification for such risks pursuant to the
terms of Article IX or (iv) such delinquency, default or non-payment is
attributable to a Company Responsibility, as defined below (in which event such
risks will be borne in accordance with this Section 7.2).
(b) A "Company Responsibility" means a delinquency, default or
non-payment by a Customer or an Authorized Dealer under any Financing provided
by a Capital Entity of a Product in circumstances where such delinquency,
default or non-payment is a result of:
-33-
<PAGE>
<PAGE>
(i) failure by any Company Entity to deliver, install or service,
as the case may be, such Product in accordance with such Company Entity's
contractual or legal obligation to deliver, install or service such
Product;
(ii) failure of such Product to comply with any contractual
representation, warranty or covenant provided by any Company Entity with
respect to such Product or with any warranty applicable to such Product
by operation of law;
(iii) any offset or counterclaim by the relevant Customer or
Authorized Dealer against the amounts due by it under the Financing on
the basis of disputes between such Customer or Authorized Dealer and any
Company Entity (or on the basis of amounts owing by any Company Entity to
such Customer or Authorized Dealer) under any business dealings between
such Customer or Authorized Dealer and any Company Entity, whether or not
related to such Product or such Financing; or
(iv) breach or violation by any Company Entity or any employee of
a Company Entity of the provisions of Section 7.1(a) (whether or not such
breach or violation gives rise to a right of termination of this
Agreement).
In addition, a "Company Responsibility" will be deemed to exist if, as a matter
of law or equity, any Company Entity is found to be responsible for the
Customer's or Authorized Dealer's failure to honor its obligations under a
Financing or such Customer or Authorized Dealer is able to avail itself of a
defense to any claim asserted by the relevant Capital Entity with respect to
such Financing based on non-performance by any Company Entity of any obligations
of any such Company Entity (whether or not related to the Financed Product) or
any breach by a Company Entity of any warranty (at contract or at law) with
respect to any Product. The application of the term "Company Responsibility" is
further described in the General Allocation of Responsibilities set forth on
Schedule C.
(c) The Company and Capital agree that in any situation in which
there arises the potential for a delinquency, default or non-payment with
respect to a Financing which may be a result of a Company Responsibility
(including any such situation in which a Customer or Authorized Dealer has
refused to perform its obligations thereunder based on the alleged existence of
a circumstance that would constitute a Company Responsibility), the billing,
collection and enforcement activities and any losses with respect to such
Financing will be allocated to the relevant Capital Entities or SBUs in
accordance with the General Allocation of Responsibilities set forth on Schedule
C.
Section 7.3. Collection and Repossession Actions . Except as
provided in Sections 7.2 and 7.4, Capital will be entitled, in its discretion,
to take (or determine not to take)
-34-
<PAGE>
<PAGE>
any and all actions to collect amounts due and unpaid or otherwise
enforce its rights upon the occurrence and continuation of a default
by a Customer or Authorized Dealer under a Financing including, without
limitation, to make demand for payment or performance, institute an
action for payment of amounts due or for specific performance, institute
collection proceedings, effect acceleration or termination of the Financing,
foreclose upon or take possession of security (which may include the Financed
Product) provided by or on behalf of the Customer or Authorized Dealer or
enforce remedies to take possession and control of the Product. In no event will
the Capital Entities engage in unlawful collection practices or refer matters
for collection to any collection agencies or attorneys who are known by the
Capital Entities to engage in unlawful collection practices.
Section 7.4. Actions Against Significant Accounts . (a) Capital
shall, to the extent reasonable and practicable, provide advance notice to the
relevant SBUs of any legal proceeding or repossession action to be initiated by
any Capital Entity against a Significant Account. If circumstances require the
immediate commencement of such an action in order to reasonably protect the
interests of the Capital Entities under any Financing or Ancillary Service or in
the related Financed Products, the Capital Entities may take such action, but
shall notify the relevant SBUs of the situation as soon as practicable after
initiating such action.
(b) In the event that any Capital Entity initiates or proposes to
initiate any legal proceeding or repossession action against a Significant
Account, such Capital Entity shall delay or refrain from pursuing or initiating
such action in the event that the Company either (A) agrees to purchase, without
recourse or warranty (except as to title and as provided herein or otherwise
agreed), all of the interest of such Capital Entity in such Financing, Ancillary
Service and the related Financed Products for a purchase price calculated in
accordance with the General Allocation of Responsibilities set forth on Schedule
C or (B) gives such Capital Entity other legal undertakings reasonably
satisfactory to such Capital Entity to induce it to delay or refrain from taking
such action.
ARTICLE VIII
SCOPE OF APPLICATION OF AGREEMENT
Section 8.1. Attribution of Actions of Subsidiaries to Their
Parents . (a) The Company agrees and acknowledges that the Company shall be
responsible for, and hereby guarantees, the due and punctual payment and
performance, in accordance with their terms, of the obligations hereunder
applicable to any Company Entity (other than the Company) or any SBU or division
within any Company Entity or in any other agreement or commitment (including,
without limitation, any lease agreement) of any such
-35-
<PAGE>
<PAGE>
Company Entity or SBU or division within any Company Entity entered into
at any time and from time to time (whether before or after the Spin-Off
Date) with or for the benefit of any Capital Entity or any strategic
business unit or division within any Capital Entity (it being
understood that no AT&T Entity shall be released from any of
its obligations under the AT&T Operating Agreement). The Company further
acknowledges and agrees that the foregoing undertaking and guarantee shall
extend for the benefit of any permitted assignee of any Capital Entity's or such
strategic business unit's or division's rights and benefits with respect to any
such agreement or commitment and, if reasonably requested by Capital, the
Company shall affirm such undertaking and guarantee for the benefit of any such
assignee. Capital agrees that any obligation of the Company hereunder or
thereunder that is paid or performed by a Company Entity (other than the
Company) shall be deemed to be paid or performed, as the case may be, by the
Company. The Company hereby represents and warrants to Capital that it has the
requisite authority to commit and bind the other Company Entities to the
applicable terms of this Agreement.
(b) Capital agrees and acknowledges that Capital shall be
responsible for, and hereby guarantees, the due and punctual payment and
performance, in accordance with their terms, of the obligations hereunder
applicable to any Capital Entity (other than Capital) or any strategic business
unit or division of any Capital Entity or in any other agreement or commitment
(including, without limitation, any lease agreement) of such Capital Entity or
any strategic business unit or division within any Capital Entity entered into
at any time and from time to time (whether before or after the Spin-Off Date)
with or for the benefit of any Company Entity or SBU or division within any
Company Entity. Capital further acknowledges and agrees that the foregoing
undertaking and guarantee shall extend to the benefit of any permitted assignee
of any Company Entity's, SBU's or division's rights and benefits with respect to
any such agreement or commitment and, if reasonably requested by the Company,
Capital shall affirm such undertaking and guarantee for the benefit of any such
assignee. The Company agrees that any obligation of Capital hereunder or
thereunder that is paid or performed by a Capital Entity (other than Capital)
shall be deemed to be paid or performed, as the case may be, by Capital. Capital
hereby represents and warrants to the Company that it has the requisite
authority to commit and bind the other Capital Entities to the applicable terms
of this Agreement.
Section 8.2. Application of Agreement to Certain Joint Ventures
and Other Minority Investments of the Company. (a) To the extent that the
Company Entities presently have or hereafter acquire equity interests in any
joint venture or other Person that is not deemed to be a "Subsidiary" for the
purposes of this Agreement, the Company Entities shall nonetheless use
reasonable efforts, upon request of Capital, to assist Capital in negotiating
and entering into an agreement with such Person
-36-
<PAGE>
<PAGE>
pursuant to which Capital would become a "preferred provider" of
financing for the products and services sold, marketed or distributed
by such Person and its Subsidiaries (if any) in accordance with the terms
and principles set forth in Section 3.2.
(b) The Company agrees to provide Capital with reasonably prompt
notice of any acquisition by any Company Entity of any equity interest in any
joint venture or other Person to which the provisions of this Section 8.2 would
apply and to provide Capital with such information concerning such Person as
Capital may reasonably request.
Section 8.3. Sale, Public Offering or Spin-Off of a Significant
Products Entity . In the event that (x) any Company Entity at any time proposes
to (i) sell in a public offering or spin-off to its shareholders a controlling
block of the equity of any Significant Products Entity or (ii) sell, directly or
indirectly, in an assets or stock sale or through a merger or other form of
business combination, a Significant Products Entity or a major portion of the
Products Capacity thereof to one or more Persons in a negotiated transaction
(including a sale or transfer in connection with a transaction referred to in
Section 8.2) and (y) the effect of such transaction would be that such
Significant Products Entity or such major portion of the Products Capacity
thereof would no longer constitute or form a part of a "Company Entity" for the
purposes of this Agreement, the Company shall:
(i) at the time that the Company formulates the general intention
to spin-off, offer publicly or seek potential purchasers for such
Significant Products Entity or portion of the Products Capacity thereof,
provide Capital with notice of such intention, and in connection with any
specific proposed spin-off, public offering or sale transaction, provide
Capital with notice of the same as far in advance of such sale as is
reasonably practicable in the circumstances; and
(ii) in the case of a spin-off or public offering, as a condition
precedent to the consummation of such transaction, if so requested by
Capital, first cause such Significant Products Entity or the entity
holding such portion of the Products Capacity thereof to be spun-off or
offered publicly to enter into an agreement with Capital under which
Capital would continue to provide Financing and Ancillary Services with
respect to the Products of such Significant Products Entity or other
entity following such spin-off or public offering that is substantially
similar in scope and terms to this Agreement and that has a term
substantially equivalent to the then remaining term of this Agreement (a
"Comparable Operating Agreement");
-37-
<PAGE>
<PAGE>
(iii) in the case of a negotiated sale transaction (including a
sale or transfer in connection with a transaction referred to in Section
8.2), if so requested by Capital, use reasonable efforts to facilitate
negotiations between Capital and the purchasers of such Significant
Products Entity or major portion of the Products Capacity thereof (or an
appropriate Affiliate) with respect to the execution by such parties of a
Comparable Operating Agreement with respect to the Products of such
Significant Products Entity or major portion of the Products Capacity
thereof; and
(iv) whether or not the Capital Entities obtain any rights to
provide Financings or Ancillary Services in the circumstances
contemplated in this Section 8.3, reimburse the Capital Entities for any
reasonable costs and charges incurred by the Capital Entities in
connection with any reduction in the scope or nature of the Capital
Entities' operations for the provision of Financings or Ancillary
Services that results from the sale or other disposition of any
Significant Products Entity or any major portion of the Products Capacity
thereof (including, without limitation, costs relating to severance or
redeployment of employees and costs relating to unutilized or
underutilized real estate or other assets); provided that to the extent
that the incurrence of such costs and expenses is reasonably determinable
to be under Capital's control, the Company shall be responsible for
reimbursement thereof only to the extent it has consented to the
incurrence of such costs and expenses, such consent not to be
unreasonably withheld (an example of such costs and expenses would be
severance obligations incurred by Capital in connection with a severance
package specifically designed for employees that are rendered redundant
as a result of the sale or other disposition of any Significant Products
Entity or any major portion of the Products Capacity thereof).
Section 8.4. New Products and Company Entities . Capital's
commitments with respect to the provision of Financings and Ancillary Services
(including those set forth in Article II), the Company's commitments to support
Capital (including those set forth in Articles III and IV) and the other
provisions of this Agreement shall apply to existing and future lines of
Products and existing and future Company Entities (including Acquired Entities
that do not, at the time of acquisition by the Company of such entities, own an
Acquired Entity Financing Source), subject in each case to the requirements of
Article II and Article III and the limitations and exceptions set forth in this
Agreement (including, without limitation, those set forth in Article IV and this
Article VIII).
Section 8.5. Geographic Scope of Agreement . (a) The Capital
Entities have the present capability to provide Financings and Ancillary
Services with respect to sales, leases
-38-
<PAGE>
<PAGE>
or other furnishings of Products sold or marketed by the Company Entities within
the United States of America, Canada, France, Germany and the United Kingdom
(each an "Active Service Area"). As the Capital Entities are able to expand
their capabilities to provide such Financings or Ancillary Services in other
countries or regions (or specific markets therein) being served by the Company
Entities, Capital may from time to time request the Company that, and the
Company may, in its sole discretion, decide to agree that such countries or
regions (or specific markets therein) be designated as "Active Service Areas"
with respect to the Company Entities generally or with respect to one or more
Company Entities or SBUs for purposes of this Agreement, in which event the
obligations of the parties hereunder shall apply with respect to such countries
or regions (or specific markets therein) to the same extent as they would to any
other Active Service Areas with respect to sales, leases or other furnishings of
Products by such Company Entities or SBUs within such Active Service Areas.
(b) Without limiting the provisions of paragraph (a) above, in
the event that the Company Entities desire to provide, in connection with the
provision of Financings or Ancillary Services in any country or region that is
not an Active Service Area, to any Alternative Provider a "preferred provider"
status with respect to such Financings or Ancillary Services reasonably similar
to the "preferred provider" status provided to the Capital Entities pursuant to
Section 3.2, the Company Entities shall provide the Capital Entities with an
opportunity to bid to provide in such country or region the Financings or
Ancillary Services and any related programs proposed to be provided in such
country or region by such Alternative Provider. In the event that any such bid
by the Capital Entities, considered as a whole, is at least as favorable to the
Company Entities as the bid of any Alternative Provider, the Company Entities
shall accept the bid of the Capital Entities and the country or region in which
such Financings or Ancillary Services and any related programs are to be
provided shall for all purposes of this Agreement (including Article III and
Article IV) be considered to be an Active Service Area.
ARTICLE IX
INDEMNIFICATION
Section 9.1. Capital Indemnity . Capital agrees to save, protect,
indemnify and hold harmless, on an After-Tax Basis, the Company Entities and the
employees, officers, directors, agents and representatives of each of the
foregoing from and against all liabilities, costs (including attorney's fees and
disbursements), claims and charges arising from or relating to: (i) the breach
by any Capital Entity of any representations, warranties or covenants of such
Capital Entity contained in or delivered pursuant to this Agreement or any other
agreement of any Capital Entity relating to Products, Financings
-39-
<PAGE>
<PAGE>
or Ancillary Services; or (ii) any violation by any Capital Entity or
any employee or agent thereof of any law applicable to the sale, lease
or other furnishing of Products or to any related Financings or Ancillary
Services (including, without limitation, any law relating to the reporting
of or extension or denial of credit, the collection of debt or the
repossession or disposition of products); provided that in the event
that a Company Entity and a Capital Entity separately agree to
indemnification (or waiver thereof) with respect to a matter that would
otherwise be subject to indemnification pursuant to this Section 9.1, such other
agreement will apply with respect to such matter and this Section 9.1 will not
so apply. The foregoing indemnity shall not apply in respect of liabilities,
costs, claims or charges to the extent arising from or relating to (i) any
action, sufferance or omission by a Company Entity or an employee of a Company
Entity that is effected in bad faith or represents gross negligence or willful
misconduct, (ii) any action, sufferance or omission by a Capital Entity or
employee of a Capital Entity pursuant to the express instructions of a Company
Entity or employee of a Company Entity (in the case of such employee, if such
instructions are provided by such employee in his or her capacity as such) or
(iii) any breach or violation by a Company Entity or any employee of a Company
Entity of the provisions of this Agreement or any other applicable agreement
between a Company Entity and a Capital Entity (whether or not such breach or
violation gives rise to a right of termination of this Agreement or such other
agreement).
Section 9.2. Company Indemnity . The Company agrees to save,
protect, indemnify and hold harmless, on an After-Tax Basis, the Capital
Entities and the employees, officers, directors, agents and representatives of
each of the foregoing from and against all liabilities, costs (including
attorney's fees and disbursements), claims and charges arising from or relating
to: (i) breach by any Company Entity of any representations, warranties or
covenants of such Company Entity contained in or delivered pursuant to this
Agreement or any other agreement of any Company Entity relating to Products,
Financings or Ancillary Services; (ii) any products, environmental or other
similar liability relating to the Products (such as claims for personal injury
or property damage); (iii) any misrepresentation made by any employee or agent
of any Company Entity to any Customer or Authorized Dealer as to the commitment
of any Capital Entity to provide any Financings or Ancillary Services to such
Customer or Authorized Dealer or the likely availability thereof; and (iv) any
violation by any Company Entity or any employee or agent thereof of any law
applicable to the sale, lease or other furnishing of Products or to any related
Financings or Ancillary Services; provided that in the event that any Company
Entity and a Capital Entity separately agree to indemnification (or waiver
thereof) with respect to a matter that would otherwise be subject to
indemnification pursuant to this Section 9.2, such other agreement will apply
with respect to such matter and this Section 9.2 will not so apply. To the
extent that a Company Entity performs its obligations under Section 7.2 with
respect to an
-40-
<PAGE>
<PAGE>
actual or potential Company Responsibility, the Capital Entities and related
indemnified parties will not be separately entitled to indemnification
under this Section 9.2 with respect to any loss or cost relating to such
Company Responsibility that would otherwise be indemnifiable under this
Section 9.2. The foregoing indemnity shall not apply in respect of liabilities,
costs, claims or charges to the extent arising from or relating to (i) any
action, sufferance or omission by a Capital Entity or an employee of a Capital
Entity that is effected in bad faith or represents gross negligence or willful
misconduct, (ii) any action, sufferance or omission by a Company Entity or
employee of a Company Entity pursuant to the express instructions of a Capital
Entity or employee of a Capital Entity (in the case of such employee, if such
instructions are provided by such employee in his or her capacity as such) or
(iii) any breach or violation by a Capital Entity or any employee of a Capital
Entity of the provisions of this Agreement or any other applicable agreement
between a Company Entity and a Capital Entity (whether or not such breach or
violation gives rise to a right of termination of this Agreement or such other
agreement).
Section 9.3. Procedure . Each indemnified party under Section 9.1
or Section 9.2 shall, promptly after receipt of notice of a claim or action
against such indemnified party in respect of which indemnity may be sought
hereunder notify the indemnifying party in writing of the claim or action;
provided, that the failure to notify the indemnifying party will not relieve it
from any liability which it may have to an indemnified party on account of the
indemnity agreement contained in Section 9.1 or Section 9.2 unless, and only to
the extent that, the indemnifying party was prejudiced by such failure, and in
no event will such failure relieve the indemnifying party from any other
liability which it may have to such indemnified party. If any such claim or
action shall be brought against an indemnified party, and it shall have notified
the indemnifying party thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of any claim or action, the indemnifying party will not be liable to the
indemnified party under Section 9.1 or Section 9.2 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, that the
indemnified party will have the right to employ separate counsel to represent it
if, in the reasonable judgment of such indemnified party, it is advisable for it
to be represented by separate counsel, and in such event the fees and expenses
of such separate counsel will be paid by such indemnified party. The
indemnifying party may not without the prior written consent of the indemnified
party agree to any settlement of any claim or action as the result of which any
remedy or relief, other than solely for monetary damages for which the
indemnifying party will be responsible hereunder, will
-41-
<PAGE>
<PAGE>
be applied to or against the indemnified party. In any action hereunder
as to which the indemnifying party has assumed the defense thereof with
counsel satisfactory to the indemnified party, the indemnified party will
continue to be entitled to participate in the defense thereof, with counsel
of its own choice, but the indemnifying party will not be obligated hereunder
to reimburse the indemnified party for the costs thereof.
ARTICLE X
DISPUTE RESOLUTION
Section 10.1. Resolution of Disputes . Except as otherwise
provided in this Article X, the procedures for discussion, negotiation and
arbitration set forth in this Article X will apply to all disputes solely
between the parties under this Agreement; provided that arbitration will not
apply or be required in the case of any dispute challenging the validity of any
provision of this Agreement or any breach of the provisions of Section 4.1
unless the parties so agree in writing.
Section 10.2. Resolution of Disputes Using Best Efforts . (a) The
parties hereto agree and acknowledge that (i) this Agreement is intended to
provide a flexible framework for a cooperative and mutually beneficial
arrangement for the provision of Financings and Ancillary Services by the
Capital Entities and the treatment by the Company Entities of Capital Entities
as the preferred providers of Financings and Ancillary Services to Customers and
Authorized Dealers and (ii) the parties shall use good faith best efforts to
resolve all differences and disputes between the parties with respect to the
matters covered hereby that may arise from time to time at the level of the
appropriate Capital Entity and Company Entity (or the appropriate SBU within
such Company Entity) and, to the extent resolution is not achieved at such
level, at the level of management of the Company and Capital. Consistent with
the foregoing principles, the parties shall not refer the resolution of such
differences and disputes to the arbitration proceedings specified herein except
to the extent that after good faith best efforts the parties cannot resolve such
differences and disputes without so escalating such resolution. Any agenda,
location or procedures for such discussions or negotiations between the parties
may be established by the parties from time to time or as the occasion warrants.
(b) The parties may, by mutual consent, retain a mediator to aid
the parties in their discussions and negotiations by informally providing advice
to the parties. Any opinion expressed by the mediator shall be strictly advisory
and shall not be binding on the parties, nor will any opinion expressed by the
mediator be admissible in any arbitration proceeding. The mediator may be chosen
from a list of mediators previously selected by the parties or by other
agreement of the parties.
-42-
<PAGE>
<PAGE>
Costs of mediation shall be borne one-half by the Company and one-half by
Capital, except that each party shall be responsible for its own expenses.
Mediation is not a prerequisite to a demand for arbitration under
Section 10.3.
Section 10.3. Arbitration. (a) If any dispute (other than a
dispute which challenges the validity of any provision of this Agreement and
other than a breach of Section 4.1) referred to the management of the Company
and Capital has not been resolved within forty-five (45) days after referral to
such management, either party may demand that the dispute be resolved by binding
arbitration. Notice of the demand for arbitration by one party will be given in
writing to the other party to this Agreement. Upon such demand, the dispute will
be decided by a sole arbitrator in accordance with the rules set forth in this
Section 10.3.
(b) The parties shall attempt to select, within 15 days after
such notice of demand for arbitration is given, a sole arbitrator satisfactory
to both parties.
(c) In the event that the parties are not able to jointly select
a sole arbitrator within such 15 day period, the parties shall each appoint an
arbitrator within 30 days after provision of the notice referred to in paragraph
(a) above. If one party appoints an arbitrator within such time period and the
other party fails to appoint an arbitrator within such time period, the
arbitrator appointed by the one party shall be the sole arbitrator of the
dispute.
(d) In the event that a sole arbitrator is not selected pursuant
to paragraph (b) or (c) above, and, instead, two arbitrators are selected
pursuant to paragraph (c) above, the two arbitrators will, within thirty (30)
days after the appointment of the later of them to be appointed, select a third
arbitrator who will act as the sole arbitrator of the dispute. After selection
of such sole arbitrator, the two initial arbitrators shall have no further role
with respect to the dispute. In the event that the arbitrators so appointed do
not, within thirty (30) days after the appointment of the later of them to be
appointed, agree on the selection of the sole arbitrator, either party may apply
to any court having jurisdiction over the parties and the controversy to select
the sole arbitrator.
(e) The sole arbitrator selected pursuant to paragraph (b), (c)
or (d) above will set a time for the hearing of the dispute which will not be
later than sixty (60) days after the date of appointment of the sole arbitrator
pursuant to paragraph (b), (c) or (d) above, and the final decision of such
arbitrator will be rendered in writing to the parties not later than sixty (60)
days after the last hearing date, unless otherwise agreed by the parties in
writing.
-43-
<PAGE>
<PAGE>
(f) The place of any arbitration hereunder will be New York, New
York, or at such other place as agreed to by the parties.
(g) Except as otherwise set forth herein, any arbitration
hereunder will be conducted in accordance with the rules of the American
Arbitration Association ("AAA") then prevailing, and the decision of the
arbitrator will be final and binding on the parties, and will be enforceable in
any court having jurisdiction over the parties. Compliance with the provisions
of this Agreement concerning arbitration of disputes is a condition precedent to
the commencement of any suit, action or proceeding in any federal, state or
local court with respect to any controversy or dispute under this Agreement,
except a suit, action or proceeding which challenges the validity of any
provision of this Agreement or a breach of Section 4.1.
(h) Any party may send out requests to compel document
production from the other party. Disputes concerning the scope of document
production and enforcement of the document production requests will be
determined by written agreement of the parties or, failing such agreement, will
be referred to the arbitrator for resolution. All discovery requests will be
subject to the proprietary rights and rights of privilege of the parties, and
the arbitrator will adopt procedures to protect such rights. Except where
contrary to the provisions set forth in this Agreement, the rules of the AAA for
commercial arbitration will be applied to all matters of procedure, including
discovery; provided, however, that the arbitration will not be conducted under
the auspices of the AAA and the fee schedule of the AAA will not apply. The
arbitrator may obtain independent legal counsel to aid in his or her resolution
of legal questions presented in the course of arbitration, to the extent he or
she considers that such counsel is appropriate or necessary for a fair
resolution of the dispute, and to the extent that it is economical to do so
considering financial consequences of the dispute. The arbitrator will be
limited to interpreting or construing the applicable provisions of this
Agreement, and will have no authority or power to alter, amend, modify, revoke
or suspend any condition or provision of this Agreement; it being understood,
however, that the arbitrator will have full authority to implement the
provisions of this Agreement, including provisions requiring further agreement
of the parties hereunder, and to fashion appropriate remedies for breaches of
this Agreement; provided that the arbitrator shall not (i) have any authority in
excess of the authority a court having jurisdiction over the parties and the
controversy or dispute would have absent these arbitration provisions and (ii)
have any right or power to award punitive damages.
(i) If a party fails or refuses to appear at and participate in
an arbitration hearing after due notice, the arbitrator may hear and determine
the controversy upon evidence produced by the appearing party.
-44-
<PAGE>
<PAGE>
(j) Arbitration costs will be borne one-half by the Company and
one-half by Capital, except that each party will be responsible for its own
expenses and the costs of witnesses selected by such party.
Section 10.4. Continuity of Service and Performance . Unless
otherwise agreed in writing, the parties will continue to provide service and
honor all other commitments under this Agreement during the course of dispute
resolution pursuant to the provisions of this Article X.
Section 10.5. Disputes as to Sales Site Protocols and Procedures.
Notwithstanding the provisions of Section 10.3(c) and Section 10.3(d), if the
Company Entities and the Capital Entities have a dispute under Section 3.2(f)
regarding compliance by the Capital Entities with applicable Protocols and
Procedures with respect to any Financings or Ancillary Services provided at a
Sales Site (or whether the Capital Entities have cured any deficiencies within
the applicable period set forth in Section 3.2(e)), and the parties are not able
to agree upon the selection of the sole arbitrator pursuant to Section 10.3(b),
either party may immediately refer the matter to the AAA and request that the
AAA select an arbitrator within 15 days of such request, and such selection by
the AAA shall be binding upon both parties.
ARTICLE XI
TERM AND TERMINATION
Section 11.1. Initial Term and Renewal . (a) Subject to Section
11.2, this Agreement shall become effective on the Spin-Off Date and shall
remain in effect until, and shall terminate on, August 4, 2000 (the "Initial
Term"). This Agreement shall automatically be renewed and remain in effect for
an indefinite number of successive periods of two years (each such period, a
"Renewal Period"), the first such Renewal Period commencing upon the expiration
of the Initial Term and each successive Renewal Period commencing upon the
expiration of the preceding Renewal Period, unless either party elects not to
extend the term of this Agreement beyond the Initial Term or any Renewal Period
by giving the other party notice of such election at least one year prior to the
expiration of the Initial Term or Renewal Term then in effect (it being
understood that failure to give timely notice of non-renewal will be deemed to
constitute an election by the parties to renew the term of this Agreement as
provided herein).
(b) Prior to the Spin-Off Date, Capital shall have no obligation
under this Agreement to the Company or any other AT&T Entity, it being
understood that the relationship between the Capital Entities and the Company
and its Subsidiaries with respect to the subject matter hereof shall continue to
be governed by the AT&T Operating Agreement prior to the consummation of the
Spin-Off Transaction.
-45-
<PAGE>
<PAGE>
Section 11.2. Termination. (a) This Agreement may be terminated in
its entirety prior to the expiration of the Initial Term or any Renewal Term in
effect:
(i) at any time, by the mutual written consent of Capital and the
Company;
(ii) at the election of the Company (after the Spin-Off Date), by
at least 180 days' prior notice to Capital, in the event of a Subsequent
Transfer of Control unless (a) prior to any such transfer, Capital
requests the Company's approval thereof and (b) the Company consents to
such transfer (it being understood that such consent shall not be
unreasonably withheld or delayed);
(iii) in the event one party (the "defaulting party") has
materially defaulted on its obligations under this Agreement, the other
party (the "non-defaulting party") may give notice of default to the
defaulting party and, in the event the defaulting party does not cure the
default within 60 days of such notice of default, the non-defaulting
party may, within 60 days after the expiration of such 60 day period,
give notice of termination to the defaulting party and specify in such
notice the date of termination of this Agreement (which date shall be a
date not less than 30 days following the date of such termination
notice), in which event this Agreement shall terminate on the date
specified in the termination notice;
(iv) at the election of the Company, by notice to Capital, in the
event that Capital commences a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy or similar law or statute or makes an
assignment of its property or any substantial portion thereof for the
benefit of creditors and such proceeding or assignment is continuing or
in effect at the time of such notice;
(v) at the election of the Company, by notice to Capital, in the
event that there is commenced against Capital an involuntary proceeding
seeking to have Capital declared a bankrupt or seeking to have a receiver
appointed with respect to a substantial portion of its property which is
not dismissed within sixty (60) days of commencement, or there is entered
an order declaring Capital a bankrupt or appointing a receiver with
respect to a substantial portion of its property and such proceeding or
order is continuing or in effect at the time of such notice;
(vi) at the election of Capital, by notice to the Company, in the
event that the Company commences a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to
itself or its debts under
-46-
<PAGE>
<PAGE>
any bankruptcy or similar law or statute or makes an assignment of its
property or any substantial portion thereof for the benefit of creditors
and such proceeding or assignment is continuing or in effect at the time
of such notice; or
(vii) at the election of Capital, by notice to the Company, in
the event that there is commenced against the Company an involuntary
proceeding seeking to have the Company declared a bankrupt or seeking to
have a receiver appointed with respect to a substantial portion of its
property which is not dismissed within sixty (60) days of commencement,
or there is entered an order declaring the Company a bankrupt or
appointing a receiver with respect to a substantial portion of its
property and such proceeding or order is continuing or in effect at the
time of such notice.
Notwithstanding anything in this Agreement to the contrary, it is specifically
understood and agreed that the Company shall not have any right to terminate
this Agreement because of the occurrence of a First Tier Transfer of Control.
Section 11.3. Effect of Termination . Upon the termination of
this Agreement as provided in this Article XI, all obligations of the parties
hereto with respect to any future Financings and Ancillary Services under this
Agreement will cease; provided, however, that the obligations of the parties set
forth herein as they relate to completed Financings and Ancillary Services
(including the obligations set forth in Articles II, III, V, VI, and VII) and
the provisions herein as to indemnification, dispute resolution, confidentiality
and miscellaneous matters (Articles IX, X, XII and XIII) will continue in full
force and effect.
ARTICLE XII
CONFIDENTIALITY
Capital and the Company each understand and agree that the terms
of this Agreement, including the schedule hereto, may be publicly disclosed,
including in any public filing made by the Company or Capital or any Affiliate
thereof with the Securities and Exchange Commission. However, Capital and the
Company each covenant and agree that it shall, and shall cause its Subsidiaries
to, treat any information provided by any Company Entity to any Capital Entity
(in the case of Capital's obligations hereunder) or by any Capital Entity to any
Company Entity (in the case of the Company's obligations hereunder) pursuant to
this Agreement (including, without limitation, the Protocols and Procedures) as
privileged and confidential and will not, without the prior consent of the other
party hereto, disclose, or cause to be disclosed, such information to any
Person, except that any such information may be disclosed (a) to Capital's or
the Company's agents, directors, officers,
-47-
<PAGE>
<PAGE>
employees, representatives, accountants, counsel or special counsel who have
been instructed or have a duty to keep such information confidential in
accordance with the terms hereof, (b) to the Affiliates of Capital and the
Company, and such Affiliates' agents, directors, officers, employees,
representatives, accountants, counsel or special counsel who have been
instructed or have a duty to keep such information confidential in accordance
with the terms hereof, (c) to such other Persons who are reasonably deemed
necessary by Capital and the Company, as the case may be, in connection with the
enforcement of their rights under this Agreement, (d) to the extent required
pursuant to applicable law or any governmental authority (including, but not
limited to, the National Association of Insurance Commissioners, Internal
Revenue Service auditors, state taxing or communications authorities or federal
or state judicial authorities), (e) to the extent required or appropriate to be
disclosed in response to a reasonable request by rating agencies, underwriters,
or creditors in connection with financing transactions undertaken by Capital or
the Company or their Affiliates, who agree or are under a duty to hold such
information confidential in accordance with the terms hereof, (f) to the extent
that prior to such disclosure, such information is in the public domain (it
being understood and agreed that any document or information that is filed as a
matter of public record with any state, federal or foreign governmental
authority or is generally available to the public at the time of disclosure
(other than as a result of disclosure by such Person) will for the purposes
hereof be deemed to be in the public domain) or (g) to Persons involved in
potential acquisitions of, mergers with, or purchase of all or substantially all
of the assets of Capital (or any other Capital Entity) or the Company (or any
other Company Entity) who, in each case, agree in writing to hold such
information confidential in accordance with the terms hereof.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Variation of Terms; Amendments . Any Capital Entity
and Company Entity may by mutual consent from time to time vary the terms of
this Agreement as it applies to such Capital Entity and either such Company
Entity or one or more SBUs within such Company Entity. In such event, such
varied terms will be deemed to amend this Agreement as it applies to such
Capital Entity and such Company Entity (or such SBUs) for such period of time as
such variance is agreed to by such Capital Entity and such Company Entity.
Notwithstanding any such variance, this Agreement will continue to apply to all
other Capital Entities and Company Entities (or, if applicable, all SBUs within
the Company Entity that consents to such variance that are not made subject to
such variance) as if such variance had not been effected. Notwithstanding the
foregoing, this Agreement cannot be amended or terminated orally, but only by a
-48-
<PAGE>
<PAGE>
writing duly executed by or on behalf of the parties hereto (or by the
applicable Company Entity and Capital Entity).
Section 13.2. No Partnership . Nothing contained in this
Agreement will be construed in any manner to constitute the creation of a
partnership between the Company Entities and the Capital Entities nor to
characterize the Company Entities and the Capital Entities as joint venturers.
The Company Entities and the Capital Entities will at all times be and remain
independent contractors with respect to the subject matter of this Agreement.
Section 13.3. Successors and Assigns; Third Parties . (a) This
Agreement will be binding upon and inure to the benefit of the parties hereto
and their successors and assigns.
(b) Except as set forth in Article IX, nothing in this Agreement,
expressed or implied, is intended or will be construed to confer upon any Person
(including Customers and Authorized Dealers) other than the parties (and the
Company Entities and Capital Entities) and their successors and assigns any
right, remedy or claim under or by reason of this Agreement.
Section 13.4. Severability . If any provision of this Agreement
or the application of any such provision to any party or circumstances will be
determined by any court of competent jurisdiction or duly authorized arbitration
tribunal to be invalid, illegal or unenforceable to any extent, the remainder of
this Agreement or such provision or the application of such provision to such
party or circumstances, other than those to which it is so determined to be
invalid, illegal or unenforceable, will remain in full force and effect to the
fullest extent permitted by law and will not be affected thereby, unless such a
construction would be unreasonable.
Section 13.5. Notices . All notices, consents, deliveries,
demands, requests, approvals and other communications which are required or may
be given hereunder will be in writing and will be deemed to have been duly given
if personally delivered (including courier service), telecopied or mailed
certified first class mail, postage prepaid, addressed as follows:
-49-
<PAGE>
<PAGE>
(a) if to the Company, to:
NCR Corporation
Attn: General Counsel
at such address as is
specified by such
General Counsel from
time to time pursuant
to this Section 13.5
Telecopier Number: (to be specified by such
General Counsel)
Confirmation Number: (to be specified by such
General Counsel)
(b) If to Capital, to:
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07960
Telecopier Number: 201-397-3220
Confirmation Number: 201-397-3187
Attention: Chairman and CEO
with a copy to:
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07960
Telecopier Number: 201-397-3220
Confirmation Number: 201-397-3187
Attention: Senior Vice President, General
Counsel, Secretary and Chief Risk
Management Officer
Section 13.6. Governing Law . This Agreement will be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to the choice of law provisions of its conflicts of law rules.
Section 13.7. Headings . The article headings and the section
headings and subheadings contained in this Agreement are intended solely for the
convenience of reference and will not affect in any manner the meaning or
interpretation of this Agreement.
-50-
<PAGE>
<PAGE>
Section 13.8. Counterparts . This Agreement may be executed in
one or more counterparts, each of which will be deemed an original instrument,
but all of which together will constitute one and the same agreement, and will
become binding when one or more counterparts have been executed and delivered by
each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
NCR CORPORATION
By:_______________________
Name:
Title:
AT&T CAPITAL CORPORATION
By:______________________
Name:
Title:
<PAGE>
<PAGE>
Schedule A
LOCATION SUPPORT AGREEMENT
LOCATION SUPPORT AGREEMENT dated as of , 199 to (this
"Agreement") between AT&T GLOBAL INFORMATION SOLUTIONS, INC., a Maryland
corporation (the "Company") and AT&T CAPITAL CORPORATION, a Delaware corporation
("Capital").
W I T N E S S E T H:
WHEREAS, Capital has requested and the Company has agreed on
behalf of itself and the Company Entities and SBUs (each as hereinafter defined)
to permit (to the extent provided in, and subject to the terms and conditions
of, this Agreement) Capital and the Capital Entities (as hereinafter defined) to
base appropriate employees of the Capital Entities ("Capital Entities
Employees") in designated space in any site or location (a "Sales Site") from
which the sale and marketing of products and services (collectively, as defined
below, "Products") is conducted by the Company or by any Company Entity or SBU;
WHEREAS, in consideration of the provision of such office space
within the Sales Sites, Capital and the Capital Entities have agreed to make
reimbursement to the Company Entities and SBUs for the costs of providing such
office space; and
WHEREAS, the parties hereto mutually desire to establish certain
other terms and conditions of the Capital Entities' utilization of such office
space to be made available to them for such purpose;
NOW, THEREFORE, in consideration of the mutual promises herein
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the conditions and
upon the terms hereof, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms will have the
following meanings, applicable both to the singular and the plural forms of the
terms defined:
"Agreement Term" has the meaning ascribed thereto in Section 3.1.
"Ancillary Services" has the meaning ascribed thereto in the
Operating Agreement.
"Company Entities" has the meaning ascribed thereto in the
Operating Agreement, subject to the provisions of Section 2.7 hereof.
1
<PAGE>
<PAGE>
"Capital Entities" has the meaning ascribed thereto in the
Operating Agreement.
"Capital Entities Personnel" has the meaning ascribed thereto in
the Preamble.
"Financing" has the meaning ascribed thereto in the Operating
Agreement.
"Letter Supplement" has the meaning ascribed thereto in Section
13.1.
"Operating Agreement" means the Global Information Solutions
Operating Agreement dated as of , 199 between the Company
and Capital, as such agreement is amended and supplemented from time to time in
accordance with its terms.
"Products" has the meaning ascribed thereto in the Operating
Agreement.
"Sales Site" has the meaning ascribed thereto in the Operating
Agreement.
"Sales Site Owner" has the meaning ascribed thereto in Section
9.1.
"SBU" has the meaning ascribed thereto in the Operating
Agreement.
"Support Space" has the meaning ascribed thereto in Section 2.1.
"Support Space Term" has the meaning ascribed thereto in Section
3.2.
All capitalized terms not otherwise defined herein but defined in the Operating
Agreement shall have the meanings ascribed thereto in the Operating Agreement.
ARTICLE II
PROVISION OF SUPPORT SPACE
Section 2.1. Support Space. Subject to the availability of space
(including storage space) in each Sales Site (such availability of space to be
determined by the affected Company Entity or SBU in its reasonable discretion),
the Company agrees to cause each of the Company Entities and SBUs to provide in
each Sales Site, to one or more of the appropriate Capital Entities intended
under the Operating Agreement to provide various Financings and Ancillary
Services to a Company Entity or SBU, (i) furnished office space (individually a
"Support Space", and collectively, "Support Spaces") which Support Space may or
may not have separately demised walls as the parties may agree to, or as may fit
the character of the location, or as may be deemed feasible in the reasonable
determination of the Company Entity or SBU, and (ii) basic office support
services for such Support Space during regular business hours (namely, cleaning,
relamping and, when so requested, telephone lines). Provision at any particular
Sales Site of one or more additional office support services, if any, such as
document duplicating, document processing, file storage, secretarial, mailroom
and similar services shall be subject to separate agreement at each Sales Site
to be concluded by the Company Entity or SBU and the Capital Entity in question,
shall not be required by the terms of this Agreement, and shall be limited in
any event to the additional office support services which are regularly
available at such Sales Site. the Company further agrees, where space is
available, to cause the Company Entities and SBUs to use reasonable efforts to
permit the Support Space for the
2
<PAGE>
<PAGE>
Capital Entity in question to be located reasonably near the sales personnel
of the Company Entity or SBU in question.
Section 2.2. Capital Entities Employees. With respect to each
Support Space the Capital Entity in question shall advise the Company Entity or
SBU in question of the number and type (manager, secretary, etc.) of Capital
Entities Employees reasonably believed to be required to be based at the related
Sales Site in connection with the provision of Financings and Ancillary Services
with respect to the Products sold or leased through such Sales Site, in order
that the parties may reach agreement on the amount, availability, adequacy and
suitability of the space proposed by the Company Entity or SBU to be identified
and designated as Support Space for such Sales Site.
Section 2.3. Sales Site Amenities. With regard to building
occupant amenities and services at any Sales Site (parking, dining facilities
and similar services as agreed to by the parties), it is the intention of the
parties hereto that, to the extent such amenities or services are available to
the Company Entity or SBU in question and/or to the employees thereof, such
amenities or services shall also be available, on the same basis and at the same
cost or charge, if any, to the Capital Entity and/or its employees (subject to
any necessary consent of the landlord where the Company Entity or SBU is not the
Sales Site Owner), provided always that the Capital Entity in question shall be
liable for its proportionate share of any costs assessed or charges imposed
generally in connection with such building occupant amenity or service, and
shall be liable for the entirety of any costs or charges arising from services
rendered solely to the Capital Entity or to the Support Space.
Section 2.4. Landlord Consent. In the event that any Sales Site
shall be leased, and not owned, by a Company Entity or SBU, and the lease in
question does not by its terms permit the tenant thereunder to make a Support
Space available to a Capital Entity in the manner contemplated by this
Agreement, the Company agrees that the Company Entity or SBU in question shall
use its reasonable efforts to procure any requisite consent. Capital shall cause
the Capital Entity in question to reimburse the Company Entity or SBU in
question for any out-of-pocket costs incurred in procuring such consent (which
shall not include any payment for such consent demanded by landlord unless
agreed in advance by the Capital Entity). In the event that such landlord
consent is not forthcoming, the Company and the Company Entity or SBU in
question shall have no further obligation to provide Support Space at such Sales
Site for the Capital Entity in question, and such Capital Entity agrees that,
with respect to any Sales Site in which such Capital Entity is in occupancy on
the date of this Agreement, such Capital Entity shall promptly vacate such
leased Sales Site as to which such landlord consent has been refused.
Section 2.5. Relocation of Company Entity or SBU Sales Site. In
the event that any Sales Site having a Support Space shall be voluntarily or
involuntarily relocated by the Company Entity or SBU in question to another
location serving the same (or new or reconfigured) geographical marketing area,
or in the event a new Sales Site is established, the Company agrees to cause
such Company Entity or SBU to use reasonable efforts to provide a new Support
Space in the new Sales Site on the terms and conditions set forth herein, unless
the Capital Entity in question shall elect not to accompany the relocation and
occupy the new Sales Site. In no event (including, but not limited to, events
such as a breach by any Company Entity of its obligations, if any, under this
Section) shall the Capital Entity located at any Sales Site remain thereat
beyond the date the Company Entity or SBU in question vacates such
3
<PAGE>
<PAGE>
Sales Site, and Capital agrees (i) to cause such Capital Entity to vacate the
Sales Site in question on or before the date the Company Entity or SBU shall
so vacate same and (ii) to indemnify and hold harmless the Company and the
Company Entity or SBU at the Sales Site in question from any and all claims,
costs, loss or damage arising from such holding over beyond such date.
Section 2.6. Occupancy In Conformity With Rules and Regulations and
Leases. Capital agrees that each Capital Entity shall occupy its respective
Support Space in accordance with the rules and regulations and general office
business practices for the Sales Site in question, whether such Sales Site is
owned by the Company Entity or SBU in question, or whether the occupancy by same
of such Sales Site shall be by way of a lease of all or a portion of the Sales
Site. The Company Entity or SBU hosting the Support Space shall provide the
Capital Entity with a copy of such rules and regulations, if available, and
advise such Capital Entity regarding any other general office business practices
to permit the Capital Entity in question to fulfil its obligations hereunder.
The Capital Entities' occupancy of any leased or subleased sales sites shall be
in compliance with any existing or future leases (or subleases) with third
parties.
ARTICLE III
TERM
Section 3.1. Term of Agreement. The term of this Agreement (the
"Agreement Term") shall be co-terminous with the term of the Operating
Agreement, subject to the provisions of Section 14.1 respecting amendment
hereof.
Section 3.2. Term of Occupancy of Individual Support Space. The
term of occupancy (the "Support Space Term") for each Support Space identified
by the parties shall commence, for those Support Spaces occupied by Capital
Entities personnel on the effective date of this Agreement, on such date
(subject to consent of the landlord at any leased Sales Site as required under
Section 2.4 hereof), and shall commence for each Support Space hereafter
identified and established pursuant to the terms of this Agreement on the date
the Capital Entity in question shall first occupy such Support Space. The
Support Space Term for any given Support Space shall expire and terminate on the
earliest to occur of (i) the date of expiration or termination of the Operating
Agreement (provided however, that the expiration or termination of the Operating
Agreement shall not be deemed to prevent the continued occupancy of such Support
Space by the Capital Entity in question, subject to the consent of the Company
Entity or SBU in question in its sole discretion, and to any necessary consent
of the landlord of such Sales Site, on the same terms and conditions as existed
prior to the date of expiration or termination, or upon such other terms as may
be agreed upon by the Capital Entity and the Company Entity or SBU in question),
(ii) the date the Sales Site containing the Support Space is vacated for any
reason by the Company Entity or SBU having the primary occupancy thereof (unless
the Capital Entity shall elect to stay to provide Financing and/or Ancillary
Services to another Company Entity remaining at such location, in which case the
expiration date for purposes of this clause (ii) shall be such remaining Company
Entity's date of vacation of such Sales Site and the Capital Entity shall have
Support Space to provide said services for the remaining Company Entity in
accordance with and subject to Article II), or (iii) the date which is ninety
(90) days from the date of written notice of termination given by the occupying
Capital Entity to the Sale Site Company Entity or SBU, or (iv) if the Sales Site
is
4
<PAGE>
<PAGE>
leased, the day prior to the date of expiration or earlier termination of
such lease in accordance with its terms.
ARTICLE IV
Reimbursement
Section 4.1. Reimbursement for Support Space. Capital covenants
and agrees to reimburse (or to cause the respective Capital Entities occupying
each Support Space to reimburse) the Company Entity or SBU owning or occupying
the Sales Site in question, for the proportional costs of provision of the
Support Space and of such Support Space's allocable share of the costs of any
common areas of the Sales Site, including, but not limited to, (i) building
operating expenses (if the Sales Site in question is owned) or reasonable
estimates for anticipated tax and/or operating expense escalation rent (if the
Sales Site is leased, it being the intent of the parties that the Capital Entity
shall be charged and paying on a current basis for tax and operating cost
escalation charge increases which are reasonably anticipated by the Company
Entity or SBU under the lease, but which charges will not be billed to same by
landlord until some period after the period for which the Capital Entity is
making payment), (ii) utility user charges (at actual cost for dedicated
utilities and as appropriately apportioned or otherwise measured if not so
dedicated to the Capital Entity) and (iii) fixed general charges for building
amenities or services which are not charged on a per-use basis (collectively,
the "Reimbursement Cost"). The Reimbursement Cost for each Support Space (i)
shall be mutually agreed on an annualized basis by the Company and Capital
(and/or by the applicable Company Entities or SBUs and Capital Entities with
respect to the Support Space in question), such agreement on particular Support
Space and Reimbursement Cost to be evidenced by letter agreement between the
affected entities intended to supplement this Agreement from time to time with
respect to such Support Space (a "Letter Supplement", as more fully described in
Section 13.1 hereof), and (ii) shall be paid by Capital or the Capital Entity,
without requiring any prior invoice or statement therefor from the Company
Entity or SBU so long as the Letter Supplement shall establish a monthly or
other periodic payment amount with respect to the Reimbursement Cost, in equal
monthly installments in advance on the first day of each calendar month in the
Support Space Term (or with such other frequency or in such other manner as may
be specified in the relevant Letter Supplement) to the Company or to the Company
Entity or SBU identified in the Letter Supplement. Capital further covenants and
agrees to pay or reimburse (or to cause the respective Capital Entities
occupying each Support Space to pay or reimburse) the Company Entity or SBU
owning or occupying the Sales Site in question (i) for the basic office support
services (if same have not previously been included in the Reimbursement Cost),
and (ii) any additional office support services as may be agreed in accordance
with the provisions of Section 2.1 hereof, and (iii) for any specially-ordered
building services during normal business hours and for any overtime charges
incurred at the Sales Site with respect to the use and occupancy of the Support
Space by the Capital Entity outside normal business hours, where such
specially-ordered and/or overtime services are charged on a per-use basis (or
such other reasonable basis), for which all such payments should be due within
30 days of receipt of a periodic statement for such user and/or office service
charges. The Company agrees for itself and the Company Entity or SBU at a Sales
Site to render all statements for any calendar year in a Support Space Term
following the close of such calendar year, and the respective Capital Entity's
obligation to pay statements so rendered shall survive the Support Space Term in
question. The Reimbursement Cost payable on account of any partial calendar
month, if any, during a Support Space Term shall be prorated on a per diem
basis.
5
<PAGE>
<PAGE>
ARTICLE V
USE
Section 5.1. Permitted Use. Capital for itself and the Capital
Entities agrees that each Support Space shall be used only for the purpose for
which the Sales Site is utilized by the Company Entity or SBU.
ARTICLE VI
DISPUTE RESOLUTION
Section 6.1. Resolution of Disputes. Resolution of disputes
regarding the terms or operation of this Agreement, either generally or with
respect to any particular Support Space or Letter Supplement, shall be effected
in accordance with the provisions of Operating Agreement Article X (Dispute
Resolution).
ARTICLE VII
AT END OF TERM
Section 7.1. At End of Support Space Term. Upon the expiration of
the Support Space Term in accordance with the terms of this Agreement (as
supplemented by any Letter Supplement with respect to the Support Space in
question) or other termination of occupancy of any Support Space by a Capital
Entity, such Capital Entity (i) shall vacate and surrender the Support Space to
the Company Entity or SBU owning or controlling the Sales Site, "broom clean"
and in good order, condition and repair, ordinary wear, tear and damage by the
elements, fire or other casualty excepted, (ii) shall on or prior to such date,
at the Capital Entity's sole cost and expense, remove from the Support Space any
alterations and restore the Support Space as may be required under Section 8.1
hereof, (iii) shall also remove all of the Capital Entity's personal property,
including but not limited to files and other business records and its owned
furniture and business equipment, if any, (iv) shall remove and replace any
hardware installed in accordance with the provisions of Section 9.3 hereof, and
(v) shall repair or pay the cost of repairing all damages to the Support Space
and/or the Sales Site caused by all such removals. Any personal property which
shall remain in the Support Space at a date which is unreasonably beyond the
date the space was vacated, may, at the option of the Company Entity or SBU, be
deemed to have been abandoned and in such case may be retained or otherwise
treated by the Company Entity or SBU as its property or may be disposed of,
without accountability, in such manner as the Company Entity or SBU may
determine, at the Capital Entity's expense, which expense shall be reimbursed to
the Company Entity or SBU within ten (10) business days after demand.
ARTICLE VIII
ALTERATIONS; FURNISHINGS AND EQUIPMENT
Section 8.1. Alterations. Alterations to any Support Space shall
be made only with the prior consent of the Company Entity or SBU, and, if
required, the consent of the
6
<PAGE>
<PAGE>
landlord of such Company Entity or SBU at a leased Sales Site. Any
permitted alterations shall be made solely in conformity with the
building maintenance and management requirements of the Support Space
building owner or landlord, as the case may be, and shall be performed at the
sole cost and expense of the Capital Entity. Any and all permitted alterations
in the Support Space shall be removed, and the Support Space restored to its
pre-alteration condition, at the Capital Entity's sole cost and expense, on or
prior to the end of the Support Space Term, unless the Company Entity or SBU for
such Support Space (and in buildings under lease thereto, the landlord under
such lease) shall agree in writing that the alteration(s) in question need not
be so removed. The Capital Entity's obligations to remove and restore hereunder
shall survive the expiration or earlier termination of the Support Space Term,
provided that, in the event the Capital Entity shall default in any obligation
to effect such removal and restoration, the Company Entity or SBU shall give
notice of such default not later than 180 days following such date of expiration
or earlier termination.
Section 8.2. Furnishings and Equipment. In the event the Capital
Entity in question wishes to furnish its Support Space with office furnishings
different than the standard office furnishing fitout provided to the Company
Entities/SBU personnel at the Sales Site, the Capital Entity must first obtain
the written permission of the Company Entity or SBU to do so, which permission
shall not be unreasonably withheld, provided, however, that (i) such furnishings
are purchased or leased by the Capital Entity, (ii) such furnishings are
installed and at term's end removed at the Capital Entity's sole cost and
expense and (iii) all such furnishings are reasonably consistent in style and
quality with the furnishings in the Sales Site used by the Company Entity or SBU
at such Sales Site. If such installation is reasonably necessary for the conduct
of the Capital Entity's business at the Sales Site, the Capital Entity in
question shall further be permitted to install business machinery and equipment
in the Support Space, subject to the electrical capacity thereof (provided same
are installed in conformity with the requirements of law and the requirements of
the underlying space lease, if any), provided same shall be removed at the
Support Space Term's end in accordance with the provisions of Section 7.1
hereof. Company Entities shall have no obligation to provide any additional or
special electrical capacity or extra heating or air-conditioning with respect to
any Capital Entity's business machinery or equipment referred to in the
preceding sentence.
ARTICLE IX
ACCESS TO SUPPORT SPACE PREMISES
Section 9.1. Sales Site Owner Access. With respect to any Support
Space, the Company Entity or SBU and/or any building landlord thereof (each, a
"Sales Site Owner") shall be and is hereby permitted access into the Support
Space under the terms of this Agreement and/or of any space lease, ground lease
or mortgage applicable to the Sales Site. Each Capital Entity occupying such
Support Space shall have the right to secure its own business files and other
proprietary information. The Company Entity or SBU in question shall have no
responsibility for the security, maintenance or preservation of such Capital
Entity business files and proprietary information.
Section 9.2. Capital Entity Access. The Company, for itself and
each of the Company Entities and SBUs providing Support Spaces, covenants and
agrees that each Capital Entity and its employees shall be provided access to
its particular Support Space on the same basis as access is permitted to the
Sales Site generally to the personnel of the Company
7
<PAGE>
<PAGE>
Entity or SBU occupying the Sales Site in question. In the event that
a restricted access Sales Site features a lobby guard, sign-in or pass
system for such building access (whether within office hours on business
days, or outside such time periods), Capital, for itself and each of the
Capital Entities occupying such Support Space, covenants and agrees to conform
to the building rules and regulations governing such access system from
time to time.
Section 9.3. Securing Support Space. Subject to the provisions of
Sections 2.1 and 9.1 hereof, and subject to any more restrictive provisions of
an underlying space lease with a Sales Site Owner, in which case the provisions
of such space lease shall control, the Capital Entity shall be permitted to
secure its separately demised Support Space with locking door hardware, provided
always that (i) if the Support Space is not delivered with locking hardware, the
cost of installation of locking hardware of the same general model and (at the
Support Space Term's end) the cost of removal and replacement thereof shall be
borne solely by the Capital Entity, and (ii) duplicate keys to such locks shall
be delivered to all affected Sales Site Owners (Company Entity or SBU and the
landlord, if any) at the Sales Site.
ARTICLE X
NO LEASE; NO CO-TENANCY; NO SUBLEASE
Section 10.1. No Lease; No Co-tenancy; No Sublease. This
Agreement is intended by the parties hereto to provide only for so-called
"location support" or "desk space" for the provision of Financings and Ancillary
Services by the Capital Entities to the Company Entities and SBUs. The Capital
Entities, with respect to the Support Spaces occupied or to be occupied by each
in the Sales Sites, do not purport or intend to be and are not to be deemed by
the Company, by the Company Entities or the SBUs or their respective landlords,
or by any third party, to be space or occupancy tenants, co-tenants or
subtenants or lease assignees of any of the Support Spaces, and Capital and the
Capital Entities shall have no rights or obligations with respect to such
Support Spaces except as specifically provided for herein and in the applicable
Letter Supplement(s). Nothing contained in this Agreement shall be construed in
any manner to constitute this Agreement as an occupancy lease respecting the
Support Space, or as a co-tenancy agreement with respect to any Sales Site
(whether owned in fee or occupied under lease by the Company Entity or SBU in
question), or as an occupancy sublease arising under any lease of a Sales Site
by an Company Entity or SBU, or as an assignment to a Capital Entity of any
lease or sublease of a Sales Site under which the Company Entity or SBU is
tenant. Capital for itself and for all Capital Entities hereby waives, with
respect to any Support Space provided hereunder, any and all rights appertaining
to, or claims which might be made by, a tenant or co-tenant or subtenant or
lease assignee of such premises. In the event that, at any Sales Site which is
under lease or sublease to an Company Entity or SBU, the landlord thereof shall
by notice or otherwise raise objection to the occupancy of the Support Space by
a Capital Entity or the conduct of its business at the Sales Site, and such
objection cannot be resolved, the affected Company Entity or SBU shall have the
right to terminate the Support Space Term by written notice to the Capital
Entity, which shall promptly pay any monies due the Company Entity or SBU for
use of the Support Space and promptly vacate said Support Space in accordance
with the provisions of Section 7.1; provided however, that in the event such
landlord is willing to consider a negotiated resolution of such objection (which
resolution shall in no event require the payment of money or the increase in any
obligation of the Company Entity or SBU under the lease), the Capital Entity
shall be afforded the
8
<PAGE>
<PAGE>
opportunity to reach such resolution with landlord prior to the service of
any notice of termination hereunder.
ARTICLE XI
INDEMNIFICATION
Section 11.1. Indemnification by Capital and Capital Entity.
Capital and the Capital Entity occupying the Support Space in question each
agrees to defend, indemnify and hold harmless each of the Company and the
Company Entity or SBU controlling the Sales Site hosting the Support Space, and
their respective directors, officers, agents and employees from and against any
and all claims, demands, liability, loss, damage, costs and expenses (including
reasonable attorneys' fees and disbursements) arising from or in connection
with: (i) the conduct or management of the Support Space or of any business
therein, or any work or act whatsoever done, or any condition created (other
than by or at the direction of the Company, the Company Entity or SBU at the
Sales Site, or any director, officer, agent or employee of any of the foregoing)
in or about the Support Space or the Sales Site during the Support Space Term,
or during any period of holdover occupancy after the expiration or earlier
termination of this Agreement and/or any Letter Supplement with respect to such
Support Space, by or at the direction of Capital or the Capital Entity; (ii) any
act, omission or negligence of Capital or of the Capital Entity or of any of
their respective directors, officers, agents, invitees, employees or contractors
(but not business visitors to the Capital Entity which are directors, officers
or employees of the hosting Company Entity or SBU); (iii) any accident, injury
or damage whatsoever (unless caused by the gross negligence or willful
misconduct of the Company or of the hosting Company Entity or SBU, or of any of
their respective directors, officers, agents, third parties invitees or
employees) occurring in or about the Support Space or the Sales Site caused by
Capital or the Capital Entity, or any director, officer, agent or employee of
either of the foregoing; and (iv) the holding over by the Capital Entity beyond
the Support Space Term as to any particular Support Space.
Section 11.2. Indemnification by the Company and the Company
Entity or SBU. The Company and the Company Entity or SBU controlling the Support
Space in question each agrees to defend, indemnify and hold harmless Capital and
the Capital Entity occupying the Support Space, and their respective directors,
officers, agents and employees from and against any and all claims, demands,
liability, loss, damage, costs and expenses (including reasonable attorneys'
fees and disbursements) arising from or in connection with: (i) the conduct or
management of the Sales Site excluding the Support Space, or of any business
therein, or any work or act whatsoever done, or any condition created (other
than by or at the direction of Capital or the Capital Entity occupying the
Support Space, or any director, officer, agent or employee of any of the
foregoing) in or about the Sales Site or the Support Space during the Support
Space Term, by or at the direction of the Company or the Company Entity or SBU;
(ii) any act, omission or negligence of the Company and/or the Company Entity or
SBU or of any of their respective directors, officers, agents, invitees,
employees or contractors (but not business visitors to the Company Entity or SBU
which are directors, officers or employees of the Capital Entity); and (iii) any
accident, injury or damage whatsoever (unless caused by the gross negligence or
willful misconduct of Capital or of the Capital Entity or of any of their
respective directors, officers, agents or employees) occurring in or about the
Support Space or the Sales Site caused by the Company or the Company Entity or
SBU, or any director, officer, agent, third parties invitees or employee of any
of the foregoing.
9
<PAGE>
<PAGE>
Section 11.3. Indemnification Claim Procedure. Each indemnified
party under Section 11.1 or 11.2 hereof with respect to any claim to be made
hereunder shall follow the procedure set forth in Section 9.3 of the Operating
Agreement.
Section 11.4. Survival of Indemnities. The indemnity agreements
set forth in this Article 11 shall survive the expiration or any earlier
termination of this Agreement and/or of any Letter Supplement with respect to
any Support Space or Sale Site as to which indemnification is sought or claimed.
ARTICLE XII
NOTICES
Section 12.1. Notices. A. All notices, consents, deliveries,
demands, requests, approvals and other communications which are required or may
be given hereunder and which affect more than one Support Space shall be in
writing and shall be deemed to have been duly given if personally delivered
(including courier service), telecopied or mailed certified first class mail,
postage prepaid, addressed as follows:
(a) if to the Company, to:
AT&T Global Information Solutions, Inc.
_______________________________________________
_______________________________________________
Telecopier Number: ____________________________
Confirmation Number: __________________________
Attention:
with a copy to:
_______________________________________________
_______________________________________________
_______________________________________________
Telecopier Number: ____________________________
Confirmation Number: __________________________
Attention:
(b) If to Capital, to:
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07960
Telecopier Number: 201-397-3220
Confirmation Number: 201-397-3187
Attention: Chief Executive Officer
10
<PAGE>
<PAGE>
with a copy to:
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07960
Telecopier Number: 201-397-3220
Confirmation Number: 201-397-3187
Attention: General Counsel
B. All notices, consents, deliveries, demands, requests,
approvals or other communications which are required or may be given hereunder
and which affect only a particular Support Space shall be in writing and shall
be deemed to have been duly given if personally delivered (including courier
service), telecopied or mailed certified first class mail, postage prepaid,
addressed to the Company Entity or SBU, or to the Capital Entity, as the case
may be, at the address and to the attention of the person identified in the
last-dated Letter Supplement delivered by the affected parties in connection
with such Support Space.
ARTICLE XIII
AGREEMENT INCORPORATION AT SUPPORT SPACES; DISTRIBUTION
Section 13.1. Letter Supplement Delivery and Agreement
Incorporation. The Company and Capital agree that, upon identification from time
to time of any Support Space to be occupied by a Capital Entity in a Sales Site,
a Letter Supplement shall be prepared executed and delivered in counterparts
between the affected Company Entity or SBU and the Capital Entity occupying or
about to occupy such Support Space, setting forth (i) the floor or suite
location thereof, (ii) the annualized Reimbursement Cost therefor and other
office equipment or service charge rates, if any, (iii) the name and address for
notices under Section 12.1 hereof, and (iv) such other Sales Site-specific
provisions for such occupancy not otherwise covered hereby. The parties hereto
further agree that this Agreement is intended to be incorporated by reference
into the Letter Supplement except to the extent that certain terms hereof are
explicitly stated to be overridden by differing provisions set forth in such
Letter Supplement, and in the event of any other conflict between the terms of
this Agreement and the terms of a Letter Supplement, the terms of this Agreement
shall govern and be deemed to prevail. Notwithstanding the foregoing, it is
further understood and agreed that, with respect to Capital Entities personnel
presently situated in Sales Sites as at the date hereof, they shall be permitted
to remain in place whether under the terms of such client commitment letters
between the affected entities as may be applicable, or otherwise, and the
Company and Capital agree that they will cooperate in good faith to prepare,
execute and deliver a Letter Supplement with respect to the Support Space for
such Sales Sites. In no event shall such Capital Entities personnel be permitted
to remain in place in a Sales Site under lease to an Company Entity or SBU for
which landlord's consent has not been forthcoming as required under Section 2.4
hereof, and failure to vacate such Support Site promptly following notice that
such landlord's consent has not been obtained shall be subject to
indemnification for any costs or damages resulting therefrom under Section 11.1
hereof. The parties' agreement to cooperate in good faith to prepare, execute
and deliver Letter Supplements shall not in any event delay the effective date
of this Agreement as to any Sales Site, and all Sales Sites shall be governed by
11
<PAGE>
<PAGE>
this Agreement from its effective date, notwithstanding the failure to have a
Letter Supplement agreed by such date.
ARTICLE XIV
MISCELLANEOUS
Section 14.1. Amendments. Any Capital Entity and Company Entity
may by mutual consent from time to time vary the terms of this Agreement as it
applies to such Capital Entity and either such Company Entity or one or more
SBUs within such Company Entity. In such event, such varied terms will be deemed
to amend this Agreement as it applies to such Capital Entity and such Company
Entity(or such SBUs) for such period of time as such variance is agreed to by
such Capital Entity and such Company Entity; provided that the variance(s) (i)
are in writing, (ii) specifically reference this Agreement, and (iii) expressly
state the intention of the parties thereto to vary the terms of this Agreement,
which varied terms shall be identified with specificity. The parties hereto
agree that a Letter Supplement containing the information described in clauses
(i) through (iv) in Section 13.1 hereof, without reference to any variance from
specific provisions of this Agreement, shall not be deemed a variance for
amendment to this Agreement. Notwithstanding any such variance, this Agreement
will continue to apply to all other Company Entities and Capital Entities (or,
if applicable, all SBUs within the Company Entity that consents to such variance
that are not made subject to such variance) as if such variance had not been
effected. Notwithstanding the foregoing, this Agreement cannot be amended or
terminated orally, but only by a writing duly executed by or on behalf of the
parties hereto (or by the applicable Company Entity and Capital Entity).
Section 14.2. Successors and Assigns; Third Parties.
(a) This Agreement will be binding upon and inure to the benefit
of the parties hereto and their successors and assigns.
(b) Except as set forth in Article XI, nothing in this Agreement,
expressed or implied, is intended or will be construed to confer upon any Person
(including Customers and Authorized Dealers, as such three capitalized terms are
defined in the Operating Agreement) other than the parties (and the Company
Entities and Capital Entities) and their successors and assigns any right,
remedy or claim under or by reason of this Agreement.
(c) The Company hereby represents and warrants to Capital that it
has the requisite authority to commit and bind the other Company Entities to the
applicable terms of this Agreement.
(d) Capital hereby represents and warrants to the Company that it
has the requisite authority to commit and bind the other Capital Entities to the
applicable terms of this Agreement.
Section 14.3. Sales Sites Under Lease. In the event that any
Sales Site is now or hereafter under lease to an Company Entity or SBU, the
execution and delivery of this Agreement, and/or of any Letter Supplement with
respect to Support Space at such Sales Site, shall not be deemed to amend or
modify or otherwise affect any such lease, and in the event of any conflict with
regard to the use and occupancy of the Support Space at such Sales Site
12
<PAGE>
<PAGE>
between the provisions of this Agreement or such Letter Supplement and the
provisions of the applicable lease, the provisions of such lease shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
AT&T GLOBAL
INFORMATION SOLUTIONS, INC.
BY: ______________________________
NAME:
TITLE:
AT&T CAPITAL CORPORATION
BY: ______________________________
NAME:
TITLE
13
<PAGE>
<PAGE>
SCHEDULE B
The Company entities have not in the past provided interim Financings
for Products in the form of sales-type leases, installment sales contracts or
conditional sales contracts to Customers or Authorized Dealers to Finance the
Acquisition by them of Products.
<PAGE>
<PAGE>
SCHEDULE C
GENERAL ALLOCATION OF
RESPONSIBILITIES
BETWEEN THE
CAPITAL ENTITIES
AND
THE COMPANY ENTITIES
<PAGE>
<PAGE>
TABLE OF CONTENTS
SECTION SUBJECT MATTER
ONE General Allocation of Responsibilities.
TWO Methods and Procedures.
ATTACHMENTS
A. - Listing of Company Responsibilities.
B. - Suggested Operational Procedures.
C. - Remarketing Procedures.
D. - Repurchase Calculation Methodology.
E. - Post-Repurchase Allocation of Repurchase Monies.
2
<PAGE>
<PAGE>
GENERAL ALLOCATION OF RESPONSIBILITIES REGARDING
TRANSACTIONS WHERE A CAPITAL ENTITY
PROVIDES FINANCING
Since 1985 Credit Holdings has been providing Financing to
Customers and Authorized Dealers. Such services are now provided by the Capital
Entities, including NCR Credit. While the Company Entities and Capital Entities
benefit from the provision of such Financings, it is recognized that the Company
Entities and Capital Entities will not receive the full benefits of such
Financings unless Customers and Authorized Dealers fulfill their related payment
obligations.
Because the revenue stream resulting from such Financings is
adversely affected by the subsequent failure of Customers or Authorized Dealers
to pay, it is appropriate to allocate the responsibility for subsequent billing,
collection and account enforcement activity when such situations occur.
Therefore, as between the Company Entities and the Capital
Entities, the entities capable of controlling a particular risk or covering a
particular risk in its pricing (Product or Financing), shall be responsible for
subsequent billing, collection, and account enforcement activity relating to the
Financing shortfall. For example, should a Financing shortfall occur as a result
of a Customer's or Authorized Dealer's inability to pay, or failure to pay for
reasons which are not related to a Company Responsibility, or should the Capital
Entities, anticipated residual value for the Product not be attained -- the
Capital Entities would be responsible.
Should a Financing shortfall occur as a result of a Company
Responsibility, then the SBU that markets or provides the related Product would
be responsible for subsequent billing,-collection, and account enforcement
activity.
In order to implement this allocation policy, the attached
Methods and Procedures, which are made a part of this General Allocation of
Responsibilities, shall apply. Such Methods and Procedures are intended to
further define and amplify the responsibilities of the Company Entities
(including their SBUs) and Capital Entities and to establish procedures that
will facilitate the expeditious resolution of issues between the Company
Entities and the Capital Entities. Except as set forth in the attached Methods
and Procedures, this General Allocation of Responsibilities will not apply in
situations where the Product warranty has expired and the Customer or Authorized
Dealer has
3
<PAGE>
<PAGE>
chosen not to avail itself of the various maintenance service contracts
offered by the SBUs.
This General Allocation of Responsibilities will not affect those
programs or transactions where the Capital Entities and Company Entities agree
(or have previously agreed), in writing, to different apportionment
responsibilities or procedures. In order to provide continued flexibility for
the future, the Capital Entities and Company Entities may modify this General
Allocation of Responsibilities as they may mutually agree in writing. Moreover,
this General Allocation of Responsibilities will apply to any successors of the
parties subject to this allocation policy.
It is understood and agreed that this General Allocation of
Responsibilities refers in various contexts to obligations or agreements of SBUs
(which may or may not be legal entities) because as a practical matter, the
relevant obligation will be performed by a SBU or the relevant agreement will be
entered into by personnel serving a SBU. In all events, any such obligations or
agreements shall, in the case of SBUs that are not Company Entities, constitute
obligations or agreements of the Company Entities of which such SBUs constitute
a division or business grouping.
NOTHING WITHIN THIS DOCUMENT PURPORTS TO EXTEND ADDITIONAL REPRESENTATIONS,
WARRANTIES OR RIGHTS TO A CUSTOMER OR AUTHORIZED DEALER ABOVE AND BEYOND THOSE
REPRESENTATIONS, WARRANTIES AND RIGHTS CONTAINED IN THE CONTRACT BETWEEN SUCH
CUSTOMER OR AUTHORIZED DEALER AND THE RELEVANT COMPANY ENTITIES.
4
<PAGE>
<PAGE>
METHODS AND PROCEDURES REGARDING
GENERAL ALLOCATION OF RESPONSIBILITIES
OVERVIEW AND GENERAL STATEMENT
The foregoing General Allocation of Responsibilities is intended to broadly
define the circumstances in which responsibility for billing, collection and
account enforcement activity is allocated to either a Capital Entity or the SBUs
in situations where a Capital Entity provides Financing for a Customer or
Authorized Dealer. The purpose of these Methods and Procedures is to further
define and amplify the General Allocation of Responsibilities, and to establish
procedures that will facilitate the resolution of issues between the Company
Entities and the Capital Entities. These Methods and Procedures are comprised of
the following:
Attachment A - is a specific listing of circumstances wherein
SBUs will assume responsibility for billing, collection, and
account enforcement activity.
Attachment B - sets forth the procedures to be followed when
dealing with transactions that require SBUs to assume
responsibility for billing, collection, and account
enforcement activity.
Attachment C - sets forth certain equipment remarketing
procedures.
Attachment D - sets forth the general repurchase calculation
methodologies that will apply when SBUs assume the
responsibility for billing, collection, and account
enforcement activity.
Attachment E - sets forth the procedures to be utilized in
calculating net book value.
In preparing these Methods and Procedures, the assumption is made
that every possible action had' been taken, in accordance with the terms and
conditions of the contract between the Customer or Authorized Dealer and the
relevant Company Entities, to resolve issues raised by the Customer or
Authorized Dealer relating to the Product or related service provided by the
Company Entities, and that such actions have not caused the Customer or
Authorized Dealer to honor its financial obligations relative to its Financing
contract with the appropriate Capital Entity.
5
<PAGE>
<PAGE>
Any exception to these Methods and Procedures requires the
consent of all parties to the foregoing General Allocation of Responsibilities
affected by such change.
6
<PAGE>
<PAGE>
Attachment A
LISTING OF COMPANY RESPONSIBILITIES
The appropriate SBU will assume responsibility for billing,
collection, and account enforcement activity of shortfall in a Financing
provided by a Capital Entity when the customer or Authorized Dealer asserts that
its failure to honor its financial obligation under the Financing contract with
the Capital Entity is a result of one or more of circumstances constituting a
Company Responsibility, provided, however, that customer assertions are subject
to the review procedures set forth in Attachment B.
SBU personnel may, on a case by case basis, conclude that
enforcing the terms and conditions of the Financing contract between the
Customer or Authorized Dealer and the appropriate Capital Entities, or the
contract between the Customer or Authorized Dealer and the appropriate Company
Entities, would be inappropriate. When this occurs, the transaction will be
treated as a Company Responsibility.
SBUs shall not be responsible for Financing shortfalls in
situations where a Capital Entity provides Customer Financing that is arranged
through an Authorized Dealer (but not including situations in which a Capital
Entity provides Dealer Financing or customer Financing arranged directly by a
Capital Entity or through a Company Entity), except in the following
circumstances: (x) the Financing shortfall is caused by clause (iii) of the
definition of "Company Responsibility" set forth in Section 7.2 of the
Agreement; (y) the Product does not work or perform in accordance with any
accompanying representation or warranty by a Company Entity; or (z) as a matter
of law or equity the Company Entities are found to be responsible for the
Customer's failure to honor its financial obligation to a Capital Entity.
Except for the matters covered by clause (iii) of the definition
of "Company Responsibility" set forth in Section 7.2 of the Agreement as well as
the immediately preceding paragraphs, a Company Responsibility will only apply
to matters that occur during the term of the warranty and during the term of any
maintenance or service contract of a Company Entity.
NOTHING WITHIN THIS DOCUMENT PURPORTS TO EXTEND ADDITIONAL
REPRESENTATIONS, WARRANTIES OR RIGHTS TO A CUSTOMER OR AUTHORIZED DEALER ABOVE
AND BEYOND THOSE REPRESENTATIONS, WARRANTIES OR RIGHTS CONTAINED IN THE CONTRACT
BETWEEN SUCH CUSTOMER OR AUTHORIZED DEALER AND THE RELEVANT COMPANY ENTITIES.
7
<PAGE>
<PAGE>
Attachment B
SUGGESTED OPERATIONAL PROCEDURES
Within 10 business days of receipt of information of Customer or
Authorized Dealer dissatisfaction and the actual withholding of, or notice from
a Customer or Authorized Dealer of their intention to withhold, payment to the
Capital Entity, the SBU or Capital Entity in receipt of such information will
complete the Initial Equipment Problem Report ("Initial Report") appended hereto
as Exhibit 1, and forward it to the other party.
The SBU will then investigate the merits of any such Customer or
Authorized Dealer assertions and will inform the Capital Entity, within 30 days
of the Initial Report Date, if the SBU believes that (1) a Company
Responsibility does exist or (2) further time is needed to investigate the
Customer or Authorized Dealer's assertion. The SBU will advise the Capital
Entity of the course of action it plans to pursue by completing the
Investigatory Response section of the Initial Report, and by returning it to the
Capital Entity within the 30 day time frame noted above. Thereafter, the Capital
Entity and SBU will follow the Action Timetable appended hereto as Exhibit 2,
whereby the SBU will provide the Capital Entity with a Status Report (Exhibit 3)
in intervals of approximately 30 days. IN NO EVENT WILL SBU'S INVESTIGATION OF A
CUSTOMER OR AUTHORIZED DEALER COMPLAINT BE DEEMED AN ACKNOWLEDGMENT THAT A
COMPANY ENTITY OR SBU BEARS ANY RESPONSIBILITY WHATSOEVER FOR THE ALLEGED
PROBLEM.
If the SBU determines that a Company Responsibility exists
("Repurchase Determination"), the SBU will assume the responsibility for
subsequent billing, collection and account enforcement by repurchasing the
Financing contract from the Capital Entity pursuant to the reimbursement
methodology set forth in Attachment D, and in accordance with the timetable
outlined in Exhibit 2. The SBU will make its Repurchase Determination within 120
days of the date of the Initial Report, unless the SBU and the Capital Entity
mutually agree to extend such date. Moreover, the SBU will make its Repurchase
Determination at such earlier date as may be warranted by the situation, and
will thereafter promptly repurchase the Financing contract from the Capital
Entity pursuant to the reimbursement methodology set forth in Attachment D.
8
<PAGE>
<PAGE>
In instances where an Company Responsibility has, in the SBU's
opinion, been corrected, but the Customer or Authorized Dealer continues to
refuse to make Financing payments to the Capital Entity for the period that such
Company Responsibility existed, in lieu of repurchasing the financing contract
as set forth above, the SBU and the Capital Entity may implement some other
mutually agreeable mechanism to compensate the Capital Entity for the cost of
carrying the non-performing asset during the non-performance period.
In the event that the SBU believes that an Company Responsibility
does not exist, and the Capital Entity initiates enforcement action against the
Customer or Authorized Dealer, and the Capital Entity is unsuccessful in
attempting to enforce its Financing contract because of a determination by a
court, arbitrator or other tribunal that there was an Company Responsibility,
then the SBU will bear responsibility for future billing, collection, and
account enforcement activity.
While a particular case is under review by the SBU as set forth
above, the Capital Entity will not initiate legal action against the Customer or
Authorized Dealer unless it is necessary to preserve the Capital Entity's rights
(in which case the Capital Entity will consult with the SBU before initiating
such legal action).
In the event that the Capital Entity believes that the SBU's
decision as to whether an Company Responsibility exists is in error, the Capital
Entity and the SBU will escalate the issue within their respective
organizations. All inquiries ' s regarding such matters should be forwarded to
the appropriate individuals within the respective organizations.
In the unusual event that the designated SBU and the Capital
Entity representatives cannot come to agreement as to how to allocate the
responsibility for subsequent billing, collection, and account enforcement
activity on a particular transaction, then such representatives will escalate
the issue to the appropriate level of senior management of the applicable SBU
and Capital Entity for resolution. Any unresolved disputes shall be resolved
pursuant to the arbitration provisions set forth in Article X of the Agreement.
Should a SBU sustain any loss resulting from an offset due to a
genuine breach by a Capital Entity of its Financing contract with the Customer
or Authorized Dealer, the Capital Entity will compensate the SBU for such loss
pursuant to procedures specified herein.
9
<PAGE>
<PAGE>
The responsible SBU may request that the Capital Entity provide post-repurchase
administrative services on transactions that fall under the terms of the General
Allocation of Responsibilities. The Capital Entities shall perform such services
at such terms as are mutually agreeable to both the Capital Entity and SBU.
10
<PAGE>
<PAGE>
Attachment C
REMARKETING PROCEDURES
In those instances where a Company Responsibility exists, the
cost of deinstallation and remarketing the Financed Product falls to the SBU
without contribution from the Capital Entity. In those instances where a Company
Responsibility does not exist, the cost of deinstallation, refurbishment, and
remarketing the Financed Product falls to the Capital Entity.
The SBU shall have the first right of purchase for Financed
Products that come into the possession of the Capital Entity for potential
remarketing, at a price that is mutually agreed to by the parties. This right is
contingent upon the establishment of mutually agreeable mechanisms, methods and
procedures as to how the right of first offer will be implemented and managed on
an ongoing basis.
11
<PAGE>
<PAGE>
Attachment D
REPURCHASE CALCULATION METHODOLOGY
As previously stated, the Capital Entities and Company Entities
do not obtain the full benefit of a customer or Authorized Dealer Financing
unless the Customer or Authorized Dealer fulfills its financial obligation under
its Financing contract with the Capital Entity. Unless otherwise agreed to by an
Company Entity or SBU and Capital Entity with respect to particular types of
Financings, when a Company Responsibility exists, all of the Capital Entity's
right, title and interest in, to and under the Financing and Financed Product
will be repurchased by the SBU from the Capital Entity utilizing the following
methodology to calculate the appropriate price to be paid to the Capital Entity:
(a) Reimbursement Methodology
The Company Entities shall pay the Capital Entities the original
equipment cost ("OEC") financed by the Capital Entity less payments received by
the Capital Entities, multiplied by the following percentages:
if OEC is less than $300,000 - 85%;
if OEC is $300,000 or more, but less than $1,000,000 - 90%; and
if OEC is $1,000,000 or more - 95%.
(b) Sundry Expenses:
The Capital Entity shall be compensated by the SBU for verifiable
out of pocket expenses incurred for transactions that fall under the terms of
this Schedule. This includes such things as litigation expense (where outside
counsel is being retained), costs of collection such as on-sight asset
inspection/inventory, collection agency expense, and deinstallation expense (if
paid by the Capital Entity).
The SBU will not be responsible for soft costs, such as
reimbursement for the time and effort of the Capital Entity employees,
consultants, or temporary employees in resolving such situations.
12
<PAGE>
<PAGE>
In some instances a Company Responsibility can be resolved by
unwinding only a portion of the transaction, as opposed to a complete repurchase
of the account by the responsible SBU. When this occurs the Capital Entity and
SBU shall apply the methodologies contained in this Schedule on that percentage
of the transaction that is being unwound, in order to arrive at the appropriate
amount to be paid to the Capital Entity by the SBU.
13
<PAGE>
<PAGE>
Attachment E
POST-REPURCHASE ALLOCATION OF REPURCHASE MONIES
The General Allocation of Responsibilities defines, among other
things, circumstances under which the SBUs will assume responsibility for the
billing, collection, and account enforcement, which is accomplished via the
repurchase of the Financing from the Capital Entity for transactions that are
Company Responsibilities. The SBUs recognize that the assumption of the
referenced responsibilities may result from problems under their direct control,
or from problems under the direct control of some other SBU (i.e., selling SBU
differs from Product-owning SBU).
The SBUs shall negotiate, within a reasonable time frame
after the date hereof, the methods and procedures necessary to allocate the
repurchase price paid to the Capital Entity by the SBU which has been deemed to
be responsible for the Financing shortfall.
14
<PAGE>
<PAGE>
Exhibit 1
PRODUCT / SERVICE PROBLEM REPORT
FOR CAPITAL ENTITY FINANCED TRANSACTION
*****INITIAL REPORT*****
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Initial Report Originator: [ ] Company Entity [ ] Capital Entity Date:
(Name): Room
Address: Branch Code (Company Entity)
Address: Telephone:
- ---------------------------------------------------------------------------------------------------------------------------
Customer/Authorized Dealer Bill
Name: Units:
Address: Contact:
Address: Telephone:
Original Date Funded: Amount Funded:
- ---------------------------------------------------------------------------------------------------------------------------
PROBLEM TYPE:
[ ] Product [ ] Service [ ] Warranty [ ] Other
Date First Notified of Problem: By Whom:
A Brief Description of Problem:
Resolution/Recommendation/Comments:
- ---------------------------------------------------------------------------------------------------------------------------
INVESTIGATORY RESPONSE; Date:
By (Name): Room
Address: Branch Code (Company Entity)
Address: Telephone:
15
<PAGE>
<PAGE>
Resolution/Recommendation/Comments:
16
<PAGE>
<PAGE>
Exhibit 2
</TABLE>
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
ACTION TIMETABLE
- ---------------------------------------------------------------------------------------------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
CASE DAYS CAPITAL ENTITY ACTION SBU ACTION REQUIRED ACTION DAYS
- ----------- ---------------------------------- ---------------------------------- -----------------------------
0 1) Becomes aware of alleged 1) Completion of Initial Report The Initial Report to be
Product/service related if problem surfaces through c). prepared and forwarded
problem, through: within 10 days of learning
a) Collection efforts of the alleged problem.
b) Customer or Authorized
Dealer contact
c) Contacted by SBU
2) Completion of Initial Report
(Exhibit 1) if problem
surfaces through a) or b)
above.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
1-30 Continue billing and collection Status Report to Capital Entity Within 30 days of first
activity, unless otherwise via the Investigator Response Case Day.
agreed. section of the Initial Report.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
31-60 Continue billing and collection Status Report to Capital Entity Within 60 days of first
activity, unless otherwise if not resolved by day 60. Case Day.
agreed.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
61-90 Continue billing and collection Status Report to Capital Entity Within 90 days of first
activity, unless otherwise if not resolved by day 90. Case Day.
agreed.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
91-120 Continue billing and collection (1) Status Report to Capital Within 120 days of first
activity pending SBU decision. Entity if not resolved by Case Day.
Case Day 120.
(2) By Case Day 120 SBU will
advise Capital Entity that is
taking one of the following
courses of action:
a) continue problem resolution
but SBU will assume the
responsibility for billing,
collection, and account
enforcement until problem is
resolved.
b) SBU will assume the
responsibilities stated in (a)
above and will deal directly
with the customer.
c) inform Capital Entity that
the SBU has performed its
obligations, and that an AT&T
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
</TABLE>
17
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
Responsibility does not exist.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
121-150 1) If SBU opts for a) or b) Within 150 days of first
above, Capital Entity will Case Day.
prepare a repurchase calculation
worksheet and forward it to the
SBU for payment processing
(along with repurchase
calculation backup and invoice).
2) If SBU chooses c) above,
Capital Entity may take whatever
action it deems appropriate,
including enforcement action
against the customer.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
151-180 If SBU has decided to assume the If SBU is to assume Within 180 days of first
responsibility for billing, responsibility for billing, Case Day.
collection, and account collection, and account
enforcement activity, Capital enforcement, it will verify that
Entity will close billing and the repurchase price is properly
collection efforts upon receipt calculated, obtain necessary
of the repurchase amount or 180 internal approvals and paperwork
days from the first Case Day to generate the repurchase
whichever occurs earlier. check, and forward the check to
Capital Entity.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
181-120 Upon receipt of SBU repurchase Retain Capital Entity documents Within 15 days of receipt
check: for future use, if any. of repurchase check.
(1) send all original documents
to SBU;
(2) execute an assignment form,
transferring all right, title,
and interest to SBU; and
(3) execute the appropriate
UCC documents to assign an
perfected security interest to
SBU.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
</TABLE>
18
<PAGE>
<PAGE>
Exhibit 3
*****Status Report *****
<TABLE>
<S> <C>
*********************************************************************************************************
Initial Report Originator: ( ) Company Entity ( ) Capital Entity Date:______________________
By (Name):_______________________________________________________ Room #:__________________________
Address:__________________________________________________________ Branch Code (Company Entity):____
Address:__________________________________________________________ Telephone:_______________________
*********************************************************************************************************
CUSTOMER/AUTHORIZED DEALER INFORMATION:
Customer/Authorized Dealer Bill
Name:_____________________________________________________________ Units:___________________________
Address:__________________________________________________________ Contact:_________________________
Address:__________________________________________________________ Telephone:_______________________
*********************************************************************************************************
FOLLOWUP INFORMATION:
( ) Problem Resolved ( ) No Problem Exists ( ) Problem Not Resolved
( ) Problem Resolution Expected By:____________________________________________________________________
Brief Description of Current Efforts:____________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
Resolution/Recombination/Comments:_______________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
*********************************************************************************************************
RECEIVERS RESPONSE (IF ANY): Date:___________________________________
By (Name):_____________________________________________ Room #:_________________________________
Address:________________________________________________ Branch Code (Company Entity):___________
Address:________________________________________________ Telephone:______________________________
Resolution/Recombination/Comments: ______________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
_________________________________________________________________________________________________________
*********************************************************************************************************
<PAGE>
<PAGE>
Exhibit B
LUCENT TECHNOLOGIES
OPERATING AGREEMENT
Dated as of __________________, 1996
Between
LUCENT TECHNOLOGIES, INC.
a Delaware corporation,
And
AT&T CAPITAL CORPORATION,
a Delaware corporation
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS.............................................................. 2
ARTICLE II
FINANCING RELATED SERVICES TO BE PROVIDED BY CAPITAL..................... 11
2.1 Financing Related Services - Objectives and Commitments ....... 11
2.2 Training of Company Personnel ................................. 13
2.3 Providing Company with Information as to
Financings and Finance Markets .............................. 14
2.4 Subsidized and Guaranteed Financings and
Ancillary Services .......................................... 14
2.5 Advisory Services ............................................. 15
2.6 No Obligation or Commitment ................................... 15
2.7 Alternative Financing and Recourse Arrangements ............... 16
ARTICLE III
PREFERRED PROVIDER STATUS................................................ 17
3.1. Support of the Capital Entities................................ 17
3.2. Preferred Provider Status...................................... 18
3.3. Right to Choose Alternative Providers.......................... 20
3.4. Finance Marketing Support...................................... 21
3.5. Personnel Support.............................................. 21
3.6. Information Support............................................ 22
3.7. Activities of the Company Entities............................. 22
ARTICLE IV
NON-COMPETITION.......................................................... 22
4.1. Covenant Not to Compete........................................ 22
4.2. Use of a Permitted Captive Financing Source.................... 25
4.3. Financing Operations of Acquired Entities...................... 26
ARTICLE V
PROTOCOLS AND PROCEDURES AND RELATED MATTERS............................. 28
5.1. Protocols and Procedures; Pilot Programs....................... 28
5.2. Systems Interface.............................................. 29
-i-
<PAGE>
<PAGE>
ARTICLE VI
REMARKETING OF PRODUCTS.................................................. 30
6.1. In General..................................................... 30
6.2. Deinstallation, Refurbishment and Re-Certification
of Remarketed Products....................................... 31
6.3. Rights to Use Software......................................... 32
ARTICLE VII
CERTAIN ALLOCATIONS OF RISK; LITIGATION AND REPOSSESSION................. 32
7.1. Representations, Warranties and Covenants...................... 32
7.2. Allocation of Certain Risks.................................... 34
7.3. Collection and Repossession Actions............................ 36
7.4. Actions Against Significant Accounts........................... 36
ARTICLE VIII
SCOPE OF APPLICATION OF AGREEMENT........................................ 37
8.1. Attribution of Actions of Subsidiaries to Their Parents........ 37
8.2. Application of Agreement to Certain Joint Ventures and Other
Minority Investments of the Company.......................... 38
8.3. Sale, Public Offering or Spin-Off of a Significant
Products Entity ............................................. 38
8.4. New Products and Company Entities.............................. 39
8.5. Geographic Scope of Agreement.................................. 40
ARTICLE IX INDEMNIFICATION................................. 41
9.1. Capital Indemnity.............................................. 41
9.2. Company Indemnity.............................................. 41
9.3. Procedure...................................................... 42
ARTICLE X
DISPUTE RESOLUTION....................................................... 43
10.1. Resolution of Disputes......................................... 43
10.2. Resolution of Disputes Using Best Efforts...................... 43
10.3. Arbitration.................................................... 44
10.4. Continuity of Service and Performance.......................... 46
10.5. Disputes as to Sales Site Protocols and Procedures............. 46
-ii-
<PAGE>
<PAGE>
ARTICLE XI
TERM AND TERMINATION..................................................... 46
11.1. Initial Term and Renewal....................................... 46
11.2. Termination.................................................... 47
11.3. Effect of Termination.......................................... 48
ARTICLE XII
CONFIDENTIALITY.......................................................... 49
ARTICLE XIII
MISCELLANEOUS............................................................ 50
13.1. Variation of Terms; Amendments................................. 50
13.2. No Partnership................................................. 50
13.3. Successors and Assigns; Third Parties.......................... 50
13.4. Severability................................................... 50
13.5. Notices........................................................ 51
13.6. Governing Law.................................................. 52
13.7. Headings....................................................... 52
13.8. Counterparts................................................... 52
SCHEDULES AND EXHIBITS
Schedule A--Description of the Business of the Divisions
Schedule B--Location Support Agreement
Schedule C--Description of Certain Past Practices of the Divisions
Relating to Interim Financings
Schedule D--Description of Certain Past Practices of AT&T Paradyne
Schedule E--Description of Certain Equipment, Systems and Services
Provided by Network Systems
Schedule F--Description of Certain Past Practices of the Divisions
Relating to the Rental of Products on a Periodic Basis
Schedule G--General Allocation of Responsibilities
-iii-
<PAGE>
<PAGE>
LUCENT TECHNOLOGIES
OPERATING AGREEMENT
LUCENT TECHNOLOGIES OPERATING AGREEMENT dated as of
________________, 1996 (this "Agreement") between LUCENT TECHNOLOGIES INC., a
Delaware corporation (the "Company"), and AT&T CAPITAL CORPORATION, a Delaware
corporation ("Capital").
W I T N E S S E T H:
WHEREAS, the Board of Directors of AT&T Corp.("AT&T") has
determined that it is in the best interest of AT&T to separate AT&T's existing
businesses into three independent businesses;
WHEREAS, as part of the foregoing, NCR Corporation ("NCR") and
the Company will enter into a Separation and Distribution Agreement with AT&T
which provides, among other things, for the separation of the Company assets and
the Company liabilities;
WHEREAS, in order to consummate a spin-off of the Company, (i)
AT&T will contribute or otherwise convey or cause to be conveyed the assets, or
certain assets, of the Divisions (as defined herein) to the Company, a recently
formed wholly-owned Subsidiary of AT&T, (ii) the Company will sell to the
public, pursuant to an initial public offering (the "IPO"), approximately 15% of
its common equity and (iii) in a separate transaction following the IPO, AT&T
will spin-off its entire interest in the Company to its shareholders (such
transactions are collectively referred to as the "Spin-Off Transactions");
WHEREAS, Capital entered into an Operating Agreement dated as of
June 25, 1993 (as amended from time to time, the "AT&T Operating Agreement")
with AT&T;
WHEREAS, pursuant to Section 8.3 of the AT&T Operating Agreement,
Capital has requested AT&T to cause the Company to enter into a Comparable
Operating Agreement (as defined in Section 8.3 of the AT&T Operating Agreement)
relating to the businesses of the Divisions that is substantially similar in
scope and terms to the AT&T Operating Agreement;
WHEREAS, AT&T and Capital have entered into an Agreement dated as
of January 5, 1996 pursuant to which AT&T has agreed to use its best efforts to
cause the Company to enter into this Agreement by January 31, 1996 (but in any
event no later than the date required pursuant to Section 8.3 of the AT&T
Operating Agreement);
WHEREAS, it is the intention of the parties hereto that (i) this
Agreement constitute a Comparable Operating Agreement relating to the businesses
of the Divisions and (ii) this Agreement shall govern the relationship between
the Company and
<PAGE>
<PAGE>
its Subsidiaries, on the one hand, and Capital and its Subsidiaries, on the
other hand, after the consummation of the Spin-Off Transactions as to the
matters set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the conditions and
upon the terms hereof, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms will have the
following meanings, applicable both to the singular and the plural forms of the
terms defined:
"AAA" has the meaning ascribed thereto in Section 10.3(g).
"Acquired Entity" has the meaning ascribed thereto in Section
4.3.
"Acquired Entity Financing Source" has the meaning ascribed
thereto in Section 4.3.
"Active Service Area" has the meaning ascribed thereto in Section
8.5.
"Adjusted Financeable Product Sales" means, with respect to any
calendar year, the aggregate purchase price (net of any discounts) paid by
Customers, Authorized Dealers or the Capital Entities (or, with respect to
periods prior to March 31, 1993, Capital Holdings and its Subsidiaries) to the
Company Entities, together with any related sales taxes and installation and
similar costs, for Financeable Products sold by the Company Entities during such
calendar year and each of the two preceding calendar years. In the event that
during any three-year period for which Adjusted Financeable Product Sales is
calculated, there has occurred a disposition, termination or phase-out by any
Company Entity of any significant Financeable Product line, the Adjusted
Financeable Product Sales amount with respect to such three-year period shall be
reduced by the amounts attributable to sales of such Financeable Products during
such three-year period and any related sales taxes and installation and similar
costs. In the event that during any three-year period for which Adjusted
Financeable Products Sales is calculated, there has been introduced or has
occurred a phase-in or an acquisition by any Company Entity of any significant
Financeable Product line, the Adjusted Financeable Product Sales amount with
respect to such three-year period shall be adjusted such that the aggregate
purchase price (net of discounts) of and any related sales taxes
-2-
<PAGE>
<PAGE>
and installation and similar costs for such significant Financeable Product line
shall be (x) with respect to each full calendar year within such three-year
period during which such Financeable Product line has been sold by the Company
Entities (each such year, a "Full Sales Year"), the actual aggregate purchase
price (net of discounts) of and any related sales taxes and installation and
similar costs for Financeable Products constituting part of such Financeable
Products line that are sold within such Full Sales Year and (y) with respect to
each calendar year within such three-year period during or prior to which such
Financeable Product line was introduced, phased-in or acquired (each such year,
a "Partial Sales Year"), an assumed amount equal to the amount calculated
pursuant to clause (x) above for the first Full Sales Year following such
Partial Sales Year. Notwithstanding the foregoing, there shall be excluded from
the foregoing calculations (i) Financeable Product lines sold by AT&T Paradyne
or Network Systems for which AT&T Paradyne or Network Systems, as the case may
be, provide financing pursuant to Section 4.1(b) and (ii) Financeable Product
lines the introduction, phase-in or acquisition of which was effected in the
calendar year with respect to which Adjusted Financeable Products Sales is being
calculated together with, in each case, any related sales taxes and installation
and similar costs. The foregoing adjustments to Adjusted Financeable Product
Sales for any period shall be calculated on a basis that is consistent with the
basis on which adjustments to Adjusted Financing Amount for such period are
calculated.
"Adjusted Financing Amount" means, with respect to any calendar
year, the aggregate amount of Financings provided by the Capital Entities (or,
with respect to periods prior to March 31, 1993, Capital Holdings and its
Subsidiaries) for Financeable Products sold by the Company Entities during such
calendar year and each of the two preceding calendar years, together with the
aggregate amount of Financings of any related sales taxes and installation and
similar costs. In the event that during any three-year period for which Adjusted
Financing Amount is calculated, there has occurred a disposition, termination or
phase-out by any Company Entity of any significant Financeable Product line, the
Adjusted Financing Amount with respect to such three-year period shall be
reduced by the amount attributable to Financings of Financeable Products
constituting part of such Financeable Product line during such three-year period
or to Financings of any related sales taxes and installation and similar costs.
In the event that during any three-year period for which Adjusted Financing
Amount is calculated, there has been introduced or has occurred a phase-in or an
acquisition by any Company Entity of any significant Financeable Product line,
the Adjusted Financing Amount with respect to such three year period shall be
adjusted such that the amount of Financings for such significant Financeable
Product line shall be (x) with respect to each Full Sales Year (as defined in
the definition of "Adjusted Financeable Product Sales"), the aggregate amount of
such Financings (together with the aggregate amount of Financings of
-3-
<PAGE>
<PAGE>
any related sales tax and installation and similar costs) for Financeable
Products constituting part of such Financeable Product line that are sold within
such Full Sales Year and (y) with respect to any Partial Sales Year (as defined
in the definition of "Adjusted Financeable Product Sales"), an assumed amount
equal to the amount calculated pursuant to clause (x) above for the first Full
Sales Year following such Partial Sales Year. Notwithstanding the foregoing,
there shall be excluded from the foregoing calculations (i) Financings provided
by the Capital Entities for Financeable Product lines sold by AT&T Paradyne or
Network Systems for which AT&T Paradyne or Network Systems, as the case may be,
provide financing pursuant to Section 4.1(b) and (ii) Financings provided by the
Capital Entities for Financeable Products lines the introduction, phase-in or
acquisition of which was effected in the calendar year with respect to which
Adjusted Financing Amount is being calculated together with, in each case,
Financings of any related sales taxes and installation and similar costs.
"Advisory Services" has the meaning ascribed thereto in Section
2.5.
"Affiliate" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly or indirectly,
of the power to vote a majority of the securities having voting power for the
election of directors (or other Persons acting in similar capacities) of such
Person or otherwise to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"After-Tax Basis" means, with respect to any payment to be
received or accrued by any Person, the amount of such payment supplemented by a
further payment or payments (which shall be payable either simultaneously with
the initial payment or, in the event that taxes resulting from the receipt or
accrual of such initial payment are not payable in the year of receipt or
accrual, at the time or times such taxes become payable) so that the sum of all
such initial and supplemental payments, after deduction of all taxes imposed by
any taxing authority (after taking into account any credits or deductions or
other tax benefits arising therefrom to the extent such are currently utilized)
resulting from the receipt or accrual of such payments (whether or not such
taxes are payable in the year of receipt or accrual) will be equal to the
initial payment to be so received or accrued.
"Agreement" has the meaning ascribed thereto in the preamble
hereto, as such agreement is amended and supplemented from time to time in
accordance with its terms.
-4-
<PAGE>
<PAGE>
"Alternative Ancillary Services" means Ancillary Services offered
or provided to the Company Entities, Customers or Authorized Dealers by an
Alternative Provider.
"Alternative Financing Program" means a Financing program offered
or provided to the Company Entities, Customers or Authorized Dealers by an
Alternative Provider.
"Alternative Provider" means a Person (other than an Affiliate of
the Company or Capital) that offers financings or other services competitive
with Financings or Ancillary Services offered by the Capital Entities hereunder.
"Ancillary Services" means (i) the provision of property,
casualty or similar types of insurance with respect to Products, (ii) asset
monitoring, recovery and remarketing services of a type provided by the Capital
Entities to the Company Entities or their Customers or Authorized Dealers on or
prior to the date hereof and (iii) any other value-added services relating to
Products or Financings offered by the Capital Entities from time to time and
agreed to by the parties to be treated as Ancillary Services for purposes of
this Agreement.
"AT&T" has the meaning ascribed thereto in the preamble.
"AT&T Entities" means AT&T and all Persons that constitute
Subsidiaries of AT&T (other than Subsidiaries that constitute Capital Entities)
from time to time.
"AT&T Microelectronics" means the SBU of AT&T commonly referred
to as "AT&T Microelectronics", a general description of the business of which
(including a description of its Products, customers and markets) is set forth on
Schedule A attached hereto and made a part hereof.
"AT&T Operating Agreement" has the meaning ascribed thereto in
the preamble.
"AT&T Paradyne" means AT&T Paradyne Corporation, a wholly-owned
Subsidiary of AT&T, a general description of the business of which (including a
description of its Products, customers and markets) is set forth on Schedule A
attached hereto and made a part hereof.
"Authorized Dealer" means any Person that is authorized or
permitted by any Company Entity to acquire Products directly from such Company
Entity for resale on a wholesale or retail basis.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banking institutions in New Jersey are authorized or required
by law to be closed.
-5-
<PAGE>
<PAGE>
"Capital" means AT&T Capital Corporation, a Delaware corporation,
and its successors and permitted assigns.
"Capital Entities" means Capital and all Persons that constitute
Subsidiaries of Capital from time to time.
"Capital Entities' Financing Penetration Rate" means, as of the
end of any calendar year, the Adjusted Financing Amount for such year and the
two preceding calendar years expressed as a percentage of the Adjusted
Financeable Product Sales for such year and the two preceding calendar years.
"Capital Holdings" means AT&T Capital Holdings, Inc., a
Delaware corporation.
"Captive Financing Trigger Event" has the meaning ascribed
thereto in Section 4.2.
"Company" has the meaning ascribed thereto in the preamble.
"Company Entities" means the Company and all Persons that
constitute Subsidiaries of the Company from time to time; provided, however, in
respect of the business activities and performance of the Company Entities at
any time prior to the Spin-Off Date, "Company Entities" shall refer to the
businesses and assets of the Divisions.
"Company Responsibility" has the meaning ascribed thereto in
Section 7.2(b).
"Comparable Operating Agreement" has the meaning ascribed thereto
in Section 8.3.
"Consumer Products" means the SBU of AT&T commonly referred to as
"Consumer Products", a general description of the business of which (including a
description of its Products, customers and markets) is set forth on Schedule A
attached hereto and made a part hereof.
"Credit" means AT&T Credit Corporation, a Delaware corporation
that is a wholly-owned Subsidiary of Capital and was previously named "AT&T
Captive Finance, Inc.".
"Credit Holdings" means AT&T Credit Holdings, Inc., a Delaware
corporation that is a wholly-owned Subsidiary of Capital Holdings and was
previously named "AT&T Credit Corporation".
"Credit Receivables Agreement" means the Operating Agreement
dated as of January 1, 1985, among AT&T and Credit Holdings and certain of their
Affiliates, as such agreement is amended and supplemented from time to time in
accordance with its terms.
-6-
<PAGE>
<PAGE>
"Customer" means any Person that is an actual (or, if the context
so indicates, potential) acquirer or user of Products, other than an Authorized
Dealer.
"Customer Financing" means any direct or indirect financing of
the sale, lease or other furnishing of Products by any Company Entity (or
Authorized Dealer) to Customers, and will include, without limitation, (i)
entering into leases, secured loans, installment sales contracts or conditional
sales contracts directly with such Customers, (ii) the purchase or financing of
receivables arising from such sales, leases or other furnishings of Products by
any Company Entity (or Authorized Dealer), and (iii) the issuance of charge or
credit cards (such as Capital's Products Plus Card) primarily intended for the
financing of purchases of Products.
"Customer Outsourcing Program" means any program of the Company
Entities for the acquisition, maintenance and/or operation by the Company
Entities of telecommunications, computer, data and/or information networks or
operations for Customers under what is generally referred to in the industry as
an outsourcing or network management contract ("Outsourcing Contract") between
the applicable Customer and the applicable Company Entities, under which program
financing of the products and other equipment and software (which may include,
but are not necessarily limited to, Products) used in connection with the
Outsourcing Contract is provided by a financing source other than the internal
or budgeted funds of the Company Entities offering such program.
"Dealer Financing" means any direct or indirect (i) financing of
the purchase or lease by Authorized Dealers of Products from the Company
Entities for resale or re-lease to Customers, including, without limitation,
floor planning loans and other forms of inventory financing and (ii) provision
of other types of secured loans to such Authorized Dealers.
"Divisions" means, collectively, AT&T Microelectronics, Network
Systems, AT&T Paradyne, Consumer Products, Global Business Communications
Systems and any other SBU of AT&T that becomes an SBU or a part of an SBU of the
Company or any of the Company's Subsidiaries in connection with the Spin-Off
Transactions. Any reference to a Division relating to a period after the
Spin-Off Date shall refer to the relevant SBU (or part of such SBU) of the
Company or the Company's Subsidiaries conducting the business of such Division
after the Spin-Off Date.
"Dollars" and "$" mean the lawful money of the United States.
"Financeable Products" means all Products (other than Products
constituting consumables or maintenance, service or similar contracts) sold by
the Company Entities to Customers or Authorized Dealers within the Active
Service Areas that (i) have
-7-
<PAGE>
<PAGE>
been Financed by the Capital Entities or (ii) are types of Products for which it
is customary in the equipment finance industry within the Active Service Areas
for third-party, "non-captive" equipment financing companies to provide
Financing.
"Financed Products" means Products with respect to which
Financing has been provided.
"Finance Marketing Support" has the meaning ascribed thereto in
Section 3.1(i).
"Financing" means Customer Financing, Dealer Financing or
Outsource Financing.
"First Tier Transfer of Control" means a transaction or series of
transactions that has the effect of reducing AT&T's direct or indirect ownership
interest of Capital's voting securities, such that Capital is no longer a
Subsidiary of AT&T.
"Global Business Communications Systems" means the SBU of AT&T
commonly referred to as "Global Business Communications Systems", a general
description of the business of which (including a description of its Products,
customers and markets) is set forth on Schedule A attached hereto and made a
part hereof.
"Information Support" has the meaning ascribed thereto in Section
3.1(v).
"Initial Term" has the meaning ascribed thereto in Section 11.1.
"IPO" has the meaning ascribed thereto in the preamble.
"Location Support" has the meaning ascribed thereto in Section
3.1(iii).
"Location Support Agreement" has the meaning ascribed thereto in
Section 3.1(iii).
"Network Systems" means the SBU of AT&T commonly referred to as
"Network Systems", a general description of the business of which (including a
description of its Products, customers and markets) is set forth on Schedule A
attached hereto and made a part hereof.
"Outsource Financing" means any direct or indirect financing
(including, without limitation, through secured loans and leases) of or with
respect to any Customer Outsourcing Program.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization,
-8-
<PAGE>
<PAGE>
government (and any department or agency thereof) or other entity.
"Personnel Support" has the meaning ascribed thereto in Section
3.1(ii).
"Products" means any products (including, without limitation,
Software, but not including any real estate) and related installation and
maintenance services provided, furnished, manufactured, sold or marketed, as the
case may be, by the Company Entities from time to time.
"Products Capacity" means the capacity of a Significant Products
Entity to manufacture, market or provide Products (including, to the extent
appropriate, the related manufacturing capacity, distribution and marketing
capacity and Product development and support systems).
"Protocols and Procedures" has the meaning ascribed thereto in
Section 5.1(a).
"Protocol Standards" has the meaning ascribed thereto in Section
5.1(a).
"Renewal Period" has the meaning ascribed thereto in Section
11.1.
"Sales Site" means any site, office or location from which any
Company Entity or SBU conducts the sale or marketing of Products.
"SBU" means a division of AT&T, prior to the Spin-Off Date, or of
a Company Entity, from and after the Spin-Off Date, involved in the manufacture,
sale, provision or marketing of Products, including, without limitation, each of
the Divisions.
"Significant Account" means a customer (which may be an
Authorized Dealer or a Customer) of a Company Entity (i) which has acquired
Products with an aggregate purchase price exceeding $10,000,000 in the most
recent calendar year or which can reasonably be expected to acquire Products
with an aggregate purchase price exceeding such amount in the current calendar
year and (ii) has been designated by such Company Entity as a "Significant
Account" by written notice to Capital.
"Significant Products Entity" means a Company Entity or SBU (x)
which is in the business of manufacturing, marketing or providing Products and
(y) which has annual sales revenues in excess of $200,000,000 for the calendar
year immediately preceding the calendar year during which the applicable
transaction referred to in Section 8.3 is proposed or effected.
"Software" means any intellectual property commonly or
generically known as software, together with related storage
-9-
<PAGE>
<PAGE>
disks and instructional and other documents, the acquisition or use of which
by any Person is customarily financed by the Capital Entities or relates to
or is used in connection with equipment financed by the Capital Entities.
"Spin-Off Date" means the date of the consummation of the
Spin-Off Transactions.
"Spin-Off Transactions" has the meaning ascribed thereto in the
preamble.
"Standard Documents" means standardized forms of documents
prepared (and from time to time revised) by the Capital Entities in connection
with the offering of various types of Financings and Ancillary Services,
including forms of leases, loan agreements, security agreements, guarantees,
financing statements and other documents necessary or appropriate for the
conducting of the Capital Entities' business of providing Financing and
Ancillary Services.
"Subsequent Transfers of Control" means any transaction or series
of events or transactions, in which Capital becomes a Subsidiary of any Person
other than the Person (or an Affiliate of the Person) which acquired Capital in
the First Tier Transfer of Control.
"Subsidiary" means, with respect to any Person, any other Person
which is directly or indirectly controlled by such Person. For purposes of this
definition, "control", as applied to any Person, means the possession, directly
or indirectly, of the power to vote a majority of the securities having voting
power for the election of directors (or other Persons acting in similar
capacities) of such Person or otherwise to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or by contract or otherwise.
"Systems Support" has the meaning ascribed thereto in Section
3.1(iv).
Unless the context indicates otherwise, references to Articles,
Sections and Schedule will refer to the corresponding articles and sections in
and schedule to this Agreement and references to the parties shall mean the
parties to this Agreement. Capitalized terms used herein without definition
(such as "Financed") that have correlative defined terms (such as "Financing")
will have a meaning correlative to the defined term. References to "consistent
with past practice" shall refer to the past practices of the Capital Entities
and the businesses of the Divisions prior to June 25, 1993.
-10-
<PAGE>
<PAGE>
ARTICLE II
FINANCING RELATED SERVICES TO BE PROVIDED BY CAPITAL
Section 2.1. Financing Related Services-Objectives and Commitments.
(a) It is the mutual objective of the parties to this Agreement that Capital
will, during the term of this Agreement and within the Active Service Areas,
either directly or through its Subsidiaries:
(i) make available to Customers of the Company Entities and
Authorized Dealers appropriate forms of Customer Financings for the
purchase, lease or other acquisition of Products (such as, but not
necessarily including with respect to each type of Product, leases,
secured loans, installment sales contracts and conditional sales
contracts), and otherwise provide the Company Entities and Authorized
Dealers with Customer Financing in the form of purchases or financings
of receivables arising from the sale, lease or other furnishing by the
Company Entities or Authorized Dealers of Products to Customers;
(ii) make available to Authorized Dealers appropriate forms
of Dealer Financing and make available to the Company Entities
appropriate forms of Outsource Financing; and
(iii) make available to the Company Entities, Customers and
Authorized Dealers, where appropriate, various types of Ancillary
Services offered from time to time by Capital and its Subsidiaries.
(b) In furtherance of the objectives described in paragraph (a)
above, Capital shall, during the term of this Agreement and within the Active
Service Areas, either directly or through its Subsidiaries:
(i) generally continue the Financing and Ancillary Services
programs under which Capital Holdings and its Subsidiaries (and, as
successors to the "captive" financing businesses thereof, Capital and
its Subsidiaries) have heretofore been providing Financings and
Ancillary Services to the Company Entities, Customers and Authorized
Dealers (subject to Capital's right to modify, revise or terminate
particular programs as appropriate to accommodate changes in market
conditions or the marketing requirements of the Company Entities,
Customers and Authorized Dealers and other relevant developments);
(ii) as the Company Entities introduce new Products, use its good
faith efforts, in cooperation with the Company, to modify existing or
devise new Financing and Ancillary Service programs, where appropriate,
to support the sale, lease or other furnishings of such Products;
-11-
<PAGE>
<PAGE>
(iii) make any new Ancillary Services offered by the Capital
Entities available to the Company Entities, Customers and Authorized
Dealers, as appropriate;
(iv) cooperate with the Company Entities and Authorized Dealers
in promoting and advertising the availability of the Financings and
Ancillary Services to Customers, including providing their sales and
marketing personnel with information with respect to such Financings and
Ancillary Services and by generally responding to inquiries made by
Customers or the employees of such Company Entities or Authorized
Dealers with respect to such Financings and Ancillary Services;
(v) jointly with the Company, establish and implement and, where
appropriate, revise from time to time Protocols and Procedures for the
furnishing of such Financings and Ancillary Services in accordance with
the provisions of Section 5.1;
(vi) prepare Standard Documents for use in connection with
standardized types of Financings and maintain the capacity to (A) modify
such Standard Documents in order to document particular Financings and
Ancillary Services and (B) prepare appropriate documentation for any
customized Financings and Ancillary Services that Capital may offer to
particular Customers or Authorized Dealers pursuant to this Agreement;
(vii) cooperate with the Company Entities and Authorized Dealers
to facilitate Financings (including, where appropriate, extensions,
renewals or modifications of existing Financings) of replacements or
upgrades of Financed Products or additions of Products to previously
Financed Products (subject to adequate protection of the interests of
the Capital Entities in any Financings that would be affected thereby);
(viii) maintain the capacity to, and employ (or have ready access
to) personnel having the requisite financial, legal and other skills to,
respond to requests of Customers or Authorized Dealers with respect to
unusual, specialized or complex Financings and Ancillary Services;
(ix) endeavor to maintain good relations with Customers and
Authorized Dealers and, by offering courteous, efficient and informed
Financing services and Ancillary Services, promote and support the
efforts of the Company Entities and Authorized Dealers to sell,
distribute and market the Products;
(x) keep appropriate employees of the Capital Entities informed
of business developments at the Company Entities, the characteristics of
Products and their usages,
-12-
<PAGE>
<PAGE>
developments of new Products, Product migration and marketing strategies
and the Product-related business plans of the Company Entities by
disseminating the information provided to the Capital Entities by the
Company Entities pursuant to Section 3.6;
(xi) generally keep informed of developments in the equipment
financing industry and of the development of new types of financings;
and
(xii) at appropriate intervals, review the types of Financings
and Ancillary Services offered and provided for the Products, the types
of Financings and Ancillary Services requested by the Company Entities,
Customers and Authorized Dealers and other available information so as
to assess the responsiveness of the Financings and Ancillary Services
offered by the Capital Entities to the financing and related needs of
such Company Entities, Customers and Authorized Dealers, and use its
good faith efforts to develop new Financing techniques or products and
new types of Ancillary Services that would enhance or facilitate the
sale, lease or other furnishings of Products to Customers and Authorized
Dealers.
(c) In connection with the activities described in paragraph (b)
above, Capital shall, during the term of this Agreement and within the Active
Service Areas, either directly or through its Subsidiaries:
(i) employ and train appropriate personnel and maintain, adapt
and upgrade its telecommunications, information-processing and
record-keeping systems as it deems necessary or appropriate for the
purpose of carrying out such activities; and
(ii) obtain and maintain such franchises, licenses and permits as
it deems necessary or appropriate for the purpose of carrying out such
activities.
Section 2.2. Training of Company Personnel. The Capital Entities
shall, consistent with past practice, conduct training programs for attendance
by appropriate sales personnel employed by the Company Entities and Authorized
Dealers at which such individuals shall be trained in the proper documentation
of Financings, the techniques of using Financings and Ancillary Services offered
by the Capital Entities as sales tools and the particulars of such Financings
and Ancillary Services. The Capital Entities shall also provide appropriate
training and assistance, consistent with past practice, to the Company Entities'
operational and office support personnel with respect to the implementation of
the Protocols and Procedures (including, without limitation, processing of
applications for and documentation of Financings and Ancillary Services), the
-13-
<PAGE>
<PAGE>
electronic systems interfaces between the Company Entities' and Capital
Entities' computer systems and related matters.
Section 2.3. Providing the Company with Information as to
Financings and Finance Markets. The Capital Entities shall, consistent with
past practice, provide to the appropriate Company Entities on a periodic basis
information concerning levels of applications for and approvals of Financings
and Ancillary Services, turn-around times for processing applications for
Financings and Ancillary Services, levels of completed and outstanding
Financings and, where requested, payment and delinquency histories with respect
to Financings and Ancillary Services, and other appropriate information with
respect to Financings and Ancillary Services provided under this Agreement. Upon
request and to the extent permitted by applicable law, the Capital Entities
shall also provide to the Company Entities appropriate information within the
possession or control of such Capital Entities that is relevant to an analysis
of the credit standing of any Customer or Authorized Dealer that has directly or
indirectly received or applied for Financing or Ancillary Services from the
Capital Entities. The Capital Entities shall also provide to the Company
Entities, (i) on a periodic basis, appropriate information concerning
competitive lease and other financing products and market conditions for
financing products, and (ii) on a regular and timely basis, the development and
marketing plans and strategies of the Capital Entities with regard to Financings
and Ancillary Services. The Capital Entities shall, in a manner consistent with
past practice, comply with all reasonable requests of the Company Entities for
information with respect to the Capital Entities' business plans and results and
programs for financings and ancillary services that are relevant to the
activities contemplated under this Agreement (whether or not relating to the
Active Service Areas.)
Section 2.4. Subsidized and Guaranteed Financings and Ancillary
Services. In the event that any Company Entity at any time desires that a
Capital Entity provide a proposed Financing or Ancillary Service that has
previously been rejected by or is otherwise unacceptable to such Capital Entity
because of the level of credit, residual or other risk proposed to be borne by
such Capital Entity in the provision of such Financing or Ancillary Service, or
if any Company Entity at any time desires that a Capital Entity provide
Financing or an Ancillary Service to a Customer or Authorized Dealer at a yield
rate or price that is more favorable to such Customer or Authorized Dealer than
the rate or price such Capital Entity is otherwise willing to offer, Capital
shall use its best efforts to work out arrangements with such Company Entity
such that the Company might, directly or indirectly, (x) subsidize such
Financing or Ancillary Service (for instance, by agreeing to pay supplemental
rent, premiums or interest or accepting a greater than usual discount) and/or
(y) provide credit support with respect to such Financing or Ancillary Service
(for instance, by guaranteeing payments due and/or the residual under a lease)
so as to permit such Capital
-14-
<PAGE>
<PAGE>
Entity to offer such Financing or Ancillary Service to the Customer or
Authorized Dealer on the terms contemplated by such Company Entity. Capital
shall use its best efforts to (x) respond in a timely manner to any proposal by
any Company Entity with respect to the subsidization or guarantee of any such
Financing or Ancillary Service and (y) identify to the Company Entities in
advance, where it is reasonably practicable to do so, the types of Financings
and Ancillary Services that Capital would be willing to provide on a subsidized
or guaranteed basis. It is understood by Capital that the provision by the
Company of any guarantee or subsidy with respect to any Financing or Ancillary
Service is in the sole discretion of the Company.
Section 2.5. Advisory Services. Capital shall (to the extent it
is permitted to do so under applicable laws without the requirement of obtaining
regulatory approvals or licenses in addition to those the Capital Entities may
possess at the relevant time) use its good faith best efforts to provide, either
directly or through its Subsidiaries, the Company Entities with financial
advisory and syndication services ("Advisory Services") upon request in areas in
which the Capital Entities have expertise, such as the structuring of Financings
for certain Products not covered by the Capital Entities' general Financing
programs (e.g., switching systems marketed by the Company Entities in certain
less developed countries) and the arranging of securitizations of financial
assets (other than financial assets subject to Financings by Capital). Such
Advisory Services shall be provided by Capital pursuant to commercially
reasonable arrangements to be agreed upon by the Company and Capital and will
involve the payment to the relevant Capital Entities of advisory fees in an
amount to be agreed upon. The utilization by the Company Entities of the Capital
Entities for provision of such Advisory Services shall be in the sole discretion
of the Company Entities.
Section 2.6. No Obligation or Commitment. (a) The Capital Entities
shall use their good faith efforts to provide Financings and Ancillary Services
for sales, leases and other furnishings of Products by the Company Entities
within the Active Service Areas, subject to compliance with Capital's credit and
documentation standards and the availability of funding sources. However, the
provisions of this Agreement are not intended to and will not be interpreted so
as to obligate or commit the Capital Entities to provide Financings or Ancillary
Services with respect to any particular Company Entity, Customer, Authorized
Dealer or Product, and the Capital Entities will retain full discretion with
respect to the circumstances in which it will provide, and the terms of, such
Financings and Ancillary Services.
(b) Although the Capital Entities are entitled, in their
discretion, to modify or discontinue programs for Financings and Ancillary
Services, the Capital Entities shall, consistent with past practice, prior to
discontinuing or making a significant modification of any such program, inform
the SBUs
-15-
<PAGE>
<PAGE>
that would be affected by such discontinuance or modification and use reasonable
efforts, in consultation with such SBUs, to minimize, as far as practicably
possible, any disruptive effect of such discontinuance or modification on such
SBU's sale, lease or other furnishings of Products.
Section 2.7. Alternative Financing and Recourse Arrangements.
(a) The Company Entities and Capital Entities may, in their discretion, choose
to enter into arrangements or programs from time to time with respect to
Financings and Ancillary Services that have terms and conditions that vary from
those contemplated in this Agreement. Any such alternative arrangements and
programs will not be construed to amend this Agreement, which may be amended
solely in accordance with the terms of Section 13.1. The parties further
acknowledge and agree that, except to the extent otherwise provided herein, (i)
any recourse or other similar arrangements with respect to Financings or
Ancillary Services (whether written or oral) in effect on the date of this
Agreement between any Capital Entity (as successor to Capital Holdings or any
Subsidiary thereof or otherwise), on the one hand, and any AT&T Entity, on the
other hand, will remain in effect in accordance with their terms and (ii) on the
Spin-Off Date the Company will succeed to the right, and assume the obligations,
of the AT&T Entities, in accordance with Section 8.1(a) (it being understood
that no AT&T Entity shall be released from its obligations under any such
recourse or similar arrangements entered into prior to the Spin-Off Date).
(b) The Company acknowledges and agrees, on behalf of itself and
the other Company Entities that are parties to the Credit Receivables Agreement,
and Capital acknowledges and agrees, on behalf of the Capital Entities that are
parties to the Credit Receivables Agreement, that (i) Credit has succeeded to
the rights and assumed the obligations of Credit Holdings in and under the
Credit Receivables Agreement, (ii) the Credit Receivables Agreement shall
continue in full force and effect except that (A) the term "Affiliates" (as such
term is used therein), as it applies to affiliates of the Company, shall include
all the Company Entities but shall not include the Capital Entities and (B) the
rights and obligations of Credit thereunder may be exercised or performed by any
Capital Entity and (iii) the terms and conditions of this Agreement shall apply
to the transactions contemplated in or effected pursuant to the Credit
Receivables Agreement to the extent that such terms and conditions are not
inconsistent with the terms and conditions of the Credit Receivables Agreement
and, to the extent of any such inconsistency, the terms and conditions set forth
in the Credit Receivables Agreement shall apply and be controlling with respect
to the transactions contemplated in or effected pursuant to the Credit
Receivables Agreement. Any disputes arising under the Credit Receivables
Agreement shall be resolved pursuant to the provisions of Article X.
-16-
<PAGE>
<PAGE>
ARTICLE III
PREFERRED PROVIDER STATUS
Section 3.1. Support of the Capital Entities. The Company agrees
that during the term of this Agreement the Company Entities shall, within the
Active Service Areas, in connection with the offering or provision of Financings
or Ancillary Services by the Capital Entities:
(i) promote the utilization by Customers and Authorized Dealers
of Customer Financings and Dealer Financings, as appropriate, and
Ancillary Services made available by the Capital Entities (which type of
support is described more fully in Section 3.4 and is referred to herein
as "Finance Marketing Support");
(ii) (A) support the efforts of the Capital Entities to make
available Customer Financings and Dealer Financings, as appropriate, and
Ancillary Services to Customers and Authorized Dealers and (B)
consistent with past practice, provide training to appropriate personnel
employed by the Capital Entities with respect to the Products and the
sales and marketing thereof (which type of support is described more
fully in Section 3.5 and is referred to herein as "Personnel Support");
(iii) provide appropriate personnel of the Capital Entities with
office space at Sales Sites and appropriate office support services on
the terms and conditions set forth in Schedule B attached hereto and
made a part hereof (the "Location Support Agreement") (which type of
support is referred to herein as "Location Support");
(iv) permit and facilitate linkages between the Capital Entities'
and the Company Entities' computer and telecommunications systems for
the purpose of retrieving and transmitting between the systems
information and documentation in connection with the offering,
documentation and monitoring of Financings and Ancillary Services and
otherwise facilitating the efficient implementation of the relationships
and activities contemplated in this Agreement (which type of support is
described more fully in Section 5.2 and is referred to herein as
"Systems Support"); and
(v) provide to the Capital Entities information with respect to
the Company Entities' product development and marketing plans,
consistent with past practice, for the purposes of permitting the
Capital Entities to more effectively design appropriate programs for
Financings and Ancillary Services and to determine the likely residual
values of Products (which type of support is described more fully in
Section 3.6 and is referred to herein as "Information Support").
-17-
<PAGE>
<PAGE>
In addition to the foregoing, the Company Entities shall provide
to the Capital Entities such assistance as the Capital Entities may reasonably
request in order to facilitate the Capital Entities' financing activities
relating to the provision of Financings and Ancillary Services. Such assistance
may include matters such as structuring and documenting arrangements (including
purchase, payment and invoicing arrangements) between the Company Entities and
the Capital Entities or between the Company Entities and Customers and
Authorized Dealers for purposes of facilitating receivables financings, leases
and other financing transactions effected by the Capital Entities.
Section 3.2 Preferred Provider Status. (a) The Company Entities
shall provide the Capital Entities with an opportunity to propose a Financing
program or Financings and, where applicable, Ancillary Services, with respect
to all sales, leases or other furnishings of Products directly by Company
Entities to Customers and Authorized Dealers and all Customer Outsourcing
Programs within the Active Service Areas. However, the Company Entities shall
have the right to utilize or promote an Alternative Financing Program or
Alternative Ancillary Services with respect to particular sales, leases or
other furnishings of Products or Customer Outsourcing Programs subject to
the following conditions:
(i) the Company Entities shall not utilize any Alternative
Financing Program or Alternative Ancillary Services if the Capital
Entities have offered to provide Financings or Ancillary Services on the
same or better terms, conditions and standards of service overall as
those offered by the Alternative Provider (it being understood, however,
that the Company Entities will not be obligated to provide the Capital
Entities with a "last look" with respect to the terms, conditions and
standards of service offered by such Alternative Provider, provided that
they do not provide any such Alternative Provider with information
concerning the terms, conditions and standards of service offered by the
Capital Entities);
(ii) the Company Entities shall not provide to any such
Alternative Provider any benefits, inducements or information in
connection with any proposed Alternative Financing Program or
Alternative Ancillary Services unless the same or comparable benefits,
inducements or information have been offered or provided to the Capital
Entities, and shall not give any Alternative Provider preferential
treatment in any respect with respect to any Alternative Financing
Program or Alternative Ancillary Services; and
(iii) the Company Entities shall not provide to any such
Alternative Provider, for purposes of facilitating or promoting any
Alternative Financing Program or Alternative Ancillary Services: (A) any
confidential information with
-18-
<PAGE>
<PAGE>
respect to any Products (including, without limitation, information
relating to Product development and marketing plans, but excluding any
specific technical information with respect to the Products being
financed necessary for the implementation of the Alternative Financing
Program), (B) any commitments to repurchase or remarket Products, (C)
the right to directly or indirectly provide incentive compensation to
any sales or other personnel employed by the Company Entities, (D) any
computer or other technological systems interfaces between the Company
Entities (on the one hand) and such Alternative Provider (on the other
hand) or (E) the opportunity or right to base or locate any Alternative
Provider personnel at any Sales Site.
(b) Except as provided in this Section 3.2, the Company Entities
shall not provide any support similar to the Finance Marketing Support, Location
Support or Systems Support to any Alternative Provider that provides or proposes
to provide, in any Active Service Area, Alternative Financing Programs or
Alternative Ancillary Services to the Company Entities, Customers or Authorized
Dealers.
(c) In the event that (i) the Capital Entities decline (or do not
bid) to provide, in any Active Service Area, any particular type of Financings
or Ancillary Services or Financings or Ancillary Services for any particular
line of new Products or Products for which the Capital Entities do not have
programs for the provision of Financings or Ancillary Services, in each such
case on such conditions and specifications as are communicated by a Company
Entity to the Capital Entities and any Alternative Provider, and (ii) such
Company Entity makes an arrangement with any such Alternative Provider to
provide an Alternative Financing Program or Alternative Ancillary Services with
respect to such particular type of Financings or Ancillary Services or
Financings or Ancillary Services for such particular line of Products on the
conditions and specifications so communicated to the Capital Entities and such
Alternative Provider, the provisions of paragraphs (a) and (b) above shall not
apply solely with respect to such Alternative Financing Program or Alternative
Ancillary Services. It is understood by the parties that the provisions of this
paragraph (c) are intended solely to permit the Company to extend the benefits
set forth in paragraphs (a) and (b) above to Alternative Providers in
circumstances in which the Capital Entities do not provide or offer to provide
certain Financings or Ancillary Services.
(d) Notwithstanding the other provisions of this Article III, the
Company Entities may but shall not be required to provide to the Capital
Entities any (i) Finance Marketing Support in connection with any Customer
Outsourcing Program, (ii) Location Support or Systems Support in connection with
any Customer Outsourcing Program in addition to that currently provided by the
Company Entities, and (iii) Information Support in connection with any Customer
Outsourcing Program except that
-19-
<PAGE>
<PAGE>
the Company Entities shall provide information to the Capital Entities relating
to the specific Products being Financed by the Capital Entities in connection
with any Customer Outsourcing Program. In addition to the foregoing, the Company
Entities may, in connection with any Customer Outsourcing Program with any
Customer, without providing a right to bid thereon to the Capital Entities, (x)
guarantee or assume the payment obligations of such Customer under financings
for products provided to such Customer by any financing source that is
unaffiliated to the Company Entities or Capital Entities to the extent that such
financings are in effect at the time that the Company Entities enter into such
Customer Outsourcing Program with such Customer and (y) finance, through the
financing program or arrangement in effect with such alternative financing
source, upgrades or add-ons to the products that have been so financed through
such alternative financing program or arrangement.
(e) In the event that a Company Entity reasonably believes that
any Financings and Ancillary Services provided by the Capital Entities at any
Sales Site are not being provided substantially and generally in accordance with
the applicable Protocols and Procedures, such Company Entity shall provide
notice thereof to the appropriate Capital Entities (which notice shall set forth
in reasonable detail the basis of such belief of the Company Entity). The
Capital Entities shall have 60 days after receipt of such notice to cure such
deficiencies and provide Financing and Ancillary Services substantially and
generally in accordance with the applicable Protocols and Procedures. If the
Capital Entities fail to cure such deficiencies within such 60 day period, the
Company Entities may, notwithstanding the provisions of Section 3.1 and this
Section 3.2, make arrangements with an Alternative Provider to provide at such
Sales Site Alternative Financing Programs and/or Alternative Ancillary Programs
of the type not being provided by the Capital Entities at such Sales Site
substantially and generally in accordance with the applicable Protocols and
Procedures.
Section 3.3. Right to Choose Alternative Providers. Capital
acknowledges that Customers and Authorized Dealers are entitled to choose not to
Finance the acquisition or use of Products or to choose to make arrangements for
obtaining Financings for the acquisition or use of Products or Ancillary
Services from Alternative Providers. Capital further acknowledges that the
provisions of this Agreement (including the Company's commitment in Section 3.2
to promote the use of Financings and Ancillary Services offered by the Capital
Entities) do not require the Company Entities to condition the sale or
furnishing of Products on the choice by Customers or Authorized Dealers of
Financings or Ancillary Services offered by the Capital Entities or otherwise
require Customers or Authorized Dealers to utilize such Financings or Ancillary
Services. Nothing set forth in this Agreement will be construed so as to
prohibit any sales representative of any Company Entity from cooperating with a
Customer or Authorized Dealer in obtaining
-20-
<PAGE>
<PAGE>
Financing or Ancillary Services from an Alternative Provider where the Customer
or Authorized Dealer has independently decided not to obtain such Financing or
Ancillary Services from Capital; provided, however, that the ability of such
Company Entities to cooperate with such Alternative Provider will be subject to
the limitations set forth in Section 3.2(a) and Section 3.2(b).
Section 3.4. Finance Marketing Support . The Company Entities'
sales representatives engaged in the sale or marketing of Products of a type for
which the Capital Entities offer Customer Financings or Dealer Financings or
Ancillary Services shall be provided by the Company Entities with promotional
and informational literature concerning such Financings and Ancillary Services
and, where appropriate, Standard Documents that are in each case provided by the
Capital Entities to the Company Entities. Such sales representatives shall make
the Financing options offered by the Capital Entities known to Customers and
Authorized Dealers interested in Financing the purchase, lease or other
acquisition of Products and, where appropriate, shall make the Ancillary
Services offered by the Capital Entities known to such Customers and Authorized
Dealers. In addition, such sales representatives shall generally use their good
faith best efforts to promote the use of such Financings and Ancillary Services
by such Customers and Authorized Dealers.
Section 3.5. Personnel Support. (a) Consistent with past
practice, the Company Entities shall, in a manner deemed appropriate by the
Company in its discretion, make available employees of such Company Entities
with the requisite position, knowledge, skill and experience to coordinate the
Company Entities' marketing and sales strategies with the Capital Entities'
marketing and Financing and Ancillary Services strategies, to coordinate the
actual marketing and sale of Products by such Company Entities with the offering
and documentation of Financings and Ancillary Services by the Capital Entities,
to receive and disseminate within each SBU within each such Company Entity and
provide timely responses to communications, requests and information from the
Capital Entities to such SBU, to coordinate cash management, accounting and
systems interfaces between the Company Entities and the Capital Entities and to
otherwise comply with such Company Entities' obligations to Capital hereunder.
(b) The Company Entities shall provide training to appropriate
personnel of the Capital Entities with respect to Products and their
characteristics and usages, the interrelationships among Product lines, the
potential for Product upgrades and add-ons, the products of other manufacturers
competitive with the Products, Product marketing and sales strategies and
similar technical or marketing matters that could be of use to such personnel in
designing and pricing appropriate types of Financings and Ancillary Services,
including the determination of appropriate residual values.
-21-
<PAGE>
<PAGE>
Section 3.6. Information Support. The Company Entities shall, in
a manner consistent with past practice, comply with all reasonable requests of
the Capital Entities for information with respect to the Company Entities'
business plans and results and Products that are relevant to the activities
contemplated under this Agreement (whether or not relating to the Active Service
Areas). Without limiting the foregoing, the Company Entities shall keep the
Capital Entities informed on a regular and timely basis of their Product
development and marketing plans and results to the extent relevant to the
activities contemplated under this Agreement. The Company Entities shall also
provide the Capital Entities appropriate information within the possession or
control of such Company Entities that is relevant to an analysis of the credit
standing of any Customer or Authorized Dealer proposed to directly or indirectly
receive Financing or Ancillary Services from the Capital Entities, and shall
provide the Capital Entities such Product information as may be useful in
connection with the pricing of Financings and Ancillary Services and the
determination of appropriate residual values (such as information as to Product
remarketing prices, Product pricing analyses, Product aging and replacement
reports and analyses and Product migration strategies).
Section 3.7. Activities of the Company Entities. The "preferred
provider" rights and benefits conferred on the Capital Entities and the
obligations of the Company Entities under this Article III shall not be
applicable to or restrict or limit the rights of the Company Entities to engage
in Financing and Ancillary Service activities to the extent the Company Entities
are expressly permitted to engage in such activities pursuant to Article IV;
provided, however, that the Company Entities shall not transfer or assign
(except to other Company Entities) such rights to any other Person.
ARTICLE IV
NON-COMPETITION
Section 4.1. Covenant Not to Compete. (a) In furtherance of
the "preferred provider" status accorded by the Company to the Capital
Entities under Section 3.2, the Company covenants and agrees that the Company
shall not, and shall not permit the other Company Entities to, directly or
indirectly, at any time during the term of this Agreement (whether as
stockholder, principal, agent, independent contractor, partner or otherwise)
maintain an ownership interest in, manage, operate, control or participate in a
business involving (i) the Financing of Products or the offering of Ancillary
Services anywhere within any Active Service Area (which activities the parties
agree shall be deemed to be in direct competition with the Capital Entities),
or (ii) the financing of products or services manufactured, sold, furnished
provided or marketed by Persons that are not Company Entities, or the offering
of ancillary services similar to the
-22-
<PAGE>
<PAGE>
Ancillary Services with respect to such products or services, or the providing
of secured financing to any Person (whether or not such competition relates to
the services offered by the Capital Entities under this Agreement) anywhere
within any Active Service Area (it being acknowledged that the prohibited
activities are not limited to any particular region within the Active Service
Areas because the prohibited activities may be engaged in effectively in
competition with the Capital Entities' business from any location within the
United States or within any other Active Service Area), except as provided in
paragraph (b) below and Section 4.2.
(b) Notwithstanding the provisions of paragraph (a) above:
(i) the Company Entities may acquire and own, individually or
collectively, in the aggregate, (A) except as provided in clause (ii)
below, not in excess of 5% of any class of stock of any financial
institution if such stock is publicly traded and listed on any national
or regional stock exchange or reported on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) and (B) ownership
interests in any company that has an equipment leasing subsidiary or
division to the extent that by ownership of such equity interests or
otherwise the Company Entities do not "control" (as described in the
definition of Subsidiary) such company, provided that the Company
Entities shall not assist such equipment leasing subsidiary or division
in competing with the Capital Entities and shall not provide such
subsidiary or division with any "preferred provider" rights of the type
set forth in Section 3.2;
(ii) the Company Entities may acquire or establish and own a
bank, insurance company, savings and loan association or similar
financial institution that does not (or, following such acquisition,
ceases to) offer programs for equipment leasing or other types of
equipment Financing with respect to Products, asset remarketing or
Finance-related equipment insurance in connection with Products that
compete with programs for such services offered by the Capital Entities;
(iii) the Company Entities may issue credit cards; provided that
the Company Entities shall not use such credit cards to offer programs
for equipment leasing or other types of equipment Financing with respect
to Products, asset remarketing or Finance-related equipment insurance in
connection with Products that compete with programs for such services
offered by the Capital Entities (it being understood that for purposes
of this clause (iii) "Products" shall include Products (as defined in
the AT&T Operating Agreement or any Comparable Operating Agreement
entered into pursuant to, and as defined in, the AT&T Operating
Agreement);
-23-
<PAGE>
<PAGE>
(iv) the Company Entities may, in a manner consistent with past
practice (such past practice being more fully described on Schedule C
attached hereto and made a part hereof) or as otherwise agreed by the
Company and Capital from time to time, provide interim Financings for
Products in the form of sales-type leases, installment sales contracts
or conditional sales contracts to Customers or Authorized Dealers to
Finance the acquisition by them of Products; provided that the Company
Entities shall offer to the Capital Entities an opportunity to purchase
the receivables resulting from such Financings on terms consistent with
past practice and, where applicable, subject to the terms of the Credit
Receivables Agreement;
(v) AT&T Paradyne may, consistent with past practice (such past
practice being more fully described on Schedule D attached hereto and
made a part hereof) provide Financings to its Customers and Authorized
Dealers in the form of sales-type leases, installment sales contracts or
conditional sales contracts and AT&T Paradyne may retain or sell the
interests in such Financings; provided that AT&T Paradyne shall, in
connection with any sale or other disposition of any interests in such
Financings or the related receivables, generally provide to Capital a
right of first refusal to purchase or otherwise acquire such interests
and to match any bids by other Persons for the purchase or other
acquisition of such interests, and, in the event that Capital makes a
bid for such purchase or other acquisition and the terms of such bid,
taken as a whole, are at least as favorable to AT&T Paradyne as the
terms of any other bid, taken as a whole, AT&T Paradyne shall sell or
otherwise dispose of such interests to Capital;
(vi) Network Systems and any Acquired Entity Financing Source (as
defined in Section 4.3(a) hereinbelow), for so long as such Acquired
Entity Financing Source is a Subsidiary of the Company or a division of
any Company Entity, may provide Financings and financial advisory and
syndication services with respect to equipment, systems and services of
the type traditionally manufactured or marketed by Network Systems as of
June 25, 1993 (such equipment, systems and services being more fully
described on Schedule E attached hereto and made a part hereof)
(together with equipment and systems manufactured by other Persons that
are integrated with equipment manufactured and Financed by Network
Systems) to Customers such as telephone companies and other providers of
communication services; provided that Network Systems and such Acquired
Entity Financing Source shall (A) not retain any interests in such
Financings other than interests in a limited amount of such Financings
and (B) provide the Capital Entities with the same opportunities to bid
on the provision of Financings and advisory and syndication services as
are provided to any unaffiliated financing source anywhere in the world;
-24-
<PAGE>
<PAGE>
(vii) the Company Entities may, consistent with past practice
(such past practice being more fully described on Schedule F attached
hereto and made a part hereof), rent Products to Customers on a daily,
weekly, monthly or other periodic basis, or otherwise, with no
obligation to advise Capital or any Capital Entity;
(viii) the Company Entities may finance the sale or other
disposition of real estate owned by the Company Entities from time to
time;
(ix) Acquired Entity Financing Sources may conduct the financing
activities that such entities are permitted to conduct under Section
4.3;
(x) the Company Entities may provide short-term trade credits to
Customers and Authorized Dealers in connection with the acquisition of
Products by such Customers and Authorized Dealers; and
(xi) the Company Entities may provide services to lessees
involving (A) inspection of leased equipment and analysis of related
leases with a view towards reducing ongoing lease expenses, (B)
provision of recommendations to reduce current and future costs related
to equipment and the related leases or (C) negotiation with lessors with
respect to matters such as credits for returned equipment, purchase by
lessees of equipment and consolidation of equipment leases.
It is the intent and understanding of the parties hereto that if,
in any action before any court, agency or tribunal legally empowered to enforce
this Section 4.1, any term, restriction, covenant or promise in this Section 4.1
is found to be invalid, illegal or unenforceable, then such term, restriction,
covenant or promise will be deemed modified to the extent necessary to make it
valid, legal or enforceable by such court, agency or tribunal.
Section 4.2. Use of a Permitted Captive Financing Source. If at
any time a Captive Financing Trigger Event (as defined below) occurs, the
Company may, upon at least 120 days' prior notice to Capital given not later
than 30 days after the date of the determination that such Captive Financing
Trigger Event exists, elect to (i) provide, or to cause another Company Entity
to provide Financings with respect to future sales, leases or other furnishings
of Products and related Ancillary Services and (ii) terminate the "preferred
provider" rights and benefits provided to the Capital Entities pursuant to
Section 3.2.
A "Captive Financing Trigger Event" shall be deemed to have
occurred if, and only if, the Capital Entities' Financing Penetration Rate as of
the end of any calendar year declines by ten (10) percentage points or more
relative to the Capital
-25-
<PAGE>
<PAGE>
Entities' Financing Penetration Rate as of the end of the preceding calendar
year (for instance, the requirements of this clause (ii) shall be satisfied for
calendar year 1997 in the event that the Capital Entities' Financing Penetration
Rate for calendar year 1997 were 44% and the Capital Entities' Financing
Penetration Rate for calendar year 1996 were 55% since such 1996 Financing
Penetration Rate would have exceeded such 1997 Financing Penetration Rate by 11
percentage points); provided that any decline in such Financing Penetration Rate
as of the end of any calendar year that is attributable to a breach or violation
by a Company Entity or an employee of a Company Entity of this Agreement
(whether or not such breach or violation gives rise to a right of termination of
this Agreement) shall be excluded from the calculation of such Capital Entities'
Financing Penetration Rate. In comparing the Capital Entities' Financing
Penetration Rate for any two three-year periods, the adjustments to the Adjusted
Financing Amount and Adjusted Financeable Product Sales contemplated in the
definitions thereof for calculation of such Capital Entities' Financing
Penetration Rates shall be effected on a consistent basis (for instance, if the
Adjusted Financing Amount and Adjusted Financeable Product Sales for calendar
year 1997 are adjusted downwards to reflect a phase-out in calendar year 1997 of
a significant Products line, the Adjusted Financing Amount and Adjusted
Financeable Products Sales for calendar year 1996 shall also be correspondingly
adjusted downwards as if the phase-out of the significant Products line occurred
in calendar year 1996).
The Company and Capital shall, as part of the Protocols and Procedures,
establish procedures and parameters for determining whether or not a Captive
Financing Trigger Event has occurred as of the end of any calendar year.
Section 4.3. Financing Operations of Acquired Entities. (a) In
the event that the Company Entities at any time acquire equity interests in or
the assets of any Person or business (such entity or the entity holding such
acquired assets being sometimes referred to herein as an "Acquired Entity") that
thereby becomes a Subsidiary of the Company or a division of any Company Entity
and which engages, directly or through an Affiliate, in the financing of
products or services manufactured, marketed or provided by such Acquired Entity
(the division or Affiliate that provides such financing being sometimes referred
to herein as an "Acquired Entity Financing Source"), except as described in
Section 4.3(c) below, the Company shall use reasonable efforts to facilitate one
or more of the following transactions by Capital, in Capital's discretion: (i)
acquisition by Capital of the capital stock or substantially all the assets of
such Acquired Entity Financing Source for an amount equal to the fair market
value thereof (not to exceed the portion of the total consideration paid by the
Company Entities for the acquired equity interests or assets that is allocable
to such assets or stock of such Acquired Entity Financing Source); (ii)
acquisition by Capital of the capital stock or substantially all of the
-26-
<PAGE>
<PAGE>
assets of such Acquired Entity Financing Source, other than its portfolio of
existing financings, for an amount equal to the fair market value of such
acquired assets (subject to the same limiting principle as in the preceding
clause (i)) and execution by Capital of an exclusive agreement with such
Acquired Entity Financing Source for Capital to service such existing portfolio
(including any future additions to such portfolio) for a reasonable,
market-based fee; or (iii) without the acquisition of such capital stock or
assets or portfolio, the execution by Capital of an exclusive agreement with
such Acquired Entity Financing Source for Capital to service such portfolio
(including any future additions to such portfolio) for a reasonable,
market-based fee.
(b) In the event that Capital does not acquire the capital stock
or substantially all the assets of any such Acquired Entity Financing Source as
provided in paragraph (a) above or Section 4.3(c) below, such Acquired Entity
Financing Source may, so long as it continues to be, or continues to be a
division or unit of, a direct or indirect Subsidiary of the Company, continue to
provide financing for: (A) products or related services manufactured, marketed,
furnished or provided by the related Acquired Entity as of the date of the
acquisition thereof by the Company Entities, together with any new generations
of such products or services (subject, however, to the limitations and
restrictions set forth in Section 4.1(b)(vi) above with respect to an Acquired
Entity Financing Source described in Section 4.3(c) below); provided, that such
products and services will nonetheless be deemed to be "Products" for the
purposes of this Agreement and Capital will also have a right to offer
Financings and Ancillary Services with respect to such Products in accordance
with the terms of Article III (except that the "preferred provider" provisions
of Section 3.2 shall not restrict the Company Entities from providing any rights
or benefits to such Acquired Entity Financing Source with respect to such
Products); and (B) products or related services manufactured, marketed or
provided by Persons that do not constitute Company Entities (subject, however,
to the limitations and restrictions set forth in Section 4.1(b)(vi) above with
respect to an Acquired Entity Financing Source described in Section 4.3(c)
below) so long as the scope and nature of such financing activities are
restricted to the scope and nature of such financing activities of such Acquired
Entity Financing Source as of the date of the acquisition thereof by the Company
Entities (it being understood and agreed that such Acquired Entity Financing
Source shall not provide Financings for Products (other than the Products
permitted to be Financed pursuant to clause (A) above) except to the extent that
such other Products are incorporated in or integral to the products and services
permitted to be financed pursuant to this clause (B) and which do not constitute
more than 40% of the value of such products or services and such Financings of
Products do not occur as a course of dealing with respect to any Customer or
Customer segment). At the request of either party, the parties shall set forth
in
-27-
<PAGE>
<PAGE>
writing the specific scope, nature and extent of the financing activities of any
such Acquired Entity Financing Source that are permitted under the terms of this
Section 4.3.
(c) Notwithstanding anything in Section 4.3(a) to the contrary,
to the extent an Acquired Entity Financing Source is engaged in the provision of
Financing and financial advisory and syndication services with respect to
equipment, systems, and services of the type traditionally manufactured or
marketed by Network Systems as of June 25, 1993, and as described on Schedule E
attached hereto, Capital shall have no right to require the Company to use
reasonable efforts to facilitate the transactions described in Section 4.3(a)(i)
or (ii) with respect to such Acquired Entity Financing Source; provided, that
the Company shall use reasonable efforts to facilitate, in Capital's discretion
(1) a transaction whereby Capital would acquire substantially all of such
Acquired Entity Financing Source's portfolio of existing financing for an amount
equal to the fair market value of such acquired assets (subject to the same
limiting principle in Section 4.3(a)(i))or (2) the same type of transaction
described in Section 4.3(a)(iii).
ARTICLE V
PROTOCOLS AND PROCEDURES AND RELATED MATTERS
Section 5.1. Protocols and Procedures; Pilot Programs. (a) The
Company and Capital acknowledge that there are presently in effect certain
protocols and procedures governing certain aspects of the business relationship
between the Capital Entities (or their predecessors) and the Company Entities
(collectively, "Protocols and Procedures") that were agreed to between such
Company Entities and Capital Entities (or their predecessors) for the purposes
of (A) on the one hand, promoting efficiency in the identification,
communication and processing of requirements of Customers and Authorized Dealers
for Financings and Ancillary Services and the provision and monitoring of such
Financings and Ancillary Services and (B) on the other hand, improving the
Capital Entities' Financing Penetration Rate while maintaining the profitability
to the Capital Entities of the provision of Financings and Ancillary Services
(the "Protocol Standards"). Such Protocols and Procedures will continue to
remain in effect between the appropriate Company Entities and Capital Entities,
and the Company Entities and Capital Entities shall conduct the activities
contemplated in the Protocols and Procedures to be conducted by the Company
Entities and Capital Entities, as the case may be, substantially and generally
in accordance with the terms thereof (it being understood that complete and
consistent compliance by the parties with the Protocols and Procedures is not
practical). It is the intention of the parties that the
-28-
<PAGE>
<PAGE>
Protocols and Procedures will not supersede or modify the agreements of the
parties set forth in the Location Support Agreement or other written agreements
between the parties relating to the provision of products or services by one
party to the other party.
(b) The appropriate Company Entities and Capital Entities shall
review the Protocols and Procedures on a periodic basis to determine if it would
be appropriate or necessary to modify or supplement the Protocols and Procedures
in order for the Protocols and Procedures to comport more closely with the
Protocol Standards or for the Protocols and Procedures to take into account new
types of Financings or Ancillary Services or other changes in circumstances in a
manner consistent with the Protocol Standards. The appropriate Company Entities
and Capital Entities may also suggest modifications or supplements to the
Protocols and Procedures at any time and from time to time that are consistent
with the Protocol Standards. The Company Entities may, consistent with past
practice, in determining whether the Protocols and Procedures are to be modified
or updated, take into account relevant benchmarking and other methods of
evaluating the Financing programs offered by the Capital Entities whereunder
such programs would be compared to substantially similar (as to scope and
nature) financing programs offered by other financing sources for equipment and
products that do not constitute Products. Where applicable, the appropriate
Company Entities and Capital Entities shall, in any such circumstances,
negotiate in good faith to appropriately modify or supplement the Protocols and
Procedures.
(c) The Capital Entities and the Company Entities shall,
consistent with past practice, cooperate with each other to institute pilot
Financing programs by the Capital Entities which are mutually satisfactory to
the Company Entities and the Capital Entities.
Section 5.2. Systems Interface. (a) The Company and Capital
agree to maintain in effect the existing telecommunications and computer
linkages (including, without limitation, telecommunications and computer
linkages relating to voice messaging, electronic written messaging, remote
terminal document retrieval, and data storage and retrieval) between the Company
Entities and Capital Entities that facilitate (x) the accessing by the Capital
Entities of information with respect to Customer and Authorized Dealer
locations, Product delivery, location, installation and servicing, SBU sales
force performance and related matters, (y) the accessing by the Company Entities
and the SBUs of information with respect to terms of or rates for Financings and
Ancillary Services, acceptance, billing and payment status and credit and
collection information and, to the extent such information is available to the
Capital Entities, information with respect to Customer and Authorized Dealer
locations and Product delivery, location, installation and servicing, and (z)
the integration of funds transfers between the
-29-
<PAGE>
<PAGE>
Company Entities and Capital Entities with their respective invoicing and
accounting systems in connection with the provision by the Capital Entities of
Financings and Ancillary Services with respect to Products.
(b) The appropriate Company Entities and Capital Entities shall
review the foregoing telecommunications and computer linkages on a periodic
basis to determine if it would be appropriate or necessary to improve, expand,
modify or supplement such linkages in order to comply with the Protocols and
Procedures, integrate more efficient technology, improve and expand data
retrieval and usage and improve the sales of Products and the utilization of
Financings and Ancillary Services offered by the Capital Entities or to take
into account new types of Financings or Ancillary Services or other changes in
circumstances. The appropriate Company Entities and Capital Entities may also
suggest improvements, expansions, modifications or supplements to such
telecommunications and computer linkages at any time and from time to time that
are consistent with the foregoing standards. If necessary or appropriate, the
appropriate Company Entities and Capital Entities shall, in any such
circumstances, take appropriate actions to effect such improvements, expansions,
modifications or supplements to such telecommunications and computer linkages.
(c) The Company Entities shall bear the costs of maintaining and
improving, expanding, modifying or supplementing the computer and
telecommunications systems owned by them and the costs of telecommunication and
other services utilized by them. The Capital Entities shall bear the costs of
maintaining and improving, expanding, modifying or supplementing the computer
and telecommunication systems owned by them and the costs of telecommunication
and other services utilized by them. The costs of designing and implementing the
interfaces between the Company Entities' and Capital Entities' computer and
telecommunications systems and the costs of related telecommunications and other
services shall be shared equally between the Company and Capital.
ARTICLE VI
REMARKETING OF PRODUCTS
Section 6.1. In General. (a) The Company Entities and the
Capital Entities and the SBUs shall, in a manner consistent with past practice
but subject to the terms hereof, coordinate their strategies with respect to the
disposition or re-lease (whether by extension of the existing lease or by a new
lease to a third party) of leased Products (whether at the end of the lease term
or upon the return or repossession of the leased Product prior to the end of
such term), with the objective of both maintaining the relevant Customers and
Authorized Dealers as purchasers and users of Products, on the one hand, and
protecting the Capital Entities' reasonable expectations concerning the
realization of profits from end of term residuals, on the other
-30-
<PAGE>
<PAGE>
hand. Unless otherwise agreed to by the Capital Entities in connection with
particular Financings or Financing programs, Capital will not be restricted in
terms of its right to sell, re-lease or otherwise dispose of returned or
repossessed Products (including Products that have been leased by or subject to
security interests or other claims in favor of any Capital Entity). Except as
otherwise agreed in writing, the Company Entities shall not be deemed to have
represented or warranted to the Capital Entities that the Capital Entities will
obtain any minimum proceeds or rate of return upon the resale, re-lease or other
disposition of returned or repossessed Products.
(b) The Company Entities and Capital Entities may from time to
time enter into agreements with respect to the disposition or re-lease of
Products. The Company acknowledges and agrees, on behalf of itself and the other
Company Entities parties thereto, and Capital acknowledges and agrees, on behalf
of itself and other Capital Entities parties thereto, that (i) Credit has
succeeded to the rights and assumed the obligations of Credit Holdings under
each and any agreement in effect on the date hereof between any AT&T Entity and
Credit Holdings with respect to the disposition or re-lease of Products and (ii)
on the Spin-Off Date the Company shall succeed to the rights and assume the
obligations of the AT&T Entities in accordance with Section 8.1(a) under each
and any agreement in effect on the date hereof between any AT&T Entity and any
Capital Entity with respect to the disposition or re-lease of Products shall
remain in full force and effect (it being understood that no AT&T Entity shall
be released from its obligations under any such agreement entered into prior to
the Spin-Off Date). The terms and conditions of this Agreement shall apply to
the disposition or re-lease of any Products with respect to which an agreement
of the type referred to in this paragraph (b) is in effect at any time to the
extent that such terms and conditions are not inconsistent with the terms and
conditions of any such agreement and, to the extent of any such inconsistency,
the terms and conditions set forth in such agreement shall apply and be
controlling.
Section 6.2. Deinstallation, Refurbishment and Re-Certification
of Remarketed Products. In the event that any Product subject to a Financing is
returned to a Capital Entity (or the right to possession of such Product
otherwise reverts to a Capital Entity), at the request of such Capital Entity,
the Company shall cause the relevant Company Entity to deinstall, refurbish,
recertify, store and/or redeliver such Product in accordance with the reasonable
instructions of such Capital Entity. Such Capital Entity shall pay such Company
Entity for such services at the most competitive rates customarily charged by
such Company Entity to Authorized Dealers and other Product dealers for such
services. Nothing contained herein shall be construed as limiting in any way the
right of the Capital Entities to obtain any of the foregoing services from
Persons other than Company Entities.
-31-
<PAGE>
<PAGE>
Section 6.3. Rights to Use Software. The Company hereby grants,
on behalf of itself and any other applicable Company Entity, a license to the
Capital Entities to use any and all Software, which license shall with respect
to any such Software be effective automatically and immediately upon Financing
by the Capital Entities of such Software or any other Products in connection
with which such Software is to be used. Except as provided herein, the scope of
the license granted to the Capital Entities shall be consistent with the scope
of the license granted by the applicable Company Entity in its standard form of
license agreement with respect to such Software. The Capital Entities shall (i)
not be required to pay any license fee for such Software or otherwise comply
with the terms of any applicable license agreement for so long as the Capital
Entities are merely providing Financing for such Software or any related
Products or have foreclosed on or otherwise repossessed or re-acquired such
Software in connection with a default under or expiration or termination of the
related Financing but are not using such Software (except for purposes of
testing or demonstrating such Software in connection with any proposed
disposition of such Software) and (ii) be entitled to assign their license to
any other Person, provided that if such Person is not a Capital Entity and the
applicable Company Entity's standard form of license agreement for such Software
requires the prior consent of a Company Entity to assign such license, the
Capital Entities shall assign such license only upon execution and delivery by
the assignee of the applicable Company Entity's standard form of license
agreement for such Software and agreement by such assignee to pay, at the
then-prevailing rate, any fees required to be paid by a licensee of such
Software to the applicable Company Entity pursuant to the terms of such license
agreement.
ARTICLE VII
CERTAIN ALLOCATIONS OF RISK; LITIGATION AND REPOSSESSION
Section 7.1. Representations, Warrants and Covenants. (a) Unless
otherwise agreed with respect to particular Financings or Ancillary Services or
programs with respect thereto, the Company and any other appropriate Company
Entity will be deemed to make the following representations, warranties and
covenants to Capital and any other appropriate Capital Entity each time that a
Capital Entity provides, extends or renews a Financing or Ancillary Service with
respect to a Product (to the extent such representations, warranties or
covenants are applicable to the particular Financing or Ancillary Service):
(i) the appropriate Capital Entity will, upon payment of the
purchase price of any Product that is being Financed by such Capital
Entity pursuant to a lease or other arrangement in which such Capital
Entity retains title to the Product, receive (A) title to the Product
(other than
-32-
<PAGE>
<PAGE>
Products constituting Software) free and clear of any lien or charge
thereon created by or through any Company Entity and (B) to the extent
any portion of such Product is not manufactured or developed by a
Company Entity and with respect to which a Company Entity has received a
warranty or indemnity from another Person, an assignment by such Company
Entity of any such applicable warranty, express or implied, and
indemnity rights applicable to such Product to the extent that such
warranty and indemnity rights are by their terms assignable (and if any
such warranty or indemnity rights are not by their terms so assignable,
such Company Entity will hold any such warranty and indemnity rights for
the benefit of such Capital Entity and will, at the direction and
expense of such Capital Entity, take all such actions as such Capital
Entity may reasonably request to enforce all or any part of such
warranty and indemnity rights);
(ii) neither any Company Entity nor any employees or agents of
any such Company Entity will knowingly participate in, or fail to
disclose to the appropriate Capital Entity any knowledge of, any
fraudulent or illegal act in connection with the Financing or Ancillary
Service;
(iii) the Product Financed by the Capital Entity will be
delivered to the Customer or Authorized Dealer named in the applicable
Financing application and installed at the location indicated in the
applicable Financing application in accordance with such Company
Entity's normal operating practices and the terms of the contract with
the Customer or Authorized Dealer, and the appropriate Company Entity
will honor all express and implied warranties and agreements,
representations and/or assurances made by such Company Entity to any
Customer or Authorized Dealer with respect to any such Product; and
(iv) the Company Entities and their employees will not, without
the appropriate Capital Entity's express consent, make any
representation, warranty or covenant on behalf of such Capital Entity to
a Customer or Authorized Dealer with respect to the Financing, the
Standard Documents or other documents provided by the Capital Entities,
the Ancillary Service or the Financed Product.
(b) Unless otherwise agreed with respect to particular
Financings, Ancillary Services or programs with respect thereto, Capital and any
other appropriate Capital Entity will be deemed to make the following
representations, warranties and covenants to the Company and any other
appropriate Company Entity each time that a Capital Entity resells a Financed
Product to a Company Entity or a Capital Entity provides, extends or renews a
Financing or Ancillary Service with respect to a Product (to the extent such
representations, warranties or covenants are applicable to the particular
Financing or Ancillary Service):
-33-
<PAGE>
<PAGE>
(i) the appropriate Company Entity will, upon payment of the
purchase price of any Financed Product that is sold by the appropriate
Capital Entity to such Company Entity, receive (A) title to the Product
free and clear of any lien or charge thereon created by or through any
Capital Entity and (B) to the extent any portion of such Product is not
manufactured or developed by a Company Entity and with respect to which
any Capital Entity has received a warranty or indemnity from a Person
other than a Company Entity, an assignment by such Capital Entity of any
such applicable warranty, express or implied, and indemnity rights
applicable to such Product to the extent that such warranty and
indemnity rights are by their terms assignable (and if any such warranty
or indemnity rights are not by their terms so assignable, such Capital
Entity will hold any such warranty and indemnity rights for the benefit
of such Company Entity and will, at the direction and expense of such
Company Entity, take all such actions as such Company Entity reasonably
will request to enforce all or any part of such warranty and indemnity
rights);
(ii) neither any Capital Entity nor any employees or agents of
such Capital Entity will knowingly participate in, or fail to disclose
to the appropriate Company Entity any knowledge of, any fraudulent or
illegal act in connection with the Financing or Ancillary Service; and
(iii) the Capital Entities and their employees will not, without
the appropriate Company Entity's express consent, make any
representation, warranty or covenant on behalf of a Company Entity to a
Customer or Authorized Dealer with respect to the Financing, Ancillary
Service or Financed Product.
Section 7.2. The Capital Entities shall assume responsibility
for and bear the risks of delinquency, default and non-payment under any
Financings provided by them unless (i) the relevant Company Entity and the
relevant Capital Entity agree or have agreed otherwise, (ii) a Company Entity
has provided the relevant Capital Entity with a full or partial guaranty or
indemnity pursuant to Section 2.4 or Section 2.7, (iii) Capital is entitled to
indemnification for such risks pursuant to the terms of Article IX or (iv) such
delinquency, default or non-payment is attributable to a Company Responsibility,
as defined below (in which event such risks will be borne in accordance with
this Section 7.2).
(b) A "Company Responsibility" means a delinquency, default or
non-payment by a Customer or an Authorized Dealer under any Financing provided
by a Capital Entity of a Product in circumstances where such delinquency,
default or non-payment is a result of:
-34-
<PAGE>
<PAGE>
(i) failure by any Company Entity to deliver, install or service,
as the case may be, such Product in accordance with such Company
Entity's contractual or legal obligation to deliver, install or service
such Product;
(ii) failure of such Product to comply with any contractual
representation, warranty or covenant provided by any Company Entity with
respect to such Product or with any warranty applicable to such Product
by operation of law;
(iii) any offset or counterclaim by the relevant Customer or
Authorized Dealer against the amounts due by it under the Financing on
the basis of disputes between such Customer or Authorized Dealer and any
Company Entity (or on the basis of amounts owing by any Company Entity
to such Customer or Authorized Dealer) under any business dealings
between such Customer or Authorized Dealer and any Company Entity,
whether or not related to such Product or such Financing; or
(iv) breach or violation by any Company Entity or any employee of
a Company Entity of the provisions of Section 7.1(a) (whether or not
such breach or violation gives rise to a right of termination of this
Agreement).
In addition, a "Company Responsibility" will be deemed to exist if, as a matter
of law or equity, any Company Entity is found to be responsible for the
Customer's or Authorized Dealer's failure to honor its obligations under a
Financing or such Customer or Authorized Dealer is able to avail itself of a
defense to any claim asserted by the relevant Capital Entity with respect to
such Financing based on non-performance by any Company Entity of any obligations
of any such Company Entity (whether or not related to the Financed Product) or
any breach by a Company Entity of any warranty (at contract or at law) with
respect to any Product. The application of the term "Company Responsibility" is
further described in the General Allocation of Responsibilities set forth on
Schedule G.
(c) The Company and Capital agree that in any situation in which
there arises the potential for a delinquency, default or non-payment with
respect to a Financing which may be a result of a Company Responsibility
(including any such situation in which a Customer or Authorized Dealer has
refused to perform its obligations thereunder based on the alleged existence of
a circumstance that would constitute a Company Responsibility), the billing,
collection and enforcement activities and any losses with respect to such
Financing will be allocated to the relevant Capital Entities or SBUs in
accordance with the General Allocation of Responsibilities set forth on Schedule
G.
(d) The parties hereby acknowledge and agree that the provisions
of this Section 7.2 and Schedule G are intended to supersede the General
Allocation of Responsibilities dated as of
-35-
<PAGE>
<PAGE>
August 5, 1988 and that such provisions will be deemed to retroactively apply to
any Financings currently subject to such General Allocation of Responsibilities.
In addition, the provisions of this Section 7.2 and Schedule G shall apply to
Financings provided at any time by any Capital Entities, including Capital
Entities to which the General Allocation of Responsibilities of August 5, 1988
did not apply.
Section 7.3. Collection and Repossession Actions . Except as
provided in Sections 7.2 and 7.4, Capital will be entitled, in its discretion,
to take (or determine not to take) any and all actions to collect amounts due
and unpaid or otherwise enforce its rights upon the occurrence and continuation
of a default by a Customer or Authorized Dealer under a Financing including,
without limitation, to make demand for payment or performance, institute an
action for payment of amounts due or for specific performance, institute
collection proceedings, effect acceleration or termination of the Financing,
foreclose upon or take possession of security (which may include the Financed
Product) provided by or on behalf of the Customer or Authorized Dealer or
enforce remedies to take possession and control of the Product. In no event will
the Capital Entities engage in unlawful collection practices or refer matters
for collection to any collection agencies or attorneys who are known by the
Capital Entities to engage in unlawful collection practices.
Section 7.4. Actions Against Significant Accounts . (a) Capital
shall, to the extent reasonable and practicable, provide advance notice to the
relevant SBUs of any legal proceeding or repossession action to be initiated by
any Capital Entity against a Significant Account. If circumstances require the
immediate commencement of such an action in order to reasonably protect the
interests of the Capital Entities under any Financing or Ancillary Service or in
the related Financed Products, the Capital Entities may take such action, but
shall notify the relevant SBUs of the situation as soon as practicable after
initiating such action.
(b) In the event that any Capital Entity initiates or proposes to
initiate any legal proceeding or repossession action against a Significant
Account, such Capital Entity shall delay or refrain from pursuing or initiating
such action in the event that the Company either (A) agrees to purchase, without
recourse or warranty (except as to title and as provided herein or otherwise
agreed), all of the interest of such Capital Entity in such Financing, Ancillary
Service and the related Financed Products for a purchase price calculated in
accordance with the General Allocation of Responsibilities set forth on Schedule
G or (B) gives such Capital Entity other legal undertakings reasonably
satisfactory to such Capital Entity to induce it to delay or refrain from taking
such action.
-36-
<PAGE>
<PAGE>
ARTICLE VIII
SCOPE OF APPLICATION OF AGREEMENT
Section 8.1. Attribution of Actions of Subsidiaries to Their
Parents . (a) The Company agrees and acknowledges that the Company shall be
responsible for, and hereby guarantees, the due and punctual payment and
performance, in accordance with their terms, of the obligations hereunder
applicable to any Company Entity (other than the Company) or any SBU or division
within any Company Entity or in any other agreement or commitment (including,
without limitation, any lease agreement) of any such Company Entity or SBU or
division within any Company Entity entered into at any time and from time to
time (whether before or after the Spin-Off Date) with or for the benefit of any
Capital Entity or any strategic business unit or division within any Capital
Entity (it being understood that no AT&T Entity shall be released from any of
its obligations under the AT&T Operating Agreement). The Company further
acknowledges and agrees that the foregoing undertaking and guarantee shall
extend for the benefit of any permitted assignee of any Capital Entity's or such
strategic business unit's or division's rights and benefits with respect to any
such agreement or commitment and, if reasonably requested by Capital, the
Company shall affirm such undertaking and guarantee for the benefit of any such
assignee. Capital agrees that any obligation of the Company hereunder or
thereunder that is paid or performed by a Company Entity (other than the
Company) shall be deemed to be paid or performed, as the case may be, by the
Company. The Company hereby represents and warrants to Capital that it has the
requisite authority to commit and bind the other Company Entities to the
applicable terms of this Agreement.
(b) Capital agrees and acknowledges that Capital shall be
responsible for, and hereby guarantees, the due and punctual payment and
performance, in accordance with their terms, of the obligations hereunder
applicable to any Capital Entity (other than Capital) or any strategic business
unit or division of any Capital Entity or in any other agreement or commitment
(including, without limitation, any lease agreement) of such Capital Entity or
any strategic business unit or division within any Capital Entity entered into
at any time and from time to time (whether before or after the Spin-Off Date)
with or for the benefit of any Company Entity or SBU or division within any
Company Entity. Capital further acknowledges and agrees that the foregoing
undertaking and guarantee shall extend to the benefit of any permitted assignee
of any Company Entity's, SBU's or division's rights and benefits with respect to
any such agreement or commitment and, if reasonably requested by the Company,
Capital shall affirm such undertaking and guarantee for the benefit of any such
assignee. The Company agrees that any obligation of Capital hereunder or
thereunder that is paid or performed by a Capital Entity (other than Capital)
shall be deemed to be paid or performed, as the case may be, by Capital. Capital
hereby represents and warrants to the Company that it has
-37-
<PAGE>
<PAGE>
the requisite authority to commit and bind the other Capital Entities to the
applicable terms of this Agreement.
Section 8.2. Application of Agreement to Certain Joint Ventures
and Other Minority Investments of the Company. (a) To the extent that
the Company Entities presently have or hereafter acquire equity
interests in any joint venture or other Person that is not deemed to be
a "Subsidiary" for the purposes of this Agreement, the Company Entities
shall nonetheless use reasonable efforts, upon request of Capital, to
assist Capital in negotiating and entering into an agreement with such
Person pursuant to which Capital would become a "preferred provider" of
financing for the products and services sold, marketed or distributed by
such Person and its Subsidiaries (if any) in accordance with the terms
and principles set forth in Section 3.2.
(b) The Company agrees to provide Capital with reasonably prompt
notice of any acquisition by any Company Entity of any equity interest in any
joint venture or other Person to which the provisions of this Section 8.2 would
apply and to provide Capital with such information concerning such Person as
Capital may reasonably request.
Section 8.3. Sale, Public Offering or Spin-Off of a Significant
Products Entity . In the event that (x) any Company Entity at any time proposes
to (i) sell in a public offering or spin-off to its shareholders a controlling
block of the equity of any Significant Products Entity or (ii) sell, directly or
indirectly, in an assets or stock sale or through a merger or other form of
business combination, a Significant Products Entity or a major portion of the
Products Capacity thereof to one or more Persons in a negotiated transaction
(including a sale or transfer in connection with a transaction referred to in
Section 8.2) and (y) the effect of such transaction would be that such
Significant Products Entity or such major portion of the Products Capacity
thereof would no longer constitute or form a part of a "Company Entity" for the
purposes of this Agreement, the Company shall:
(i) at the time that the Company formulates the general intention
to spin-off, offer publicly or seek potential purchasers for such
Significant Products Entity or portion of the Products Capacity thereof,
provide Capital with notice of such intention, and in connection with
any specific proposed spin-off, public offering or sale transaction,
provide Capital with notice of the same as far in advance of such sale
as is reasonably practicable in the circumstances; and
(ii) in the case of a spin-off or public offering, as a condition
precedent to the consummation of such transaction, if so requested by
Capital, first cause such Significant Products Entity or the entity
holding such portion of the
-38-
<PAGE>
<PAGE>
Products Capacity thereof to be spun-off or offered publicly to enter
into an agreement with Capital under which Capital would continue to
provide Financing and Ancillary Services with respect to the Products of
such Significant Products Entity or other entity following such spin-off
or public offering that is substantially similar in scope and terms to
this Agreement and that has a term substantially equivalent to the then
remaining term of this Agreement (a "Comparable Operating Agreement");
(iii) in the case of a negotiated sale transaction (including a
sale or transfer in connection with a transaction referred to in Section
8.2), if so requested by Capital, use reasonable efforts to facilitate
negotiations between Capital and the purchasers of such Significant
Products Entity or major portion of the Products Capacity thereof (or an
appropriate Affiliate) with respect to the execution by such parties of
a Comparable Operating Agreement with respect to the Products of such
Significant Products Entity or major portion of the Products Capacity
thereof; and
(iv) whether or not the Capital Entities obtain any rights to
provide Financings or Ancillary Services in the circumstances
contemplated in this Section 8.3, reimburse the Capital Entities for any
reasonable costs and charges incurred by the Capital Entities in
connection with any reduction in the scope or nature of the Capital
Entities' operations for the provision of Financings or Ancillary
Services that results from the sale or other disposition of any
Significant Products Entity or any major portion of the Products
Capacity thereof (including, without limitation, costs relating to
severance or redeployment of employees and costs relating to unutilized
or underutilized real estate or other assets); provided that to the
extent that the incurrence of such costs and expenses is reasonably
determinable to be under Capital's control, the Company shall be
responsible for reimbursement thereof only to the extent it has
consented to the incurrence of such costs and expenses, such consent not
to be unreasonably withheld (an example of such costs and expenses would
be severance obligations incurred by Capital in connection with a
severance package specifically designed for employees that are rendered
redundant as a result of the sale or other disposition of any
Significant Products Entity or any major portion of the Products
Capacity thereof).
Section 8.4. New Products and Company Entities . Capital's
commitments with respect to the provision of Financings and Ancillary Services
(including those set forth in Article II), the Company's commitments to support
Capital (including those set forth in Articles III and IV) and the other
provisions of this Agreement shall apply to existing and future lines of
Products and existing and future Company Entities (including Acquired
-39-
<PAGE>
<PAGE>
Entities that do not, at the time of acquisition by the Company of such
entities, own an Acquired Entity Financing Source), subject in each case to the
requirements of Article II and Article III and the limitations and exceptions
set forth in this Agreement (including, without limitation, those set forth in
Article IV and this Article VIII).
Section 8.5. Geographic Scope of Agreement . (a) The Capital
Entities have the present capability to provide Financings and Ancillary
Services with respect to sales, leases or other furnishings of Products sold or
marketed by the Company Entities within the United States of America, Canada,
France, Germany and the United Kingdom (each an "Active Service Area"). As the
Capital Entities are able to expand their capabilities to provide such
Financings or Ancillary Services in other countries or regions (or specific
markets therein) being served by the Company Entities, Capital may from time to
time request the Company that, and the Company may, in its sole discretion,
decide to agree that such countries or regions (or specific markets therein) be
designated as "Active Service Areas" with respect to the Company Entities
generally or with respect to one or more Company Entities or SBUs for purposes
of this Agreement, in which event the obligations of the parties hereunder shall
apply with respect to such countries or regions (or specific markets therein) to
the same extent as they would to any other Active Service Areas with respect to
sales, leases or other furnishings of Products by such Company Entities or SBUs
within such Active Service Areas.
(b) Without limiting the provisions of paragraph (a) above, in
the event that the Company Entities desire to provide, in connection with the
provision of Financings or Ancillary Services in any country or region that is
not an Active Service Area, to any Alternative Provider a "preferred provider"
status with respect to such Financings or Ancillary Services reasonably similar
to the "preferred provider" status provided to the Capital Entities pursuant to
Section 3.2, the Company Entities shall provide the Capital Entities with an
opportunity to bid to provide in such country or region the Financings or
Ancillary Services and any related programs proposed to be provided in such
country or region by such Alternative Provider. In the event that any such bid
by the Capital Entities, considered as a whole, is at least as favorable to the
Company Entities as the bid of any Alternative Provider, the Company Entities
shall accept the bid of the Capital Entities and the country or region in which
such Financings or Ancillary Services and any related programs are to be
provided shall for all purposes of this Agreement (including Article III and
Article IV) be considered to be an Active Service Area.
-40-
<PAGE>
<PAGE>
ARTICLE IX
INDEMNIFICATION
Section 9.1. Capital Indemnity . Capital agrees to save, protect,
indemnify and hold harmless, on an After-Tax Basis, the Company Entities and the
employees, officers, directors, agents and representatives of each of the
foregoing from and against all liabilities, costs (including attorney's fees and
disbursements), claims and charges arising from or relating to: (i) the breach
by any Capital Entity of any representations, warranties or covenants of such
Capital Entity contained in or delivered pursuant to this Agreement or any other
agreement of any Capital Entity relating to Products, Financings or Ancillary
Services; or (ii) any violation by any Capital Entity or any employee or agent
thereof of any law applicable to the sale, lease or other furnishing of Products
or to any related Financings or Ancillary Services (including, without
limitation, any law relating to the reporting of or extension or denial of
credit, the collection of debt or the repossession or disposition of products);
provided that in the event that a Company Entity and a Capital Entity separately
agree to indemnification (or waiver thereof) with respect to a matter that would
otherwise be subject to indemnification pursuant to this Section 9.1, such other
agreement will apply with respect to such matter and this Section 9.1 will not
so apply. The foregoing indemnity shall not apply in respect of liabilities,
costs, claims or charges to the extent arising from or relating to (i) any
action, sufferance or omission by a Company Entity or an employee of a Company
Entity that is effected in bad faith or represents gross negligence or willful
misconduct, (ii) any action, sufferance or omission by a Capital Entity or
employee of a Capital Entity pursuant to the express instructions of a Company
Entity or employee of a Company Entity (in the case of such employee, if such
instructions are provided by such employee in his or her capacity as such) or
(iii) any breach or violation by a Company Entity or any employee of a Company
Entity of the provisions of this Agreement or any other applicable agreement
between a Company Entity and a Capital Entity (whether or not such breach or
violation gives rise to a right of termination of this Agreement or such other
agreement).
Section 9.2. Company Indemnity . The Company agrees to save,
protect, indemnify and hold harmless, on an After-Tax Basis, the Capital
Entities and the employees, officers, directors, agents and representatives of
each of the foregoing from and against all liabilities, costs (including
attorney's fees and disbursements), claims and charges arising from or relating
to: (i) breach by any Company Entity of any representations, warranties or
covenants of such Company Entity contained in or delivered pursuant to this
Agreement or any other agreement of any Company Entity relating to Products,
Financings or Ancillary Services; (ii) any products, environmental or other
similar liability relating to the Products (such as claims for personal injury
or property damage); (iii) any misrepresentation made by any employee or agent
of any Company Entity to any
-41-
<PAGE>
<PAGE>
Customer or Authorized Dealer as to the commitment of any Capital Entity to
provide any Financings or Ancillary Services to such Customer or Authorized
Dealer or the likely availability thereof; and (iv) any violation by any Company
Entity or any employee or agent thereof of any law applicable to the sale, lease
or other furnishing of Products or to any related Financings or Ancillary
Services; provided that in the event that any Company Entity and a Capital
Entity separately agree to indemnification (or waiver thereof) with respect to a
matter that would otherwise be subject to indemnification pursuant to this
Section 9.2, such other agreement will apply with respect to such matter and
this Section 9.2 will not so apply. To the extent that a Company Entity performs
its obligations under Section 7.2 with respect to an actual or potential Company
Responsibility, the Capital Entities and related indemnified parties will not be
separately entitled to indemnification under this Section 9.2 with respect to
any loss or cost relating to such Company Responsibility that would otherwise be
indemnifiable under this Section 9.2. The foregoing indemnity shall not apply in
respect of liabilities, costs, claims or charges to the extent arising from or
relating to (i) any action, sufferance or omission by a Capital Entity or an
employee of a Capital Entity that is effected in bad faith or represents gross
negligence or willful misconduct, (ii) any action, sufferance or omission by a
Company Entity or employee of a Company Entity pursuant to the express
instructions of a Capital Entity or employee of a Capital Entity (in the case of
such employee, if such instructions are provided by such employee in his or her
capacity as such) or (iii) any breach or violation by a Capital Entity or any
employee of a Capital Entity of the provisions of this Agreement or any other
applicable agreement between a Company Entity and a Capital Entity (whether or
not such breach or violation gives rise to a right of termination of this
Agreement or such other agreement).
Section 9.3. Procedure . Each indemnified party under Section 9.1
or Section 9.2 shall, promptly after receipt of notice of a claim or action
against such indemnified party in respect of which indemnity may be sought
hereunder notify the indemnifying party in writing of the claim or action;
provided, that the failure to notify the indemnifying party will not relieve it
from any liability which it may have to an indemnified party on account of the
indemnity agreement contained in Section 9.1 or Section 9.2 unless, and only to
the extent that, the indemnifying party was prejudiced by such failure, and in
no event will such failure relieve the indemnifying party from any other
liability which it may have to such indemnified party. If any such claim or
action shall be brought against an indemnified party, and it shall have notified
the indemnifying party thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of any claim or action, the indemnifying party will not be liable to the
indemnified party
-42-
<PAGE>
<PAGE>
under Section 9.1 or Section 9.2 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, that the indemnified party
will have the right to employ separate counsel to represent it if, in the
reasonable judgment of such indemnified party, it is advisable for it to be
represented by separate counsel, and in such event the fees and expenses of such
separate counsel will be paid by such indemnified party. The indemnifying party
may not without the prior written consent of the indemnified party agree to any
settlement of any claim or action as the result of which any remedy or relief,
other than solely for monetary damages for which the indemnifying party will be
responsible hereunder, will be applied to or against the indemnified party. In
any action hereunder as to which the indemnifying party has assumed the defense
thereof with counsel satisfactory to the indemnified party, the indemnified
party will continue to be entitled to participate in the defense thereof, with
counsel of its own choice, but the indemnifying party will not be obligated
hereunder to reimburse the indemnified party for the costs thereof.
ARTICLE X
DISPUTE RESOLUTION
Section 10.1. Resolution of Disputes . Except as otherwise
provided in this Article X, the procedures for discussion, negotiation and
arbitration set forth in this Article X will apply to all disputes solely
between the parties under this Agreement; provided that arbitration will not
apply or be required in the case of any dispute challenging the validity of any
provision of this Agreement or any breach of the provisions of Section 4.1
unless the parties so agree in writing.
Section 10.2. Resolution of Disputes Using Best Efforts . (a) The
parties hereto agree and acknowledge that (i) this Agreement is intended to
provide a flexible framework for a cooperative and mutually beneficial
arrangement for the provision of Financings and Ancillary Services by the
Capital Entities and the treatment by the Company Entities of Capital Entities
as the preferred providers of Financings and Ancillary Services to Customers and
Authorized Dealers and (ii) the parties shall use good faith best efforts to
resolve all differences and disputes between the parties with respect to the
matters covered hereby that may arise from time to time at the level of the
appropriate Capital Entity and Company Entity (or the appropriate SBU within
such Company Entity) and, to the extent resolution is not achieved at such
level, at the level of management of the Company and Capital. Consistent with
the foregoing principles, the parties shall not refer the resolution of such
differences and disputes to the arbitration proceedings specified herein except
to the extent that after good faith best efforts the parties cannot resolve such
differences and disputes without so
-43-
<PAGE>
<PAGE>
escalating such resolution. Any agenda, location or procedures for such
discussions or negotiations between the parties may be established by the
parties from time to time or as the occasion warrants.
(b) The parties may, by mutual consent, retain a mediator to aid
the parties in their discussions and negotiations by informally providing advice
to the parties. Any opinion expressed by the mediator shall be strictly advisory
and shall not be binding on the parties, nor will any opinion expressed by the
mediator be admissible in any arbitration proceeding. The mediator may be chosen
from a list of mediators previously selected by the parties or by other
agreement of the parties. Costs of mediation shall be borne one-half by the
Company and one-half by Capital, except that each party shall be responsible for
its own expenses. Mediation is not a prerequisite to a demand for arbitration
under Section 10.3.
Section 10.3. Arbitration. (a) If any dispute (other than a
dispute which challenges the validity of any provision of this Agreement and
other than a breach of Section 4.1) referred to the management of the Company
and Capital has not been resolved within forty-five (45) days after referral to
such management, either party may demand that the dispute be resolved by binding
arbitration. Notice of the demand for arbitration by one party will be given in
writing to the other party to this Agreement. Upon such demand, the dispute will
be decided by a sole arbitrator in accordance with the rules set forth in this
Section 10.3.
(b) The parties shall attempt to select, within 15 days after
such notice of demand for arbitration is given, a sole arbitrator satisfactory
to both parties.
(c) In the event that the parties are not able to jointly select
a sole arbitrator within such 15 day period, the parties shall each appoint an
arbitrator within 30 days after provision of the notice referred to in paragraph
(a) above. If one party appoints an arbitrator within such time period and the
other party fails to appoint an arbitrator within such time period, the
arbitrator appointed by the one party shall be the sole arbitrator of the
dispute.
(d) In the event that a sole arbitrator is not selected pursuant
to paragraph (b) or (c) above, and, instead, two arbitrators are selected
pursuant to paragraph (c) above, the two arbitrators will, within thirty (30)
days after the appointment of the later of them to be appointed, select a third
arbitrator who will act as the sole arbitrator of the dispute. After selection
of such sole arbitrator, the two initial arbitrators shall have no further role
with respect to the dispute. In the event that the arbitrators so appointed do
not, within thirty (30) days after the appointment of the later of them to be
appointed, agree on the selection of the sole
-44-
<PAGE>
<PAGE>
arbitrator, either party may apply to any court having jurisdiction over the
parties and the controversy to select the sole arbitrator.
(e) The sole arbitrator selected pursuant to paragraph (b), (c)
or (d) above will set a time for the hearing of the dispute which will not be
later than sixty (60) days after the date of appointment of the sole arbitrator
pursuant to paragraph (b), (c) or (d) above, and the final decision of such
arbitrator will be rendered in writing to the parties not later than sixty (60)
days after the last hearing date, unless otherwise agreed by the parties in
writing.
(f) The place of any arbitration hereunder will be New York, New
York, or at such other place as agreed to by the parties.
(g) Except as otherwise set forth herein, any arbitration
hereunder will be conducted in accordance with the rules of the American
Arbitration Association ("AAA") then prevailing, and the decision of the
arbitrator will be final and binding on the parties, and will be enforceable in
any court having jurisdiction over the parties. Compliance with the provisions
of this Agreement concerning arbitration of disputes is a condition precedent to
the commencement of any suit, action or proceeding in any federal, state or
local court with respect to any controversy or dispute under this Agreement,
except a suit, action or proceeding which challenges the validity of any
provision of this Agreement or a breach of Section 4.1.
(h) Any party may send out requests to compel document
production from the other party. Disputes concerning the scope of document
production and enforcement of the document production requests will be
determined by written agreement of the parties or, failing such agreement, will
be referred to the arbitrator for resolution. All discovery requests will be
subject to the proprietary rights and rights of privilege of the parties, and
the arbitrator will adopt procedures to protect such rights. Except where
contrary to the provisions set forth in this Agreement, the rules of the AAA for
commercial arbitration will be applied to all matters of procedure, including
discovery; provided, however, that the arbitration will not be conducted under
the auspices of the AAA and the fee schedule of the AAA will not apply. The
arbitrator may obtain independent legal counsel to aid in his or her resolution
of legal questions presented in the course of arbitration, to the extent he or
she considers that such counsel is appropriate or necessary for a fair
resolution of the dispute, and to the extent that it is economical to do so
considering financial consequences of the dispute. The arbitrator will be
limited to interpreting or construing the applicable provisions of this
Agreement, and will have no authority or power to alter, amend, modify, revoke
or suspend any condition or provision of this Agreement; it being understood,
however, that the arbitrator will have full authority
-45-
<PAGE>
<PAGE>
to implement the provisions of this Agreement, including provisions requiring
further agreement of the parties hereunder, and to fashion appropriate remedies
for breaches of this Agreement; provided that the arbitrator shall not (i) have
any authority in excess of the authority a court having jurisdiction over the
parties and the controversy or dispute would have absent these arbitration
provisions and (ii) have any right or power to award punitive damages.
(i) If a party fails or refuses to appear at and participate in
an arbitration hearing after due notice, the arbitrator may hear and determine
the controversy upon evidence produced by the appearing party.
(j) Arbitration costs will be borne one-half by the Company and
one-half by Capital, except that each party will be responsible for its own
expenses and the costs of witnesses selected by such party.
Section 10.4. Continuity of Service and Performance . Unless
otherwise agreed in writing, the parties will continue to provide service and
honor all other commitments under this Agreement during the course of dispute
resolution pursuant to the provisions of this Article X.
Section 10.5. Disputes as to Sales Site Protocols and Procedures
. Notwithstanding the provisions of Section 10.3(c) and Section 10.3(d), if the
Company Entities and the Capital Entities have a dispute under Section 3.2(f)
regarding compliance by the Capital Entities with applicable Protocols and
Procedures with respect to any Financings or Ancillary Services provided at a
Sales Site (or whether the Capital Entities have cured any deficiencies within
the applicable period set forth in Section 3.2(e)), and the parties are not able
to agree upon the selection of the sole arbitrator pursuant to Section 10.3(b),
either party may immediately refer the matter to the AAA and request that the
AAA select an arbitrator within 15 days of such request, and such selection by
the AAA shall be binding upon both parties.
ARTICLE XI
TERM AND TERMINATION
Section 11.1. Initial Term and Renewal . (a) Subject to Section
11.2, this Agreement shall become effective on the Spin-Off Date and shall
remain in effect until, and shall terminate on, August 4, 2000 (the "Initial
Term"). This Agreement shall automatically be renewed and remain in effect for
an indefinite number of successive periods of two years (each such period, a
"Renewal Period"), the first such Renewal Period commencing upon the expiration
of the Initial Term and each successive Renewal Period commencing upon the
expiration of the preceding Renewal Period, unless either party elects not to
extend the term of this Agreement beyond the Initial Term or any
-46-
<PAGE>
<PAGE>
Renewal Period by giving the other party notice of such election at least one
year prior to the expiration of the Initial Term or Renewal Term then in effect
(it being understood that failure to give timely notice of non-renewal will be
deemed to constitute an election by the parties to renew the term of this
Agreement as provided herein).
(b) Prior to the Spin-Off Date, Capital shall have no obligation
under this Agreement to the Company, the Divisions or any AT&T Entity, it being
understood that the relationship between the Capital Entities and the Divisions
with respect to the subject matter hereof shall continue to be governed by the
AT&T Operating Agreement prior to the consummation of the Spin-Off Transactions.
Section 11.2. Termination. (a) This Agreement may be terminated
in its entirety prior to the expiration of the Initial Term or any Renewal Term
in effect:
(i) at any time, by the mutual written consent of Capital and the
Company;
(ii) at the election of the Company (after the Spin-Off Date), by
at least 180 days' prior notice to Capital, in the event of a Subsequent
Transfer of Control unless (a) prior to any such transfer, Capital
requests the Company's approval thereof and (b) the Company consents to
such transfer (it being understood that such consent shall not be
unreasonably withheld or delayed);
(iii) in the event one party (the "defaulting party") has
materially defaulted on its obligations under this Agreement, the other
party (the "non-defaulting party") may give notice of default to the
defaulting party and, in the event the defaulting party does not cure
the default within 60 days of such notice of default, the non-defaulting
party may, within 60 days after the expiration of such 60 day period,
give notice of termination to the defaulting party and specify in such
notice the date of termination of this Agreement (which date shall be a
date not less than 30 days following the date of such termination
notice), in which event this Agreement shall terminate on the date
specified in the termination notice;
(iv) at the election of the Company, by notice to Capital, in the
event that Capital commences a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy or similar law or statute or
makes an assignment of its property or any substantial portion thereof
for the benefit of creditors and such proceeding or assignment is
continuing or in effect at the time of such notice;
-47-
<PAGE>
<PAGE>
(v) at the election of the Company, by notice to Capital, in the
event that there is commenced against Capital an involuntary proceeding
seeking to have Capital declared a bankrupt or seeking to have a
receiver appointed with respect to a substantial portion of its property
which is not dismissed within sixty (60) days of commencement, or there
is entered an order declaring Capital a bankrupt or appointing a
receiver with respect to a substantial portion of its property and such
proceeding or order is continuing or in effect at the time of such
notice;
(vi) at the election of Capital, by notice to the Company, in the
event that the Company commences a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy or similar law or statute or
makes an assignment of its property or any substantial portion thereof
for the benefit of creditors and such proceeding or assignment is
continuing or in effect at the time of such notice; or
(vii) at the election of Capital, by notice to the Company, in
the event that there is commenced against the Company an involuntary
proceeding seeking to have the Company declared a bankrupt or seeking to
have a receiver appointed with respect to a substantial portion of its
property which is not dismissed within sixty (60) days of commencement,
or there is entered an order declaring the Company a bankrupt or
appointing a receiver with respect to a substantial portion of its
property and such proceeding or order is continuing or in effect at the
time of such notice.
Notwithstanding anything in this Agreement to the contrary, it is specifically
understood and agreed that the Company shall not have any right to terminate
this Agreement because of the occurrence of a First Tier Transfer of Control.
Section 11.3. Effect of Termination . Upon the termination of
this Agreement as provided in this Article XI, all obligations of the parties
hereto with respect to any future Financings and Ancillary Services under this
Agreement will cease; provided, however, that the obligations of the parties set
forth herein as they relate to completed Financings and Ancillary Services
(including the obligations set forth in Articles II, III, V, VI, and VII) and
the provisions herein as to indemnification, dispute resolution, confidentiality
and miscellaneous matters (Articles IX, X, XII and XIII) will continue in full
force and effect.
-48-
<PAGE>
<PAGE>
ARTICLE XII
CONFIDENTIALITY
Capital and the Company each understand and agree that the terms
of this Agreement, including the schedule hereto, may be publicly disclosed,
including in any public filing made by the Company or Capital or any Affiliate
thereof with the Securities and Exchange Commission. However, Capital and the
Company each covenants and agrees that it shall, and shall cause its
Subsidiaries to, treat any information provided by any Company Entity to any
Capital Entity (in the case of Capital's obligations hereunder) or by any
Capital Entity to any Company Entity (in the case of the Company's obligations
hereunder) pursuant to this Agreement (including, without limitation, the
Protocols and Procedures or any proprietary information otherwise acquired
hereunder) as privileged and confidential and to hold such information and to
use it solely for purposes of this Agreement and will not, without the prior
consent of the other party hereto, disclose, or cause to be disclosed, such
information to any Person, except that any such information may be disclosed (a)
to Capital's or the Company's agents, directors, officers, employees,
representatives, accountants, counsel or special counsel who have a need to know
or have access to such information and who have been instructed or have a duty
to keep such information confidential in accordance with the terms hereof, (b)
to the Affiliates of Capital and the Company, and such Affiliates' agents,
directors, officers, employees, representatives, accountants, counsel or special
counsel who have a need to know or have access to such information and who have
been instructed or have a duty to keep such information confidential and to use
it in accordance with the terms hereof, (c) to such other Persons who are
reasonably deemed necessary by Capital and the Company, as the case may be, in
connection with the enforcement of their rights under this Agreement, (d) to the
extent required pursuant to applicable law or any governmental authority
(including, but not limited to, the National Association of Insurance
Commissioners, Internal Revenue Service auditors, state taxing or communications
authorities or federal or state judicial authorities), (e) to the extent
required or appropriate to be disclosed in response to a reasonable request by
rating agencies, underwriters, or creditors in connection with financing
transactions undertaken by Capital or the Company or their Affiliates, who agree
or are under a duty to hold such information confidential in accordance with the
terms hereof, (f) to the extent that prior to such disclosure, such information
is in the public domain (it being understood and agreed that any document or
information that is filed as a matter of public record with any state, federal
or foreign governmental authority or is generally available to the public at the
time of disclosure (other than as a result of disclosure by such Person) will
for the purposes hereof be deemed to be in the public domain) or (g) to Persons
involved in potential acquisitions of, mergers with, or purchase of all or
substantially all of the assets of Capital (or any other Capital Entity) or the
Company (or any other
-49-
<PAGE>
<PAGE>
Company Entity) who, in each case, agree in writing to hold such information
confidential in accordance with the terms hereof. Capital and the Company
Entities will take such action as may be reasonably necessary to ensure that the
competitors of the other party do not acquire such information.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Variation of Terms; Amendments. Any Capital Entity
and Company Entity may by mutual consent from time to time vary the terms of
this Agreement as it applies to such Capital Entity and either such Company
Entity or one or more SBUs within such Company Entity. In such event, such
varied terms will be deemed to amend this Agreement as it applies to such
Capital Entity and such Company Entity (or such SBUs) for such period of time as
such variance is agreed to by such Capital Entity and such Company Entity.
Notwithstanding any such variance, this Agreement will continue to apply to all
other Capital Entities and Company Entities (or, if applicable, all SBUs within
the Company Entity that consents to such variance that are not made subject to
such variance) as if such variance had not been effected. Notwithstanding the
foregoing, this Agreement cannot be amended or terminated orally, but only by a
writing duly executed by or on behalf of the parties hereto (or by the
applicable Company Entity and Capital Entity).
Section 13.2. No Partnership. Nothing contained in this
Agreement will be construed in any manner to constitute the creation of a
partnership between the Company Entities and the Capital Entities nor to
characterize the Company Entities and the Capital Entities as joint venturers.
The Company Entities and the Capital Entities will at all times be and remain
independent contractors with respect to the subject matter of this Agreement.
Section 13.3. Successors and Assigns; Third Parties. (a) This
Agreement will be binding upon and inure to the benefit of the parties hereto
and their successors and assigns.
(b) Except as set forth in Article IX, nothing in this Agreement,
expressed or implied, is intended or will be construed to confer upon any Person
(including Customers and Authorized Dealers) other than the parties (and the
Company Entities and Capital Entities) and their successors and assigns any
right, remedy or claim under or by reason of this Agreement.
Section 13.4. Severability. If any provision of this Agreement
or the application of any such provision to any party or circumstances will be
determined by any court of competent jurisdiction or duly authorized arbitration
tribunal to be invalid, illegal or unenforceable to any extent, the remainder of
this Agreement or such provision or the application of such provision to such
party or circumstances, other than those to
-50-
<PAGE>
<PAGE>
which it is so determined to be invalid, illegal or unenforceable, will remain
in full force and effect to the fullest extent permitted by law and will not be
affected thereby, unless such a construction would be unreasonable.
Section 13.5. Notices. All notices, consents, deliveries,
demands, requests, approvals and other communications which are required or may
be given hereunder will be in writing and will be deemed to have been duly given
if personally delivered (including courier service), telecopied or mailed
certified first class mail, postage prepaid, addressed as follows:
(a) if to the Company, to:
LUCENT TECHNOLOGIES INC.
Attn: General Counsel
At such address as is
specified by such
General Counsel from
time to time pursuant
to this Section 13.5
Telecopier Number: (to be specified by such
General Counsel)
Confirmation Number: (to be specified by such
General Counsel)
with a copy to:
the same address
Attn: Pamela Craven, Esq.
(b) If to Capital, to:
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07960
Telecopier Number: 201-397-3220
Confirmation Number: 201-397-3187
Attention: Chairman and CEO
with a copy to:
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07960
Telecopier Number: 201-397-3220
Confirmation Number: 201-397-3187
Attention: Senior Vice President, General
Counsel, Secretary and Chief Risk
Management Officer
-51-
<PAGE>
<PAGE>
Section 13.6. Governing Law. This Agreement will be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to the choice of law provisions of its conflicts of law rules.
Section 13.7. Headings. The article headings and the section
headings and subheadings contained in this Agreement are intended solely for the
convenience of reference and will not affect in any manner the meaning or
interpretation of this Agreement.
Section 13.8. Counterparts. This Agreement may be executed in
one or more counterparts, each of which will be deemed an original instrument,
but all of which together will constitute one and the same agreement, and will
become binding when one or more counterparts have been executed and delivered by
each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
LUCENT TECHNOLOGIES INC.
By:_______________________
Name:
Title:
AT&T CAPITAL CORPORATION
By:______________________
Name:
Title:
-52-
<PAGE>
<PAGE>
SCHEDULE A
I. NETWORK SYSTEMS
A. PRODUCTS
Central office switching equipment and associated software.
Transmission systems.
Mobile switching centers, radio base stations, mini/microcells,
fixed-loop systems, wireless data products.
Optical fiber, electronic wire and cable products.
Wired and wireless terminal equipment.
B. CUSTOMERS/MARKETS EQUIPMENT
Local and long distance service providers in the US and
internationally.
US government.
Private communications network operators.
Cable television companies.
Wireless service providers.
Competitive access providers.
II. CONSUMER PRODUCTS
A. PRODUCTS
Corded and cordless telephones, cellular phones, .
answering systems and telephone accessories, including intercoms, fax
line adapters, modular headsets, specialty products and tone/bell
ringers.
Communications systems for disabled persons.
VideoPhones.
Smart Cards.
Personal communicators.
Personal computers, copiers and printers of third party vendors.
<PAGE>
<PAGE>
B. CUSTOMERS/MARKETS
Consumers.
Small businesses that acquire the products through AT&T Phone Center
stores.
III. GLOBAL BUSINESS COMMUNICATIONS SYSTEMS
A. PRODUCTS
Customer-premises communications, video, voice processing and computer -
telephone integration systems, including, but, not limited to:
Communications systems (e.g., Definity(C), Partner(R) and Merlin(R)
Communications Systems)
Multimedia Call Exchanges (MMCX)
Products that link private branch exchanges (PBXs) to computers for
customer service and telemarketing applications.
Multimedia messaging and response systems (e.g., AT&T Intuity(TM)
System; Audix(R) Voice Messaging Systems; Conversant(R) Voice
Information System Ovation voice processing system; Message
Manager(TM)system; and AT&T Group Video System).
Video conferencing systems.
Voice and data terminals.
Computer equipment.
Wire and wiring.
Installation and maintenance services.
System design and integration services.
Routers, brouters, hubs, switches, computers, workstations and other
products manufactured by affiliates and third parties.
Computer-telephony applications and software.
Data/muiltimedia communications, wireless and professional services.
Microcells and wireless communications products.
<PAGE>
<PAGE>
B. CUSTOMERS MARKETS
End-user Business customers worldwide.
Private communications network operators.
Systems integrators.
US, State and Local Governments and related entities.
Not-for-profit entities.
AT&T affiliates.
IV. AT&T PARADYNE
A. PRODUCTS
Consumer and commercial modems.
VideoSpan'TM' multimedia technology.
Network management systems and network access products, such as
Acculink(R) and Comsphere(R) multiplexers and CSU/DSUs.
Data service units/channel service units.
Channel extension products.
Globespan receivers.
B. CUSTOMERS/MARKETS
Business customers.
V. AT&T MICROELECTRONICS
A. PRODUCTS
Digital signal processors.
Integrated circuits.
Optoelectronic components.
Printed circuit boards and power systems.
Semiconductors.
Videoconferencing microchips.
Telecommunications microchips.
B. CUSTOMERS/MARKETS
AT&T Corp. and other high-technolcgy companies worldwide.
<PAGE>
<PAGE>
Schedule B
LOCATION SUPPORT AGREEMENT
LOCATION SUPPORT AGREEMENT dated as of __________________, 1996
to (this "Agreement") between LUCENT TECHNOLOGIES INC., a Delaware corporation
(the "Company") and AT&T CAPITAL CORPORATION, a Delaware corporation
("Capital").
W I T N E S S E T H:
WHEREAS, Capital has requested and the Company has agreed on
behalf of itself and the Company Entities and SBUs (each as hereinafter defined)
to permit (to the extent provided in, and subject to the terms and conditions
of, this Agreement) Capital and the Capital Entities (as hereinafter defined) to
base appropriate employees of the Capital Entities ("Capital Entities
Employees") in designated space in any site or location (a "Sales Site") from
which the sale and marketing of products and services (collectively, as defined
below, "Products") is conducted by the Company or by any Company Entity or SBU;
WHEREAS, in consideration of the provision of such office space
within the Sales Sites, Capital and the Capital Entities have agreed to make
reimbursement to the Company Entities and SBUs for the costs of providing such
office space; and
WHEREAS, the parties hereto mutually desire to establish certain
other terms and conditions of the Capital Entities' utilization of such office
space to be made available to them for such purpose;
NOW, THEREFORE, in consideration of the mutual promises herein
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and subject to the conditions and
upon the terms hereof, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms will have the
following meanings, applicable both to the singular and the plural forms of the
terms defined:
"Agreement Term" has the meaning ascribed thereto in Section 3.1.
"Ancillary Services" has the meaning ascribed thereto in the
Operating Agreement.
"Company Entities" has the meaning ascribed thereto in the
Operating Agreement, subject to the provisions of Section 2.7 hereof.
"Capital Entities" has the meaning ascribed thereto in the
Operating Agreement.
1
<PAGE>
<PAGE>
"Capital Entities Personnel" has the meaning ascribed thereto in
the Preamble.
"Financing" has the meaning ascribed thereto in the Operating
Agreement.
"Letter Supplement" has the meaning ascribed thereto in
Section 13.1.
"Operating Agreement" means the Lucent Technologies Operating
Agreement dated as of __________________, 1996 between the Company and Capital,
as such agreement is amended and supplemented from time to time in accordance
with its terms.
"Products" has the meaning ascribed thereto in the Operating
Agreement.
"Sales Site" has the meaning ascribed thereto in the Operating
Agreement.
"Sales Site Owner" has the meaning ascribed thereto in Section
9.1.
"SBU" has the meaning ascribed thereto in the Operating
Agreement.
"Support Space" has the meaning ascribed thereto in Section 2.1.
"Support Space Term" has the meaning ascribed thereto in
Section 3.2.
All capitalized terms not otherwise defined herein but defined in the Operating
Agreement shall have the meanings ascribed thereto in the Operating Agreement.
ARTICLE II
PROVISION OF SUPPORT SPACE
Section 2.1. Support Space. Subject to the availability of space
(including storage space) in each Sales Site (such availability of space to be
determined by the affected Company Entity or SBU in its reasonable discretion),
the Company agrees to cause each of the Company Entities and SBUs to provide in
each Sales Site, to one or more of the appropriate Capital Entities intended
under the Operating Agreement to provide various Financings and Ancillary
Services to a Company Entity or SBU, (i) furnished office space (individually a
"Support Space", and collectively, "Support Spaces") which Support Space may or
may not have separately demised walls as the parties may agree to, or as may fit
the character of the location, or as may be deemed feasible in the reasonable
determination of the Company Entity or SBU, and (ii) basic office support
services for such Support Space during regular business hours (namely, cleaning,
relamping and, when so requested, telephone lines). Provision at any particular
Sales Site of one or more additional office support services, if any, such as
document duplicating, document processing, file storage, secretarial, mailroom
and similar services shall be subject to separate agreement at each Sales Site
to be concluded by the Company Entity or SBU and the Capital Entity in question,
shall not be required by the terms of this Agreement, and shall be limited in
any event to the additional office support services which are regularly
available at such Sales Site. The Company further agrees, where space is
available, to cause the Company Entities and SBUs to use reasonable efforts to
permit the Support Space for the
2
<PAGE>
<PAGE>
Capital Entity in question to be located reasonably near the sales personnel of
the Company Entity or SBU in question.
Section 2.2. Capital Entities Employees. With respect to each
Support Space the Capital Entity in question shall advise the Company Entity or
SBU in question of the number and type (manager, secretary, etc.) of Capital
Entities Employees reasonably believed to be required to be based at the related
Sales Site in connection with the provision of Financings and Ancillary Services
with respect to the Products sold or leased through such Sales Site, in order
that the parties may reach agreement on the amount, availability, adequacy and
suitability of the space proposed by the Company Entity or SBU to be identified
and designated as Support Space for such Sales Site.
Section 2.3. Sales Site Amenities. With regard to building
occupant amenities and services at any Sales Site (parking, dining facilities
and similar services as agreed to by the parties), it is the intention of the
parties hereto that, to the extent such amenities or services are available to
the Company Entity or SBU in question and/or to the employees thereof, such
amenities or services shall also be available, on the same basis and at the same
cost or charge, if any, to the Capital Entity and/or its employees (subject to
any necessary consent of the landlord where the Company Entity or SBU is not the
Sales Site Owner), provided always that the Capital Entity in question shall be
liable for its proportionate share of any costs assessed or charges imposed
generally in connection with such building occupant amenity or service, and
shall be liable for the entirety of any costs or charges arising from services
rendered solely to the Capital Entity or to the Support Space.
Section 2.4. Landlord Consent. In the event that any Sales Site
shall be leased, and not owned, by a Company Entity or SBU, and the lease in
question does not by its terms permit the tenant thereunder to make a Support
Space available to a Capital Entity in the manner contemplated by this
Agreement, the Company agrees that the Company Entity or SBU in question shall
use its reasonable efforts to procure any requisite consent. Capital shall cause
the Capital Entity in question to reimburse the Company Entity or SBU in
question for any out-of-pocket costs incurred in procuring such consent (which
shall not include any payment for such consent demanded by landlord unless
agreed in advance by the Capital Entity). In the event that such landlord
consent is not forthcoming, the Company and the Company Entity or SBU in
question shall have no further obligation to provide Support Space at such Sales
Site for the Capital Entity in question, and such Capital Entity agrees that,
with respect to any Sales Site in which such Capital Entity is in occupancy on
the date of this Agreement, such Capital Entity shall promptly vacate such
leased Sales Site as to which such landlord consent has been refused.
Section 2.5. Relocation of Company Entity or SBU Sales Site. In
the event that any Sales Site having a Support Space shall be voluntarily or
involuntarily relocated by the Company Entity or SBU in question to another
location serving the same (or new or reconfigured) geographical marketing area,
or in the event a new Sales Site is established, the Company agrees to cause
such Company Entity or SBU to use reasonable efforts to provide a new Support
Space in the new Sales Site on the terms and conditions set forth herein, unless
the Capital Entity in question shall elect not to accompany the relocation and
occupy the new Sales Site. In no event (including, but not limited to, events
such as a breach by any Company Entity of its obligations, if any, under this
Section) shall the Capital Entity located at any Sales Site remain thereat
beyond the date the Company Entity or SBU in question vacates such
3
<PAGE>
<PAGE>
Sales Site, and Capital agrees (i) to cause such Capital Entity to vacate the
Sales Site in question on or before the date the Company Entity or SBU shall so
vacate same and (ii) to indemnify and hold harmless the Company and the Company
Entity or SBU at the Sales Site in question from any and all claims, costs, loss
or damage arising from such holding over beyond such date.
Section 2.6. Occupancy In Conformity With Rules and Regulations and
Leases. Capital agrees that each Capital Entity shall occupy its respective
Support Space in accordance with the rules and regulations and general office
business practices for the Sales Site in question, whether such Sales Site is
owned by the Company Entity or SBU in question, or whether the occupancy by same
of such Sales Site shall be by way of a lease of all or a portion of the Sales
Site. The Company Entity or SBU hosting the Support Space shall provide the
Capital Entity with a copy of such rules and regulations, if available, and
advise such Capital Entity regarding any other general office business practices
to permit the Capital Entity in question to fulfil its obligations hereunder.
The Capital Entities' occupancy of any leased or subleased sales sites shall be
in compliance with any existing or future leases (or subleases) with third
parties.
Section 2.7. Excluded Company Entity and SBU. This Location
Support Agreement shall not be deemed to apply to the Company Entity known as
AT&T PARADYNE Corporation or to the SBU known as AT&T Consumer Products, unless
and until one or both of such entities shall elect to become a party hereto, as
evidenced by a written notice of election satisfactory in form and substance to
both the present parties.
ARTICLE III
TERM
Section 3.1. Term of Agreement. The term of this Agreement (the
"Agreement Term") shall be co-terminous with the term of the Operating
Agreement, subject to the provisions of Section 14.1 respecting amendment
hereof.
Section 3.2. Term of Occupancy of Individual Support Space. The
term of occupancy (the "Support Space Term") for each Support Space identified
by the parties shall commence, for those Support Spaces occupied by Capital
Entities personnel on the effective date of this Agreement, on such date
(subject to consent of the landlord at any leased Sales Site as required under
Section 2.4 hereof), and shall commence for each Support Space hereafter
identified and established pursuant to the terms of this Agreement on the date
the Capital Entity in question shall first occupy such Support Space. The
Support Space Term for any given Support Space shall expire and terminate on the
earliest to occur of (i) the date of expiration or termination of the Operating
Agreement (provided however, that the expiration or termination of the Operating
Agreement shall not be deemed to prevent the continued occupancy of such Support
Space by the Capital Entity in question, subject to the consent of the Company
Entity or SBU in question in its sole discretion, and to any necessary consent
of the landlord of such Sales Site, on the same terms and conditions as existed
prior to the date of expiration or termination, or upon such other terms as may
be agreed upon by the Capital Entity and the Company Entity or SBU in question),
(ii) the date the Sales Site containing the Support Space is vacated for any
reason by the Company Entity or SBU having the primary occupancy thereof (unless
the Capital Entity shall elect to stay to provide Financing and/or Ancillary
Services to another Company Entity remaining at such location, in which case the
4
<PAGE>
<PAGE>
expiration date for purposes of this clause (ii) shall be such remaining Company
Entity's date of vacation of such Sales Site and the Capital Entity shall have
Support Space to provide said services for the remaining Company Entity in
accordance with and subject to Article II), or (iii) the date which is ninety
(90) days from the date of written notice of termination given by the occupying
Capital Entity to the Sale Site Company Entity or SBU, or (iv) if the Sales Site
is leased, the day prior to the date of expiration or earlier termination of
such lease in accordance with its terms.
ARTICLE IV
Reimbursement
Section 4.1. Reimbursement for Support Space. Capital covenants
and agrees to reimburse (or to cause the respective Capital Entities occupying
each Support Space to reimburse) the Company Entity or SBU owning or occupying
the Sales Site in question, for the proportional costs of provision of the
Support Space and of such Support Space's allocable share of the costs of any
common areas of the Sales Site, including, but not limited to, (i) building
operating expenses (if the Sales Site in question is owned) or reasonable
estimates for anticipated tax and/or operating expense escalation rent (if the
Sales Site is leased, it being the intent of the parties that the Capital Entity
shall be charged and paying on a current basis for tax and operating cost
escalation charge increases which are reasonably anticipated by the Company
Entity or SBU under the lease, but which charges will not be billed to same by
landlord until some period after the period for which the Capital Entity is
making payment), (ii) utility user charges (at actual cost for dedicated
utilities and as appropriately apportioned or otherwise measured if not so
dedicated to the Capital Entity) and (iii) fixed general charges for building
amenities or services which are not charged on a per-use basis (collectively,
the "Reimbursement Cost"). The Reimbursement Cost for each Support Space (i)
shall be mutually agreed on an annualized basis by the Company and Capital
(and/or by the applicable Company Entities or SBUs and Capital Entities with
respect to the Support Space in question), such agreement on particular Support
Space and Reimbursement Cost to be evidenced by letter agreement between the
affected entities intended to supplement this Agreement from time to time with
respect to such Support Space (a "Letter Supplement", as more fully described in
Section 13.1 hereof), and (ii) shall be paid by Capital or the Capital Entity,
without requiring any prior invoice or statement therefor from the Company
Entity or SBU so long as the Letter Supplement shall establish a monthly or
other periodic payment amount with respect to the Reimbursement Cost, in equal
monthly installments in advance on the first day of each calendar month in the
Support Space Term (or with such other frequency or in such other manner as may
be specified in the relevant Letter Supplement) to the Company or to the Company
Entity or SBU identified in the Letter Supplement. Capital further covenants and
agrees to pay or reimburse (or to cause the respective Capital Entities
occupying each Support Space to pay or reimburse) the Company Entity or SBU
owning or occupying the Sales Site in question (i) for the basic office support
services (if same have not previously been included in the Reimbursement Cost),
and (ii) any additional office support services as may be agreed in accordance
with the provisions of Section 2.1 hereof, and (iii) for any specially-ordered
building services during normal business hours and for any overtime charges
incurred at the Sales Site with respect to the use and occupancy of the Support
Space by the Capital Entity outside normal business hours, where such
specially-ordered and/or overtime services are charged on a per-use basis (or
such other reasonable basis), for which all such payments should be due within
30 days of receipt of a periodic statement for such user and/or office service
charges. The Company agrees for itself and the Company Entity or SBU at a Sales
Site to render all
5
<PAGE>
<PAGE>
statements for any calendar year in a Support Space Term following the close of
such calendar year, and the respective Capital Entity's obligation to pay
statements so rendered shall survive the Support Space Term in question. The
Reimbursement Cost payable on account of any partial calendar month, if any,
during a Support Space Term shall be prorated on a per diem basis.
ARTICLE V
USE
Section 5.1. Permitted Use. Capital for itself and the Capital
Entities agrees that each Support Space shall be used only for the purpose for
which the Sales Site is utilized by the Company Entity or SBU.
ARTICLE VI
DISPUTE RESOLUTION
Section 6.1. Resolution of Disputes. Resolution of disputes
regarding the terms or operation of this Agreement, either generally or with
respect to any particular Support Space or Letter Supplement, shall be effected
in accordance with the provisions of Operating Agreement Article X (Dispute
Resolution).
ARTICLE VII
AT END OF TERM
Section 7.1. At End of Support Space Term. Upon the expiration of
the Support Space Term in accordance with the terms of this Agreement (as
supplemented by any Letter Supplement with respect to the Support Space in
question) or other termination of occupancy of any Support Space by a Capital
Entity, such Capital Entity (i) shall vacate and surrender the Support Space to
the Company Entity or SBU owning or controlling the Sales Site, "broom clean"
and in good order, condition and repair, ordinary wear, tear and damage by the
elements, fire or other casualty excepted, (ii) shall on or prior to such date,
at the Capital Entity's sole cost and expense, remove from the Support Space any
alterations and restore the Support Space as may be required under Section 8.1
hereof, (iii) shall also remove all of the Capital Entity's personal property,
including but not limited to files and other business records and its owned
furniture and business equipment, if any, (iv) shall remove and replace any
hardware installed in accordance with the provisions of Section 9.3 hereof, and
(v) shall repair or pay the cost of repairing all damages to the Support Space
and/or the Sales Site caused by all such removals. Any personal property which
shall remain in the Support Space at a date which is unreasonably beyond the
date the space was vacated, may, at the option of the Company Entity or SBU, be
deemed to have been abandoned and in such case may be retained or otherwise
treated by the Company Entity or SBU as its property or may be disposed of,
without accountability, in such manner as the Company Entity or SBU may
determine, at the Capital Entity's expense, which expense shall be reimbursed to
the Company Entity or SBU within ten (10) business days after demand.
6
<PAGE>
<PAGE>
ARTICLE VIII
ALTERATIONS; FURNISHINGS AND EQUIPMENT
Section 8.1. Alterations. Alterations to any Support Space shall
be made only with the prior consent of the Company Entity or SBU, and, if
required, the consent of the landlord of such Company Entity or SBU at a leased
Sales Site. Any permitted alterations shall be made solely in conformity with
the building maintenance and management requirements of the Support Space
building owner or landlord, as the case may be, and shall be performed at the
sole cost and expense of the Capital Entity. Any and all permitted alterations
in the Support Space shall be removed, and the Support Space restored to its
pre-alteration condition, at the Capital Entity's sole cost and expense, on or
prior to the end of the Support Space Term, unless the Company Entity or SBU for
such Support Space (and in buildings under lease thereto, the landlord under
such lease) shall agree in writing that the alteration(s) in question need not
be so removed. The Capital Entity's obligations to remove and restore hereunder
shall survive the expiration or earlier termination of the Support Space Term,
provided that, in the event the Capital Entity shall default in any obligation
to effect such removal and restoration, the Company Entity or SBU shall give
notice of such default not later than 180 days following such date of expiration
or earlier termination.
Section 8.2. Furnishings and Equipment. In the event the Capital
Entity in question wishes to furnish its Support Space with office furnishings
different than the standard office furnishing fitout provided to the Company
Entities/SBU personnel at the Sales Site, the Capital Entity must first obtain
the written permission of the Company Entity or SBU to do so, which permission
shall not be unreasonably withheld, provided, however, that (i) such furnishings
are purchased or leased by the Capital Entity, (ii) such furnishings are
installed and at term's end removed at the Capital Entity's sole cost and
expense and (iii) all such furnishings are reasonably consistent in style and
quality with the furnishings in the Sales Site used by the Company Entity or SBU
at such Sales Site. If such installation is reasonably necessary for the conduct
of the Capital Entity's business at the Sales Site, the Capital Entity in
question shall further be permitted to install business machinery and equipment
in the Support Space, subject to the electrical capacity thereof (provided same
are installed in conformity with the requirements of law and the requirements of
the underlying space lease, if any), provided same shall be removed at the
Support Space Term's end in accordance with the provisions of Section 7.1
hereof. Company Entities shall have no obligation to provide any additional or
special electrical capacity or extra heating or air-conditioning with respect to
any Capital Entity's business machinery or equipment referred to in the
preceding sentence.
ARTICLE IX
ACCESS TO SUPPORT SPACE PREMISES
Section 9.1. Sales Site Owner Access. With respect to any Support
Space, the Company Entity or SBU and/or any building landlord thereof (each, a
"Sales Site Owner") shall be and is hereby permitted access into the Support
Space under the terms of this Agreement and/or of any space lease, ground lease
or mortgage applicable to the Sales Site. Each Capital Entity occupying such
Support Space shall have the right to secure its own business files and other
proprietary information. The Company Entity or SBU in question shall have no
responsibility for the security, maintenance or preservation of such Capital
Entity business files and proprietary information.
7
<PAGE>
<PAGE>
Section 9.2. Capital Entity Access. The Company, for itself and
each of the Company Entities and SBUs providing Support Spaces, covenants and
agrees that each Capital Entity and its employees shall be provided access to
its particular Support Space on the same basis as access is permitted to the
Sales Site generally to the personnel of the Company Entity or SBU occupying the
Sales Site in question. In the event that a restricted access Sales Site
features a lobby guard, sign-in or pass system for such building access (whether
within office hours on business days, or outside such time periods), Capital,
for itself and each of the Capital Entities occupying such Support Space,
covenants and agrees to conform to the building rules and regulations governing
such access system from time to time.
Section 9.3. Securing Support Space. Subject to the provisions of
Sections 2.1 and 9.1 hereof, and subject to any more restrictive provisions of
an underlying space lease with a Sales Site Owner, in which case the provisions
of such space lease shall control, the Capital Entity shall be permitted to
secure its separately demised Support Space with locking door hardware, provided
always that (i) if the Support Space is not delivered with locking hardware, the
cost of installation of locking hardware of the same general model and (at the
Support Space Term's end) the cost of removal and replacement thereof shall be
borne solely by the Capital Entity, and (ii) duplicate keys to such locks shall
be delivered to all affected Sales Site Owners (Company Entity or SBU and the
landlord, if any) at the Sales Site.
ARTICLE X
NO LEASE; NO CO-TENANCY; NO SUBLEASE
Section 10.1. No Lease; No Co-tenancy; No Sublease. This
Agreement is intended by the parties hereto to provide only for so-called
"location support" or "desk space" for the provision of Financings and Ancillary
Services by the Capital Entities to the Company Entities and SBUs. The Capital
Entities, with respect to the Support Spaces occupied or to be occupied by each
in the Sales Sites, do not purport or intend to be and are not to be deemed by
the Company, by the Company Entities or the SBUs or their respective landlords,
or by any third party, to be space or occupancy tenants, co-tenants or
subtenants or lease assignees of any of the Support Spaces, and Capital and the
Capital Entities shall have no rights or obligations with respect to such
Support Spaces except as specifically provided for herein and in the applicable
Letter Supplement(s). Nothing contained in this Agreement shall be construed in
any manner to constitute this Agreement as an occupancy lease respecting the
Support Space, or as a co-tenancy agreement with respect to any Sales Site
(whether owned in fee or occupied under lease by the Company Entity or SBU in
question), or as an occupancy sublease arising under any lease of a Sales Site
by an Company Entity or SBU, or as an assignment to a Capital Entity of any
lease or sublease of a Sales Site under which the Company Entity or SBU is
tenant. Capital for itself and for all Capital Entities hereby waives, with
respect to any Support Space provided hereunder, any and all rights appertaining
to, or claims which might be made by, a tenant or co-tenant or subtenant or
lease assignee of such premises. In the event that, at any Sales Site which is
under lease or sublease to an Company Entity or SBU, the landlord thereof shall
by notice or otherwise raise objection to the occupancy of the Support Space by
a Capital Entity or the conduct of its business at the Sales Site, and such
objection cannot be resolved, the affected Company Entity or SBU shall have the
right to terminate the Support Space Term by written notice to the Capital
Entity, which shall promptly pay any monies due the Company Entity or SBU for
use of the Support Space and promptly vacate said
8
<PAGE>
<PAGE>
Support Space in accordance with the provisions of Section 7.1; provided
however, that in the event such landlord is willing to consider a negotiated
resolution of such objection (which resolution shall in no event require the
payment of money or the increase in any obligation of the Company Entity or SBU
under the lease), the Capital Entity shall be afforded the opportunity to reach
such resolution with landlord prior to the service of any notice of termination
hereunder.
ARTICLE XI
INDEMNIFICATION
Section 11.1. Indemnification by Capital and Capital Entity.
Capital and the Capital Entity occupying the Support Space in question each
agrees to defend, indemnify and hold harmless each of the Company and the
Company Entity or SBU controlling the Sales Site hosting the Support Space, and
their respective directors, officers, agents and employees from and against any
and all claims, demands, liability, loss, damage, costs and expenses (including
reasonable attorneys' fees and disbursements) arising from or in connection
with: (i) the conduct or management of the Support Space or of any business
therein, or any work or act whatsoever done, or any condition created (other
than by or at the direction of the Company, the Company Entity or SBU at the
Sales Site, or any director, officer, agent or employee of any of the foregoing)
in or about the Support Space or the Sales Site during the Support Space Term,
or during any period of holdover occupancy after the expiration or earlier
termination of this Agreement and/or any Letter Supplement with respect to such
Support Space, by or at the direction of Capital or the Capital Entity; (ii) any
act, omission or negligence of Capital or of the Capital Entity or of any of
their respective directors, officers, agents, invitees, employees or contractors
(but not business visitors to the Capital Entity which are directors, officers
or employees of the hosting Company Entity or SBU); (iii) any accident, injury
or damage whatsoever (unless caused by the gross negligence or willful
misconduct of the Company or of the hosting Company Entity or SBU, or of any of
their respective directors, officers, agents, third parties invitees or
employees) occurring in or about the Support Space or the Sales Site caused by
Capital or the Capital Entity, or any director, officer, agent or employee of
either of the foregoing; and (iv) the holding over by the Capital Entity beyond
the Support Space Term as to any particular Support Space.
Section 11.2. Indemnification by the Company and the Company
Entity or SBU. The Company and the Company Entity or SBU controlling the Support
Space in question each agrees to defend, indemnify and hold harmless Capital and
the Capital Entity occupying the Support Space, and their respective directors,
officers, agents and employees from and against any and all claims, demands,
liability, loss, damage, costs and expenses (including reasonable attorneys'
fees and disbursements) arising from or in connection with: (i) the conduct or
management of the Sales Site excluding the Support Space, or of any business
therein, or any work or act whatsoever done, or any condition created (other
than by or at the direction of Capital or the Capital Entity occupying the
Support Space, or any director, officer, agent or employee of any of the
foregoing) in or about the Sales Site or the Support Space during the Support
Space Term, by or at the direction of the Company or the Company Entity or SBU;
(ii) any act, omission or negligence of the Company and/or the Company Entity or
SBU or of any of their respective directors, officers, agents, invitees,
employees or contractors (but not business visitors to the Company Entity or SBU
which are directors, officers or employees of the Capital Entity); and (iii) any
accident, injury or damage whatsoever (unless caused by the gross negligence or
willful misconduct of Capital or of the Capital Entity or of any of their
respective
9
<PAGE>
<PAGE>
directors, officers, agents or employees) occurring in or about the Support
Space or the Sales Site caused by the Company or the Company Entity or SBU, or
any director, officer, agent, third parties invitees or employee of any of the
foregoing.
Section 11.3. Indemnification Claim Procedure. Each indemnified
party under Section 11.1 or 11.2 hereof with respect to any claim to be made
hereunder shall follow the procedure set forth in Section 9.3 of the Operating
Agreement.
Section 11.4. Survival of Indemnities. The indemnity agreements
set forth in this Article 11 shall survive the expiration or any earlier
termination of this Agreement and/or of any Letter Supplement with respect to
any Support Space or Sale Site as to which indemnification is sought or claimed.
ARTICLE XII
NOTICES
Section 12.1. Notices. A. All notices, consents, deliveries,
demands, requests, approvals and other communications which are required or may
be given hereunder and which affect more than one Support Space shall be in
writing and shall be deemed to have been duly given if personally delivered
(including courier service), telecopied or mailed certified first class mail,
postage prepaid, addressed as follows:
(a) if to the Company, to:
_______________________________________
_______________________________________
_______________________________________
Telecopier Number:_____________________
Confirmation Number:___________________
Attention:
with a copy to:
_______________________________________
_______________________________________
_______________________________________
Telecopier Number:_____________________
Confirmation Number:___________________
Attention:
10
<PAGE>
<PAGE>
(b) If to Capital, to:
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07960
Telecopier Number: 201-397-3220
Confirmation Number: 201-397-3187
Attention: Chief Executive Officer
with a copy to:
AT&T Capital Corporation
44 Whippany Road
Morristown, New Jersey 07960
Telecopier Number: 201-397-3220
Confirmation Number: 201-397-3187
Attention: General Counsel
B. All notices, consents, deliveries, demands, requests,
approvals or other communications which are required or may be given hereunder
and which affect only a particular Support Space shall be in writing and shall
be deemed to have been duly given if personally delivered (including courier
service), telecopied or mailed certified first class mail, postage prepaid,
addressed to the Company Entity or SBU, or to the Capital Entity, as the case
may be, at the address and to the attention of the person identified in the
last-dated Letter Supplement delivered by the affected parties in connection
with such Support Space.
ARTICLE XIII
AGREEMENT INCORPORATION AT SUPPORT SPACES; DISTRIBUTION
Section 13.1. Letter Supplement Delivery and Agreement
Incorporation. The Company and Capital agree that, upon identification from time
to time of any Support Space to be occupied by a Capital Entity in a Sales Site,
a Letter Supplement shall be prepared executed and delivered in counterparts
between the affected Company Entity or SBU and the Capital Entity occupying or
about to occupy such Support Space, setting forth (i) the floor or suite
location thereof, (ii) the annualized Reimbursement Cost therefor and other
office equipment or service charge rates, if any, (iii) the name and address for
notices under Section 12.1 hereof, and (iv) such other Sales Site-specific
provisions for such occupancy not otherwise covered hereby. The parties hereto
further agree that this Agreement is intended to be incorporated by reference
into the Letter Supplement except to the extent that certain terms hereof are
explicitly stated to be overridden by differing provisions set forth in such
Letter Supplement, and in the event of any other conflict between the terms of
this Agreement and the terms of a Letter Supplement, the terms of this Agreement
shall govern and be deemed to prevail. Notwithstanding the foregoing, it is
further understood and agreed that, with respect to Capital Entities personnel
presently situated in Sales Sites as at the date hereof, they shall be permitted
to remain in place whether under the terms of such client commitment letters
11
<PAGE>
<PAGE>
between the affected entities as may be applicable, or otherwise, and the
Company and Capital agree that they will cooperate in good faith to prepare,
execute and deliver a Letter Supplement with respect to the Support Space for
such Sales Sites. In no event shall such Capital Entities personnel be permitted
to remain in place in a Sales Site under lease to an Company Entity or SBU for
which landlord's consent has not been forthcoming as required under Section 2.4
hereof, and failure to vacate such Support Site promptly following notice that
such landlord's consent has not been obtained shall be subject to
indemnification for any costs or damages resulting therefrom under Section 11.1
hereof. The parties' agreement to cooperate in good faith to prepare, execute
and deliver Letter Supplements shall not in any event delay the effective date
of this Agreement as to any Sales Site, and all Sales Sites shall be governed by
this Agreement from its effective date, notwithstanding the failure to have a
Letter Supplement agreed by such date.
ARTICLE XIV
MISCELLANEOUS
Section 14.1. Amendments. Any Capital Entity and Company Entity
may by mutual consent from time to time vary the terms of this Agreement as it
applies to such Capital Entity and either such Company Entity or one or more
SBUs within such Company Entity. In such event, such varied terms will be deemed
to amend this Agreement as it applies to such Capital Entity and such Company
Entity (or such SBUs) for such period of time as such variance is agreed to by
such Capital Entity and such Company Entity; provided that the variance(s) (i)
are in writing, (ii) specifically reference this Agreement, and (iii) expressly
state the intention of the parties thereto to vary the terms of this Agreement,
which varied terms shall be identified with specificity. The parties hereto
agree that a Letter Supplement containing the information described in clauses
(i) through (iv) in Section 13.1 hereof, without reference to any variance from
specific provisions of this Agreement, shall not be deemed a variance for
amendment to this Agreement. Notwithstanding any such variance, this Agreement
will continue to apply to all other Company Entities and Capital Entities (or,
if applicable, all SBUs within the Company Entity that consents to such variance
that are not made subject to such variance) as if such variance had not been
effected. Notwithstanding the foregoing, this Agreement cannot be amended or
terminated orally, but only by a writing duly executed by or on behalf of the
parties hereto (or by the applicable Company Entity and Capital Entity).
Section 14.2. Successors and Assigns; Third Parties.
(a) This Agreement will be binding upon and inure to the benefit
of the parties hereto and their successors and assigns.
(b) Except as set forth in Article XI, nothing in this Agreement,
expressed or implied, is intended or will be construed to confer upon any Person
(including Customers and Authorized Dealers, as such three capitalized terms are
defined in the Operating Agreement) other than the parties (and the Company
Entities and Capital Entities) and their successors and assigns any right,
remedy or claim under or by reason of this Agreement.
(c) The Company hereby represents and warrants to Capital that it
has the requisite authority to commit and bind the other Company Entities to the
applicable terms of this Agreement.
12
<PAGE>
<PAGE>
(d) Capital hereby represents and warrants to the Company that it
has the requisite authority to commit and bind the other Capital Entities to the
applicable terms of this Agreement.
Section 14.3. Sales Sites Under Lease. In the event that any
Sales Site is now or hereafter under lease to an Company Entity or SBU, the
execution and delivery of this Agreement, and/or of any Letter Supplement with
respect to Support Space at such Sales Site, shall not be deemed to amend or
modify or otherwise affect any such lease, and in the event of any conflict with
regard to the use and occupancy of the Support Space at such Sales Site between
the provisions of this Agreement or such Letter Supplement and the provisions of
the applicable lease, the provisions of such lease shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the date first above written.
LUCENT TECHNOLOGIES INC.
BY:______________________________
NAME:
TITLE:
AT&T CAPITAL CORPORATION
BY:_______________________________
NAME:
TITLE
13
<PAGE>
<PAGE>
SCHEDULE C
The Company Entities traditionally have provided only the following types of
interim Financings to Finance the acquisition of Products by Customers or
Authorized Dealers:
1. Consumer Products offers an installment billing program to Customers. The
installment sale product is only offered to Customers (both business and
consumer) who acquire Product at a Consumer Products' Phone Center store. The
Financing is a no interest financing - the Customer pays the purchase price in
equal monthly installments over a term of 4, 8 or 12 months. The Customer also
must pay a fixed application fee, which is based on the length of the term. (For
example, the application fee for a 4 month installment sale is Fifteen Dollars,
for an 8 month installment sale is Thirty Dollars, and for a 12 month
installment sale is Forty-Five Dollars.). The gross receivable stream from such
Financings is approximately $25 Million to $35 Million per year. Additionally,
Consumer Products has discontinued its offer of 8 and 12 month installment sales
in selected stores where it is trialing a replacement program offered by one of
the Capital Entities.
2. Consumer Products offers 30 day payment terms to qualifying business
Customers for purchases of Product acquired at a Consumer Products' Phone Center
store. This Financing is only offered with respect to the types of equipment
traditionally sold by Consumer Products to small businesses.
3. Consumer Products offers interim Financing to SNET and Rochester Telephone
with respect to traditional consumer telephone equipment sold by Consumer
Products and provided by the local telephone companies to consumers who obtain
their local telephone service from them. Under this offering, Consumer Products
provides such equipment to SNET and Rochester Telephone at $3.00 per unit for 24
months or $2.00 per unit for 36 months. Consumer Products provides approximately
50,000 phones per year to these entities.
<PAGE>
<PAGE>
SCHEDULE D
AT&T Paradyne traditionally has provided rental or service contracts (i.e., full
pay-out financings with maintenance and service included) at a fixed monthly
amount for terms of 12 months or greater with respect to data equipment
manufactured by it. Such equipment consists of modems, VideoSpan(TM) multimedia
technology, mulitplexers, CSU/DSUs, data service and channel service units, and
channel extension products. Such Financing has been provided to Customers who
acquire the Products directly from AT&T Paradyne and its Authorized Dealers,
which typically are not Authorized Dealers of Products of other AT&T Entities.
<PAGE>
<PAGE>
SCHEDULE E
Network Systems traditionally has manufactured or marketed the following types
of telecommunications equipment and systems, as well as associated installation
and maintenance services, for incorporation into land-based and wireless
telecommunication networks operated by public and private sellers of
telecommunications services:
Central office switching equipment and associated software, transmission
systems, mobile switching centers, radio base stations, mini- and
micro-cells, fixed-loop systems, wireless data products, optical fiber,
electronic wire and cable products, wired and wireless terminal equipment.
<PAGE>
<PAGE>
SCHEDULE F
The following constitute the past practices of the Company Entities regarding
their rental of Products to Customers on a daily, weekly, monthly or other
periodic basis:
1. Consumer Products rents specific AT&T brand home telephones
(i.e., Trimline(R), Princess(R), traditional, feature and cordless telephones,
and answering systems) at a fixed monthly payment to Customers who are
consumers. This is a true rental, and not a lease or sale, although Consumer
Products markets this product as the "AT&T Lease Service Program". The rental is
on a month-to-month basis. The Customer can obtain a replacement for free at any
time and for any reason (i.e., "no questions asked") if the Customer delivers
the telephone to a Consumer Products' Phone Center store or one of approximately
700 "AT&T authorized Service Agencies" in the United States. The replacement set
generally is a refurbished set of the same model. In 1993, the gross revenues
from the this rental product was approximately $740 Million, and these revenues
are declining at a rate of approximately 15% per year.
2. Global Business Communications Systems (GBCS) offers its direct Customers
a rental product known, interchangeable, as a "Term Plan" or "service contract."
Under the Term Plan, GBCS offers selected telecommunications equipment (prior
to 1993, key systems and Horizon(R) and Dimension(R) PBXs and key systems;
after 1993, only Partner(R) and Legend(R) communications systems) to business
Customers in the United States at fixed monthly payments on a month-to-month
basis or for a specified period of time "Commitment Period"). The Commitment
Periods offered by GBCS are 12, 24 and 48 months. If neither party terminates
the Term Plan 30 days prior to the end of the Commitment Period, it is
automatically renewed for the shortest Commitment Period then available at the
price and terms then in effect. Except for the Partner and Legend systems rented
under Term Plans, the only Terms Plans that remain on the books of GBCS are
those that are in automatic renewal. In a Term Plan, GBCS retains title to the
equipment, bears the risk of loss (except for loss caused by the Customer),
and maintains the equipment at no additional charge. Term plans are not
available to Customers who acquire the Product through an Authorized Dealer.
<PAGE>
<PAGE>
SCHEDULE G
GENERAL ALLOCATION OF
RESPONSIBILITIES
BETWEEN THE
CAPITAL ENTITIES
AND
THE COMPANY ENTITIES
<PAGE>
<PAGE>
TABLE OF CONTENTS
SECTION SUBJECT MATTER
ONE General Allocation of Responsibilities.
TWO Methods and Procedures.
ATTACHMENTS
A. - Listing of Company Responsibilities.
B. - Suggested Operational Procedures.
C. - Remarketing Procedures.
D. - Repurchase Calculation Methodology.
E. - Calculating Net Book Value.
F. - Post-Repurchase Allocation of Repurchase Monies.
2
<PAGE>
<PAGE>
GENERAL ALLOCATION OF RESPONSIBILITIES REGARDING
TRANSACTIONS WHERE A CAPITAL ENTITY
PROVIDES FINANCING
Since 1985 Credit Holdings has been providing Financing to
Customers and Authorized Dealers. Such services are now provided by the Capital
Entities, including AT&T Credit. While the Company Entities and Capital Entities
benefit from the provision of such Financings, it is recognized that the Company
Entities and Capital Entities will not receive the full benefits of such
Financings unless Customers and Authorized Dealers fulfill their related payment
obligations.
Because the revenue stream resulting from such Financings is
adversely affected by the subsequent failure of Customers or Authorized Dealers
to pay, it is appropriate to allocate the responsibility for subsequent billing,
collection and account enforcement activity when such situations occur.
Therefore, as between the Company Entities and the Capital
Entities, the entities capable of controlling a particular risk or covering a
particular risk in its pricing (Product or Financing), shall be responsible for
subsequent billing, collection, and account enforcement activity relating to the
Financing shortfall. For example, should a Financing shortfall occur as a result
of a Customer's or Authorized Dealer's inability to pay, or failure to pay for
reasons which are not related to a Company Responsibility, or should the Capital
Entities, anticipated residual value for the Product not be attained -- the
Capital Entities would be responsible.
Should a Financing shortfall occur as a result of a Company
Responsibility, then the SBU that markets or provides the related Product would
be responsible for subsequent billing,-collection, and account enforcement
activity.
In order to implement this allocation policy, the attached
Methods and Procedures, which are made a part of this General Allocation of
Responsibilities, shall apply. Such Methods and Procedures are intended to
further define and amplify the responsibilities of the Company Entities
(including their SBUs) and Capital Entities and to establish procedures that
will facilitate the expeditious resolution of issues between the Company
Entities and the Capital Entities. Except as set forth in the attached Methods
and Procedures, this General Allocation of Responsibilities will not apply in
situations where the Product warranty has expired and the Customer or Authorized
Dealer has
3
chosen not to avail itself of the various maintenance service contracts offered
by the SBUs.
This General Allocation of Responsibilities will not affect those
programs or transactions where the Capital Entities and Company Entities agree
(or have previously agreed), in writing, to different apportionment
responsibilities or procedures. In order to provide continued flexibility for
the future, the Capital Entities and Company Entities may modify this General
Allocation of Responsibilities as they may mutually agree in writing. Moreover,
this General Allocation of Responsibilities will apply to any successors of the
parties subject to this allocation policy.
It is understood and agreed that this General Allocation of
Responsibilities refers in various contexts to obligations or agreements of SBUs
(which may or may not be legal entities) because as a practical matter, the
relevant obligation will be performed by a SBU or the relevant agreement will be
entered into by personnel serving a SBU. In all events, any such obligations or
agreements shall, in the case of SBUs that are not Company Entities, constitute
obligations or agreements of the Company Entities of which such SBUs constitute
a division or business grouping.
NOTHING WITHIN THIS DOCUMENT PURPORTS TO EXTEND ADDITIONAL REPRESENTATIONS,
WARRANTIES OR RIGHTS TO A CUSTOMER OR AUTHORIZED DEALER ABOVE AND BEYOND THOSE
REPRESENTATIONS, WARRANTIES AND RIGHTS CONTAINED IN THE CONTRACT BETWEEN SUCH
CUSTOMER OR AUTHORIZED DEALER AND THE RELEVANT COMPANY ENTITIES.
4
<PAGE>
<PAGE>
METHODS AND PROCEDURES REGARDING
GENERAL ALLOCATION OF RESPONSIBILITIES
OVERVIEW AND GENERAL STATEMENT
The foregoing General Allocation of Responsibilities is intended to broadly
define the circumstances in which responsibility for billing, collection and
account enforcement activity is allocated to either a Capital Entity or the SBUs
in situations where a Capital Entity provides Financing for a Customer or
Authorized Dealer. The purpose of these Methods and Procedures is to further
define and amplify the General Allocation of Responsibilities, and to establish
procedures that will facilitate the resolution of issues between the Company
Entities and the Capital Entities. These Methods and Procedures are comprised of
the following:
Attachment A - is a specific listing of circumstances wherein
SBUs will assume responsibility for billing, collection, and
account enforcement activity.
Attachment B - sets forth the procedures to be followed when
dealing with transactions that require SBUs to assume
responsibility for billing, collection, and account
enforcement activity.
Attachment C - sets forth certain equipment remarketing
procedures.
Attachment D - sets forth the general repurchase calculation
methodologies that will apply when SBUs assume the
responsibility for billing, collection, and account
enforcement activity.
Attachment E - sets forth the procedures to be utilized in
calculating net book value.
In preparing these Methods and Procedures, the assumption is made
that every possible action had' been taken, in accordance with the terms and
conditions of the contract between the Customer or Authorized Dealer and the
relevant Company Entities, to resolve issues raised by the Customer or
Authorized Dealer relating to the Product or related service provided by the
Company Entities, and that such actions have not caused the Customer or
Authorized Dealer to honor its financial obligations relative to its Financing
contract with the appropriate Capital Entity.
5
<PAGE>
<PAGE>
Any exception to these Methods and Procedures requires the
consent of all parties to the foregoing General Allocation of Responsibilities
affected by such change.
6
<PAGE>
<PAGE>
Attachment A
LISTING OF COMPANY RESPONSIBILITIES
The appropriate SBU will assume responsibility for billing,
collection, and account enforcement activity of shortfall in a Financing
provided by a Capital Entity when the customer or Authorized Dealer asserts that
its failure to honor its financial obligation under the Financing contract with
the Capital Entity is a result of one or more of circumstances constituting a
Company Responsibility, provided, however, that customer assertions are subject
to the review procedures set forth in Attachment B.
SBU personnel may, on a case by case basis, conclude that
enforcing the terms and conditions of the Financing contract between the
Customer or Authorized Dealer and the appropriate Capital Entities, or the
contract between the Customer or Authorized Dealer and the appropriate Company
Entities, would be inappropriate. When this occurs, the transaction will be
treated as a Company Responsibility.
SBUs shall not be responsible for Financing shortfalls in
situations where a Capital Entity provides Customer Financing that is arranged
through an Authorized Dealer (but not including situations in which a Capital
Entity provides Dealer Financing or customer Financing arranged directly by a
Capital Entity or through a Company Entity), except in the following
circumstances: (x) the Financing shortfall is caused by clause (iii) of the
definition of "Company Responsibility" set forth in Section 7.2 of the
Agreement; (y) the Product does not work or perform in accordance with any
accompanying representation or warranty by a Company Entity; or (z) as a matter
of law or equity the Company Entities are found to be responsible for the
Customer's failure to honor its financial obligation to a Capital Entity.
Except for the matters covered by clause (iii) of the definition
of "Company Responsibility" set forth in Section 7.2 of the Agreement as well as
the immediately preceding paragraphs, a Company Responsibility will only apply
to matters that occur during the term of the warranty and during the term of any
maintenance or service contract of a Company Entity.
NOTHING WITHIN THIS DOCUMENT PURPORTS TO EXTEND ADDITIONAL
REPRESENTATIONS, WARRANTIES OR RIGHTS TO A CUSTOMER OR AUTHORIZED DEALER ABOVE
AND BEYOND THOSE REPRESENTATIONS, WARRANTIES OR RIGHTS CONTAINED IN THE CONTRACT
BETWEEN SUCH CUSTOMER OR AUTHORIZED DEALER AND THE RELEVANT COMPANY ENTITIES.
7
<PAGE>
<PAGE>
Attachment B
SUGGESTED OPERATIONAL PROCEDURES
Within 10 business days of receipt of information of Customer or
Authorized Dealer dissatisfaction and the actual withholding of, or notice from
a Customer or Authorized Dealer of their intention to withhold, payment to the
Capital Entity, the SBU or Capital Entity in receipt of such information will
complete the Initial Equipment Problem Report ("Initial Report") appended hereto
as Exhibit 1, and forward it to the other party.
The SBU will then investigate the merits of any such Customer or
Authorized Dealer assertions and will inform the Capital Entity, within 30
days of the Initial Report Date, if the SBU believes that (1) a Company
Responsibility does exist or (2) further time is needed to investigate the
Customer or Authorized Dealer's assertion. The SBU will advise the Capital
Entity of the course of action it plans to pursue by completing the
Investigatory Response section of the Initial Report, and by returning it to
the Capital Entity within the 30 day time frame noted above. Thereafter, the
Capital Entity and SBU will follow the Action Timetable appended hereto as
Exhibit 2, whereby the SBU will provide the Capital Entity with a Status
Report (Exhibit 3) in intervals of approximately 30 days. IN NO EVENT WILL
SBU'S INVESTIGATION OF A CUSTOMER OR AUTHORIZED DEALER COMPLAINT BE DEEMED AN
ACKNOWLEDGMENT THAT A COMPANY ENTITY OR SBU BEARS ANY RESPONSIBILITY
WHATSOEVER FOR THE ALLEGED PROBLEM.
If the SBU determines that a Company Responsibility exists
("Repurchase Determination"), the SBU will assume the responsibility for
subsequent billing, collection and account enforcement by repurchasing the
Financing contract from the Capital Entity pursuant to the reimbursement
methodology set forth in Attachment D, and in accordance with the timetable
outlined in Exhibit 2. The SBU will make its Repurchase Determination within
120 days of the date of the Initial Report, unless the SBU and the Capital
Entity mutually agree to extend such date. Moreover, the SBU will make its
Repurchase Determination at such earlier date as may be warranted by the
situation, and will thereafter promptly repurchase the Financing contract from
the Capital Entity pursuant to the reimbursement methodology set forth in
Attachment D.
8
<PAGE>
<PAGE>
In instances where an Company Responsibility has, in the SBU's
opinion, been corrected, but the Customer or Authorized Dealer continues to
refuse to make Financing payments to the Capital Entity for the period that
such Company Responsibility existed, in lieu of repurchasing the financing
contract as set forth above, the SBU and the Capital Entity may implement some
other mutually agreeable mechanism to compensate the Capital Entity for the
cost of carrying the non-performing asset during the non-performance period.
In the event that the SBU believes that an Company Responsibility
does not exist, and the Capital Entity initiates enforcement action against the
Customer or Authorized Dealer, and the Capital Entity is unsuccessful in
attempting to enforce its Financing contract because of a determination by a
court, arbitrator or other tribunal that there was an Company Responsibility,
then the SBU will bear responsibility for future billing, collection, and
account enforcement activity.
While a particular case is under review by the SBU as set forth
above, the Capital Entity will not initiate legal action against the Customer or
Authorized Dealer unless it is necessary to preserve the Capital Entity's rights
(in which case the Capital Entity will consult with the SBU before initiating
such legal action).
In the event that the Capital Entity believes that the SBU's
decision as to whether an Company Responsibility exists is in error, the Capital
Entity and the SBU will escalate the issue within their respective
organizations. All inquiries's regarding such matters should be forwarded to
the appropriate individuals within the respective organizations.
In the unusual event that the designated SBU and the Capital
Entity representatives cannot come to agreement as to how to allocate the
responsibility for subsequent billing, collection, and account enforcement
activity on a particular transaction, then such representatives will escalate
the issue to the appropriate level of senior management of the applicable SBU
and Capital Entity for resolution. Any unresolved disputes shall be resolved
pursuant to the arbitration provisions set forth in Article X of the Agreement.
Should a SBU sustain any loss resulting from an offset due to a
genuine breach by a Capital Entity of its Financing contract with the Customer
or Authorized Dealer, the Capital Entity will compensate the SBU for such loss
pursuant to procedures specified herein.
9
<PAGE>
<PAGE>
The responsible SBU may request that the Capital Entity provide post-repurchase
administrative services on transactions that fall under the terms of the General
Allocation of Responsibilities. The Capital Entities shall perform such services
at such terms as are mutually agreeable to both the Capital Entity and SBU.
10
<PAGE>
<PAGE>
Attachment C
REMARKETING PROCEDURES
In those instances where a Company Responsibility exists, the
cost of deinstallation and remarketing the Financed Product falls to the SBU
without contribution from the Capital Entity. In those instances where a Company
Responsibility does not exist, the cost of deinstallation, refurbishment, and
remarketing the Financed Product falls to the Capital Entity.
The SBU shall have the first right of purchase for Financed
Products that come into the possession of the Capital Entity for potential
remarketing, at a price that is mutually agreed to by the parties. This right is
contingent upon the establishment of mutually agreeable mechanisms, methods and
procedures as to how the right of first offer will be implemented and managed on
an ongoing basis.
11
<PAGE>
<PAGE>
Attachment D
REPURCHASE CALCULATION METHODOLOGY
As previously stated, the Capital Entities and Company Entities
do not obtain the full benefit of a customer or Authorized Dealer Financing
unless the Customer or Authorized Dealer fulfills its financial obligation under
its Financing contract with the Capital Entity. Unless otherwise agreed to by an
Company Entity or SBU and Capital Entity with respect to particular types of
Financings, when a Company Responsibility exists, all of the Capital Entity's
right, title and interest in, to and under the Financing and Financed Product
will be repurchased by the SBU from the Capital Entity utilizing the following
methodology to calculate the appropriate price to be paid to the Capital Entity:
(a) Principal Balance Reimbursement:
The Capital Entity shall be compensated for the entire original
amount funded in the event that the Customer or Authorized Dealer made no
payments under the Financing contract, or in cases where the Capital Entity
received payments but is returning the payments to the Customer or Authorized
Dealer as part of a negotiated settlement.
The Capital Entity shall be compensated for the remaining unpaid
principal balance for those transactions where Customer or Authorized Dealer
payments were received and retained by the Capital Entity.
The method to be used to amortize the Customer or Authorized
Dealer transaction to arrive at the remaining unpaid principal balance, at any
given point in time, is the Mortgage Method Adjusted.
(b) Interest Reimbursement:
The Capital Entity shall be compensated for the cost of funds
expense that it incurred to fund a particular transaction. Therefore, for each
transaction where the SBU repurchases a Product from the Capital Entity under
the terms of this Agreement, the following procedures for calculating interest
reimbursement will apply:
12
<PAGE>
<PAGE>
The cost of-funds rate is derived through the cost of funds
report of the Capital Entity for the corresponding week during which the
transaction was originally funded. The appropriate cost of funds rate can be
determined by locating the term of the Financing under the applicable Financing
contract, then locating the appropriate rate for the stated term.
Assuming that there are no Customer or Authorized Dealer
payments, or that whatever payment stream that was made to the Capital Entity is
being returned to the Customer or Authorized Dealer, the Capital Entity shall
receive compound interest for the number of interest periods from the date of
funding to the anticipated date of repurchase by the SBU.
In the event that Customer or Authorized Dealer payments are
retained by the Capital Entity, interest reimbursement at the cost of funds rate
should be calculated from the first interest period after the Capital Entity
receives its final Customer or Authorized Dealer remittance, up to and including
the interest period in which the SBU repurchases the Financing contract from the
Capital Entity.
Late charge income, as a method of compensating for the delay in the originally
anticipated cash flow to the Capital Entity, will not apply to transactions that
fall under the terms of this Schedule.
(c) Sundry Expenses:
The Capital Entity shall be compensated by the SBU for verifiable
out of pocket expenses incurred for transactions that fall under the terms of
this Schedule. This includes such things as litigation expense (where outside
counsel is being retained), costs of collection such as on-sight asset
inspection/inventory, collection agency expense, and deinstallation expense (if
paid by the Capital Entity).
The SBU will not be responsible for soft costs, such as
reimbursement for the time and effort of the Capital Entity employees,
consultants, or temporary employees in resolving such situations.
(d) Other:
It is agreed that, for all transactions that fall under the terms
of this Schedule, the Capital Entity will in no event receive a repurchase price
that is less than its
13
<PAGE>
<PAGE>
net book value, which is calculated in accordance with the description
hereinafter contained.
In some instances a Company Responsibility can be resolved by
unwinding only a portion of the transaction, as opposed to a complete repurchase
of the account by the responsible SBU. When this occurs the Capital Entity and
SBU shall apply the methodologies contained in this Schedule on that percentage
of the transaction that is being unwound, in order to arrive at the appropriate
amount to be paid to the Capital Entity by the SBU.
14
<PAGE>
<PAGE>
Attachment E
CALCULATING NET BOOK VALUE
Net Book Value (NBV) is the remaining net investment in the lease
recorded in accordance with generally accepted accounting principles as defined
by the Financial Accounting Standards Board (FASB No. 13). More specifically,
the methodologies utilized in the calculation of NBV vary depending upon the
type of Financing being contemplated. The following is a description of the
calculation methodologies by type of Financing:
(a) Direct Finance Lease:
NBV is calculated via Mortgage Method Adjusted amortization from
the original amount Financed (less any advance Customer or Authorized Dealer
payments), down to the accounting residual value, or the term of the Financing,
at the true implicit rate (which is the internal rate of return of the
anticipated accounting revenue stream).
(b) Operating Lease:
NBV is calculated by straight line depreciation, depreciating
from the original Product cost down to the accounting residual value at the end
of the firm term.
Transactions for which no Customer or Authorized Dealer payments
have been made will have a NBV as of Period 0. Transactions for which Customer
or Authorized Dealer payments have been received and retained by the Capital
Entity will have a NBV as of the period number which is equal to the total
number of payments received and retained (i.e., if four (4) payments ire made
and retained, NBV as of Period 4). Transactions for which Customer or Authorized
Dealer payments have been made but will be returned to the Customer or
Authorized Dealer by the Capital Entity will have a NBV as of the period number
which is equal to the total number of payments made. In addition, the Capital
Entity will be reimbursed for Customer or Authorized Dealer payments returned to
the Customer or Authorized Dealer.
The Capital Entities reserve the right to alter the methodology
for calculation of NBV and income recognition as required by the Financial
Accounting Standards Board and shall provide advance written notice to the
appropriate SBU prior to the implementation of-any contemplated change.
15
<PAGE>
<PAGE>
Attachment F
POST-REPURCHASE ALLOCATION OF REPURCHASE MONIES
The General Allocation of Responsibilities defines, among other
things, circumstances under which the SBUs will assume responsibility for the
billing, collection, and account enforcement, which is accomplished via the
repurchase of the Financing from the Capital Entity for transactions that are
Company Responsibilities. The SBUs recognize that the assumption of the
referenced responsibilities may result from problems under their direct control,
or from problems under the direct control of some other SBU (i.e., selling SBU
differs from Product-owning SBU).
The SBUs shall negotiate, within a reasonable time frame after the date hereof,
the methods and procedures necessary to allocate the repurchase price paid to
the Capital Entity by the SBU which has been deemed to be responsible for the
Financing shortfall.
16
<PAGE>
<PAGE>
Exhibit 1
PRODUCT / SERVICE PROBLEM REPORT
FOR CAPITAL ENTITY FINANCED TRANSACTION
*****INITIAL REPORT*****
</TABLE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Report Originator: [ ] Company Entity [ ] Capital Entity Date:
(Name): Room
Address: Branch Code (Company Entity)
Address: Telephone:
- -----------------------------------------------------------------------------------------------------------
Customer/Authorized Dealer Bill
Name: Units:
Address: Contact:
Address: Telephone:
Original Date Funded: Amount Funded:
- -----------------------------------------------------------------------------------------------------------
PROBLEM TYPE:
[ ] Product [ ] Service [ ] Warranty [ ]Other
Date First Notified of Problem: By Whom:
A Brief Description of Problem:
Resolution/Recommendation/Comments:
- -----------------------------------------------------------------------------------------------------------
INVESTIGATORY RESPONSE; Date:
By (Name): Room
Address: Branch Code (Company Entity)
Address: Telephone:
</TABLE>
17
Resolution/Recommendation/Comments:
18
<PAGE>
<PAGE>
Exhibit 2
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
ACTION TIMETABLE
- ---------------------------------------------------------------------------------------------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
CASE DAYS CAPITAL ENTITY ACTION SBU ACTION REQUIRED ACTION DAYS
- ----------- ---------------------------------- ---------------------------------- -----------------------------
<S> <C> <C> <C>
0 1) Becomes aware of alleged 1) Completion of Initial Report The Initial Report to be
Product/service related if problem surfaces through c). prepared and forwarded
problem, through: within 10 days of learning
a) Collection efforts of the alleged problem.
b) Customer or Authorized
Dealer contact
c) Contacted by SBU
2) Completion of Initial Report
(Exhibit 1) if problem
---------
surfaces through a) or b)
above.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
1-30 Continue billing and collection Status Report to Capital Entity Within 30 days of first
activity, unless otherwise via the Investigator Response Case Day.
agreed. section of the Initial Report.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
31-60 Continue billing and collection Status Report to Capital Entity Within 60 days of first
activity, unless otherwise if not resolved by day 60. Case Day.
agreed.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
61-90 Continue billing and collection Status Report to Capital Entity Within 90 days of first
activity, unless otherwise if not resolved by day 90. Case Day.
agreed.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
91-120 Continue billing and collection (1) Status Report to Capital Within 120 days of first
activity pending SBU decision. Entity if not resolved by Case Day.
Case Day 120.
(2) By Case Day 120 SBU will
advise Capital Entity that is
taking one of the following
courses of action:
a) continue problem resolution
but SBU will assume the
responsibility for billing,
collection, and account
enforcement until problem is
resolved.
b) SBU will assume the
responsibilities stated in (a)
above and will deal directly
with the customer.
c) inform Capital Entity that
the
</TABLE>
19
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
SBU has performed its
obligations, and that an AT&T
Responsibility does not exist.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
121-150 1) If SBU opts for a) or b) Within 150 days of first
above, Capital Entity will Case Day.
prepare a repurchase calculation
worksheet and forward it to the
SBU for payment processing
(along with repurchase
calculation backup and invoice).
2) If SBU chooses c) above,
Capital Entity may take whatever
action it deems appropriate,
including enforcement action
against the customer.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
151-180 If SBU has decided to assume the If SBU is to assume Within 180 days of first
responsibility for billing, responsibility for billing, Case Day.
collection, and account collection, and account
enforcement activity, Capital enforcement, it will verify that
Entity will close billing and the repurchase price is properly
collection efforts upon receipt calculated, obtain necessary
of the repurchase amount or 180 internal approvals and paperwork
days from the first Case Day to generate the repurchase
whichever occurs earlier. check, and forward the check to
Capital Entity.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
- ----------- ---------------------------------- ---------------------------------- -----------------------------
181-120 Upon receipt of SBU repurchase Retain Capital Entity documents Within 15 days of receipt
check: for future use, if any. of repurchase check.
(1) send all original documents
to SBU;
(2) execute an assignment form,
transferring all right, title,
and interest to SBU; and
(3) execute the appropriate
UCC documents to assign an
perfected security interest to
SBU.
- ----------- ---------------------------------- ---------------------------------- -----------------------------
</TABLE>
20
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Exhibit 3
*****Status Report *****
********************************************************************************************************************************
Initial Report Originator: ( ) Company Entity ( ) Capital Entity Date:______________________
By (Name): ______________________________________________________ Room #: _____________________________________________
Address: ______________________________________________________ Branch Code (Company Entity): __________________________
Address: ______________________________________________________ Telephone: _____________________________________________
********************************************************************************************************************************
CUSTOMER/AUTHORIZED DEALER INFORMATION:
Customer/Authorized Dealer Bill
Name: _______________________________________________________ Units: ________________________________________________
Address: _______________________________________________________ Contact:________________________________________________
Address: _______________________________________________________ Telephone:______________________________________________
********************************************************************************************************************************
FOLLOWUP INFORMATION:
( ) Problem Resolved ( ) No Problem Exists ( ) Problem Not Resolved
( ) Problem Resolution Expected By: ______________________________________________________________________________________
Brief Description of Current Efforts: ______________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
Resolution/Recombination/Comments: _____________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
********************************************************************************************************************************
RECEIVERS RESPONSE (IF ANY): Date: ________________________________________________________
By (Name): _____________________________________________ Room #:________________________________________________________
Address: _____________________________________________ Branch Code (Company Entity):__________________________________
Address: _____________________________________________ Telephone:_____________________________________________________
Resolution/Recombination/Comments: _____________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
________________________________________________________________________________________________________________________________
********************************************************************************************************************************
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 11
Form 10-K for 1995
File No. 1-11237
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Thousands except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income before cumulative
effect of accounting
change $127,555 $100,336 $ 71,510 $ 73,572 $ 54,199
Cumulative effect on
prior years of
accounting change - - (2,914) - -
- ---------------------------------------------------------------------------
Net income $127,555 $100,336 $ 68,596 $ 73,572 $ 54,199
===========================================================================
Primary
Average shares
outstanding* 46,948 46,876 42,969 40,250 40,250
Net effect of dilutive
stock options - based
on the treasury
method using average
market price 234 30 33 - -
- ---------------------------------------------------------------------------
Total 47,182 46,906 43,002 40,250 40,250
===========================================================================
Per share amounts:
Income before cumulative
effect of accounting
change $ 2.70 $ 2.14 $ 1.67 $ 1.83 $ 1.35
Cumulative effect on
prior years of
accounting change - - (.07) - -
- ---------------------------------------------------------------------------
Net income $ 2.70 $ 2.14 $ 1.60 $ 1.83 $ 1.35
===========================================================================
</TABLE>
1
<PAGE>
<PAGE>
EXHIBIT 11
Form 10-K for 1995
File No. 1-11237
AT&T CAPITAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Thousands except per share data)
(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fully Diluted**
Average shares
outstanding* 46,948 46,876 42,969 40,250 40,250
Net effect of dilutive
stock options - based on the
treasury method using the
greater of the average market
price or year end price 507 30 33 - -
- ---------------------------------------------------------------------------
Total 47,455 46,906 43,002 40,250 40,250
===========================================================================
Per share amounts:
Income before cumulative
effect of accounting
change $ 2.69 $ 2.14 $ 1.67 $ 1.83 $ 1.35
Cumulative effect on
prior years of
accounting change - - (.07) - -
- ---------------------------------------------------------------------------
Net income $ 2.69 $ 2.14 $ 1.60 $ 1.83 $ 1.35
===========================================================================
</TABLE>
* 1992 and 1991 shares are restated to give effect to a 402,500-for-one stock
reclassification.
** This calculation is submitted in accordance with Regulation S-K item 601 (b)
11 although not required by footnote 2 to paragraph 14 of APB Opinion No. 15
because it results in dilution of less than 3 %.
2
<PAGE>
<PAGE>
EXHIBIT 12
Form 10-K for 1995
File No. 1-11237
AT&T CAPITAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31, 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings from continuing
operations:
Income before
income taxes
and extraordinary
loss $208,239 $173,614 $138,040 $114,875 $ 82,559
Deduct undistributed
earnings on equity
investments, net of
losses - - - - (14)
Add fixed charges
included in income
before income taxes
and cumulative effect
of accounting change 418,624 277,913 242,100 258,312 279,926
- ---------------------------------------------------------------------------
Total earnings from
continuing
operations, as
adjusted $626,863 $451,527 $380,140 $373,187 $362,471
- ---------------------------------------------------------------------------
Total fixed charges* $418,624 $277,913 $242,100 $258,312 $279,926
Ratio of earnings
to fixed charges 1.50 1.62 1.57 1.44 1.29
- ---------------------------------------------------------------------------
</TABLE>
* Fixed charges include interest on indebtedness, preferred stock
dividends and the portion of rentals representative of the interest
factor.
1
<PAGE>
<PAGE>
EXHIBIT 21
Form 10-K for 1995
File No. 1-11237
SUBSIDIARIES OF AT&T CAPITAL CORPORATION
(AS OF DECEMBER 31, 1995)
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION
OF INCORPORATION
NAME OF SUBSIDIARY OR ORGANIZATION
<S> <C>
AT&T Automotive Services, Inc. Delaware
AT&T Capital Canada, Inc.(1) Ontario, Canada
Capita Canadian Trust Ontario, Canada
AT&T Capital FSC, Inc. Barbados
AT&T Capital Limited England & Wales
AT&T Capital (Automotive Services) Limited England & Wales
Keep Leasing Limited England & Wales
AT&T Commercial Finance Corporation (2) Delaware
ATMOR Properties Inc. (in trust) Delaware
AT&T Capital Leasing Services, Inc. (3) Massachusetts
The Lease Factor, Inc. Massachusetts
Eaton Express Corporation Massachusetts
AT&T Capital Services Corporation Delaware
AT&T Systems Leasing Corporation Michigan
AT&T Credit Corporation Delaware
AT&T Credit International, Inc. Delaware
AT&T Credit Consumer Finance Corporation Delaware
AT&T Credit Corporation of Puerto Rico Delaware
NCR Credit Corp. Delaware
AT&T Small Business Lending Corporation Delaware
Capita Beteiligungs AG Germany
Capita Global Finance Corporation Delaware
Capita Hungary Trading and Servicing Company Hungary
Limited (also known as Capita Hungary Ltd.)
Capita International L.L.C. Delaware
Arrendadora Capita Corporation, S.A. de C.V. Mexico
Capita Servicios, S.A. de C.V. Mexico
The Capita Corporation de Mexico, S.A. de C.V. (4) Mexico
Capita Resources, Inc. Delaware
Capital Syndication Corporation Delaware
The Capita Corporation Australia Limited (5) Australia
Hunter Leasing Limited Australia
Lonsfield Pty. Ltd (6) Australia
The Capita Corporation Holding B.V. Netherlands
Capita Holding France, S.A. France
The Capita Corporation Finance France, S.N.C. France
The Capita Corporation Location France, S.N.C. France
</TABLE>
1
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Capita Holdings U.K. Limited England & Wales
AT&T Capital (Vendor Services) Limited England & Wales
Capita Holding Germany GmbH Germany
Capita AG & Co. Germany
Capita Corporation Italy, S.p.A. Italy
The Capita Corporation AG Switzerland
The Capita Corporation NV/SA Belgium
The Capita Corporation de Argentina S. A. Argentina
The Capita Corporation Hong Kong Limited (7) Hong Kong
The Capita Corporation New Zealand Limited New Zealand
The Equipment Insurance Company Vermont
</TABLE>
(*) All subsidiaries do business under their corporate names, and the other
names indicated in the footnotes below.
(1) Hyster Credit Company
(2) Hyster Credit Company and JCB Finance Company
(3) Eaton Financial Company
(4) AT&T Capital de Mexico and The Capita Corporation
(5) AT&T Capital Corporation and The Capita Corporation
(6) The Capita Corporation Australia Limited
(7) AT&T Capital Corporation
2
<PAGE>
<PAGE>
Exhibit 23
Form 10-K for 1995
File No. 1-11237
CONSENT OF INDEPENDENT AUDITORS
-------------------------------
We consent to the incorporation by reference in the registration statements of
AT&T Capital Corporation and Subsidiaries on Forms S-3 (File No. 33-61003) and
S-8 (File Nos. 33-49877 and 33-54315) of our reports dated January 25, 1996,
which include explanatory paragraphs that describe the Company's change in its
method of accounting for income taxes in 1993, on our audits of the consolidated
financial statements and financial statement schedule of AT&T Capital
Corporation and Subsidiaries as of December 31, 1995 and 1994, and for the years
ended December 31, 1995, 1994 and 1993, which reports are included in this
Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
1301 Avenue of the Americas
New York, New York
March 6, 1996
1
<PAGE>
<PAGE>
EXHIBIT 24(a)
Form 10-K for 1995
File No. 1-11237
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
Joseph J. Melone
-------------------------
Joseph J. Melone
Director
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 1st day of March, 1996, personally appeared before me, Joseph J.
Melone, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Janet Hannon
-----------------------
Notary Public
Janet Hannon
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR. and EDWARD M. DWYER, and each of them, as attorneys for him and in his
name, place and stead, and in each of his offices and capacities as a director,
an officer, or both an officer and a director of the Company, to execute and
file such annual report on Form 10-K, and thereafter to execute and file any
amendment or amendments thereto on Form 8, hereby giving and granting to said
attorneys full power and authority to do and perform each and every act and
thing whatsoever requisite and necessary to be done in and about the premises,
including the use or transmission of any personal identification numbers
assigned to the undersigned by the Securities and Exchange Commission, as fully,
for all intents and purposes, as the undersigned might or could do if personally
present at the doing thereof, hereby ratifying and confirming all that said
attorneys may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
Thomas C. Wajnert
-------------------------
Thomas C. Wajnert
Director, Chairman of the Board
and Chief Executive Officer
STATE OF NEW JERSEY )
) ss.:
COUNTY OF MORRIS )
On the 1st day of March, 1996, personally appeared before me, Thomas C.
Wajnert, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Suzanne M. Queally
-----------------------
Notary Public
Suzanne M. Queally
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
John P. Clancey
-------------------------
John P. Clancey
Director
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
On the 1st day of March, 1996, personally appeared before me, John P.
Clancey, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Joanne L. Quiring
-----------------------
Notary Public
Joanne L. Quiring
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
William B. Marx, Jr.
-------------------------
William B. Marx, Jr.
Director
STATE OF NEW JERSEY )
) ss.:
COUNTY OF UNION )
On the 1st day of March, 1996, personally appeared before me, William B.
Marx, Jr., to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Janice Mitchell
-----------------------
Notary Public
Janice Mitchell
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
James P. Kelly
-------------------------
James P. Kelly
Director
STATE OF GEORGIA )
) ss.:
COUNTY OF FULTON )
On the 1st day of March, 1996, personally appeared before me, James P.
Kelly, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Linda E. Thornton
-----------------------
Notary Public
Linda E. Thornton
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
Gerald M. Lowrie
-------------------------
Gerald M. Lowrie
Director
DISTRICT OF COLUMBIA )
) ss.:
)
On the 1st day of March, 1996, personally appeared before me, Gerald M.
Lowrie, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Linda L. Mangum
-----------------------
Notary Public
Linda L. Mangum
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under her name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for her and in her name, place and stead, and in each of her offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 7th day of March, 1996.
Marilyn J. Wasser
-------------------------
Marilyn J. Wasser
Director
STATE OF NEW JERSEY )
) ss.:
COUNTY OF MORRIS )
On the 7th day of March, 1996, personally appeared before me, Marilyn J.
Wasser, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that she executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 7th day of March, 1996.
Ann E. McNee
-----------------------
Notary Public
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
Richard A. McGinn
-------------------------
Richard A. McGinn
Director
STATE OF NEW JERSEY )
) ss.:
COUNTY OF UNION )
On the 1st day of March, 1996, personally appeared before me, Richard A.
McGinn, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1sr day of March, 1996.
Janice Mitchell
-----------------------
Notary Public
Janice Mitchell
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
S. Lawrence Prendergast
-------------------------
S. Lawrence Prendergast
Director
STATE OF NEW JERSEY )
) ss.:
COUNTY OF SOMERSET )
On the 1st day of March, 1996, personally appeared before me, S.
Lawrence Prendergast, to me known, and known to me to be the person described in
and who executed the foregoing instrument and duly acknowledged that he executed
and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Jacqueline C. Dawson
-----------------------
Notary Public
Jacqueline C. Dawson
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 4th day of March, 1996.
Brooks Walker, Jr.
-------------------------
Brooks Walker, Jr.
Director
STATE OF CALIFORNIA )
) ss.:
CITY & COUNTY OF SAN FRANCISCO )
On the 4th day of March, 1996, personally appeared before me, Brooks
Walker, Jr., to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 4th day of March, 1996.
Gail J. Strack
-----------------------
Notary Public
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints EDWARD
M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys for him and in
his name, place and stead, and in each of his offices and capacities as a
director, an officer, or both an officer and a director of the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute and
file any amendment or amendments thereto on Form 8, hereby giving and granting
to said attorneys full power and authority to do and perform each and every act
and thing whatsoever requisite and necessary to be done in and about the
premises, including the use or transmission of any personal identification
numbers assigned to the undersigned by the Securities and Exchange Commission,
as fully, for all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
Ramon Oliu, Jr.
-------------------------
Ramon Oliu, Jr.
Vice President and Controller
STATE OF NEW JERSEY )
) ss.:
COUNTY OF MORRIS )
On the 1st day of March, 1996, personally appeared before me, Ramon
Oliu, Jr., to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Ann E. McNee
-----------------------
Notary Public
Ann E. McNee
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR. and THOMAS C. WAJNERT, and each of them, as attorneys for him and in
his name, place and stead, and in each of his offices and capacities as a
director, an officer, or both an officer and a director of the Company, to
execute and file such annual report on Form 10-K, and thereafter to execute and
file any amendment or amendments thereto on Form 8, hereby giving and granting
to said attorneys full power and authority to do and perform each and every act
and thing whatsoever requisite and necessary to be done in and about the
premises, including the use or transmission of any personal identification
numbers assigned to the undersigned by the Securities and Exchange Commission,
as fully, for all intents and purposes, as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
Edward M. Dwyer
-------------------------
Edward M. Dwyer
Senior Vice President and
Chief Financial Officer
STATE OF NEW JERSEY )
) ss.:
COUNTY OF MORRIS )
On the 1st day of March, 1996, personally appeared before me, Edward M.
Dwyer, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Ann E. McNee
-----------------------
Notary Public
Ann E. McNee
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AT&T CAPITAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1934, as
amended, an annual report on Form 10-K; and
WHEREAS, the undersigned is a director, an officer, or both an officer
and a director of the Company, as indicated below under his name:
NOW, THEREFORE, the undersigned hereby constitutes and appoints RAMON
OLIU, JR., EDWARD M. DWYER and THOMAS C. WAJNERT, and each of them, as attorneys
for him and in his name, place and stead, and in each of his offices and
capacities as a director, an officer, or both an officer and a director of the
Company, to execute and file such annual report on Form 10-K, and thereafter to
execute and file any amendment or amendments thereto on Form 8, hereby giving
and granting to said attorneys full power and authority to do and perform each
and every act and thing whatsoever requisite and necessary to be done in and
about the premises, including the use or transmission of any personal
identification numbers assigned to the undersigned by the Securities and
Exchange Commission, as fully, for all intents and purposes, as the undersigned
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do, or cause to be
done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of March, 1996.
Richard W. Miller
-------------------------
Richard W. Miller
Director
STATE OF NEW JERSEY )
) ss.:
COUNTY OF MORRIS )
On the 1st day of March, 1996, personally appeared before me, Richard W.
Miller, to me known, and known to me to be the person described in and who
executed the foregoing instrument and duly acknowledged that he executed and
delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 1st day of March, 1996.
Ann E. McNee
-----------------------
Notary Public
Ann E. McNee
<PAGE>
<PAGE>
EXHIBIT 24(b)
Form 10-K for 1995
File No. 1-11237
CERTIFICATE OF CORPORATE RESOLUTION
I, Robert J. Ingato, an Assistant Secretary of AT&T Capital Corporation,
hereby certify that the following resolutions were duly adopted by the Audit
Committee of AT&T Capital Corporation's Board of Directors at a meeting held on
March 1, 1996:
RESOLVED: that the Company's Annual Report on Form 10-K for 1995
substantially in the form presented to the Committee at this meeting is
approved, with such changes as the Chief Financial Officer may approve, provided
that any material changes will also be approved by the General Counsel and the
Chief Executive Officer and that the Audit Committee will be advised of any
material changes made in the financial statements (or related notes) in the Form
10-K; and
FURTHER RESOLVED: that the Chief Executive Officer, the Chief Financial
Officer and the Controller are each severally authorized to sign the Form 10-K
in the name and on behalf of the Company.
Robert J. Ingato
Dated: March 6, 1996 Robert J. Ingato
<TABLE> <S> <C>
<PAGE>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information primarily extracted
from AT&T Capital Corporation's audited consolidated income statement and
balance sheet for and at the year ended December 31, 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> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,961
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> (223,220)
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F2>
<PP&E> 0
<DEPRECIATION> (642,728) <F1>
<TOTAL-ASSETS> 9,541,259
<CURRENT-LIABILITIES> 0 <F2>
<BONDS> 4,716,058
<COMMON> 470
0
0
<OTHER-SE> 1,115,655
<TOTAL-LIABILITY-AND-EQUITY> 9,541,259
<SALES> 48,724
<TOTAL-REVENUES> 1,577,035
<CGS> 43,370
<TOTAL-COSTS> 397,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 86,214
<INTEREST-EXPENSE> 411,040
<INCOME-PRETAX> 208,239
<INCOME-TAX> 80,684
<INCOME-CONTINUING> 127,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 127,555
<EPS-PRIMARY> 2.70
<EPS-DILUTED> 2.70
<FN>
<F1> Accumulated depreciation relates to equipment under operating
leases.
<F2> This item is not applicable since the Company does not prepare a
classified balance sheet.
</FN>
