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NATIONAL DATA CORPORATION
1994 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Item 1. BUSINESS
Item 2. PROPERTIES
Item 3. LEGAL PROCEEDINGS
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
EXECUTIVE OFFICERS OF THE REGISTRANT
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Item 6. SELECTED FINANCIAL DATA
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Part III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item 11. EXECUTIVE COMPENSATION
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
PART I
Item 1. BUSINESS
General
National Data Corporation (the "Company"), incorporated in 1967,
is focused on providing value-added systems and services to the health
care, integrated payment systems, and government and corporate markets.
In the health care area the Company engages principally in providing
practice management systems and electronic claims processing,
adjudication and clinical data base information for pharmacies,
dentists, physicians, hospitals, health maintenance organizations
("HMO's"), clinics, nursing homes and other health care markets. The
Company also provides integrated payment systems solutions such as
credit card, debit card and check verification/guarantee services for
retailers, health care providers, universities and colleges and
government agencies. The Company also provides cash management,
information reporting and electronic data interchange ("EDI") services
for corporate and government customers. In addition, the Company has
developed electronic tax payment and filing systems. Services are
provided through centralized host, distributed microprocessor-based and
value-added telecommunications networks accessing real-time information
processing systems capable of sending and receiving information
utilizing a variety of terminals, PC's and other communication devices.
The network operates seven days a week, 24 hours per day.
The Company is one of the largest independent providers of
value-added applications systems and services for the health care and
integrated payment systems markets in the United States.
Services
The Company's products and services are provided in the
following lines of business: (i) health care application systems and
services, (ii) integrated payment systems, (iii) government and
corporate information systems and services and (iv) international
services. A decision was made to exit the communication services
business in 1991. All remaining communication services contracts are
expected to expire during the coming fiscal year ending May 31, 1995,
and the amount of future business is not material.
HEALTH CARE APPLICATION SYSTEMS AND SERVICES (HCASS)
HCASS is a leading provider of a full range of products and
services to address health care cost containment and improved patient
care issues. The Company's complete line of products includes practice
management systems and electronic claims processing, adjudication and
payment systems, funding capabilities and clinical data base
information for pharmacies, dentists, physicians, hospitals, HMO's,
clinics and nursing homes. Approximately 31% of the Company's revenue
in fiscal 1994 was derived from these products and services. This is
the fastest growing portion of the Company's business.
The Company's DataStat pharmacy practice management systems
provide solutions for independent and chain pharmacies, hospitals,
HMO's, clinics and nursing homes. The systems enable the pharmacist to
manage and perform patient registration, drug record-keeping, private
and third-party billing, inventory control and ordering, automatic price
updating, management reporting and drug database updates to detect
clinical dispensing and prescribing errors. DataStat systems provide
value-added claims processing and switching services as well. The
services are offered through systems that are sold and maintained by the
Company and tailored to the needs of users utilizing micro- and mini-
computer platforms selected for the needs of each particular customer.
The Company's electronic point-of-sale systems meet the requirements of
retail pharmacies and are fully integrated into the DataStat product
line, providing credit and debit card processing capabilities and other
associated functions such as inventory reporting and ordering.
During fiscal 1994 the Company brought to market the NDC Dental
System and began shipping in August 1994. The NDC Dental System
operates in a Windows environment on IBM compatible personal computers.
This new system incorporates the business automation functions of the
DataStat dental system with advanced clinical functionality. The
Company's DataStat dental practice management system is designed to
provide dentists with patient record accounting, patient scheduling and
recall, billing and collection, and insurance claims information and
electronic processing to improve the efficiency of office management.
In July 1994 the Company acquired the assets and business of
Lytec Systems, Inc. ("Lytec"), a Salt Lake City, Utah based provider of
practice management systems to the physician market. Lytec is a leading
provider of practice management syst ems to this market, with
approximately 6,000 users. The Lytec products complement the Company's
current practice management and value-added transaction processing
capabilities.
The Company's EasyClaim real-time electronic claims processing
service is offered to pharmacies, dentists, hospitals, HMO's and
preferred provider organizations. The service includes eligibility
verification, patient-specific benefit coverage, claims data capture and
editing, claim adjudication, and retrospective and prospective drug
utilization review. Electronic claims processing represents the
Company's fastest growing service. The network includes approximately
49,000 health care provider locations. Approximately 375 million real-
time electronic claims were processed in fiscal 1994, increasing 50%
over the prior year.
The Company's practice management systems are primarily marketed
directly through the Company's personnel and jointly with pharmaceutical
wholesalers. The practice management system for the physicians' market
is sold through third parties and direct marketing. There is no
dominant competitor in the practice management systems market. The
Company competes principally with General Computer Corporation, QS/1 and
the 3PM unit of McKesson Corporation in the pharmacy systems market.
The principal competitors in the dental systems market are Softdent and
Dentech. The main competitors in the physicians' system market are The
Computer Place's MediSoft product and Medical Manager, sold by Systems
Plus, Inc.
In the electronic claims processing market, in which the
Company's services are offered directly through Company personnel, the
Company's principal competitors are General Computer Corporation, Envoy
Corporation, and Electronic Data Systems. The Company believes that it
is the leading provider of real-time electronic claims processing
services based on the number of transactions processed. Its value-
added services, such as adjudication and clinical data bases, help
distinguish the Company from those competitors who only serve as a
transaction switch.
Revenue for HCASS products and services is based upon software
license fees and purchase or lease payments for the practice management
systems, together with recurring monthly maintenance and support fees,
as well as upgrade charges for new applications capabilities. Fees for
the electronic claims processing services are based on a per transaction
rate, with the rate varying depending upon the scope of services
provided.
INTEGRATED PAYMENT SYSTEMS
The Company's Integrated Payment Systems ("IPS") unit provides a
wide range of payment system alternatives to the retail, health care
and government segments of this market. Its name was changed from
"Retail Application Systems and Services" to reflect the significant
changes made during this past fiscal year to broaden the product lines
and distribution channels in this area. Credit card, debit card, check
verification and check guarantee services are provided through direct
distribution to merchants as well as indirectly through financial
institutions. Approximately 55% of the Company's fiscal 1994 revenue
was derived from these services.
The services provided by this unit, for both the direct and
indirect distribution channels, include credit and debit card
authorization, data capture and product and customer support functions,
primarily for VISA and MasterCard bank cards. All major cards are
supported, however, including American Express, Discover and private
label cards. In addition, for merchants with a direct relationship,
the Company performs the financial settlement between the merchant and
the card associations . With the direct relationship the Company
performs a variety of services, including a thorough credit review of
all prospective merchants. Other functions performed include funding of
the credit/debit card sale, reconciliation of the financial settlement
and resolution of disputes between the Company's merchants and the
cardholder. Fees for these services are principally based on the dollar
volume of transactions processed directly for merchants and a per
transaction rate for financial institutions where the Company indirectly
serves the merchant.
In June 1994 the Company expanded its payment system services to
include check guarantee in addition to check verification services.
This was done through the acquisition of the assets and business of Yes
Check, Inc. Check verification differs from check guarantee in that in
the former the Company verifies that the individual presenting a check
at the point-of-sale does not have a history of writing uncollectable
checks. In the case of check guarantee, the Company not only verifies
the transaction; it also guarantees the retailer that it will be paid.
If a check is not paid, the Company reimburses the retailer and assumes
the right to collect from the individual writing the check. Fees in the
check verification business are based on a per transaction rate, whereas
fees in the check guarantee market are based upon a percentage, or
discount, of the face value of each check guaranteed by the Company.
During fiscal 1994 the Company announced its new procurement
card service. This service is aimed at corporate purchases of high-
volume, small dollar items. The product is credit card-based and is
intended to significantly reduce the cost of making such small
purchases, while at the same time provide the corporate purchasing
department needed controls and management information relating to its
purchases.
The Company provides credit and debit authorizations utilizing
dial terminals, electronic cash registers, and proprietary personal
computer applications. These systems provide financial institutions and
merchants with a comprehensive, nation wide authorization network for
credit cards, debit cards and checks. They also provide information
data collection and reporting through point-of-sale terminal devices
located at the merchant's place of business. Authorization requests are
transmitted from the merchant to the Company and then to the
appropriate source of the purchaser's credit file. The response is then
relayed to the merchant. Approximately 95% of all transactions
authorized are processed electronically.
The Company also provides electronic data capture (EDC) systems
which incorporate the capabilities of its electronic point-of-sale
authorization system, combined with enhanced software, to enable the
Company to electronically capture the entire transaction and transmit
the necessary value-added information directly to the Company's central
computer system for faster clearing through the banking system. This
allows the merchant organization quicker access to its funds and avoids
the necessity and cost of physically processing paper charge slips.
Specialized value-added applications for specialty retailers,
restaurants, hotels and oil companies are marketed by the Company. In
addition, EDC is included in certain of the Company's he alth care
application systems and services products.
The Company's tax payment product provides for the electronic
payment of corporate taxes. The Company initiates the electronic funds
transfer process for payment of the taxes due, while delivering the
information summary to the appropriate government agency. The Company's
tax filing product provides electronic filing of corporate tax returns.
The Company markets its integrated payment products and services
principally through its bank relationships, independent contractors and
its own personnel. The principal competition includes First Data
Corporation, First Financial Management Corporation and Card
Establishment Services, Inc., depending on the particular market
segment. Revenue in the IPS market has been affected by several
industry trends. First, the continued shift from voice to electronic
transaction processing has negatively impacted revenue due to the
significant difference in price per transaction. Second, the sale by
banks of their merchant processing businesses and the resulting loss of
their merchant customers if the acquirer performs its own processing h
as adversely affected revenue. Third, portions of the IPS market also
experienced continued price competition in fiscal 1994 and the Company
believes this pressure will continue. The pressure has reflected
itself in a lower price per transaction trend in the indirect portion
of the IPS business. However, the Company's price adjustments have
been partially offset by higher volume and longer term contract
commitments from customers. At the same time, the Company has reduced
its costs of doing business through the use of new technology, new
telecommunications arrangements and internal productivity programs.
Operating nationwide and serving approximately 80,000 merchant
locations directly, and over 200 financial institutions supporting an
estimated 270,000 merchant locations, the Company is one of the leading
merchant processing companies in the nation.
GOVERNMENT AND CORPORATE INFORMATION SYSTEMS AND SERVICES (GCISS)
GCISS services include cash management, tax payment and filing,
information reporting and electronic data interchange (EDI). The
services are designed to provide financial, management and operational
data to corporate and government institutions worldwide. Approximately
10% of the Company's fiscal 1994 revenue was derived from these
services.
Cash management products and services provide an electronic
window for the transmission of financial and other information
worldwide. GCISS provides solutions to meet corporate needs including
multi-bank, multi-currency account activity; balance and transaction
detail information; wire transfer capabilities; automated clearinghouse
(ACH) funds transfer initiations; and cash concentration services.
Corporate and government organizations use these services to collect,
consolidate and report financial, administrative and operating data from
more than 200,000 locations.
The Company's EDI service translates business-to-business
communications into standard or custom formats allowing the customer to
electronically exchange payments and remittance information with its
trading partners.
The Company's bank deposit reporting, bank balance reporting,
and other financial and information services are offered in competition
with systems operated in-house by banks, with systems offered by other
third parties and with methods traditionally used by companies to
report and compile bank deposits.
INTERNATIONAL SERVICES
Internationally, the Company provides certain of its products
and services. These include the credit and debit card processing, cash
management, information reporting and health care application systems
and services products discussed above. Services are marketed in
Europe, Canada and Japan through the Company's personnel. Approximately
2% of the Company's fiscal 1994 revenue was derived from these
services.
COMMUNICATIONS SERVICES
The Company is exiting this business. Communications services
include operator services offered to both long distance and local
exchange telecommunications carriers. The Company has reduced its
dependence on communications services since the fourth quarter of the
fiscal year ended May 31, 1991 when the Company decided to phase down
this portion of its business. A small volume of communications services
business continues at this time. The Company expects that substantially
all of this business will be terminated during fiscal 1995.
Approximately 2% of the Company's fiscal 1994 revenue was derived from
these services.
At the end of fiscal 1993 the Company arranged an outsourcing
arrangement with a third party to buffer its work load as this business
was phased down. The Company also transferred its Tucker, Georgia,
voice center to this third party. In conjunction with the transaction,
the Company entered into an agreement to obtain certain voice operator
services from the purchaser for a three year period to supplement the
Company's remaining voice centers located in Dallas, Texas and Toronto,
Canada.
GOVERNMENT BUSINESS
Approximately 4% of the Company's total revenue during fiscal
1994 was derived from contracts with, or as a subcontractor of
contractors with, the United States government. All such contracts and
subcontracts are generally subject to termination at the convenience of
the United States Government whenever it believes that such termination
would be in its best interests. Under contracts and subcontracts
terminated for the convenience of the United States government, the
Company is generally entitled to receive payment for work completed and
allowable termination costs.
Operations
The Company maintains two computer processing sites in Atlanta,
Georgia and one in Los Angeles, California supporting its real-time,
on-line network. The Company also maintains remote processing
facilities in Toronto, Canada; London, England and Dallas, Texas.
Tandem fault tolerant front-end processors along with UNISYS
multi-processor computers are utilized as the primary transaction
processors for real-time applications. The computers run in a co-
processor mode enabling them to continue to function in the event a
single processor fails. Information from all point-of-sale terminal
devices is received by the Tandem front-end communication systems. The
Tandem systems determine the availability of mainframe computers and
then route transactions to the appropriate system.
The Company's communications network is a redundant system. All
nodes are backed up and are serviced by at least two high-speed lines.
Each network link has built in software to monitor the network on a
continuing basis. The communications network has been designed to
operate on a 24-hour, 7-day-a-week basis without scheduled down time .
Competition
The Company has a number of actual and potential competitors as
to all of the systems and services that it offers. In addition to the
competition described above in the discussion of the Company's lines of
business, many of the Company's services receive direct competition as
a result of the marketing efforts of computer manufacturers to encourage
businesses to purchase or lease the manufacturers' computers and
establish in-house systems. In addition to this actual competition, the
Com pany believes that there are several companies that have the
capability to offer some of the Company's services in competition with
the Company, certain of which are substantially larger than the Company.
The Company believes that its ability to off er integrated solutions to
its customers, including hardware, software, processing and network
facilities, is a positive factor pertaining to the competitive position
of the Company. The Company recognizes, however, that its industry
segment is increasingly competitive.
Product Development
During the fiscal years ended May 31, 1994, May 31, 1993, and
May 31, 1992, the Company spent approximately $4,708,000, $3,825,000 and
$2,420,000, respectively, on activities relating to the development of
new products, services and techniques, and on the improvement and
maintenance of existing products, services and techniques.
Employees
As of May 31, 1994 the Company and its subsidiaries had approximately
1,000 full-time employees and 525 hourly, variable labor employees.
Financial Information Relating to Business Segment
and Classes of Services
The Company operates in one reportable business segment, Data
Processing Services. See Management's Discussion and Analysis of
Financial Condition and Results of Operations for a further discussion.
The following table sets forth the approximate contribution to
consolidated revenues of each class of service in the Data Processing
Services segment during the Company's last three fiscal years.
Year ended May 31,
1994 1993 1992
(000's omitted)
Integrated Payment Systems $112,427 $113,793 $121,774
Health Care Application
Systems and Services $63,005 $56,268 $47,735
Government and Corporate
Information Systems and Services $20,565 $21,549 $24,767
Other $8,009 $12,946 $22,210
- - -------------------------------------------------------------------
Total $204,006 $204,556 $216,486
Note: Certain reclassifications have been made to the fiscal 1993 and
fiscal 1992 results to conform to the fiscal 1994 presentation.
Item 2. PROPERTIES
The following table indicates the location, use, size, basic
annual rental, and termination date for the Company's principal leases
of real property.
No. of
Sq. Ft. Net Termination
Location Use Leased Annual Rent Date
Atlanta, Housing of central computers 81,236 $593,023 2003
Georgia and customer support systems
Atlanta, Housing of computers and
Georgia operations for merchant
processing 40,000 $302,671 1996
Rockville, Housing of computers for 14,220 $229,503 1997
Maryland information services center
London, Sales Center and software
England development 2,594 $135,004 1995
Tucker, Warehouse and maintenance
Georgia operations 54,269 $393,895 1995
El Monte, Housing of computers and
California operations for data
processing 7,633 $115,842 1994
Toronto, Regional Center 10,535 $170,100 1994
Canada
Dallas, Regional Center 22,209 $212,096 1997
Texas
Hanover, Merchant Processing Center 19,240 $283,790 1996
Maryland
In addition to the leases referred to above, the Company leases
23 sales offices, two warehouse facilities, and various other facilities
for an aggregate annual rental of approximately $668,000. The Company
also continues to pay rent on closed facilities with a total annual
rental of approximately $1,116,473, which obligations will expire
September, 1995.
In January 1987, the Company took occupancy of a newly
constructed six-story, 120,000 square foot corporate headquarters
building adjacent to the One National Data Plaza building in Atlanta,
Georgia. Permanent financing for the building of $ 12,000,000 is at a
fixed rate of 9.375% per year for a 10-year term and 30 year
amortization. See Note 9 to the Company's Consolidated Financial
Statements.
The Company owns or leases a variety of computers and other
computer equipment for its operational needs. In recent years the
Company has significantly upgraded and expanded its computers and
related equipment in order to increase efficiency, enhance reliability,
and provide the necessary base for business expansion.
The Company believes that its facilities and equipment are
suitable and adequate for the business of the Company as presently
conducted.
Item 3. LEGAL PROCEEDINGS
The Company and certain of its previous officers were party to
three lawsuits, which were consolidated as "National Data Corporation
Shareholder Litigation". The Plaintiffs, purporting to act on behalf of
a class, alleged violations of rule 10(b) (5) under the Securities
Exchange Act of 1934 under a "fraud on the market" theory for alleged
misrepresentations and omissions relating to expected earnings which
resulted in, the plaintiffs contended, the Company's common stock being
overvalu ed in the market. The Company and the plaintiffs signed an
agreement in September, 1993 to settle this matter for $6,950,000. The
Company's insurer bore two-thirds of the settlement and related future
costs. The cost to the Company, net of income taxes and insurance
proceeds, was approximately $1,450,000. Both the Company and its
insurer paid their full share of the settlement amount on December 1,
1993, and the settlement received final approval from the court in
December, 1993.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, titles, ages, and business experience of all present
executive officers of the Company are listed below. All officers hold
office at the pleasure of the Board of Directors, unless they earlier
retire or resign.
(a) Robert A. Yellowlees, Chairman, President and Chief
Executive Officer. Mr. Yellowlees, age 55, has served as
President and Chief Executive Officer since May 1992, as Chairman of
the Board since June 1992, and as a director since May 1985. He has
also served since June 1990 as Chairman of the Board of Spectrum
Research Group, consultants on the management of technology, and as
a member of the Board of John H. Harland Co. since 1994.
(b) Jerry W. Braxton, Executive Vice President and Chief
Financial Officer. Mr. Braxton, age 47, joined the Company in January
1992 as Executive Vice President and Chief Financial Officer. Prior to
joining the Company, he was employed by Contel Corporation for 16 years
and served in the capacity of Vice President - Treasurer and Vice
President - Controller of that organization.
(c) Richard S. Cohan, Senior Vice President, Health Care
Business Development. Mr. Cohan, age 41, joined the Company in 1980 as
Management Support Analyst in the National Data Federal Systems, Inc.
subsidiary. He was named to the position of Group Vice President and
General Manager of Health Care Institutional Services in December of
1987, Senior Vice President of the Health Care Application Systems and
Services unit in September 1992 and to his present position in December
1993.
(d) Donald B. Graham, Executive Vice President, Planning,
Management and Support. Mr. Graham, age 54, joined the Company in
January 1994 as Executive Vice President, Planning, Management and
Support. Prior to joining the Company, he was p resident and chief
executive officer of Information Systems of America, a software sales
and service company, from February 1988 until July 1993. Prior to that
he served as a management consultant from 1986 to 1988, and as Vice
President of HBO & Co ., a hospital information systems company, from
1982 to 1986.
(e) James R. Henderson, Executive Vice President, Health Care
Application Systems and Services. Mr. Henderson, age 49, joined the
Company in September 1992 as Executive Vice President of Product Line
Management. He was named to his present position in December 1993.
Prior to joining the Company, he was Executive Vice President of
Worldwide Sales, Marketing and Operations for Quality Micro Systems,
Inc. from 1988 until 1991 and before that position was Executive Vice
President of Worldwide Marketing and Technology with Dun & Bradstreet
Software.
(f) Donald L. Howard, Vice President - Human Resources. Mr.
Howard, age 56, joined the Company as Vice President - Human Resources
in February 1980. Prior to joining the Company, he was employed by
Great American Management and Investment, Inc. and was most recently
serving that organization as Corporate Personnel Director and Assistant
Vice President.
(g) E. Michael Ingram, Senior Vice President, Corporate
Counsel, and Secretary. Mr. Ingram, age 42, joined the Company in 1980
as staff counsel. Prior to joining the Company, he was engaged in the
private practice of law since 1976. Mr. Ingram was named to the
position of Vice President, Corporate Counsel, and Secretary in January
1985 and to his present position in February 1988.
(h) J. David Lyons, Executive Vice President, Marketing & Sales
- - - Mr. Lyons, age 55, has served the Company in his present capacity
since July 1993. Prior to joining the Company, he was Senior Vice
President of Sales and Marketing for Syncordia, a unit of British
Telecom, from September 1990 to March 1993, and from November 1981 to
September 1990 was Vice President and General Manager of international
sales and service for Data General Corporation.
(i) Kevin C. Shea, Executive Vice President - Integrated
Payment Systems - Mr. Shea, age 44, joined the Company in March 1987 as
Credit Card Services Division Vice President, was named Group Vice
President of National Data Payment Systems, Inc. (NDPS) in June 1988,
was named Executive Vice President of NDPS in December 1990 and was
named to his present position in September 1992. Prior to joining the
Company, he served from June 1985 as principal and Chief Operating
Officer of First Interstate Bank Results, Inc., consultant to First
Interstate Bancorp for retail banking systems matters.
(j) M. P. Stevenson, Jr. - Vice President and Controller. Mr.
Stevenson, age 39, joined the Company as Director of Internal Audit in
1986. He has since served as Vice President of Finance in the National
Data Payment Systems, Inc. subsidiary and was named to his present post
in October 1992.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company hereby incorporates by reference the information
under the heading "Market Price and Dividend Information" from its
Annual Report to Stockholders for the fiscal year ended May 31, 1994.
Item 6. SELECTED FINANCIAL DATA
The Company hereby incorporates by reference the information
under the heading "Selected Financial Data" from its Annual Report to
Stockholders for the fiscal year ended May 31, 1994.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company hereby incorporates by reference the information
under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations" from its Annual Report to
Stockholders for the fiscal year ended May 31, 19 94.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Company are included
in the Company's Annual Report to Stockholders for the fiscal year ended
May 31, 1994 and are incorporated herein by reference:
(1) Report of Independent Accountants.
(2) Consolidated Statements of Income for the three
years ended May 31, 1994.
(3) Consolidated Balance Sheets at May 31, 1994 and
1993.
(4) Consolidated Statements of Changes in
Stockholders' Equity for the three years ended
May 31, 1994.
(5) Consolidated Statements of Cash Flows for the
three years ended May 31, 1994.
(6) Notes to Consolidated Financial Statements.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company hereby incorporates by reference the information
contained under the heading "Election of Directors - Certain Information
Concerning Nominees and Directors" from its definitive Proxy Statement
to be delivered to the stockholders of the Company in connection with
the 1994 Annual Meeting of Stockholders to be held on November 17, 1994.
Certain information relating to executive officers of the Company
appears at pages 11 to 12 of this Annual Report on Form 10-K.
Item 11. EXECUTIVE COMPENSATION
The Company hereby incorporates by reference the information
contained under the heading "Election of Directors - Compensation and
Other Benefits" from its definitive proxy statement to be delivered to
the stockholders of the Company in connection with the 1994 Annual
Meeting of Stockholders to be held on November 17, 1994. In no event
shall the information contained in the proxy statement under the
sections entitled "Shareholder Return Analysis," "Comparison of
Cumulative Total Returns ," and "Report of the Compensation and Stock
Option Committees".
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company hereby incorporates by reference the information
contained under the headings "Election of Directors - Common Stock
Ownership of Management" and " - Common Stock Ownership by Certain Other
Persons" from its definitive Proxy Statem ent to be delivered to the
stockholders of the Company in connection with the 1994 annual meeting
of stockholders to be held on November 17, 1994.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a)(1) The following consolidated financial statements for the
Registrant and its subsidiaries, and the report thereon of the
Registrant's independent accountants, are included in the Registrant's
Annual Report to Stockholders for the year ended May 31, 1994 and are
incorporated by reference in Item 8 of this Report.
Report of Independent Accountants
Consolidated Statements of Income for the three years ended May 31,
1994.
Consolidated Balance Sheets at May 31, 1994 and 1993.
Consolidated Statements of Changes in Stockholders' Equity for the three
years ended May 31, 1994.
Consolidated Statement of Cash Flows for the three years ended May 31,
1994.
Notes to Consolidated Financial Statements.
(a)(2) Other than as described below, Financial Statement Schedules are
not filed with this Report because the Schedules are either inapplicable
or the required information is presented in the Financial Statements or
Notes thereto. The following Schedules are filed in Appendix A as a
part hereof:
Consolidated Schedule I - Marketable Securities.
Consolidated Schedule II - Accounts Receivable from Related Parties and
Underwriters, Promoters and Employees other than Related Parties.
Consolidated Schedule V - Property, Plant and Equipment.
Consolidated Schedule VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment.
Consolidated Schedule VIII - Valuation and Qualifying Accounts.
Consolidated Schedule IX - Short-term Borrowings
Consolidated Schedule X - Supplementary Income Statement Information.
(a)(3)Exhibits
(3)(i) Certificate of Incorporation of the Registrant, as amended
(filed as Exhibit 3(i) to the Registrant's Annual Report on Form 10-K
for the year ended May 31, 1991, File No. 03966, and incorporated herein
by reference).
(ii) Bylaws of the Registrant, as amended (filed as Exhibit 3(ii) to
the Registrant's Annual Report on Form 10-K for the year ended
May 31, 1991, File No. 03966, and incorporated herein by
reference).
(4) Shareholder Rights Agreement adopted by the Registrant on
January 18, 1991 (filed as Exhibit 4(1) to the Registrant's
Current Report on Form 8-K dated January 18, 1991, File No.
03966, and incorporated herein by reference.)
(10)(i) Purchase Agreement dated as of July 6, 1988 between Registrant
and Chemical Bank, as amended by the Amendment dated as of August 1,
1988 (filed as Exhibit 1 to the Registrant's Current Report on Form 8-K
dated August 15, 1988, File No. 03966, and incorporated herein by
reference.)
(ii) Acquisition Credit Agreement dated as of April 15, 1993 between
the Registrant and Wachovia Bank of Georgia, N.A. ("Wachovia"), as Agent
(filed as Exhibit 3(ii) to the Registrant's Annual Report on From 10-K
for the year ended May 31, 1993, File No. 03966, and incorporated herein
by reference).
(iii) Working Capital Credit Agreement dated April 15, 1993 between
the Registrant and Wachovia Bank of Georgia, N.A. ("Wachovia"), as Agent
(filed as Exhibit 3(iii) to the Registrant's Annual Report on From 10-K
for the year ended May 31, 1993, Fi le No. 03966, and incorporated
herein by reference).
(iv) Letter Agreement dated as of October 30, 1992 between the
Registrant and Sanwa Business Credit Corporation (filed as Exhibit 3(iv)
to the Registrant's Annual Report on From 10-K for the year ended May
31, 1993, File No. 03966, and incorporated herein by reference).
(v) Acquisition Credit Agreement dated as of July 29, 1994 between
the Registrant and Wachovia Bank of Georgia, N.A. ("Wachovia"),
as Agent.
(vi) Working Capital Credit Agreement dated July 29, 1994 between the
Registrant and Wachovia Bank of Georgia, N.A. ("Wachovia"), as
Agent.
Executive Compensation Plans and Arrangements
(vii) Form of Executive Severance Compensation Agreement with certain
executive officers (filed as Exhibit 10(ii) to the Registrant's
Annual Report on Form 10-K for the year ended May 31, 1986, File
No. 03966, and incorporated herein by reference.)
(viii) Non-Employee Directors Stock Option Plan (filed as Exhibit
10(iv) to the Registrant's Annual Report on Form 10-K for the
year ended May 31, 1987, File No. 03966, and incorporated herein
by reference.)
(ix) Employment Agreement dated as of May 18, 1992 between Robert A.
Yellowlees and the Registrant (filed as Exhibit 10(vi) to the
Registrant's Annual Report on Form 10-K for the year ended May 31, 1992,
File No. 03966, and incorporated herein by reference.)
(x) Renewal Employment Agreement to be effective as of May 18, 1995
between Robert A. Yellowlees and the Registrant.
(xi) Retirement Plan for Non-Employee Directors (filed as Exhibit
10(vii) to the Registrant's Annual Report on Form 10-K for the
year ended May 31, 1992, File No. 03966, and incorporated herein
by reference.)
(xii) Amended and Restated Retirement Plan for Non-Employee Directors,
dated as of April 20, 1994.
(13) Annual Report to Shareholders for fiscal year ended May 31,
1994.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Public Accountants (included in Appendix
A, page A-11).
(b) The Registrant filed no reports on Form 10-K during the last
quarter of the period covered by this report.
(c) The Exhibits to this Report are listed under Item 14(a)(3)
above.
(d) The Financial Statement Schedules to this Report are listed
under Item 14(a)(2) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, National Data Corporation has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NATIONAL DATA CORPORATION
By: /s/ Robert A. Yellowlees
-------------------------------
Robert A. Yellowlees, Chairman of the
Board, President and Chief Executive
Officer
(Principal Executive Officer)
By: /s/ Jerry W. Braxton
-------------------------------
Jerry W. Braxton, Executive Vice
President and Chief Financial Officer
(Principal Financial Officer)
By: /s/ Marion P. Stevenson
------------------------------
Marion P. Stevenson
Vice President and Controller
(Principal Accounting Officer)
Date: August 25, 1994
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by a majority of the Board of
Directors of the Registrant on the dates indicated:
Signature Title Date
/s/ Robert A. Yellowlees Chairman of the Board, August 25, 1994
Robert A. Yellowlees and Chief Executive Officer
/s/ Edward L. Barlow Director August 25, 1994
Edward L. Barlow
/s/ James B. Edwards Director August 25, 1994
James B. Edwards
/s/ Ira C. Herbert Director August 25, 1994
Ira C. Herbert
/s/ Don W. Sands Director August 25, 1994
Don W. Sands
/s/ Neil Williams Director August 25, 1994
Neil Williams
COMMISSION FILE NUMBER 03966
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS FILED WITH ANNUAL REPORT
ON FORM 10-K
FOR THE FISCAL YEAR ENDED MAY 31, 1994
NATIONAL DATA CORPORATION
National Data Plaza
Atlanta, Georgia 30329-2010
NATIONAL DATA CORPORATION
FORM 10-K
INDEX TO EXHIBITS
Exhibit Sequentially
Numbers Description
Numbered Page
(10)(v) Acquisition Credit Agreement dated as of July 29,
1994 between the Registrant and Wachovia Bank
of Georgia, N.A. ("Wachovia"), as Agent.
(10)(vi) Working Capital Credit Agreement dated as of July 29,
1994 between the Registrant and Wachovia Bank
of Georgia, N.A. ("Wachovia"), as Agent.
(10)(x) Renewal Employment Agreement to be effective
as of May 18, 1995 between Robert A. Yellowlees
and the Registrant.
(10)(xii) Amended and Restated Retirement Plan for Non-
Employee Directors, dated as of April 20, 1994.
(13) Annual Report to Shareholders for fiscal year
ended May 31, 1994.
(21) Subsidiaries of the Registrant.
(23) Consent of Independent Public Accountants
(included in Appendix A).
PART IV
Selected Financial Data
(In thousands except per share data)
Year ended May 31,
1994 1993 1992 1991 1990
Revenue from operations:
Integrated Payment
Systems $112,427 $113,793 $121,774 $132,918 $128,044
Health Care Application
Systems and Services 63,005 56,268 47,735 37,488 36,767
Government, Corporate
System and Services 20,565 21,549 24,767 29,386 26,645
Other 8,009 12,946 22,210 27,299 82,313
- - ------------------------------------------------------------------------
Total $204,006 $204,556 $216,486 $227,091 $273,769
Operating income(loss) 18,387 15,021 14,675 (21,059) 11,453
Net Income:
Income (loss) from:
Continuing operations $11,160 $8,489 $7,419 $(14,136) $1,963
Discontinued operations - - - - 1,119
Extraordinary item (1,450) - - - -
-------- ------- -------- -------- -------
Net income $ 9,710 $8,489 $7,419 $(14,136) $3,082
Earnings (loss) per share:
Continuing operations $ .86 $ .68 $ .62 $ (1.20) $ .17
Discontinued operations - - - - .09
Extraordinary item (.11) - - - -
------- ----- ----- -------- -----
Earnings per share $ .75 $ .68 $ .62 $ (1.20) $ .26
Dividends per share $ .44 $ .44 $ .44 $ .44 $ .44
Total assets $183,326 $175,348 $194,882 $212,146 $277,200
Long-term obligations $23,063 $26,329 $30,081 $27,377 $32,950
Total stockholders'equity $109,331 $101,261 $96,450 $93,023 $110,891
________________________________________________________________________
Note: Certain reclassifications have been made to prior years' financial
statements to conform to fiscal 1994 presentation.
MARKET PRICE AND DIVIDEND INFORMATION
_____________________________________________________________
During the second quarter of fiscal year 1994, National Data
Corporation was listed on the New York Stock Exchange.
Prior to that time, the Company's common stock was traded on
the over-the-counter market. National Data Corporation's
common stock is traded on the New York Stock Exchange under
the ticker symbol "NDC." The high and low prices and
dividend paid per share of the Company's common stock for
each quarter during the last two fiscal years were as
follows:
Dividend
Per
High/Ask Low/Bid Share
Fiscal Year 1993
First Quarter 11 9 1/4 .11
Second Quarter 12 1/2 8 .11
Third Quarter 17 1/2 12 .11
Fourth Quarter 18 14 1/4 .11
Fiscal Year 1994
First Quarter 19 1/2 14 1/4 .11
Second Quarter 19 1/4 15 .11
Third Quarter 21 1/4 14 5/8 .11
Fourth Quarter 23 16 1/2 .11
The number of shareholders of record as of August 10, 1994 was 2,189.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
For an understanding of the significant factors that influenced the Company's
results during the past three fiscal years, the following discussion should be
read in conjunction with the Consolidated Financial Statements appearing
elsewhere in this annual report. Certain reclassifications have been made to
the fiscal 1993 and 1992 results to conform to the fiscal 1994 presentation.
Fiscal year ended May 31, 1994 compared to fiscal year ended May 31, 1993
________________________________________________________________________
The following table reflects the relative percentage ratios and the percent
change from the prior year:
Percent
Fiscal year ended May 31, Increase
1994 1993 (Decrease)
(Dollars in Millions) $ % $ % of Dollars
________________________________________________________________________
Revenue:
Integrated Payment $112.4 55% $113.8 56% (1%)
Health Care 63.0 31% 56.3 28% 12%
Government/Corporate 20.6 10% 21.5 10% (5%)
Other 8.0 4% 12.9 6% (38%)
________________________________________________________________________
Total Revenue 204.0 100% 204.5 100% 0%
Cost of Service:
Operations 92.8 45% 95.5 47% (3%)
Depreciation/Amortization 14.5 7% 15.9 8% (9%)
Hardware Sales 9.9 5% 11.1 5% (11%)
________________________________________________________________________
Total Cost of Service 117.2 57% 122.5 60% (4%)
________________________________________________________________________
Gross Margin 86.8 43% 82.0 40% 6%
Sales, General and
Administrative Expense 68.4 34% 67.0 33% 2%
Operating Margin 18.4 9% 15.0 7% 22%
Investment and Other Income 0.5 0% 1.8 1% (74%)
Interest Expense, (net) (1.5) 0% (2.2) (1%) (33%)
_______________________________________________________________________
Income Before Income Taxes
and Extraordinary Item 17.4 9% 14.6 7% 19%
Provision for Income Taxes 6.2 3% 6.1 3% 1%
________________________________________________________________________
Net Income Before
Extraordinary Item 11.2 6% 8.5 4% 31%
Extraordinary Item:
(Settlement of shareholder
lawsuit, net of income
taxes of $1.0) (1.5) (1%) - - -
________________________________________________________________________
Net Income $ 9.7 5% $ 8.5 4% 14%
========================================================================
Overview
________________________________________________________________________
Revenue
Total revenue for fiscal 1994 was $204,006,000, a decrease of $550,000 (less
than 1%) from revenue of $204,556,000 for the previous year. The reduction was
due principally to two factors. The decision to exit the Communication Services
business caused a decline in revenue of $3,733,000 from the prior fiscal year.
Also, the Integrated Payment Systems business continues to be impacted by the
shift from voice to electronic authorization, as well as declining price trends
on new transactions in the indirect business, resulting in a decline in revenue
of $1,366,000. These decreases were offset by an increase of $6,737,000 in the
Health Care Application Systems and Services business principally due to
increased electronic claims transaction volume. A more detailed discussion of
the business unit results follows.
Integrated Payment Systems (IPS) revenue for fiscal 1994 was $112,427,000, a
decrease of $1,366,000 (1%) from revenue of $113,793,000 for the prior year,
with the decline occurring principally in the indirect (distribution through
banks) side of the business. The indirect business represents approximately 45%
of total IPS revenues.
Direct revenue increased $2,387,000 (4%). Transaction volumes processed
increased by 4% and terminal sales and fees increased as well, primarily as a
result of a sales expansion program.
Indirect revenue decreased $3,753,000 (7%). Voice authorization revenue
decreased $561,000 (6%) and electronic authorization and data capture revenue
decreased $3,192,000 (7%). The decrease in voice authorization revenue is
attributable to a continued shift of business to electronic authorizations due
to lower prices to the merchants and a higher quality of service. Voice
authorization processing volume declined approximately 10% in the period and now
represents 8% of total IPS revenue. The decrease in electronic authorization
and data capture revenue was primarily the result of price reductions of
approximately 7%. The number of electronic authorization and data capture
transactions processed increased modestly in the current year.
Health Care Application Systems and Services (HCASS) revenue for fiscal 1994 was
$63,005,000, an increase of $6,737,000 (12%) from revenue of $56,268,000 for the
prior year.
Electronic Claims Processing revenue increased $9,663,000 (50%). This increase
was the result of a 51% increase in claims processed for the current customer
base and new customers added this year. The Company expects the growth trends in
electronic claims processing to continue. Pharmacy/Dental Practice Management
Systems revenue decreased $1,970,000 (7%) in fiscal 1994. This was primarily
the result of decreased sales of the microcomputer-based pharmacy and dental
practice management systems (DataStat) which was affected by the introduction of
a new Dental prodect. This was offset by an increase in recurring maintenance
revenue associated with the growing installed systems base. Revenue from sales
to government and institutional customers decreased $956,000 (10%), primarily as
a result of decreased turnkey systems sales to institutional customers and
overall reductions in defense department spending.
Government and Corporate Information Systems and Services revenue
for fiscal 1994 was $20,565,000, a decrease of $984,000 (5%) from revenue of
$21,549,000 for the prior year. Reduced demand for cash management services is
caused largely by a trend toward movement of these services to in-house,
microcomputer-based systems. The reductions were partially offset by the
emerging electronic tax filing/payment systems and applications for electronic
data interchange (EDI).
Other revenue for fiscal 1994 was $8,009,000, a decrease of $4,937,000 (38%)
from revenue of $12,946,000 for the prior year. This decrease was primarily the
result of the Company's decision to exit the communication services market in
1991. The Company anticipates that this revenue will cease in the first quarter
of fiscal 1995 as contracts with various customers expire. Weak economies in
Europe and Japan and the same cash management demand trends noted previously are
the primary causes of the revenue decline in the International business.
Costs and Expenses
________________________________________________________________________
Total cost of service was $117,208,000 for fiscal 1994. This was a decrease of
$5,329,000 (4%) from last year. This decrease was largely the result of a
reduction in cost of operations of $2,662,000 (3%), consisting principally of
payroll and telecommunications cost reductions. Hardware costs decreased
$1,251,000 (11%), directly related to volume associated with reduced sales of
healthcare practice management systems. Depreciation and amortization expense
decreased $1,411,000 (9%) from last year.
Gross Margin increased to 43% from 40% in the prior year.
Sales, general and administrative expense was $68,411,000 for fiscal 1994.
This is an increase of $1,413,000 (2%) from the prior year. This increase
was primarily due to sales expansion programs in the Integrated
Payment Systems and the Healthcare Application Systems and Services areas.
Investment and Other Income
________________________________________________________________________
Investment and other income for fiscal 1994 was $480,000, a decrease of
$1,371,000 (74%) below the prior year of $1,851,000. This decrease was
principally a result of a decrease in interest income. The lower interest
income resulted from the Company's sale of its pharmacy and dental systems lease
portfolio in fiscal 1993 (see note 7 to the Consolidated Financial Statements).
Interest Expense, net
________________________________________________________________________
Net interest expense for 1994 was $1,508,000, a decrease of $728,000 (33%) from
the prior year's interest expense of $2,236,000. This decrease was largely
attributable to lower borrowings on the Company's line of credit, a decrease in
interest rates and a decrease in the imputed interest rate associated with earn-
out liabilities relating to the Company's purchase of several merchant
processing businesses.
Income Taxes
________________________________________________________________________
The provision for income taxes, as a percentage of taxable income, was 35% and
42% for the years ended May 31, 1994 and 1993, respectively. The decreased rate
in the current year is primarily due to research and development tax credits.
The Company expects this reduced rate to continue.
Net Income Before Extraordinary Item
_________________________________________________________________________
Net income before extraordinary item for fiscal 1994 was $11,160,000, an
increase of $2,671,000 (31%) from fiscal 1993 net income of $8,489,000.
Extraordinary Item
________________________________________________________________________
The Company reported an extraordinary charge of $1,450,000 (net of income taxes)
in fiscal 1994, representing the settlement cost of a lawsuit brought against
the Company. See note 10 to the Consolidated Financial Statements for further
discussion.
Net Income
________________________________________________________________________
Net income for fiscal 1994 was $9,710,000, an increase of $1,221,000 (14%), as
compared to fiscal 1993 net income of $8,489,000. Earnings per share for fiscal
1994 were $0.75, an increase of $0.07 (10%) from last year. The weighted
average number of common and common equivalent shares outstanding for fiscal
1994 was 12,987,000, an increase of 453,000 (4%) as compared to fiscal 1993.
Fiscal year ended May 31, 1993 compared to fiscal year ended May 31, 1992
___________________________________________________________________________
The following table reflects the relative percentage ratios and the percent
change from the prior year:
Percent
Fiscal year ended May 31, Increase
1993 1992 (Decrease)
(Dollars in Millions) $ % $ % of Dollars
________________________________________________________________________
Revenue:
Integrated Payment $113.8 56% $121.8 56% (7%)
Health Care 56.3 28% 47.7 22% 18%
Government/Corporate 21.5 10% 24.8 11% (13%)
Other 12.9 6% 22.2 11% (42%)
________________________________________________________________________
Total Revenue 204.5 100% 216.5 100% (6%)
Cost of Service:
Operations 95.5 47% 106.6 49% (10%)
Depreciation/Amortization 15.9 8% 15.6 7% 2%
Hardware Sales 11.1 5% 8.4 4% (32%)
________________________________________________________________________
Total Cost of Service 122.5 60% 130.6 60% (6%)
________________________________________________________________________
Gross Margin 82.0 40% 85.9 40% (5%)
Sales, General and
Administrative Expense 67.0 33% 71.2 33% (6%)
Operating Margin 15.0 7% 14.7 7% 2%
Investment and Other Income 1.8 1% 2.3 1% (20%)
Interest Expense, (net) (2.2) (1%) (4.2) (2%) (47%)
_______________________________________________________________________
Income Before Income Taxes 14.6 7% 12.8 6% 14%
Provision for Income Taxes 6.1 3% 5.4 3% 13%
________________________________________________________________________
Net Income $ 8.5 4% $ 7.4 3% 14%
========================================================================
Overview
________________________________________________________________________
Revenue
Total revenue for fiscal 1993 was $204,556,000, a decrease of $11,930,000 (6%)
from revenue of $216,486,000 for the previous year. The reduction was due
principally to two factors. The decision to exit the Communication Services
business caused a decline in revenue of $7,593,000 from the prior fiscal year.
Also, the Integrated Payment Systems business was impacted by the shift from
voice to electronic authorization, as well as price trends on new transactions
in the indirect business, resulting in a decline in revenue of $7,981,000.
These decreases were offset by an increase of $8,533,000 in the
Health Care Application Systems and Services business principally due to
increased electronic claims transaction volume. A more detailed discussion of
the business unit results follows.
Integrated Payment Systems (IPS) revenue for fiscal 1993 was $113,793,000, a
decrease of $7,981,000 (7%) from revenue of $121,774,000 for the prior year,
with the decline occurring principally in the indirect (distribution through
banks) side of the business. The indirect business represented approximately
50% of total IPS revenues.
Direct revenue decreased $2,007,000 (3%); however, transaction volumes processed
increased by 12% and terminal sales and fees increased as well. Increased
transaction volume had a favorable revenue impact of $5,104,000, primarily as a
result of improved sales productivity. Terminal sales and other fees increased
$440,000. These increases were offset by a reduction in the prices charged to
merchants of $7,550,000, or approximately 15%, along with a shift from paper
to electronic-based processing.
Indirect revenue decreased $5,974,000 (10%). Voice authorization revenue
decreased $2,608,000 (21%) and electronic authorization and data capture revenue
decreased $3,367,000 (7%). The decrease in voice authorization revenue is
attributable to a continued shift of business to electronic authorizations due
to lower prices to the merchants and a higher quality of service. Voice
authorization processing volume declined approximately 20% in the period and
represents 9% of the total IPS revenue. The decrease in electronic
authorization and data capture revenue was primarily the result of price
reductions of 10%. The number of electronic authorization and data capture
transactions processed were essentially the same in both periods.
Health Care Application Systems and Services (HCASS) revenue for fiscal 1993 was
$56,268,000, an increase of $8,533,000 (18%) from revenue of $47,735,000 for the
prior year.
Electronic Claims Processing revenue increased $5,173,000 (36%). This increase
was the result of a 48% increase in claims processed for the current customer
base and new customers. Pharmacy/Dental Practice Management Systems revenue
increased $3,442,000 (14%) in fiscal 1993. This was primarily the result of
increased sales of the microcomputer-based pharmacy and dental practice
management systems (DataStat) and an increase in recurring maintenance revenue
associated with the growing installed customer base. Revenue from sales to
government and institutional customers decreased $82,000 (1%), primarily as a
result of decreased turnkey systems sales to institutional customers and overall
reductions in defense department spending.
Government and Corporate Information Systems and Services revenue
for fiscal 1993 was $21,549,000, a decrease of $3,218,000 (13%) from revenue of
$24,767,000 for the prior year. Reduced demand for cash management services in
a period of low interest rates and a trend toward movement of these services to
in-house, microcomputer-based systems are largely responsible for these
reductions.
Other revenue for fiscal 1993 was $12,946,000, a decrease of $9,264,000 (42%)
from revenue of $22,210,000 for the prior year. This decrease was primarily the
result of the Company's decision to exit the communication services market in
1991. Weak economies in Europe and Japan and the same cash management demand
trends noted previously are the primary causes of the revenue decline in the
International business.
Cost and Expenses
________________________________________________________________________
Total cost of service was $122,537,000 for fiscal 1993. This was a decrease of
$8,032,000 (6%) from last year. This decrease was largely the result of a
reduction in cost of operations of $11,100,000 (10%), consisting principally of
payroll and telecommunications cost reductions. Hardware costs increased
$2,700,000 (32%), directly related to volume associated with sales of healthcare
practice management systems and point-of-sale terminal devices in the retail
market. Depreciation and amortization expense was essentially flat at
approximately $16,000,000 in both periods.
Gross Margin realized for each year was 40%.
Sales, general and administrative expense was $66,998,000 for fiscal 1993. This
is a decrease of $4,244,000 (6%) from the prior year. The decrease was the
result of cost containment programs focused on elimination of redundancy and
non-essential activities. The programs were initiated in the second quarter of
fiscal 1993. As a percentage of revenue, sales, general and administrative
expenses for fiscal 1993 and 1992 were 33% in both periods.
Investment and Other Income
________________________________________________________________________
Investment and other income for fiscal 1993 was $1,851,000, a decrease of
$461,000 (20%) below the prior year of $2,312,000. This decrease was
principally a decrease in interest income. The lower interest income resulted
from the Company's sale of its pharmacy and dental systems lease portfolio in
fiscal 1993.
Interest Expense, net
________________________________________________________________________
Net interest expense for 1993 was $2,236,000, a decrease of $1,960,000
(47%) from the prior year's interest expense of $4,196,000. This decrease was
largely attributable to lower borrowings on the Company's line of credit, a
decrease in interest rates and a decrease in the imputed interest rate
associated with earn-out liabilities relating to the Company's purchase of
several merchant processing businesses.
Income Taxes
________________________________________________________________________
The provision for income taxes, as a percentage of taxable income, was 42% for
both periods.
Net Income
________________________________________________________________________
Net income for fiscal 1993 was $8,489,000, an increase of $1,070,000 (14%), as
compared to fiscal 1992 net income of $7,419,000. Earnings per share for fiscal
1993 were $0.68, an increase of $0.06 (10%) from last year. The weighted
average number of common and common equivalent shares outstanding for fiscal
1993 was 12,534,000, an increase of 505,000 (4%) as compared to fiscal 1992.
Analysis of Financial Position
_______________________________________________________________________
Liquidity and Capital Resources
Net cash provided by operating activities was $38,632,000 in fiscal 1994, an
increase of $5,681,000 (17%), compared to the prior year of $32,951,000. The
improvement is principally related to a reduction in accounts
receivable balances as a result of increased emphasis placed on asset
management.
Cash used in investing activities was $10,291,000 compared to cash provided by
investing activities of $15,463,000 in the prior year. In fiscal 1994, the
Company made investments in capital assets of approximately $15,357,000 as
compared to $8,237,000 in fiscal 1993. Last year the Company generated
approximately $19,257,000 in cash by selling a majority of its' lease portfolio.
Net cash used in financing activities was $7,433,000, a decrease of $26,203,000
from the prior year. Proceeds from the sale of common stock to employees
increased $1,754,000 in the current year. In addition, payments of $24,500,000
were made by the Company to pay-off its line of credit and note payable in
fiscal 1993. No borrowings were made against the line of credit in fiscal 1994.
Dividends of approximately $5,500,000 and $5,300,000 were paid in fiscal 1994
and 1993, respectively.
Subsequent to year-end, the Company entered into a $15,000,000 committed,
working capital line of credit with two banks expiring in August 1995. The
Company believes funds generated from operations along with its committed line
of credit and the $38,012,000 cash on hand will be adequate to meet normal
business operating needs. In addition to the working capital line of credit,
the Company obtained a committed $40,000,000 acquisition line of credit which
expires in August of 1996.
Stockholders' Equity
Stockholders' equity increased $8,070,000 (8%), from May 31, 1993 to
$109,331,000 at May 31, 1994.
CONSOLIDATED STATEMENTS OF INCOME
NATIONAL DATA CORPORATION
(in thousands except per share data) Year Ended May 31,
1994 1993 1992
Revenue $204,006 $204,556 $216,486
Operating Expenses:
Cost of service 117,208 122,537 130,569
Sales, general and administrative 68,411 66,998 71,242
-------- -------- ------
185,619 189,535 201,811
Operating income 18,387 15,021 14,675
Other income (expense):
Investment and other income 480 1,851 2,312
Interest expense, net (1,508) (2,236) (4,196)
-------- -------- ------
(1,028) (385) (1,884)
Income before income taxes and extraordinary item 17,359 14,636 12,791
Provision for income taxes (Note 3) 6,199 6,147 5,372
-------- -------- ------
Net income before extraordinary item 11,160 8,489 7,419
Extraordinary item:
Settlement of shareholder lawsuit
(net of income tax of $1,050) (Note 10) (1,450) - -
-------- -------- ------
Net income $9,710 $8,489 $7,419
======== ======== ========
Earnings per common and common equivalent
shares, primary and fully diluted (Note 1)
Income before extraordinary item 0.86 0.68 0.62
Extraordinary item (0.11) - -
-------- -------- ------
$0.75 $0.68 $0.62
======== ======== ========
See Notes to Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
NATIONAL DATA CORPORATION
(in thousands except share data)
May 31, May 31,
1994 1993
ASSETS ---- ----
Current assets:
Cash and cash equivalents $38,012 $17,150
Short-term investments 25 625
Accounts receivable:
Trade (less allowances of $1,168 and $1,044) 31,763 36,168
Other (less allowances of $968 and $681)(Note 1) 19,701 17,418
Investment in sales-type leases, current portion
(less allowances of $575 and $968) (Note 7) 2,357 6,292
Inventory 3,518 2,663
Prepaid expenses and other current assets 4,429 5,184
-------- --------
Total current assets 99,805 85,500
Investment in sales-type leases (less allowances
of $367 and $510) (Note 7) 1,500 3,377
Property and equipment, at cost:
Land 402 402
Building 6,503 6,503
Equipment 71,213 76,067
Software (Note 8) 27,519 23,849
Leasehold improvements 13,949 13,867
Furniture and fixtures 8,744 8,856
Work in progress 2,736 924
-------- --------
131,066 130,468
Less-Accumulated depreciation and amortization (102,754) (100,994)
-------- --------
28,312 29,474
Property acquired under capital leases, net of
accumulated amortization (Note 6) 7,317 3,918
-------- --------
36,429 33,392
Deposits 2,029 2,019
Other assets:
Acquired intangibles and goodwill, net of accumulated
amortization of $30,438 and $24,901 (Note 1 and 2) 41,250 46,299
Other 3,113 4,761
-------- --------
44,363 51,060
Total Assets $183,326 $175,348
======== ========
See Notes to Consolidated Financial Statements
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $6,783 $8,466
Earn-out payable on acquired businesses,
current portion (Note 2) 2,598 3,032
Accrued compensation and benefits 4,462 4,792
Merchant processing payables 15,154 11,176
Income taxes payable (Note 3) 6,358 2,660
Deferred income taxes, current portion 776 703
Obligations under capital leases,
current portion (Note 6) 1,985 1,033
Mortgage payable, current portion (Note 9) 149 135
Other accrued liabilities 12,667 15,761
-------- --------
Total current liabilities 50,932 47,758
Mortgage payable (Note 9) 11,100 11,261
Earn-out payable on acquired businesses (Note 2) 1,238 3,011
Deferred income taxes (Note 3) 1,685 6,641
Obligations under capital leases (Note 6) 5,193 2,860
Other long-term liabilities 3,847 2,556
-------- --------
Total liabilities 76,494 74,087
Commitments and contingencies (Note 10)
Stockholders' Equity (Note 4):
Preferred stock, par value $1.00 per share,
1,000,000 shares authorized; none issued - -
Common stock, par value $.125 per share,
30,000,000 shares authorized; 12,610,262
and 12,226,732 shares issued 1,576 1,528
Capital in excess of par value 30,215 26,249
Retained earnings 78,865 74,658
Cumulative translation adjustment (Note 1) (533) (393)
-------- --------
110,123 102,042
Less:
Deferred compensation (Note 4) (792) (781)
-------- --------
Total stockholders' equity 109,331 101,261
Total Liabilities and Stockholders' Equity $183,326 $175,348
========= =========
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
NATIONAL DATA CORPORATION
(in thousands)
Year Ended May 31,
1994 1993 1992
---- ---- ----
Net income $9,710 $8,489 $7,419
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 12,209 13,626 14,921
Amortization of acquired intangibles
and goodwill 5,981 6,210 6,189
Provisions for bad debts/sales allowances/
operations losses 4,550 5,477 5,953
Loss on disposal of fixed assets 59 476 299
Changes in assets and liabilities,
net of the effects of acquisitions:
Decrease in trade accounts receivable 1,208 1,772 710
(Increase) decrease in other
accounts receivable (3,885) (5,069) 195
Decrease in income tax receivable - - 2,852
(Increase) decrease in investment
in sales-type leases 6,020 (2,958) (2,702)
Increase in inventory (855) (593) (648)
Decrease in prepaid expenses
and other assets 3,378 3,823 240
Increase (decrease) in accounts
payable and accrued liabilities 1,443 7,926 (8,958)
Increase (decrease) in income tax payable
and deferred income taxes (1,186) (6,228) 5,117
------- -------- -------
Net cash provided by operating activities 38,632 32,951 31,587
Cash flows from investing activities:
Capital expenditures (10,504) (5,305) (6,887)
Proceeds from sale of equipment 13 1,511 261
Proceeds from sale of sales-type
leases inventory - 19,257 -
Business acquisitions (400) - (9,395)
Decrease in investments and
other noncurrent assets 600 - 1,600
-------- -------- --------
Net cash provided by (used in)
investing activities (10,291) 15,463 (14,421)
Cash flows from financing activities:
Net payments under lines of credit - (4,500) (30,780)
Borrowing (payment) on note payable - (20,000) 20,000
Principal payments under mortgage,
capital lease arrangements and
other long-term debt (2,417) (2,305) (1,107)
Principal payments on earn-out payable (2,772) (2,996) (3,552)
Net proceeds from the issuance of stock
Under employee stock plan 3,259 1,505 1,085
Dividends paid (5,503) (5,340) (5,238)
-------- -------- --------
Net cash used in financing activities (7,433) (33,636) (19,592)
Effect of exchange rate changes on cash (46) - -
-------- -------- --------
Increase (decrease) in cash
and cash equivalents 20,862 14,778 (2,426)
Cash, beginning of period 17,150 2,372 4,798
-------- -------- --------
Cash, end of period $38,012 $17,150 $2,372
======== ======== ========
Supplemental schedule of noncash investing
and financing activities:
Capital leases entered into in
exchange for property and equipment $4,853 $2,932 $257
======== ======== ========
See Notes to Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
NATIONAL DATA CORPORATION
(in thousands except per share data)
Common Stock Capital in Cumulative Deferred
Number Excess of Retained Translation Treasury Compen-
of Shares Amount Par Value Earnings Adjustment Stock sation
Balance at May 31, 1991 11,796 $1,475 $22,409 $69,328 $0 $0 ($189)
Net income - - - 7,419 - - -
Cash dividends ($.44 per share) - - - (5,238) - - -
Foreign currency translation adjustment - - - - (166) - -
Stock issued under employee
stock plans 164 20 1,203 - - - (138)
Amortization of deferred
compensation - - - - - - 327
- - --------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1992 11,960 1,495 23,612 71,509 (166) 0 0
Net income - - - 8,489 - - -
Cash dividends ($.44 per share) - - - (5,340) - - -
Foreign currency translation adjustment - - - - (227) - -
Stock issued under employee
stock plans 158 19 1,479 - - - -
Stock issued under restricted
stock plans 109 14 1,158 - - - (1,172)
Amortization of deferred
compensation - - - - - - 391
- - --------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1993 12,227 1,528 26,249 74,658 (393) 0 (781)
Net income - - - 9,710 - - -
Cash dividends ($.44 per share) - - - (5,503) - - -
Foreign currency translation adjustment - - - - (140) - -
Stock issued under employee
stock plans 333 42 3,217 - - - -
Stock issued under restricted
stock plans 50 6 749 - - - (755)
Amortization of deferred
compensation - - - - - - 744
- - --------------------------------------------------------------------------------------------------------------------------
Balance at May 31, 1994 12,610 $1,576 $30,215 $78,865 ($533) $0 ($792)
==========================================================================================================================
See Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies:
_____________________________________________________________
Principles of consolidation - The consolidated financial
statements include the accounts of the Company and its wholly
owned subsidiaries. Significant intercompany transactions
have been eliminated in consolidation.
Revenue - Revenue from major software license agreements is
recognized upon installation. Revenue associated with the
Company's government cost-plus contracts and all other
revenue is recognized as work is completed or services are
performed.
Other receivables - Other receivables consist primarily of
reimbursable amounts associated with the merchant processing
operation.
Inventory - Inventory, which is composed primarily of
microcomputer hardware and peripheral equipment and
electronic point-of-sale terminals, is stated at lower of
cost or market. Cost is determined by using the first-in,
first-out method.
Investment in sales-type leases - The Company's leasing
operations consist principally of noncancelable leases of
computer equipment and software, generally covering five
years. Accordingly, the present value of all payments due
under the lease contract is recorded as revenue at the
inception of the lease and shipment of the equipment.
Interest income is recorded over the lease term (see also
Note 7).
Property and equipment - Property and equipment is stated at
cost less accumulated depreciation and amortization.
Depreciation and amortization are calculated using the
straight-line method for financial reporting purposes and
primarily accelerated methods for tax purposes. Equipment is
depreciated over two-to five-year lives, and the building is
depreciated over a 40-year life. Leasehold improvements and
property acquired under capital leases are amortized over the
shorter of the useful life of the asset or the term of the
lease. The costs of purchased and internally developed
software used to provide services to customers or internal
administrative services are capitalized and amortized on a
straight-line basis over their estimated useful lives, up to
five years. Work in Progress consists of capital projects
currently under development (see also Note 8).
Acquired intangibles and goodwill - Acquired intangibles
primarily represent customer contracts and covenants-not-to-
compete associated with the Company's acquisitions. Acquired
intangibles are amortized using the straight-line method over
their estimated useful lives of 4 to 20 years. Goodwill
represents the excess of the cost of acquired businesses over
the fair market value of their tangible and identifiable net
assets. Goodwill is being amortized on a straight-line basis
predominantly over 20 years. Subsequent to an acquisition,
the Company regularly evaluates whether events and
circumstances have occurred that indicate the carrying amount
of goodwill may warrant revision or may not be recoverable.
When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the
future undiscounted net cash flows of the related businesses
over the remaining life of the goodwill in measuring whether
the goodwill is recoverable (see also Note 2).
Income taxes - The Company files income tax returns on the
accrual basis. Deferred income taxes are provided for all
timing differences in reporting transactions for financial
reporting and income tax purposes (see also Note 3).
Earn-out payables - Earn-out payables represent the present
value of estimated future payments under the earn-out
agreements related to the Company's business acquisitions
(see also Note 2).
Foreign currency translation - The financial statements of
foreign subsidiaries have been remeasured from their
functional currency into U.S. dollars in accordance with
Statement of Financial Accounting Standards No. 52.
Cash and cash equivalents - For purposes of reporting cash
flows, cash and cash equivalents include cash on hand and
unrestricted amounts deposited with banks.
Reclassifications - Certain reclassifications have been made
to the fiscal 1993 and 1992 consolidated financial statements
to conform to the fiscal 1994 presentation.
Earnings per common share - Earnings per common and common
equivalent share on a primary basis are computed by dividing
net income by the weighted average number of common shares
and common equivalent shares outstanding during the period.
Common equivalent shares represent stock options that, if
exercised, would have a dilutive effect on earnings per
share. All options with an exercise price less than the
average market share price for the period are assumed to have
a dilutive effect on earnings per share.
Earnings per common and common equivalent share on a fully
diluted basis are computed by the same method as described
for primary earnings per share except that the higher of
(1) the ending market share price or (2) the average market
share price is used to compute the fully diluted earnings per
share, as compared to the average market share price for
primary earnings per share.
The primary and fully diluted weighted average number of
common and common equivalent shares outstanding is as follows
(in thousands):
Year Ended May 31,
1994 1993 1992
Primary 12,987 12,534 12,029
Fully Diluted 12,987 12,535 12,029
Note 2 - Business Acquisitions
_____________________________________________________________
During fiscal year 1992, the Company acquired the merchant
credit card processing contracts of Signet Bank for
$9,395,000.
The acquisition has been accounted for as a purchase;
accordingly, the results of operations of the acquired
business from the date of acquisition, which were not
material, have been included in the accompanying consolidated
statements of income. The purchase consisted of a single cash
payment.
For all portfolios acquired, the acquired assets and
liabilities, including the acquired intangibles and
liabilities for earn-out payments (if any), were originally
recorded in the Company's consolidated financial statements
based on preliminary estimates of their fair market values at
the date of acquisition. These estimates are revised as
necessary upon final appraisal of the acquired assets,
primarily acquired intangibles, and determination of actual
earn-out payments, if any. During fiscal 1994 and fiscal
1993, the purchase price and earn-out liabilities related to
prior fiscal year acquisitions were increased by $564,000 and
reduced by $770,000, respectively, to reflect actual earn-out
payments and current estimates of future earn-out payments.
In addition, the Company increased interest expense by
$230,000 and reduced interest expense by $278,000 in fiscal
1994 and 1993, respectively, to adjust accrued interest on
earn-out liabilities based on revised estimates.
The changes in acquired intangibles and goodwill for fiscal
years 1994 and 1993 are summarized below (in thousands):
Balance at May 31, 1992 $53,264
Purchase price adjustments (755)
Amortization (6,210)
- - -------------------------------------------------------------
Balance at May 31, 1993 $46,299
Additions from acquisitions 400
Purchase price adjustments 532
Amortization (5,981)
- - -------------------------------------------------------------
Balance at May 31, 1994 $41,250
==========
Note 3 - Income Taxes
_____________________________________________________________
The provision for income taxes includes:
Year Ended May 31, 1994 1993 1992
(in thousands)
Current tax expense:
Federal $ 3,904 $ 3,527 $ 2,292
State 457 755 324
------- ------- ------
4,361 4,282 2,616
Deferred tax expense:
Federal 661 1,772 2,618
State 127 93 138
------- ------- ------
788 1,865 2,756
Total $ 5,149 $ 6,147 $ 5,372
======= ======= ======
The Company's effective tax rates differ from Federal
statutory rates as follows:
Year Ended May 31, 1994 1993 1992
(in thousands)
Federal statutory rate 35.0% 34.0% 34.0%
State net income taxes, net of
federal income tax benefit 2.5% 3.8% 2.4%
Non-taxable interest income (1.6%) - -
Non-deductible amortization of
intangible assets 1.0% 2.2% 4.2%
Other (1.9%) 2.0% 1.4%
------- ------ ------
35.0% 42.0% 42.0%
======= ====== ======
Deferred tax liabilities at May 31, 1994 consist of net
noncurrent deferred tax liabilities of $1,685,000 and net
current deferred tax liabilities of $776,000. As of May 31,
1994, principal components of deferred tax items, as
aggregated under Statement of Financial Accounting Standards
#109, "Accounting for Income Taxes," are as follows (in
thousands):
Deferred tax liabilities:
Differences between book and tax bases of:
Property and equipment $ 2,138
Employee benefit plans 236
Prepaid expenses 149
Excess of cost over fair value of
assets acquired 2,609
Other 361
-------
$ 5,493
Deferred tax assets:
Differences between book and tax bases of:
Accrued expenses $ 1,229
Customer contracts 1,803
-------
$ 3,032
Net deferred tax liability $ 2,461
=======
Note 4 - Stockholder's Equity
_____________________________________________________________
Stock Option Plans - The Company had two employee option
plans at May 31, 1994, the 1982 Incentive Stock Option Plan
(1982 Plan) and the 1987 Stock Option Plan (1987 Plan). All
stock option plans in existence in prior years were
terminated upon adoption of the 1987 Plan. The 1982 and 1987
Plans provide for granting options, to certain officers and
key employees, to purchase the Company's common stock at
prices not less than fair market value at the time of grant.
Options granted become exercisable in various annual
increments and terminate over a period not to exceed six
years for the 1982 Plan and ten years for the 1987 Plan.
Transactions in stock options under these plans are
summarized as follows:
Option Price
Shares Under Per Share
Option at Date of Grant
_____________________________________________________________
Outstanding at May 31, 1991 1,025,323 $9.75 - $33.75
Granted 657,825
Exercised (47,833)
Expired or terminated (183,581)
- - -------------------------------------------------------------
Outstanding at May 31, 1992 1,451,734 $9.25 - $33.75
Granted 789,159
Exercised (140,870)
Expired or terminated (714,968)
- - -------------------------------------------------------------
Outstanding at May 31, 1993 1,385,055 $8.00 - $33.75
Granted 519,000
Exercised (239,543)
Expired or terminated (182,587)
- - -------------------------------------------------------------
Outstanding at May 31, 1994 1,481,925 $8.00 - $33.75
At May 31, 1994, there were 643,783 shares available for
future grants under the 1987 Plan and no shares available for
grant under the 1982 Plan.
Other Stock Plans - The Company has an Employee Stock
Purchase Plan under which the sale of 600,000 shares of its
common stock has been authorized. Employees may designate up
to the lesser of $25,000 or 20% of their annual compensation
for the purchase of stock. The price for shares purchased
under the plan is the lower of 85% of market value on the
first day or the last day of the purchase period. At May 31,
1994, 564,106 shares have been issued under this plan with
35,894 shares reserved for future issuance.
The Company also has a Non-employee Directors Stock Option
Plan which provides for grants of options, consisting of
5,000 shares of the Company's common stock for each completed
year of service, to directors who are not employees of the
Company. A maximum of five options may be granted to each
such director, and the maximum number of shares for which
options may be granted is 230,000. The options are
exercisable immediately at the current market value on the
date of grant. During fiscal years 1994, 1993 and 1992,
options for 25,000, 25,000 and 30,000 shares, respectively,
were issued under the Plan and none were exercised. As of
May 31, 1994, 35,000 shares were available for future grants.
The Company's 1983 Restricted Stock Plan (Restricted Plan)
authorizes 325,000 shares of the Company's common stock to be
awarded to key employees. Shares awarded under the
Restricted Plan are held in escrow and released to the
grantee upon the grantee's satisfaction of conditions of
the grantee's restricted stock agreement. Awards are
recorded as deferred compensation, a reduction of
stockholder's equity based on the quoted fair market value of
the Company's common stock at the award date. Compensation
expense is recognized ratably during the escrow period of the
award.
During fiscal years 1994, 1993 and 1992, 49,500, 109,000 and
10,000 shares, respectively, of the Company's common stock
were awarded under the Restricted Plan with restriction
periods of one to four years. As of May 31, 1994, 122,167
shares remain in escrow. There were 56,500 shares reserved
for future issuance under this plan. The Company expensed
$744,000, $391,000 and $327,000 for the years ended May 31,
1994, 1993 and 1992, respectively, in connection with the
Restricted Plan.
The Company's 1984 Employee Stock Ownership Plan was
dissolved in fiscal year 1993, and all shares escrowed were
distributed to eligible employees. At May 31, 1994, no
shares remain in escrow to be distributed to employees.
Note 5 - Pension Plan:
_____________________________________________________________
The Company has a noncontributory defined benefit pension
plan covering substantially all of its United States
employees who have met the eligibility provisions of the
plan. Benefits are based on years of service and the
employee's compensation during the highest five consecutive
years of earnings of the last ten years of service. Plan
provisions and funding meet the requirements of the Employee
Retirement Income Security Act of 1974, as amended.
The following table sets forth the plan's funded status and
amounts recognized in the Company's consolidated financial
statements at May 31, 1994 and 1993 (in thousands):
May 31,
1994 1993
Actuarial present value of
benefit obligations:
Accumulated benefit obligation,
including vested benefits of
$11,535 as of May 31, 1994
and $10,960 as of May 31, 1993 $12,242 $11,794
Effect of salary progression 4,068 3,634
--------- --------
Projected benefit obligation for
services rendered to date 16,310 15,428
Plan assets at fair market value,
primarily common stocks and bonds 15,037 14,445
--------- --------
Plan assets less than projected
benefit obligation (1,273) (983)
Unrecognized net loss from past
experience different from that
assumed and effect of changes
in assumptions 2,533 3,034
Unrecognized prior service cost 817 983
Unrecognized net asset at June 1,
1985, being amortized over 17 years (1,857) (2,092)
-------- -------
Prepaid Pension Cost $220 $ 942
======== =======
Net pension expense (benefit) included the following
components (in thousands):
1994 1993 1992
Service cost-benefits earned
during the period $ 1,052 $ 915 $ 714
Interest cost on projected
benefit obligation 1,283 1,093 826
Actual return on plan assets (852) (1,449) (910)
Net amortization and deferral (638) 75 (406)
Curtailment (gain) loss 66 89 (266)
----------------------------
Net Pension Expense (Benefit) $ 911 $ 723 $ (42)
============================
Significant assumptions used in determining net pension
expense (benefit) and related obligations were as follows:
May 31,
1994 1993
Discount rate 7.75% 8.25%
Rate of increase in compensation
levels 4.33% 4.00%
Expected long-term rate of
return on assets 10.00% 10.00%
The Company terminated 339 and 158 employees in fiscal 1994
and 1993, respectively. These terminations were accounted
for in accordance with Statement of Financial Accounting
Standards No. 88, "Employer's Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for
Termination Benefits," and the resulting curtailment loss of
$66,000 and $89,000 in the years ended May 31, 1994 and 1993,
respectively, is included in the net pension expense.
On December 18, 1991, the Company adopted a retirement plan
for non-employee directors of the Company with five or more
years of service (The Directors' Plan). The Directors' Plan
benefits are based on 50% of the annual Director retainer
amount in effect on the date of a director's retirement
plus 10% for each year of service up to 100% of the base
amount for ten years' service. The benefits are payable upon
retirement, at or after age 70, for a period equal to the
number of years of service as a Director but not more than 15
years for participants with 15 or more years of Board Service
as of the effective date of the Directors' Plan and not more
than 10 years for all other participants. The expense
related to the Directors' Plan was immaterial in both fiscal
1994 and 1993.
In November 1992, the Financial Accounting Standards Board
issued Statement No. 112, "Employer's Accounting for
Postemployment Benefits." This statement requires the
accrual of the expected cost of such benefits during the
employees' years of service. Adoption of this statement is
required for fiscal years beginning after December 15, 1993.
The new standard will not have a material effect on the
Company's results of operations or financial position.
Note 6 - Lease Obligations
- - -------------------------------------------------------------
The Company conducts a major part of its operations using
leased facilities and equipment. Many of these leases have
renewal and purchase options and provide that the Company pay
the cost of property taxes, insurance and maintenance.
Rent expense on all operating leases for fiscal years 1994,
1993 and 1992 was $4,392,000, $5,128,000 and $5,488,000,
respectively.
Asset balances for property acquired under capital leases
consist of the following (in thousands):
1994 1993
Buildings $ - $ 2,300
Equipment 10,026 5,218
-------------------
10,026 7,518
Less: accumulated depreciation (2,709) (3,600)
-------------------
$ 7,317 $ 3,918
===================
Future minimum lease payments for all noncancelable leases at
May 31, 1994 were as follows (in thousands):
Capital Operating
Leases Leases
-----------------------
1995 $ 2,230 $ 3,855
1996 2,214 2,427
1997 1,756 1,580
1998 1,207 723
1999 494 593
Thereafter - 2,323
-----------------------
Total future minimum lease $ 7,901 $11,501
payments
Less: amount representing
interest (723)
-----------
Present value of net minimum 7,178
lease payments
Less: current portion (1,985)
-----------
Long-term obligations under
capital leases at May 31, 1994 $ 5,193
===========
Note 7 - Sales-type Leases:
_____________________________________________________________
The Company has entered into sales-type leases with customers
for certain of its computer equipment and software products.
The components of the Company's investment in such leases at
May 31, 1994 and 1993 were as follows (in thousands):
1994 1993
Total future minimum lease
payments to be received 5,746 $13,662
Less: unearned income (947) (2,515)
---------------------
Gross investment in sales-
type leases 4,799 11,147
Less: allowance for
doubtful accounts (942) (1,478)
---------------------
Net investment in sales- 3,857 9,669
type leases
Less: current portion (2,357) (6,292)
---------------------
Net investment in sales-
type leases, noncurrent
portion $ 1,500 $ 3,377
=====================
In fiscal 1994 and 1993, the Company sold approximately
$11,903,000 and $21,831,000, respectively, of its sales-type
leases to a third party. These sales have been reflected as
reductions in the above investment balances. The related
gains, which were not material, have been recorded as other
income in the accompanying consolidated statements of income.
Under the terms of the sales, the purchaser has recourse to
the Company should certain amounts of the leases prove to be
uncollectible. For the majority of the leases, this recourse
is limited to 20% of the outstanding balance of leases sold;
however, certain leases were sold with full recourse. The
anticipated loss on the maximum recourse amount of $5,413,000
and $ 5,183,000 at May 31, 1994 and 1993, respectively, is
not material and is included in other current liabilities in
the accompanying consolidated balance sheets.
At May 31, 1994, the future minimum lease payments scheduled
to be received in each of the five succeeding years and
thereafter were as follows (in thousands):
Year Ending May 31, Amount
____________________________________________________________
1995 $ 3,060
1996 932
1997 751
1998 569
1999 387
Thereafter 47
------------
$ 5,746
============
Note 8 - Software Costs:
_____________________________________________________________
The following table sets forth information regarding the
Company's software costs for the years ended May 31, 1994,
1993 and 1992 (in thousands):
1994 1993 1992
Unamortized software costs $7,641 $6,596 $6,892
Capitalization of internally
developed software 1,450 1,651 883
Research and development
primarily associated with
software development 4,708 3,825 2,420
Software amortization expense 2,209 2,310 2,976
Note 9 - Mortgage Payable:
_____________________________________________________________
The Company has permanent financing on its headquarters
building consisting of a $12,000,000 mortgage at a 9.375%
fixed rate due in 1997. Principal payments due on the
mortgage are as follows (in thousands):
Year Ending May 31, Amount
- - -------------------------------------------------------------
1995 $ 149
1996 164
1997 10,936
-----------
$ 11,249
===========
The carrying amount approximates its fair value because the
interest rate on the mortgage approximates the current market
rates.
Note 10 - Commitments and Contingencies
____________________________________________________________
The Company and certain of its previous officers were party
to three lawsuits, which were consolidated as "National Data
Corporation Shareholder Litigation." The plaintiffs,
purporting to act on behalf of a class, alleged violations
of rule 10(b)(5) under the Securities Exchange Act of 1934
under a "fraud on the market" theory for alleged
misrepresentations and omissions relating to expected
earnings which resulted in, the plaintiffs contend, the
Company's common stock being overvalued in the market. The
Company and the plaintiffs signed an agreement on September
27, 1993 to settle this matter for $6,950,000. The Company's
insurer bore two-thirds of the settlement and related future
costs. The cost to the Company, net of income taxes and
insurance proceeds, was approximately $1,450,000. Both the
Company and its insurer paid their full share of the
settlement amount on December 1, 1993, and the settlement
received final approval from the court on December 16, 1993.
The Company is party to a number of other claims and lawsuits
incidental to its business. In the opinion of management,
the ultimate outcome of such matters, in the aggregate, will
not have a material adverse impact upon the Company's
financial position or results of operations.
Subsequent to year-end, the Company entered into a
$15,000,000 committed line of credit with two banks to fund
the Company's working capital requirements. In addition, the
Company obtained a two-year $40,000,000 line of credit for
acquisitions. Borrowings under these agreements bear
interest at the prime rate less 1% and the prime rate,
respectively. The lines of credit are not secured. The
agreements require the Company to maintain certain financial
ratios and contain other restrictive covenants. The working
capital line of credit expires in August 1995, and the
acquisition line of credit expires in August 1996.
As of May 31, 1994, the Company processed credit card
transactions for approximately 80,000 direct merchant locations.
The annual volumes processed for each customer range from
approximately $2,000 to $1 billion. The Company's merchant
customers have liability for charges disputed by cardholders.
However, in the case of merchant fraud, or insolvency or
bankruptcy of the merchant, the Company may be liable for any
of such charges disputed by cardholders. The Company
requires cash deposits and other types of collateral by
certain merchants to minimize any such contingent liability.
In addition, the Company believes that the diversification
of its merchant portfolio among industries and geographic
regions minimizes its risk of loss. Based on its historical
loss experience, the Company has established reserves for
estimated losses on transactions processed through May 31,
1994. In the opinion of management, such reserves for losses
are adequate.
In connection with the Company's acquisition of merchant
credit card operations of banks, the Company has also entered
into depository and processing agreements ("the Agreements")
with certain of the banks. These Agreements allow the
Company to use the banks' "Bank Identification Number"
to clear credit card transactions through VISA and
MasterCard. Certain of the Agreements contain financial
covenants, and the Company was in compliance with all such
covenants as of May 31, 1994.
Note 11 - Information on Major Customers and Foreign
Operations:
_____________________________________________________________
The Company operates principally in data processing services
and provides specialized data processing applications
designed to meet the business needs of its customers. The
applications include a variety of Healthcare Application
Systems and Services, Integrated Payment Systems and
Government and Corporate Information Systems and Services.
The Company markets its products internationally and has
sales offices in Canada, Europe and Japan. Revenue from non-
U.S. operations was $4,873,000, $6,077,000 and $7,748,000 for
the years ended May 31, 1994, 1993 and 1992, respectively.
Operating losses from foreign operations were $449,000,
$2,102,000, and $1,061,000 in 1994, 1993 and 1992,
respectively. Assets related to foreign operations are not
significant.
Approximately 4%, 5% and 5% of the Company's total revenue
for the years ended May 31, 1994, 1993 and 1992,
respectively, was derived from contracts with, or as a
subcontractor of contractors with, the United States
government. All such contracts and subcontracts are
generally subject to termination at the convenience of the
United States government, whenever it believes that such
termination would be in its best interests. If such
contracts and subcontracts were terminated for the
convenience of the United States government, the Company is
generally entitled to receive payment for work completed and
allowable termination costs.
Note 12 - Subsequent Events
____________________________________________________________
In June 1994, the assets and certain liabilities of Yes
Check, Inc., were acquired. Yes Check, Inc. is a Chicago-
based check guarantee company with 49 employees. On July 15,
1994, the Company acquired the assets and certain liabilities
of Lytec Systems, Inc., a Salt Lake City company that
develops and markets medical practice management software
with 10 employees. The combined estimated annual revenues for
these acquired companies is $8,000,000.
Both acquisitions require earn-out payments at future dates
that are not estimable at this time. The aggregate price
paid for these acquisitions was $9,150,000.
Note 13 - Supplemental Cash Flow Information:
____________________________________________________________
Supplemental cash flow disclosures, including noncash
investing and financing activities, for the years ended May
31, 1994, 1993 and 1992 are as follows (in thousands):
1994 1993 1992
Income taxes paid, net of $3,543 $4,260 $1,391
refunds received
Interest paid 1,745 2,510 3,745
Property and equipment
acquired under capital
leases 4,853 2,932 257
Note 14 - Quarterly Consolidated Financial Information
(Unaudited)
____________________________________________________________
(In thousands except per share data)
Quarter Ended
Aug.31 Nov.30 Feb.28 May 31
Fiscal Year 1994
Revenue $50,213 $50,321 $50,444 $53,028
Operating Income 3,947 4,514 4,280 5,646
Net Income:
Before extraordinary item 2,108 2,278 2,641 3,833
After extraordinary item 658 2,578 2,641 3,833
Earnings per share
Before extraordinary item .17 .20 .20 .29
After extraordinary item .05 .20 .20 .29
Fiscal Year 1993
Revenue $51,592 $49,966 $49,519 $53,479
Operating Income 2,256 2,939 4,200 5,626
Net Income 1,143 1,732 2,423 3,191
Earnings per share .10 .14 .20 .26
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULES
We have audited in accordance with generally accepted auditing
standards, the financial statements included in National Data
Corporation's annual report to shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated July 15, 1994.
Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedules listed in the index above
are the responsibility of the company's management and are presented for
purposes of complying with the Securities and Exchange Commission's
rules and are not part of the basic financial statements. These
schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly
state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen & Co.
Atlanta, Georgia
July 15, 1994
APPENDIX A
to
ANNUAL REPORT ON FORM 10-K
NATIONAL DATA CORPORATION AND ITS SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULES
CONTENTS
Report of Independent Public Accountants as to Schedules
Consolidated Schedule I - Marketable Securities
Consolidated Schedule II - Accounts Receivable From Related Parties and
Underwriters, Promoters and Employees Other Than Related Parties
Consolidated Schedule V - Property, Plant and Equipment
Consolidated Schedule VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment
Consolidated Schedule VIII - Valuation and Qualifying Accounts
Consolidated Schedule IX - Short-term Borrowings
Consolidated Schedule X - Supplementary Income Statement Information
Consent of Independent Public Accountants
NATIONAL DATA CORPORATION
CONSOLIDATED SCHEDULE I
MARKETABLE SECURITIES
(In thousands)
Column A Column B Column C Column D Column E
Market Value Amount at
of Each Issue Which
Name of Issuer Cost of at Balance Carried in the
and Title of Each Issue Amount Each Issue Sheet Date Balance Sheet
Certificates of Deposit $25 $25 $25 $25
======== ======= ======== ========
NATIONAL DATA CORPORATION
CONSOLIDATED SCHEDULE II
ACCOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
(in thousands)
Column A Column B Column C Column D - Deductions Column E
- - --------------- ---------------------- ----------- ---------------------------------- ----------------------
Balance at Beginning Additions Balance at End
of Period Foreign Foreign of Period
Currency Amounts Amounts Currency
Name of Debtors Current Non-Current Translation collected written-off Translation Current Non-Current
May 31, 1992
Rob Harris 170 - 12 - - - 182 -
Gale Turner 20 80 6 7 - - 20 80
--------------------------------------------------------------------------------------------------
$190 $80 $18 $7 - - $202 $80
May 31, 1993
Rob Harris 182 - - 33 - (26) 123 -
Gale Turner 20 80 14 24 - - 25 65
--------------------------------------------------------------------------------------------------
$202 $80 $14 $57 - ($26) $148 $65
May 31, 1994
Rob Harris 123 - - 100 20 (3) - -
Gale Turner 25 65 5 26 - - 26 43
--------------------------------------------------------------------------------------------------
$148 $65 $5 $126 $20 ($3) $ 26 $43
NATIONAL DATA CORPORATION
CONSOLIDATED SCHEDULE V
PROPERTY, PLANT & EQUIPMENT
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
OTHER
BALANCE CHANGES BALANCE
AT -ADD AT
BEGINNING ADDITIONS RETIRE- (DEDUCT) END OF
CLASSIFICATION OF PERIOD AT COST MENTS -DESCRIBE PERIOD
YEAR ENDED MAY 31, 1992
OWNED PROPERTY:
LAND $402 $0 $0 $0 $402
EQUIPMENT 87,846 4,310 9,458 98 a 82,796
SOFTWARE 42,313 1,768 1,082 1,021 a,c 44,020
FURNITURE AND FIXTURES 9,731 252 298 30 a 9,715
BUILDING STRUCTURE 6,504 0 0 0 6,504
LEASEHOLD IMPROVEMENTS 15,618 718 1,201 (63) 15,072
SUB-TOTAL 162,414 8,059 12,039 1,086 158,509
LEASED PROPERTY:
BUILDINGS 2,879 0 177 (33) a 2,669
EQUIPMENT 2,230 257 0 0 2,487
SUB-TOTAL 5,109 257 177 (33) 5,156
TOTAL PROPERTY $167,523 $8,316 $12,216 $42 $163,665
YEAR ENDED MAY 31, 1993
OWNED PROPERTY:
LAND $402 $0 $0 $0 $402
EQUIPMENT 82,796 2,355 8,849 (235)a,b 76,067
SOFTWARE 44,020 2,660 22,332 425 a,b,c 24,773
FURNITURE AND FIXTURES 9,715 28 842 (51)a,b 8,856
BUILDING STRUCTURE 6,504 0 0 0 6,504
LEASEHOLD IMPROVEMENTS 15,072 109 1,202 (107)a,b 13,872
SUB-TOTAL 158,509 5,152 33,225 32 130,468
LEASED PROPERTY:
BUILDINGS 2,669 0 369 0 2,300
EQUIPMENT 2,487 2,932 201 0 5,218
SUB-TOTAL 5,156 2,932 570 0 7,518
TOTAL PROPERTY $163,665 $8,084 $33,795 $32 $137,986
YEAR ENDED MAY 31, 1994
OWNED PROPERTY:
LAND $402 $0 $0 $0 $402
EQUIPMENT 76,067 4,013 8,702 (165)a,b 71,213
SOFTWARE 24,773 6,340 48 (810)a,b 30,255
FURNITURE AND FIXTURES 8,850 35 199 58 a,b 8,744
BUILDING STRUCTURE 6,504 - - (1)a 6,503
LEASEHOLD IMPROVEMENTS 13,872 116 - (39)a,b 13,949
SUB-TOTAL 130,468 10,504 8,949 (957) 131,066
LEASED PROPERTY:
BUILDINGS 2,300 0 2,300 0 0
EQUIPMENT 5,218 4,853 55 10 10,026
SUB-TOTAL 7,518 4,853 2,355 10 10,026
TOTAL PROPERTY $137,986 $14,357 $11,304 ($947) $141,092
(a) adjustment of prior years' items
(b) foreign currency translation
(c) revised lease terms
NATIONAL DATA CORPORATION
CONSOLIDATED SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT & EQUIPMEN
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
OTHER
BALANCE CHANGES BALANCE
AT DEPRECIATION/ -ADD AT
BEGINNING AMORTIZATION RETIRE- (DEDUCT) END OF
CLASSIFICATION OF PERIOD EXPENSE MENTS -DESCRIBE PERIOD
YEAR ENDED MAY 31, 1992
OWNED PROPERTY:
EQUIPMENT $64,368 $9,841 $9,210 ($96)a $64,903
SOFTWARE 36,392 2,434 800 7 a 38,033
FURNITURE AND FIXTURE 5,488 953 296 - 6,145
BUILDING STRUCTURE 731 169 - - 900
LEASEHOLD IMPROVEMENT 9,982 1,363 1,171 - 10,174
SUB-TOTAL 116,961 14,760 11,477 (89) 120,155
LEASED PROPERTY:
BUILDINGS 2,599 462 177 - 2,884
EQUIPMENT 195 148 - - 343
SUB-TOTAL 2,794 610 177 - 3,227
TOTAL PROPERTY $119,755 $15,370 $11,654 ($89) $123,382
YEAR ENDED MAY 31, 1993
OWNED PROPERTY:
EQUIPMENT $64,903 $9,031 $8,094 ($74)a,b $65,766
SOFTWARE 38,033 1,714 22,281 53 a,b 17,519
FURNITURE AND FIXTURE 6,145 864 798 (11)a,b 6,200
BUILDING STRUCTURE 900 169 - - 1,069
LEASEHOLD IMPROVEMENT 10,174 1,341 1,025 (50)c 10,440
SUB-TOTAL 120,155 13,119 32,198 (82) 100,994
LEASED PROPERTY:
BUILDINGS 2,884 115 403 - 2,596
EQUIPMENT 343 789 129 - 1,003
SUB-TOTAL 3,227 904 532 - 3,599
TOTAL PROPERTY $123,382 $14,023 $32,730 ($82) $104,593
YEAR ENDED MAY 31, 1994
OWNED PROPERTY:
EQUIPMENT $65,766 $6,358 $8,635 ($157)a,c $63,332
SOFTWARE 17,519 2,208 48 (3)a,c 19,676
FURNITURE AND FIXTURE 6,200 847 194 78 a,c 6,931
BUILDING STRUCTURE 1,069 168 - (1)a,c 1,236
LEASEHOLD IMPROVEMENT 10,440 1,148 - (9)a,c 11,579
SUB-TOTAL 100,994 10,729 8,877 (92) 102,754
LEASED PROPERTY:
BUILDINGS 2,596 - 2,281 (315)a -
EQUIPMENT 1,003 1,480 74 300 a 2,709
SUB-TOTAL 3,599 1,480 2,355 (15) 2,709
TOTAL PROPERTY $104,593 $12,209 $11,232 ($107) $105,463
(a) adjustment of prior year's items
(b) foreign currency translation
NATIONAL DATA CORPORATION
CONSOLIDATED SCHEDULE VIII
VALUATION & QUALIFYING ACCOUNTS
(In thousands)
Column A Column B Column C Column D Column E
Balance at Charged to Uncollectible Balance at
Beginning Cost and Accounts End
Description of Period Expenses Write-off of Period
Trade Receivable Allowances:
May 31, 1992 $4,206 $2,604 $4,919 $1,891
May 31, 1993 1,891 2,352 3,199 1,044
May 31, 1994 1,044 3,150 3,026 1,168
Other Receivable Allowances:
May 31, 1992 $1,431 $1,941 $2,329 $1,043
May 31, 1993 1,043 2,064 2,426 681
May 31, 1994 681 1,983 1,696 968
Sales-Type Lease Allowances:
May 31, 1992 $2,745 $1,407 $2,086 $2,066
May 31, 1993 2,066 727 1,315 1,478
May 31, 1994 1,478 (208) 328 942
NATIONAL DATA CORPORATION
CONSOLIDATED SCHEDULE IX
SHORT-TERM BORROWINGS
(In thousands)
Column A Column B Column C Column D Column E Column F
Max Amount Avg Amount Weighted
Balance Weighted Outstanding Outstanding Avg Int
Category of aggregate @ end of Average During the During the Rate During
short-term borrowings Period Interest Rate Period Period the Period
1992:
Bank Lines of Credit $4,500 7.00% $34,350 $24,708 a 7.30% b
1993:
Bank Lines of Credit $ 0 6.50% $6,500 $1,767 a 6.50% b
1994:
Bank Lines of Credit $ 0 5.64% $0 $0 5.00% b
See note 10 to the Consolidated Financial Statements for general terms
of the above short-term borrowings.
a. Average amounts outstanding at the end of each month for the years ended 5/31/92 and 5/31/93
b. Weighted average calculated using month-end balances and month-end interest rates.
NATIONAL DATA CORPORATION
CONSOLIDATED SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
( in thousands )
COLUMN A COLUMN B
Charged to
Item Operating Expenses
May 31, 1992
Maintenance and repairs $4,382
Amortization of acquired intangibles and goodwill 6,189
Taxes, other than payroll and income 1,298
May 31, 1993
Maintenance and repairs $4,410
Amortization of acquired intangibles and goodwill 5,685
Taxes, other than payroll and income 1,551
May 31, 1994
Maintenance and repairs $5,986
Amortization of acquired intangibles and goodwill 5,981
Taxes, other than payroll and income 1,463
EX-21
2
SUBSIDIARIES OF REGISTRANT
EXHIBIT (21)
Subsidiaries of the Registrant
The Registrant had the following subsidiaries at May 31, 1994,
each of which was wholly-owned by the Registrant, except as noted below:
Jurisdiction of
Name Incorporation
National Billing Systems, Inc. Georgia
National Data Payment Systems, Inc. New York
Modular Data, Inc. Delaware
Connection Technologies, Inc. Georgia
NDC Federal Systems, Inc. Delaware
NDC Advanced Network Services, Inc. Georgia
Technology Sales & Leasing Co., Inc. Georgia
NDC International, Inc. Georgia
National Data Realty, Inc. Georgia
National Data Corporation of Canada, Ltd. Canada
Nationcall, Inc. Georgia
NDC/Yes Check, Inc. (See Note 1) Georgia
Note 1: NDC/Yes Check, Inc. is 80% owned by the Registrant.
EX-23
3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included (or incorporated by reference) in
this Form 10-K, into the Registrant's previously filed Registration
Statements, File Numbers 2-81717, 2-86961, 2-92193, 33-25635, 33-43005,
33-44858, 33-58622 and 33-58624.
Arthur Andersen & Co.
Atlanta, Georgia
August 26, 1994
EX-10
4
MATERIAL CONTRACTS
$15,000,000
WORKING CAPITAL CREDIT AGREEMENT
dated as of
July 29, 1994
among
NATIONAL DATA CORPORATION
The Banks Listed Herein
and
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
TABLE OF CONTENTS
CREDIT AGREEMENT
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions 1
SECTION 1.02 Accounting Terms and Determinations 13
SECTION 1.03 References 13
SECTION 1.04 Use of Defined Terms 13
SECTION 1.05 Terminology 13
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend 13
SECTION 2.02 Method of Borrowing 14
SECTION 2.03 Notes 16
SECTION 2.04 Maturity of Loans 16
SECTION 2.05 Interest Rates 16
SECTION 2.06 Fees 18
SECTION 2.07 Optional Termination or Reduction of
the Commitments 18
SECTION 2.08 Mandatory Reduction and Termination
of Commitments 18
SECTION 2.09 Optional Prepayments 18
SECTION 2.10 Mandatory Prepayments 19
SECTION 2.11 General Provisions as to Payments 19
SECTION 2.12 Computation of Interest and Fees 19
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01 Conditions to First Borrowing 20
SECTION 3.02 Conditions to All Borrowings 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Corporate Existence and Power 22
SECTION 4.02 Corporate and Governmental
Authorization; No Contravention 22
SECTION 4.03 Binding Effect 22
SECTION 4.04 Financial Information 23
SECTION 4.05 No Litigation 23
SECTION 4.06 Compliance with ERISA 23
SECTION 4.07 Taxes 23
SECTION 4.08 Subsidiaries 24
SECTION 4.09 Not an Investment Company 24
SECTION 4.10 Ownership of Property; Liens 24
SECTION 4.11 No Default 24
SECTION 4.12 Full Disclosure 24
SECTION 4.13 Environmental Matters 24
SECTION 4.14 Capital Stock 25
SECTION 4.15 Margin Stock 25
SECTION 4.16 Insolvency 25
ARTICLE V
COVENANTS
SECTION 5.01 Information 26
SECTION 5.02 Inspection of Property, Books and
Records 28
SECTION 5.03 Restricted Payments 28
SECTION 5.04 Fixed Charges Coverage 28
SECTION 5.05 Loans or Advances 29
SECTION 5.06 Investments; Acquisitions 29
SECTION 5.07 Negative Pledge 30
SECTION 5.08 Debt 31
SECTION 5.09 Maintenance of Existence 32
SECTION 5.10 Dissolution 32
SECTION 5.11 Consolidations, Mergers and Sales
of Assets 32
SECTION 5.12 Use of Proceeds 33
SECTION 5.13 Compliance with Laws; Payment of
Taxes 33
SECTION 5.14 Insurance 33
SECTION 5.15 Change in Fiscal Year 34
SECTION 5.16 Maintenance of Property 34
SECTION 5.17 Environmental Notices 34
SECTION 5.18 Environmental Matters 34
SECTION 5.19 Environmental Release 34
SECTION 5.20 Future Subsidiaries 34
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default 35
SECTION 6.02 Notice of Default 38
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment; Powers and Immunities 38
SECTION 7.02 Reliance by Agent 39
SECTION 7.03 Defaults 39
SECTION 7.04 Rights of Agent as a Bank 39
SECTION 7.05 Indemnification 40
SECTION 7.06 Payee of Note Treated as Owner 40
SECTION 7.07 Nonreliance on Agent and Other Banks 40
SECTION 7.08 Failure to Act 41
SECTION 7.09 Resignation or Removal of Agent 41
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01 Basis for Determining Interest Rate
Inadequate or Unfair 42
SECTION 8.02 Illegality 42
SECTION 8.03 Increased Cost and Reduced Return 43
SECTION 8.04 Base Rate Loans Substituted for
Affected Euro-Dollar Loans 44
SECTION 8.05 Compensation 45
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Notices 45
SECTION 9.02 No Waivers 46
SECTION 9.03 Expenses; Documentary Taxes 46
SECTION 9.04 Indemnification 46
SECTION 9.05 Sharing of Setoffs 48
SECTION 9.06 Amendments and Waivers 49
SECTION 9.07 No Margin Stock Collateral 50
SECTION 9.08 Successors and Assigns 50
SECTION 9.09 Confidentiality 52
SECTION 9.10 Representation by Banks 53
SECTION 9.11 Obligations Several 53
SECTION 9.12 Georgia Law 53
SECTION 9.13 Interpretation 53
SECTION 9.14 WAIVER OF JURY TRIAL; CONSENT
TO JURISDICTION 53
SECTION 9.15 Counterparts 54
EXHIBIT A 56
EXHIBIT B 59
EXHIBIT C 62
EXHIBIT D 64
EXHIBIT E 67
EXHIBIT F 69
EXHIBIT G 77
EXHIBIT H 88
Schedule 4.01 89
Schedule 4.08 90
WORKING CAPITAL CREDIT AGREEMENT
AGREEMENT dated as of July 29, 1994 among NATIONAL DATA
CORPORATION, the BANKS listed on the signature pages hereof and
WACHOVIA BANK OF GEORGIA, N.A., as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in
this Section 1.01 shall, for all purposes of this Agreement and
any amendment hereto (except as herein otherwise expressly
provided or unless the context otherwise requires), have the
meanings set forth herein:
"Acquisition Credit Agreement" means that certain
Acquisition Credit Agreement, dated as of even date herewith,
among the Borrower, the banks from time to time party thereto,
and Wachovia Bank of Georgia, N.A., as the Agent thereunder,
together with all amendments and supplements thereto.
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.05(c).
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the
Borrower (a "Controlling Person"), (ii) any Person (other than
the Borrower or a Subsidiary) which is controlled by or is under
common control with a Controlling Person, or (iii) any Person
(other than a Subsidiary) of which the Borrower owns, directly or
indirectly, 20% or more of the common stock or equivalent equity
interests. As used herein, the term "control" means possession,
directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or
otherwise.
"Agent" means Wachovia Bank of Georgia, N.A., a
national banking association organized under the laws of the
United States of America, in its capacity as agent for the Banks
hereunder, its successors and permitted assigns in such capacity,
and any other Person appointed as Agent in accordance with
Section 7.09.
"Agreement" means this Working Capital Credit
Agreement, together with all amendments and supplements hereto.
"Applicable Margin" has the meaning set forth in
Section 2.05(a).
"Assignee" has the meaning set forth in Section 9.08(c).
"Assignment and Acceptance" means an Assignment and
Acceptance executed in accordance with Section 9.08(c) in the
form attached hereto as Exhibit D.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages
hereof as having a Commitment, and its successors and permitted
assigns.
"Base Rate" means for any Base Rate Loan for any day,
the rate per annum equal to the higher as of such day of (i) the
Prime Rate minus 1.0%, and (ii) one-half of one percent above the
Federal Funds Rate. For purposes of determining the Base Rate
for any day, changes in the Prime Rate shall be determined as at
the end of any day and shall be effective on the date of each
such change.
"Base Rate Loan" means a Loan to be made as a Base Rate
Loan pursuant to the applicable Notice of Borrowing, Section
2.02(f), or Article VIII, as applicable.
"Borrower" means National Data Corporation, a Delaware
corporation, and its successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of
Loans made to the Borrower at the same time by the Banks pursuant
to Article II. A Borrowing is a "Base Rate Borrowing" if such
Loans are Base Rate Loans or a "Euro-Dollar Borrowing" if such
Loans are Euro-Dollar Loans.
"Capital Expenditures" means for any period the sum of
all capital expenditures incurred during such period by the
Borrower and its Consolidated Subsidiaries, as determined in
accordance with GAAP.
"Capital Stock" means any nonredeemable capital stock of
the Borrower or any Consolidated Subsidiary (to the extent issued
to a Person other than the Borrower), whether common or
preferred.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. 9601 et. seq. and its
implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant
to CERCLA.
"Change of Law" shall have the meaning set forth in
Section 8.02.
"Closing Date" means July 29, 1994.
"Code" means the Internal Revenue Code of 1986, as
amended, or any successor Federal tax code.
"Commitment" means, as to any Bank, the obligation of
such Bank to make Loans in an aggregate principal amount at any
time outstanding up to but not exceeding the amount set forth
opposite such Bank's name on the signature pages hereof (as the
same may be reduced from time to time pursuant to the provisions
of this Agreement).
"Compliance Certificate" has the meaning set forth in
Section 5.01(c).
"Consolidated Debt" means at any date the Debt of the
Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"Consolidated Fixed Charges" means, without duplication,
as at any date of determination, the sum of (i) Consolidated
Interest Expense, (ii) all payment obligations of the Borrower
and its Consolidated Subsidiaries under all operating leases and
rental agreements and (iii) any Consolidated Debt scheduled to be
paid within 1 year of such date of determination.
"Consolidated Interest Expense" for any period means,
without duplication, interest, whether expensed or capitalized,
in respect of outstanding Consolidated Debt of the Borrower and
its Consolidated Subsidiaries during such period; provided, that,
in determining Consolidated Interest Expense, interest on Debt
referred to in clauses (viii) and (ix) of the definition of Debt
shall only be included to the extent that the Borrower's or any
Consolidated Subsidiary's obligation to pay such Debt is not
contingent in nature, as of any date of determination.
"Consolidated Net Income" means, for any period, the Net
Income of the Borrower and its Consolidated Subsidiaries
determined on a consolidated basis, but excluding (i)
extraordinary items and (ii) any equity interests of the Borrower
or any Subsidiary in the unremitted earnings of any Person that
is not a Subsidiary.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which, in accordance
with GAAP, would be consolidated with those of the Borrower in
its consolidated financial statements as of such date.
"Controlled Group" means all members of a controlled
group of corporations and all trades or businesses (whether or
not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414 of
the Code.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in
the ordinary course of business, (iv) all obligations of such
Person as lessee under capital leases, (v) all obligations of
such Person to reimburse any bank or other Person in respect of
amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a
corporation), (vii) all obligations (regardless of whether
contingent or absolute) of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit
or similar instrument, (viii) all Debt of others secured by a
Lien on any asset of such Person, whether or not such Debt is
assumed by such Person, and (ix) all Debt of others Guaranteed by
such Person.
"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.
"Default Rate" means, with respect to any Loan, on any
day, the sum of 2.0% plus the then highest interest rate
(including the Applicable Margin) which may be applicable to any
Loans hereunder (irrespective of whether any such class of Loans
are actually outstanding hereunder).
"Depreciation" means for any period the sum of all
depreciation expenses of the Borrower and its Consolidated
Subsidiaries for such period, as determined in accordance with
GAAP.
"Dividends" means for any period the sum of all
dividends paid or declared during such period in respect of any
Capital Stock and Redeemable Preferred Stock (other than
dividends paid or payable in the form of additional Capital
Stock).
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Georgia are
authorized by law to close.
"Environmental Authorizations" means all licenses,
permits, orders, approvals, notices, registrations or other legal
prerequisites for conducting the business of the Borrower
required by any Environmental Requirement.
"Environmental Authority" means any foreign, federal,
state, local or regional government that exercises any form of
jurisdiction or authority under any Environmental Requirement.
"Environmental Judgments and Orders" means all
judgments, decrees or orders arising from or in any way
associated with any Environmental Requirements, whether or not
entered upon consent or written agreements with an Environmental
Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated
in a judgment, decree or order.
"Environmental Liabilities" means any liabilities,
whether accrued, contingent or otherwise, arising from and in any
way associated with any Environmental Requirements.
"Environmental Notices" means notice from any
Environmental Authority or by any other person or entity, of
possible or alleged noncompliance with or liability under any
Environmental Requirement, including without limitation any
complaints, citations, demands or requests from any Environmental
Authority or from any other person or entity for correction of
any, violation of any Environmental Requirement or any
investigations concerning any violation of any Environmental
Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated
with any Environmental Requirement.
"Environmental Releases" means releases as defined in
CERCLA or under any applicable state or local environmental law
or regulation.
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to
the Borrower, any Subsidiary or the Properties, including but
not limited to any such requirement under CERCLA or similar state
legislation and all federal, state and local laws, ordinances,
regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor law.
Any reference to any provision of ERISA shall also be deemed to
be a reference to any successor provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business
Day on which dealings in Dollar deposits are carried out in the
London interbank market.
"Euro-Dollar Loan" means a Loan to be made as a
Euro-Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.05(c).
"Event of Default" has the meaning set forth in Section
6.01.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upward, if necessary, to the next higher 1/100th
of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day, provided that (i) if the day for
which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published
on the next succeeding Business Day, and (ii) if such rate is not
so published for any day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent on such day on
such transactions, as determined by the Agent.
"Financial Institution" has the meaning ascribed thereto
in O.C.G.A. 7-1-4(21) as of the date hereof.
"First Chicago" means The First National Bank of
Chicago, a national banking association and its successors and
permitted assigns.
"Fiscal Quarter" means any fiscal quarter of the
Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles
applied on a basis consistent with those which, in accordance
with Section 1.02, are to be used in making the calculations for
purposes of determining compliance with the terms of this
Agreement.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or
services, to provide collateral security, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Materials" includes, without limitation, (a)
solid or hazardous waste, as defined in the Resource Conservation
and Recovery Act of 1980, 42 U.S.C. 6901 et. seq. and its
implementing regulations and amendments, or in any applicable
state or local law or regulation, (b) "hazardous substance",
"pollutant", or "contaminant" as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any
other petroleum product or by-product, including, crude oil or
any fraction thereof (d) toxic substances, as defined in the
Toxic Substances Control Act of 1976, or in any applicable state
or local law or regulation or (e) insecticides, fungicides, or
rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local
law or regulation, as each such Act, statute or regulation may be
amended from time to time.
"Income Available for Fixed Charges" for any period
means the sum of (i) Consolidated Net Income, (ii) taxes on
income, (iii) depreciation, (iv) interest expense, (v) all
payment obligations of the Borrower and its Consolidated
Subsidiaries for such period under all operating leases and
rental agreements, and (vi) amortization of intangible assets,
all determined with respect to the Borrower and its Consolidated
Subsidiaries on a consolidated basis for such period and in
accordance with GAAP.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in the
first, second or third month thereafter, as the Borrower may
elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to paragraph (c) below) which would
otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall, subject to
paragraph (c) below, end on the last Euro-Dollar Business Day
of the appropriate subsequent calendar month; and
(c) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date.
(2) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to paragraph (b) below) which would
otherwise end on a day which is not a Domestic Business Day
shall be extended to the next succeeding Domestic Business
Day; and
(b) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination Date.
"Investment" means any investment in any Person, whether
by means of purchase or acquisition of obligations or securities
of such Person, capital contribution to such Person, loan or
advance to such Person, making of a time deposit with such
Person, Guarantee or assumption of any obligation of such Person
or otherwise.
"Lending Office" means, as to each Bank, its office
located at its address set forth on the signature pages hereof
(or identified on the signature pages hereof as its Lending
Office) or such other office as such Bank may hereafter designate
as its Lending Office by notice to the Borrower and the Agent.
"Lien" means, with respect to any asset, any mortgage,
deed to secure debt, deed of trust, lien, pledge, charge,
security interest, security title, preferential arrangement,
which has the practical effect of constituting a security
interest or encumbrance, or encumbrance or servitude of any kind
in respect of such asset to secure or assure payment of a Debt or
a Guarantee, whether by consensual agreement or by operation of
statute or other law. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement
relating to such asset.
"Loan" means, as to any Bank, a Loan made by such Bank
pursuant to Section 2.01.
"Loan Documents" means this Agreement, the Notes, the
Subsidiary Guaranties, any other document evidencing, relating to
or securing the Loans, and any other document or instrument
delivered in connection with this Agreement, the Notes, the Loans
or the Subsidiary Guaranties, as such documents and instruments
may be amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.05(c).
"Long-Term Debt" means at any date any Consolidated Debt
which matures (or the maturity of which may at the option of the
Borrower or any Consolidated Subsidiary be extended such that it
matures) more than one year after such date.
"Margin Stock" means "margin stock" as defined in
Regulations G, T, U or X.
"Material Adverse Effect" means, with respect to any
event, act, condition or occurrence of whatever nature (including
any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or
not related, a material adverse change in, or a material adverse
effect upon, any of (a) the financial condition, operations,
business, properties or prospects of Borrower and its
Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Agent or the Banks under the Loan Documents, or
the ability of the Borrower or any Subsidiary Guarantor to
perform its obligations under the Loan Documents to which it is a
party, as applicable, or (c) the legality, validity or
enforceability of any Loan Document.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"NDPS" means National Data Payment Systems, Inc., a New
York corporation, and its successors and permitted assigns.
"Net Income" means, as applied to any Person for any
period, the aggregate amount of net income of such Person, after
taxes, for such period, as determined in accordance with GAAP.
"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, together with all
amendments, consolidations, modifications, renewals, and
supplements thereto.
"Notice of Borrowing" has the meaning set forth in
Section 2.02.
"Obligations" means any and all Debt, liabilities and
obligations of Borrower to the Agent or any of the Banks pursuant
to this Agreement or any of the other Loan Documents.
"Participant" has the meaning set forth in Section
9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an unincorporated association, a trust or any other
entity or organization, including, but not limited to, a
government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and is
either (i) maintained by a member of the Controlled Group for
employees of any member of the Controlled Group or (ii)
maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes
contributions and to which a member of the Controlled Group is
then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions.
"Prime Rate" refers to that interest rate so denominated
and set by Wachovia from time to time as an interest rate basis
for borrowings. The Prime Rate is but one of several interest
rate bases used by Wachovia. Wachovia lends at interest rates
above and below the Prime Rate.
"Properties" means, as of the date of any determination,
all real property currently owned, leased or otherwise used or
occupied by the Borrower or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any
preferred stock issued by such Person which is at any time prior
to the Termination Date either (i) mandatorily redeemable (by
sinking fund or similar payments or otherwise) or (ii) redeemable
at the option of the holder thereof.
"Regulation G" means Regulation G of the Board of
Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations
issued thereunder.
"Regulation T" means Regulation T of the Board of
Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations
issued thereunder.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations
issued thereunder.
"Regulation X" means Regulation X of the Board of
Governors of the Federal Reserve System, as in effect from time
to time, together with all official rulings and interpretations
issued thereunder.
"Required Banks" means at any time Banks having at least
67% of the aggregate amount of the Commitments or, if the
Commitments are no longer in effect, Banks holding at least 67%
of the aggregate outstanding principal amount of the Notes.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital stock
(except dividends payable solely in shares of its capital stock)
or (ii) any payment on account of the purchase, redemption,
retirement or acquisition of (a) any shares of the Borrower's
capital stock (except shares acquired upon the conversion thereof
into other shares of its capital stock) or (b) any option,
warrant or other right to acquire shares of the Borrower's
capital stock.
"Sanwa" means Sanwa Business Credit Corporation.
"Sanwa Letter Agreement" means that certain Letter
Agreement, dated October 30, 1992, between Technology Sales and
Leasing Co., Inc. and Sanwa, together with all amendments and
supplements thereto.
"Stockholders' Equity" means, at any time, the
shareholders' equity of the Borrower and its Consolidated
Subsidiaries, as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries prepared in accordance with GAAP, but excluding any
Redeemable Preferred Stock of the Borrower or any of its
Consolidated Subsidiaries. Shareholders' equity generally would
include, but not be limited to (i) the par or stated value of all
outstanding Capital Stock, (ii) capital surplus, (iii) retained
earnings, and (iv) various deductions such as (A) purchases of
treasury stock, (B) valuation allowances, (C) receivables due
from an employee stock ownership plan, (D) employee stock
ownership plan debt guarantees, and (E) translation adjustments
for foreign currency transactions.
"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.
"Subsidiary Guarantor" means a Subsidiary which has
executed a Subsidiary Guaranty in connection herewith or pursuant
to Section 5.20.
"Subsidiary Guaranties" means any one or more or all, as
the context shall require or permit, of those certain Subsidiary
Guaranty Agreements, substantially in the form of Exhibit "G"
(with such revisions as are necessary in order to reflect the
date on which such are being executed, the parties thereto and
hereto, and any other necessary changes which relate to matters
of appropriate references therein), executed and delivered by the
Subsidiary Guarantors from time to time in favor of the Agent,
for the ratable benefit of the Banks, including, without
limitation, the Subsidiary Guaranty made by certain Subsidiary
Guarantors on even date herewith together with all amendments and
supplements thereto.
"Termination Date" means August 2,1995, or such later
date as may be agreed upon by each of the Banks and the Agent.
"Third Parties" means all lessees, sublessees, licensees
and other users of the Properties, excluding those users of the
Properties in the ordinary course of the Borrower's business and
on a temporary basis.
"Transferee" has the meaning set forth in Section
9.08(d).
"Unfunded Vested Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the present
value of all vested nonforfeitable benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable
to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the
Controlled Group to the PBGC or the Plan under Title IV of ERISA.
"Unused Commitment" means at any date, with respect to
any Bank, an amount equal to its Commitment less the aggregate
outstanding principal amount of its Loans.
"Wachovia" means Wachovia Bank of Georgia, N.A., a
national banking association and its successors and permitted
assigns.
"Wachovia Letter of Credit" means that certain
Irrevocable Standby Letter of Credit LC870-008806 issued by
Wachovia (formerly known as The First National Bank of Atlanta)
in favor of Texas Commerce Bank for the account of the Borrower,
together with all amendments and supplements thereto, and
renewals thereof.
"Wachovia Letter of Credit Obligations" means at any
time the sum of the aggregate (i) unfunded amount of the Wachovia
Letter of Credit, plus (ii) amounts owing to Wachovia by the
Borrower due to payments made by Wachovia under the Wachovia
Letter of Credit which have not been reimbursed by the Borrower.
"Wholly Owned Subsidiary" means any Subsidiary all of
the shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations.
Unless otherwise specified herein, all terms of an accounting
character used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared
in accordance with GAAP, applied on a basis consistent (except
for changes concurred in by the Borrower's independent public
accountants or otherwise required by a change in GAAP) with the
most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the Banks
unless with respect to any such change concurred in by the
Borrower's independent public accountants or required by GAAP, in
determining compliance with any of the provisions of any of the
Loan Documents: (i) the Borrower shall have objected to
determining such compliance on such basis at the time of delivery
of such financial statements, or (ii) the Required Banks shall so
object in writing within 30 days after the delivery of such
financial statements, in either of which events such calculations
shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made
in respect of the first financial statements delivered under
Section 5.01, shall mean the financial statements referred to in
Section 4.04).
SECTION 1.03. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits",
"Schedules", "Sections" and other Subdivisions are references to
Articles, exhibits, schedules, sections and other subdivisions
hereof.
SECTION 1.04. Use of Defined Terms. All terms defined
in this Agreement shall have the same defined meanings when used
in any of the other Loan Documents, unless otherwise defined
therein or unless the context shall require otherwise.
SECTION 1.05. Terminology. All personal pronouns used
in this Agreement, whether used in the masculine, feminine or
neuter gender, shall include all other genders; the singular
shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are
for convenience only, and neither limit nor amplify the
provisions of this Agreement.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank severally
agrees, on the terms and conditions set forth herein, to make
Loans as follows:
From time to time prior to the Termination Date, each
Bank shall make Loans to the Borrower in an aggregate principal
amount at any one time outstanding which shall not exceed its
Commitment. Each (i) Euro-Dollar Borrowing under this Section
2.01 shall be in an aggregate principal amount of $1,000,000 or
any larger multiple of $500,000 and (ii) Base Rate Borrowing
under this Section 2.01 shall be in an aggregate principal amount
of $500,000 or any larger multiple of $500,000, (except that any
such Euro-Dollar or Base Rate Borrowing may be in any lesser
amount equal to the aggregate amount of the Unused Commitments)
and shall be made from the several Banks ratably in accordance
with their respective Commitments. Within the foregoing limits,
the Borrower may borrow under this Section 2.01, repay or, to the
extent permitted by Section 2.09, prepay Loans and reborrow under
this Section 2.01 at any time before the Termination Date.
SECTION 2.02. Method of Borrowing. (a) The Borrower
shall give the Agent notice (a "Notice of Borrowing"), which
shall be substantially in the form of Exhibit E, on the same day
(before 10:30 A.M., Atlanta, Georgia time) for each Base Rate
Borrowing, and at least 3 Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such 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,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to
be Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing the Agent
shall promptly notify each Bank of the contents thereof and of
such Bank's ratable share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 1:00 P.M. (Atlanta, Georgia time) on
the date of each Borrowing, each Bank shall (except as provided
in paragraph (d) of this Section) make available its ratable
share of such Borrowing, in Federal or other funds immediately
available in Atlanta, Georgia, to the Agent at its address
referred to in Section 9.01. Unless the Agent determines that
any applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the
Banks available to the Borrower by 4:00 P.M. (Atlanta, Georgia
time) on the date of a Borrowing at the Agent's aforesaid
address. Unless the Agent receives notice from a Bank, at the
Agent's address referred to in or specified pursuant to Section
9.01, no later than 12:00 P.M. (local time at such address) on
the date of a Borrowing stating that such Bank will not make a
Loan in connection with such Borrowing, the Agent shall be
entitled to assume that such Bank will make a Loan in connection
with such Borrowing and, in reliance on such assumption, the
Agent may (but shall not be obligated to) make available such
Bank's ratable share of such Borrowing to the Borrower for the
account of such Bank. If the Agent makes such Bank's ratable
share available to the Borrower and such Bank does not in fact
make its ratable share of such Borrowing available on such date,
the Agent shall be entitled to recover such Bank's ratable share
from such Bank or the Borrower (and for such purpose shall be
entitled to charge such amount to any account of the Borrower
maintained with the Agent), together with interest thereon for
each day during the period from the date of such Borrowing until
such sum shall be paid in full at a rate per annum equal to the
Federal Funds Rate for each such day during such period, provided
that any such payment by the Borrower of such Bank's ratable
share and interest thereon shall be without prejudice to any
rights that the Borrower may have against such Bank. If the
Agent does not exercise its option to advance funds for the
account of such Bank, it shall forthwith notify the Borrower of
such decision.
(d) If any Bank makes a new Loan hereunder on a day on
which the Borrower is to repay all or any part of an outstanding
Loan from such Bank, such Bank shall apply the proceeds of its
new Loan to make such repayment and only an amount equal to the
difference (if any) between the amount being borrowed and the
amount being repaid shall be made available by such Bank to the
Agent as provided in paragraph (c) of this Section, or remitted
by the Borrower to the Agent as provided in Section 2.11, as the
case may be.
(e) Notwithstanding anything to the contrary contained
in this Agreement, no Euro-Dollar Borrowing may be made if there
shall have occurred a Default or an Event of Default, which
Default or Event of Default shall not have been cured or waived.
(f) In the event that a Notice of Borrowing fails to
specify whether the Loans comprising such Borrowing are to be
Base Rate Loans or Euro-Dollar Loans, such Loans shall be made as
Base Rate Loans. If the Borrower is otherwise entitled under
this Agreement to repay any Loans maturing at the end of an
Interest Period applicable thereto with the proceeds of a new
Borrowing, and the Borrower fails to repay such Loans using its
own moneys and fails to give a Notice of Borrowing in connection
with such new Borrowing, a new Borrowing shall be deemed to be
made on the date such Loans mature (in accordance with Section
2.04) in an amount equal to the principal amount of the Loans so
maturing, and the Loans comprising such new Borrowing shall be
Base Rate Loans.
(g) Notwithstanding anything to the contrary contained
herein, there shall not be more than 8 interest rates (including
the Applicable Margins) applicable to the Loans at any given
time.
SECTION 2.03. 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 Lending Office in an amount equal to the
original principal amount of such Bank's Commitment.
(b) Upon receipt of each Bank's Note pursuant to Section
3.01, the Agent shall mail such Note to such Bank. Each Bank
shall record, and prior to any transfer of each of its Notes
shall endorse on the schedule forming a part thereof appropriate
notations to evidence, the date, amount and maturity of each Loan
made by it, the date and amount of each payment of principal made
by the Borrower with respect thereto and whether such Loan is a
Base Rate Loan or Euro-Dollar Loan, and such schedule shall
constitute rebuttable presumptive evidence of the principal
amount owing and unpaid on such Bank's Notes; provided that the
failure of any Bank to make any such recordation or endorsement
shall not affect the obligation of the Borrower hereunder or
under the Notes. Each Bank is hereby irrevocably authorized by
the Borrower so to endorse its Notes and to attach to and make a
part of any Note a continuation of any such schedule as and when
required.
SECTION 2.04. Maturity of Loans. Each Loan included in
any Borrowing shall mature, and the principal amount thereof
shall be due and payable, on the last day of the Interest Period
applicable to such Borrowing. The entire principal balance of
the Loans, together with all accrued but unpaid interest thereon,
shall be due and payable on the Termination Date.
SECTION 2.05. Interest Rates. (a) "Applicable Margin"
means:
(i) for any Base Rate Loan, 0.0%, and
(ii) for any Euro-Dollar Loan, 0.75%.
(b) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date
such Loan is made until it becomes due, at a rate per annum equal
to the Base Rate for such day plus the Applicable Margin. Such
interest shall be payable for each Interest Period on the last
day thereof. Any overdue principal of and, to the extent
permitted by applicable law, overdue interest on any Base Rate
Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the
Applicable Margin plus the applicable Adjusted London Interbank
Offered Rate for such Interest Period; provided that if any
Euro-Dollar Loan shall, as a result of paragraph (1)(c) of the
definition of Interest Period, have an Interest Period of less
than 1 month, such Euro-Dollar Loan shall bear interest during
such Interest Period at the rate applicable to Base Rate Loans
during such period. Any overdue principal of and, to the extent
permitted by law, overdue interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Default Rate.
The "Adjusted London Interbank Offered Rate" applicable
to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the next
higher 1/16th of 1%) by dividing (i) the applicable London
Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such
Euro-Dollar Loan, the rate per annum determined on the basis of
the offered rate for deposits in Dollars of amounts equal or
comparable to the principal amount of such Euro-Dollar Loan
offered for a term comparable to such Interest Period, which
rates appear on the Reuters Screen LIBO Page as of 11:00 A.M.,
London time, 2 Euro-Dollar Business Days prior to the first day
of such Interest Period, provided that (i) if more than one such
offered rate appears on the Reuters Screen LIBO Page, the "London
Interbank Offered Rate" will be the arithmetic average (rounded
upward, if necessary, to the next higher 1/16th of 1%) of such
offered rates; (ii) if no such offered rates appear on such page,
the "London Interbank Offered Rate" for such Interest Period will
be the arithmetic average (rounded upward, if necessary, to the
next higher 1/16th of 1%) of rates quoted by not less than two
major banks in New York City, selected by the Agent, at
approximately 10:00 A.M., New York City time, 2 Euro-Dollar
Business Days prior to the first day of such Interest Period, for
deposits in Dollars offered to leading European banks for a term
comparable to such Interest Period in an amount equal or
comparable to the principal amount of such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" (or in respect of
any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any
Bank to United States residents).
(d) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt
notice to the Borrower and the Banks by telecopier, telex or
cable of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of
manifest error.
SECTION 2.06. Fees. (a) The Borrower shall pay to the
Agent for the account of each Bank a facility fee calculated at
the rate of 0.375% per annum on the total amount of the
Commitments (without regard to the outstanding principal amount
of the Loans). Such facility fees shall accrue from and
including the Closing Date to but excluding the Termination Date
and shall be payable, in arrears, on each March 31, June 30,
September 30 and December 31, and on the Termination Date.
(b) The Borrower shall pay to the Agent, for the
account and sole benefit of the Agent, on the Closing Date
(prorated for the period from the Closing Date to June 30, 1993),
and on each March 31, June 30, September 30 and December 31
thereafter, and on the Termination Date, a fully earned and non-
refundable administrative fee in the amount of $2,500 per
calendar quarter (or portion thereof) occurring prior to the
Termination Date.
SECTION 2.07. Optional Termination or Reduction of the
Commitments. The Borrower may, upon at least 3 Domestic Business
Days' notice to the Agent, terminate at any time, or
proportionately reduce from time to time by an aggregate amount
of at least $1,000,000, the Commitments. If the Commitments are
terminated in their entirety, all accrued fees (as provided under
Section 2.06) shall be due and payable on the effective date of
such termination and shall not thereafter accrue.
SECTION 2.08. Mandatory Reduction and Termination of
Commitments. The Commitments shall terminate on the Termination
Date and any Loans then outstanding (together with accrued
interest thereon) shall be due and payable on such date.
SECTION 2.09. Optional Prepayments. (a) The Borrower
may, on any Domestic Business Day, by notice to the Agent prior
to 10:30 A.M. on such date, prepay any Base Rate Borrowing in
whole at any time, or from time to time in part in amounts
aggregating at least $500,000, by paying the principal amount to
be prepaid together with accrued interest thereon to the date of
prepayment. Each such optional prepayment shall be applied to
prepay ratably the Base Rate Loans of the several Banks included
in such Base Rate Borrowing.
(b) Subject to Section 8.05, the Borrower may, on any
Euro-Dollar Business Day, by notice to the Agent prior to 10:30
A.M. (Atlanta, Georgia time) on such date, prepay any Euro-Dollar
Loan in whole at any time, or from time to time in part, prior to
the maturity thereof, in amounts aggregating at least $1,000,000
(except that any such prepayment may be in any lesser amount
equal to the entire outstanding balance of any relevant Euro-
Dollar Loan), by paying the principal amount to be prepaid
together with accrued interest thereon to the date of the
prepayment.
(c) Upon receipt of a notice of prepayment pursuant to
this Section, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such
prepayment and such notice shall not thereafter be revocable by
the Borrower.
SECTION 2.10. Mandatory Prepayments. (a) On each date
on which the Commitments are reduced pursuant to Section 2.07 or
Section 2.08, the Borrower shall repay or prepay such principal
amount of the outstanding Loans, if any (together with interest
accrued thereon), as may be necessary so that after such payment
the aggregate unpaid principal amount of the Loans does not
exceed the aggregate amount of the Commitments as then reduced.
(b) Each and every calendar month during the term of
this Agreement, the Borrower shall repay or prepay the Loans to
the extent necessary to cause the aggregate outstanding principal
balance of the Loans to be not greater than $3,000,000 for a
period of not less than 5 consecutive calendar days.
SECTION 2.11. General Provisions as to Payments.
(a)The Borrower shall make each payment of principal of, and
interest on, the Loans and of facility fees hereunder, not later
than 10:30 A.M. (Atlanta, Georgia time) on the date when due, in
Federal or other funds immediately available in Atlanta, Georgia,
to the Agent at its address referred to in Section 9.01. The
Agent will promptly distribute to each Bank its ratable share of
each such payment received by the Agent for the account of the
Banks.
(b) Whenever any payment of principal of, or interest
on, the Base Rate Loans or of facility fees shall be due on a day
which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of or interest
on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day.
SECTION 2.12. Computation of Interest and Fees.
Interest on Base Rate Loans shall be computed on the basis of a
year of 365 days and paid for the actual number of days elapsed
(including the first day but excluding the last day). Interest
on Euro-Dollar Loans shall be computed on the basis of a year of
360 days and paid for the actual number of days elapsed,
calculated as to each Interest Period from and including the
first day thereof to but excluding the last day thereof.
Facility fees and any other fees payable hereunder shall be
computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but
excluding the last day).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing. The
obligation of each Bank to make a Loan on the occasion of the
first Borrowing is subject to the satisfaction of the conditions
set forth in Section 3.02 and receipt by the Agent of the
following (in sufficient number of counterparts (except as to the
Notes) for delivery of a counterpart to each Bank and retention
of one counterpart by the Agent):
(a) from each of the parties to the Loan Documents of
either (i) a duly executed counterpart of each of the Loan
Documents signed by such party or (ii) a telex or facsimile
transmission stating that such party has duly executed a
counterpart of each of the Loan Documents and sent such
counterparts to the Agent;
(b) a duly executed Note for the account of each Bank
complying with the provisions of Section 2.03;
(c) a duly executed Subsidiary Guaranty, dated as of
the Closing Date, substantially in the form of Exhibit G;
(d) an opinion (together with any opinions of local
counsel relied on therein) of (i) Michael Ingram, general
counsel to the Borrower and its Subsidiaries, and (ii) Alston
& Bird, special counsel for the Borrower and the Subsidiary
Guarantors, in each case dated as of the Closing Date,
substantially in the form of Exhibit B and covering such
additional matters relating to the transactions contemplated
hereby as the Agent or any Bank may reasonably request;
(e) an opinion of Jones, Day, Reavis & Pogue special
counsel for the Banks and the Agent, dated the date of the
Closing Date, substantially in the form of Exhibit C and
covering such additional matters relating to the transactions
contemplated hereby as the Agent or any Bank may reasonably
request;
(f) a certificate, dated as of the Closing Date, signed
on behalf of the Borrower by a principal financial officer of
the Borrower, to the effect that (i) no Default has occurred
and is continuing on the Closing Date and (ii) the
representations and warranties of the Borrower contained in
Article IV are true on and as of the Closing Date;
(g) a duly executed Termination and Release Agreement,
dated as of the Closing Date, substantially in the form of
Exhibit H;
(h) all documents which the Agent or any Bank may
reasonably request relating to the existence of the Borrower
or any Subsidiary Guarantor, the corporate authority for and
the validity of the Loan Documents to which it is a party,
and any other matters relevant hereto, all in form and
substance satisfactory to the Agent, including, without
limitation, a certificate of incumbency of the Borrower and
each Subsidiary Guarantor, signed by its respective Secretary
or an Assistant Secretary, certifying as to the names, true
signatures and incumbency of its respective officer or
officers authorized to execute and deliver the Loan Documents
to which it is a party, and certified copies of the following
items as to the Borrower and each Subsidiary Guarantor: (i)
its Certificate of Incorporation, (ii) its Bylaws, (iii) a
certificate of the Secretary of State of (x) the States of
Delaware and Georgia as to the good standing of the Borrower
as a Delaware corporation, and (y) the state of incorporation
of each Subsidiary Guarantor as to its good standing therein,
and (iv) the action taken by its Board of Directors
authorizing its execution, delivery and performance of the
Loan Documents to which it is a party; and
(i) a Notice of Borrowing.
SECTION 3.02. Conditions to All Borrowings. The
obligation of each Bank to make a Loan on the occasion of each
Borrowing is subject to the satisfaction of the following
conditions:
(a) receipt by the Agent of a Notice of Borrowing;
(b) the fact that, immediately after such Borrowing, no
Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of
the Borrower contained in Article IV of this Agreement shall
be true on and as of the date of such Borrowing except for
changes permitted herein and except to the extent that such
representations and warranties relate solely to an earlier
date; and
(d) the fact that, immediately after such Borrowing,
the aggregate outstanding principal amount of the Loans of
each Bank will not exceed the amount of its Commitment.
Each Borrowing hereunder shall be deemed to be a representation
and warranty by the Borrower on the date of such Borrowing as to
the facts specified in paragraphs (b), (c) and (d) of this
Section; provided that such Borrowing shall not be deemed to be
such a representation and warranty to the effect set forth in
Section 4.04(b) as to any event, act or condition having a
Material Adverse Effect which has theretofore been disclosed in
writing by the Borrower to the Banks if the aggregate outstanding
principal amount of the Loans immediately after such Borrowing
will not exceed the aggregate outstanding principal amount
thereof immediately before such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to transact business in every
jurisdiction set forth on Schedule 4.01 and the failure of the
Borrower to be so qualified in any other jurisdiction could not
reasonably be expected to have or cause a Material Adverse
Effect, and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except where the failure
to have any such licenses, authorizations, consents and approvals
could not reasonably be expected to have or cause a Material
Adverse Effect.
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention. The execution, delivery and performance by the
Borrower of this Agreement, the Notes and the other Loan
Documents (i) are within the Borrower's corporate powers, (ii)
have been duly authorized by all necessary corporate action,
(iii) require no action by or in respect of or filing with, any
governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of
the Borrower or of any material agreement, judgment, injunction,
order, decree or other instrument binding upon the Borrower or
any of its Subsidiaries, and (v) do not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower
enforceable in accordance with its terms, and the Notes and the
other Loan Documents to which the Borrower is a party, when
executed and delivered in accordance with this Agreement, will
constitute valid and binding obligations of the Borrower
enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each
case to general principles of equity and to bankruptcy,
insolvency, fraudulent transfer, and similar laws affecting the
enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) The
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of May 31, 1993, and the related consolidated
statements of income, shareholders' equity and cash flows for the
Fiscal Year then ended, reported on by Arthur Andersen & Co.,
copies of which have been delivered to each of the Banks, and the
unaudited consolidated financial statements of the Borrower for
the interim period ended February 28, 1994, copies of which have
been delivered to each of the Banks, fairly present in all
material respects, in conformity with GAAP (subject to normal,
recurring, year-end audit adjustments), the consolidated
financial position of the Borrower and its Consolidated
Subsidiaries as of such dates and their consolidated results of
operations and cash flows for such periods stated.
(b) Since May 31, 1993, there has been no event, act,
condition or occurrence having a Material Adverse Effect.
SECTION 4.05. No Litigation. There is no action, suit
or proceeding pending, or to the knowledge of the Borrower
threatened, against or affecting the Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental
body, agency or official which could reasonably be expected to
have or cause a Material Adverse Effect.
SECTION 4.06. Compliance with ERISA. (a) The Borrower
and each member of the Controlled Group have fulfilled their
obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all
material respects with the presently applicable provisions of
ERISA and the Code, and have not incurred any liability to the
PBGC under Title IV of ERISA.
(b) Neither the Borrower nor any member of the
Controlled Group is or ever has been obligated to contribute to
any Multiemployer Plan.
SECTION 4.07. Taxes. There have been filed on behalf of
the Borrower and its Subsidiaries all Federal, state and local
income, excise, property and other tax returns which are required
to be filed by them and all taxes due pursuant to such returns or
pursuant to any assessment received by or on behalf of the
Borrower or any Subsidiary have been paid or contested as
permitted by Section 5.13. The charges, accruals and reserves on
the books of the Borrower and its Subsidiaries in respect of
taxes or other governmental charges are, in the opinion of the
Borrower, adequate. United States income tax returns of the
Borrower and its Subsidiaries' have been examined and closed
through the Fiscal Year ended May 31, 1992.
SECTION 4.08. Subsidiaries. Each of the Subsidiary
Guarantors is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation, is qualified to transact business in every
jurisdiction set forth in Schedule 4.08 and the failure of any
such Subsidiary Guarantor to be so qualified in any other
jurisdictions could not reasonably be expected to have or cause a
Material Adverse Effect, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted, except where
the failure to have any such licenses, authorizations, consents
and approvals could not reasonably be expected to have or cause a
Material Adverse Effect. The Borrower has no Subsidiaries except
for those Subsidiaries listed on Schedule 4.08, which accurately
sets forth their respective jurisdictions of incorporation.
SECTION 4.09. Not an Investment Company. The Borrower
is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10. Ownership of Property; Liens. Each of the
Borrower and its Consolidated Subsidiaries has title to its
properties sufficient for the conduct of its business, and none
of such property is subject to any Lien except as permitted in
Section 5.07.
SECTION 4.11. No Default. Neither the Borrower nor any
of its Consolidated Subsidiaries is in default under or with
respect to any agreement, instrument or undertaking to which it
is a party (including, without limitation, the Subsidiary
Guaranties) or by which it or any of its property is bound which
could reasonably be expected to have or cause a Material Adverse
Effect. No Default or Event of Default has occurred and is
continuing.
SECTION 4.12. Full Disclosure. All (i) information,
whether written or oral, heretofore furnished by either the chief
executive officer, chief financial officer, chief accounting
officer, controller or chief legal officer of the Borrower, and
(ii) written information heretofore furnished by any of the other
employees of the Borrower, to the Agent or any Bank for purposes
of or in connection with this Agreement or any transaction
contemplated hereby is, and all such information hereafter
furnished by such representatives of the Borrower to the Agent or
any Bank will be, true, accurate and complete in every material
respect or based on reasonable estimates on the date as of which
such information is stated or certified. The Borrower has
disclosed to the Banks in writing any and all facts known to the
Borrower, after due inquiry, which could reasonably be expected
to have or cause a Material Adverse Effect.
SECTION 4.13. Environmental Matters. (a) Neither the
Borrower nor any Subsidiary is subject to any Environmental
Liability which could reasonably be expected to have or cause a
Material Adverse Effect and, to the best of the Borrower's
knowledge, neither the Borrower nor any Subsidiary has been
designated as a potentially responsible party under CERCLA or
under any state statute similar to CERCLA. To the best of the
Borrower's knowledge, none of the Properties has been identified
on any current or proposed (i) National Priorities List under 40
C.F.R. 300, (ii) CERCLIS list or (iii) any list arising from a
state statute similar to CERCLA.
(b) No Hazardous Materials are being, and, to the best
of the Borrower's knowledge, have been, used, produced,
manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are otherwise present
at, on, in or under the Properties, or, to the best of the
knowledge of the Borrower, without independent inquiry, at or
from any adjacent site or facility, except for Hazardous
Materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed, or otherwise
handled in minimal amounts in the ordinary course of business in
compliance in all material respects with all applicable
Environmental Requirements.
(c) Borrower and each of its Subsidiaries is in
compliance in all material respects with all Environmental
Requirements in connection with the operation of the Properties
and Borrower's and each of its Subsidiary's respective
businesses.
SECTION 4.14. Capital Stock. All Capital Stock,
debentures, bonds, notes and all other securities of the Borrower
and its Subsidiaries presently issued and outstanding are validly
and properly issued in accordance with all applicable laws,
including but not limited to, the "Blue Sky" laws of all
applicable states and the federal securities laws. The issued
shares of Capital Stock of the Borrower's Wholly Owned
Subsidiaries is owned by the Borrower free and clear of any Lien
or adverse claim. At least a majority of the issued shares of
Capital Stock of each of the Borrower's other Subsidiaries (other
than Wholly Owned Subsidiaries) is owned by the Borrower free and
clear of any Lien or adverse claim.
SECTION 4.15. Margin Stock. Neither the Borrower nor
any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of purchasing or carrying
any Margin Stock, and no part of the proceeds of any Loan will be
used to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation X.
SECTION 4.16. Insolvency. After giving effect to the
execution and delivery of the Loan Documents and the making of
the Loans under this Agreement, the Borrower will not be
"insolvent," within the meaning of such term as used in O.C.G.A.
18-2-22 or as defined in 101 of Title 11 of the United States
Code, as amended from time to time, or be unable to pay its debts
generally as such debts become due, or have an unreasonably small
capital to engage in any business or transaction, whether current
or contemplated.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has any
Commitment hereunder or any amount payable hereunder or under any
Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to
each of the Banks:
(a) as soon as available and in any event within 95
days after the end of each Fiscal Year, a consolidated
balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Year and the
related consolidated statements of income, shareholders'
equity and cash flows for such Fiscal Year, setting forth in
each case in comparative form the figures for the previous
fiscal year, all certified by Arthur Andersen & Co. or other
independent public accountants of nationally recognized
standing, with such certification to be free of exceptions
and qualifications not acceptable to the Required Banks;
provided, that delivery pursuant to paragraph (i) below of
copies of the Annual Report on Form 10-K of the Borrower for
such Fiscal Year filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of
this Section 5.01(a);
(b) as soon as available and in any event within 50
days after the end of each of the first three quarters of
each Fiscal Year, a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of
such quarter and the related statement of income and
statement of cash flows for such quarter and for the portion
of the Fiscal Year ended at the end of such quarter, setting
forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the
previous Fiscal Year, all certified (subject to normal
year-end adjustments) as to fairness of presentation in all
material respects, generally accepted accounting principles
and consistency by the chief financial officer or the chief
accounting officer of the Borrower; provided, that delivery
pursuant to clause (g) below of copies of the Quarterly
Report on Form 10-Q of the Borrower for such Fiscal Quarter
filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this Section 5.01(b);
(c) simultaneously with the delivery of each set of
financial statements referred to in Sections 5.01(a) and (b)
above, a certificate, substantially in the form of Exhibit F
(a "Compliance Certificate"), of the chief financial officer
or the chief accounting officer of the Borrower (i) setting
forth in reasonable detail the calculations required to
establish whether the Borrower was in compliance with the
requirements of Sections 5.03 through 5.08, inclusive, on the
date of such financial statements and (ii) stating whether
any Default exists on the date of such certificate and, if
any Default then exists, setting forth the details thereof
and the action which the Borrower is taking or proposes to
take with respect thereto;
(d) simultaneously with the delivery of each set of
annual financial statements referred to in paragraph (a)
above, a statement of the firm of independent public
accountants which reported on such statements to the effect
that nothing has come to their attention in the course of
their audit to cause them to believe that any Default existed
on the date of such financial statements;
(e) within 5 Domestic Business Days after the chief
executive officer, chief financial officer, chief accounting
officer, controller or chief legal officer of the Borrower
(or any other individual having similar duties and
responsibilities as any of the foregoing although not having
the same title) becomes aware of the occurrence of any
Default, a certificate of the chief financial officer or the
chief accounting officer or such other Person of the Borrower
setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of all
financial statements, reports and proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and
any registration statements on Form S-8 or its equivalent)
and annual, quarterly or monthly reports which the Borrower
shall have filed with the Securities and Exchange Commission;
(h) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of any
"reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is
required to give notice of any such reportable event, a copy
of the notice of such reportable event given or required to
be given to the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of ERISA, a copy
of such notice; or (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate or appoint a
trustee to administer any Plan, a copy of such notice; and
(i) from time to time such additional information
regarding the financial position or business of the Borrower
and its Subsidiaries as the Agent, at the request of any
Bank, may reasonably request.
SECTION 5.02 Inspection of Property, Books and Records.
The Borrower will (i) keep, and cause each Subsidiary to keep,
proper books of record and account in which full, true and
correct entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its business and
activities; and (ii) permit, and cause each Subsidiary to permit,
representatives of any Bank at such Bank's expense prior to the
occurrence of a Default and at the Borrower's expense after the
occurrence of a Default to visit and inspect any of their
respective properties, to examine and make abstracts from any of
their respective books and records and to discuss their
respective affairs, finances and accounts with their respective
officers, employees and independent public accountants. The
Borrower agrees to cooperate and assist in such visits and
inspections, in each case at such reasonable times and as often
as may reasonably be desired. Notwithstanding the foregoing,
prior to the occurrence of a Default, no Bank may engage in (i)
more than 2 inspections per Fiscal Year or (ii) discussions with
the Borrower's independent public accountants, unless the
Borrower shall have otherwise consented to same.
SECTION 5.03. Restricted Payments. The Borrower will
not declare or make any Restricted Payment during any Fiscal Year
unless, after giving effect thereto, the aggregate of all
Restricted Payments declared or made during such Fiscal Year does
not exceed $6,000,000 and no Default shall be in existence (which
has not been specifically waived in writing pursuant to Section
9.06) either immediately preceding or succeeding the making or
declaration of any such Restricted Payment.
SECTION 5.04. Fixed Charges Coverage. At the end of
each Fiscal Quarter, commencing with the Fiscal Quarter ending
May 31, 1994, the ratio of Income Available for Fixed Charges for
the immediately preceding 4 Fiscal Quarters then ended to the sum
of (i) Consolidated Fixed Charges, (ii) Dividends, (iii) Capital
Expenditures (excluding Capital Expenditures which constitute
acquisitions permitted by clauses (x) and (y) of Section
5.06(b)), and (iv) to the extent not already counted in
determining Consolidated Fixed Charges, principal payments
scheduled to be made under any "earn-out" agreements of the
Borrower, in each case for the immediately preceding 4 Fiscal
Quarters then ended, shall not have been less than 1.10 to 1.0;
provided, that, notwithstanding the foregoing, in determining
Consolidated Fixed Charges for purposes of this Section 5.04, (i)
for so long as the "Termination Date" under the Acquisition
Credit Agreement shall be more than 1 year from any date of
determination, 25.0% of the "Loans" outstanding under the
Acquisition Credit Agreement shall be deemed to be Consolidated
Debt scheduled to be paid within 1 year, (ii) if the "Termination
Date" under the Acquisition Credit Agreement shall be less than 1
year from any date of determination, 33.34% of the "Loans"
outstanding under the Acquisition Credit Agreement shall be
deemed to be Consolidated Debt scheduled to be paid within 1
year, and (iii) the Loans outstanding under this Agreement shall
be excluded from the definition of Consolidated Debt.
SECTION 5.05. Loans or Advances. Neither the Borrower
nor any of its Subsidiaries shall make loans or advances to any
Person except: (i) loans or advances to employees not exceeding
$1,000,000 in the aggregate principal amount outstanding at any
time for the Borrower and its Subsidiaries, in each case made in
the ordinary course of business and consistent with practices
existing on the Closing Date, (ii) deposits required by
government agencies or public utilities, (iii) loans or advances
to Subsidiary Guarantors or to the Borrower, and (iv) travel
advances to employees not exceeding $500,000 in the aggregate
principal amount outstanding at any time for the Borrower and its
Subsidiaries, in each case made in the ordinary course of
business and consistent with practices existing on the Closing
Date; provided that after giving effect to the making of any
loans, advances or deposits permitted by clause (i), (ii), (iii)
and (iv) of this Section, no Default shall be in existence (which
has not been specifically waived in writing pursuant to Section
9.06).
SECTION 5.06. Investments; Acquisitions. (a) Neither
the Borrower nor any of its Subsidiaries shall make Investments
in any Person except as permitted by Sections 5.05 and 5.06(b),
and except Investments in (i) direct obligations of the United
States Government maturing within one year, (ii) certificates of
deposit issued by a bank rated A-1 or better by Standard & Poor's
corporation or P1 or better by Moody's Investors Service Inc.,
(iii) commercial paper rated A-1 or the equivalent thereof by
Standard & Poor's Corporation or P1 or the equivalent thereof by
Moody's Investors Service, Inc. and in either case maturing
within 6 months after the date of acquisition, (iv) Subsidiary
Guarantors, and/or (v) tender bonds the payment of the principal
of and interest on which is fully supported by a letter of credit
issued by a United States bank whose long-term certificates of
deposit are rated at least AA or the equivalent thereof by
Standard & Poor's Corporation and Aa or the equivalent thereof by
Moody's Investors Service, Inc.; provided, that this Section
shall not prohibit the Borrower's Guarantee of certain
obligations of Technology Sales and Leasing Co., Inc. under the
Sanwa Letter Agreement to the extent that such Guarantee and the
Debt Guaranteed pursuant thereto is not prohibited by Section
5.08.
(b) Without the prior written consent of the Agent and
the Required Banks, the Borrower will not, and it will not permit
any Subsidiary to, acquire, whether directly or through the
purchase of stock, convertible notes or otherwise, any assets
other than the acquisition of the assets of a Subsidiary
Guarantor or of fixed assets (which fixed assets do not
constitute all or substantially all of the assets of the Person
from whom such assets are acquired) unless (x) such acquisition
is of a business which is similar (as to product sold or service
rendered) to the Borrower's, or any relevant Subsidiary's,
business, (y) such acquisition is to be made upon a negotiated
basis with the approval of the board of directors of the Person
to be acquired, or of the percentage of ownership interests
required by the charter documents of such Person to approve any
such acquisition, and (z) no Default shall be in existence or be
caused thereby (which has not been specifically waived in writing
pursuant to Section 9.06).
SECTION 5.07. Negative Pledge. Neither the Borrower nor
any Consolidated Subsidiary will create, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired by
it, except for the following:
(a) Liens existing on the date of this Agreement
securing Debt outstanding on the date of this Agreement in an
aggregate principal amount not exceeding $22,263,000.00;
(b) any Lien existing on any asset of any corporation
at the time such corporation becomes a Consolidated
Subsidiary and not created in contemplation of such event;
(c) any Lien on any asset securing Debt (including,
without limitation, a capital lease) incurred or assumed for
the purpose of financing all or any part of the cost of
acquiring or constructing such asset, provided that such Lien
attaches to such asset concurrently with or within 18 months
after the acquisition or completion of construction thereof;
(d) any Lien on any asset of any corporation existing
at the time such corporation is merged or consolidated with
or into the Borrower or a Consolidated Subsidiary and not
created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Consolidated
Subsidiary and not created in contemplation of such
acquisition;
(f) Liens securing Debt owing by any (i) Subsidiary to
the Borrower or (ii) Subsidiary Guarantor to another
Subsidiary Guarantor;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien
permitted by any of the foregoing paragraphs of this Section,
provided that (i) such Debt is not secured by any additional
assets, and (ii) the amount of such Debt secured by any such
Lien is not increased;
(h) Liens incidental to the conduct of its business or
the ownership of its assets, including, without limitation,
Liens of materialmen and landlords, which (i) do not secure
Debt and (ii) do not in the aggregate materially detract from
the value of its assets or materially impair the use thereof
in the operation of its business;
(i) any Lien in respect of any taxes which are either
(x) not, as at any date of determination, due and payable or
(y) being contested in good faith as permitted by Section
5.13;
(j) Liens in respect of judgments or awards for which
appeals or proceedings for review are being prosecuted and in
respect of which a stay of execution upon any such appeal or
proceeding for review shall have been secured, provided that
such Person shall have established reserves which are
adequate under GAAP for such judgments or awards.
(k) Liens existing on the date of this Agreement
created by NDPS on certain of its assets, and securing
certain indemnity obligations of NDPS to the sellers of the
merchant credit card processing contracts;
(l) Liens securing the Borrower's and/or Technology
Sales and Leasing Co., Inc.'s recourse obligations to Sanwa
in respect of certain equipment lease and software license
agreements sold to Sanwa by the Borrower or by Technology
Sales and Leasing Co., Inc. and Guaranteed by the Borrower
from time to time; provided, that such Liens shall only
attach to property which has been sold to Sanwa; and
(m) Liens not otherwise permitted by the foregoing
paragraphs of this Section securing Debt (other than
indebtedness represented by the Notes) in an aggregate
principal amount at any time outstanding not to exceed
$5,000,000.
Provided Liens permitted by the foregoing paragraphs (a) through
(m) inclusive (excluding (l)) shall at no time secure Debt in an
aggregate amount greater than $38,263,000.00.
SECTION 5.08. Debt. The Borrower will not, nor will it
permit any Subsidiary to incur, any Debt other than (i) Debt
arising under this Agreement, the Acquisition Credit Agreement,
or the other Loan Documents, (ii) the Wachovia Letter of Credit
Obligations, (iii) Debt in existence as of the date hereof and
secured by Liens permitted by Section 5.07, (iv) Debt incurred
after the date hereof in an aggregate amount up to $10,000,000 at
any time outstanding, resulting from the periodic sale of
equipment lease and software license agreements; provided,
however, that for purposes of this clause (iv), the Borrower's or
any Subsidiary's obligations resulting from the sale of equipment
lease and software license agreements shall be counted as Debt
only if and to the extent that there is any recourse to the
Borrower or such Subsidiary or to the assets of the Borrower or
such Subsidiary; (v) Debt in respect of a private placement
transaction (provided, that, no more than 10.0% of the aggregate
principal amount received by the Borrower or any Subsidiary
pursuant to any such private placement transaction shall be
scheduled to be paid during the first year following the closing
thereof) and (vi) other Debt which shall not exceed
$22,000,000.00 in the aggregate at any given time, after the date
hereof; provided, that, at no time shall the aggregate amount of
Debt owing to Financial Institutions (other than Wachovia and
First Chicago to the extent permitted herein) exceed $10,000,000.
SECTION 5.09. Maintenance of Existence. The Borrower
shall, and shall cause each Subsidiary to, maintain its corporate
existence and carry on its business in substantially the same
manner and in substantially the same fields as such business is
now carried on and maintained; provided, that the (i) Borrower
may dissolve Subsidiaries pursuant to Section 5.10 and (ii) the
Borrower or any Subsidiary may discontinue a business line
pursuant to Section 5.11.
SECTION 5.10. Dissolution. Neither the Borrower nor any
of its Subsidiaries shall suffer or permit dissolution or
liquidation either in whole or in part or redeem or retire any
shares of its own stock or that of any Subsidiary, except through
corporate reorganization to the extent permitted by Section 5.11;
provided, that the Borrower may dissolve Subsidiaries from time
to time if (i) the Board of Directors of the Borrower has
determined that such dissolution is desirable, and (ii) the
Borrower has provided the Banks with evidence satisfactory to the
Banks, in their reasonable judgment, that such dissolution could
not reasonably be expected to have or cause a Material Adverse
Effect.
SECTION 5.11. Consolidations, Mergers and Sales of
Assets. The Borrower will not, nor will it permit any Subsidiary
to, consolidate or merge with or into, or sell, lease or
otherwise transfer all or any substantial part of its assets to,
any other Person, or discontinue or eliminate any business line
or segment, provided that (a) the Borrower may merge with another
Person if (i) such Person was organized under the laws of the
United States of America or one of its states, (ii) the Borrower
is the corporation surviving such merger and (iii) immediately
after giving effect to such merger, no Default shall have
occurred and be continuing, (b) Subsidiary Guarantors may merge
with and sell assets to, one another and the Borrower, (c) the
Borrower and the Subsidiaries may eliminate or discontinue
business lines and segments from time to time if such action (i)
has been approved by the Board of Directors of the Borrower, and
(ii) the Borrower or any such Subsidiary provides the Required
Banks with evidence satisfactory to the Required Banks, in their
reasonable judgment, that such elimination or discontinuance will
not jeopardize the Borrower's or any Subsidiary Guarantor's
ability to perform under any of the Loan Documents, (d) so long
as no Default shall be in existence either immediately prior to
or following any asset disposition, the Borrower may sell or
otherwise dispose of (x) any of its equipment lease and software
license agreements and (y) any of its other assets in an amount
of up to $10,000,000 in fair market value during each consecutive
12 month period and (e) during the existence of a Default which
does not constitute an Event of Default, the Borrower may
continue to sell equipment leases and software license agreements
to Sanwa on the same terms on which such sales customarily were
consummated prior to such Default.
SECTION 5.12. Use of Proceeds. The proceeds of the
Loans shall be used for working capital and other general
corporate purposes. No portion of the proceeds of the Loans will
be used by the Borrower (i) in connection with any tender offer
for, or other acquisition of, stock of any corporation with a
view towards obtaining control of such other corporation, (ii)
directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin
Stock, or (iii) for any purpose in violation of any applicable
law or regulation.
SECTION 5.13. Compliance with Laws; Payment of Taxes.
The Borrower will, and will cause each of its Subsidiaries and
each member of the Controlled Group to, comply in all material
respects with applicable laws (including but not limited to
ERISA), regulations and similar requirements of governmental
authorities (including but not limited to PBGC), except where the
necessity of such compliance is being contested in good faith
through appropriate proceedings. The Borrower will, and will
cause each of its Subsidiaries to, pay, prior to the accrual of
any penalty in respect thereof, all taxes, assessments,
governmental charges, claims for labor, supplies, rent and other
obligations which, if unpaid, might become a Lien against the
property of the Borrower or any Subsidiary, except liabilities
being contested in good faith and against which, if reasonably
requested by the Agent, the Borrower will set up reserves in
accordance with GAAP.
SECTION 5.14. Insurance. The Borrower will maintain,
and will cause each of its Subsidiaries to maintain (either in
the name of the Borrower or in such Subsidiary's own name), with
financially sound and reputable insurance companies, insurance on
all its property in at least such amounts and against at least
such risks as are usually insured against in the same general
area by companies of established repute engaged in the same or
similar business.
SECTION 5.15. Change in Fiscal Year. The Borrower will
not change its Fiscal Year without the consent of the Required
Banks, which consent shall not be unreasonably withheld.
SECTION 5.16. Maintenance of Property. The Borrower
shall, and shall cause each Subsidiary to, maintain all of its
properties and assets in good condition, repair and working
order, ordinary wear and tear excepted.
SECTION 5.17. Environmental Notices. Upon obtaining
knowledge thereof, the Borrower shall furnish to the Banks and
the Agent prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and
Environmental Releases at, on, in, under or in any way affecting
the Properties or any adjacent property, and all facts, events,
or conditions that could lead to any of the foregoing if any of
the foregoing could reasonably be expected to have or cause a
Material Adverse Effect; provided, that should the Borrower or
any Subsidiary receive any written notice with respect to any of
the foregoing, then the Borrower shall provide the Banks and the
Agent with a copy of same, regardless of whether the facts,
events or conditions described therein might have or cause a
Material Adverse Effect.
SECTION 5.18. Environmental Matters. The Borrower will
not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose
of, manage at, or otherwise handle, or ship or transport to or
from the Properties any Hazardous Materials except for Hazardous
Materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed, managed, or otherwise
handled in the ordinary course of business in compliance in all
material respects with all applicable Environmental Requirements.
SECTION 5.19. Environmental Release. The Borrower
agrees that upon the occurrence of an Environmental Release it
will act promptly to investigate the extent of, and to take
appropriate remedial action to remedy, such Environmental
Release, to the extent required by any applicable Environmental
Requirement or any Environmental Judgment and Order.
SECTION 5.20. Future Subsidiaries. The Borrower shall
cause all of its Subsidiaries not existing as of the date hereof
to execute and deliver Subsidiary Guaranties, and other Loan
Documents related thereto, as requested by the Agent, within 25
Business Days of the creation or acquisition of any such
Subsidiary by the Borrower. The delivery of such documents and
instruments shall be accompanied by such other documents as the
Agent may reasonably request (e.g., certificates of
incorporation, articles of incorporation and bylaws, opinion
letters, and appropriate resolutions of the Board of Directors of
any such Subsidiary Guarantor).
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 any interest on
any Loan within 3 Domestic Business Days after such interest
shall become due, or shall fail to pay any fee or other
amount payable hereunder within 5 Domestic Business Days
after such fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.02(ii), 5.03 to 5.12,
inclusive, or 5.20; or
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained or incorporated by reference
in this Agreement (other than those covered by paragraph (a)
or (b) above) and such failure shall not have been cured
within 30 days after the earlier to occur of (i) written
notice thereof has been given to the Borrower by the Agent at
the request of any Bank or (ii) the Borrower otherwise
becomes aware of any such failure; or
(d) any representation, warranty, certification or
statement made or incorporated by reference in Article IV or
in any certificate, financial statement or other document
delivered pursuant to this Agreement shall prove to have been
incorrect or misleading in any material respect when made (or
deemed made); or
(e) the Borrower or any Subsidiary shall fail to make
any payment in respect of Debt outstanding in the aggregate
principal amount of $500,000 or greater (other than the
Notes) when due or within any applicable grace period; or
(f) an "Event of Default" shall occur under any of the
other Loan Documents; provided, that, should any such "Event
of Default" be waived by the Banks, then, such waiver shall
operate as a waiver of an Event of Default arising under this
Section 6.01(f) as a result of same; or
(g) any event or condition shall occur which results in
the acceleration of the maturity of Debt outstanding of the
Borrower or any Subsidiary in the aggregate principal amount
of $500,000 or greater (including, without limitation, any
"put" of such Debt to the Borrower or any Subsidiary) or
enables the holders of such Debt or any Person acting on such
holders' behalf to accelerate the maturity thereof
(including, without limitation, any "put" of such Debt to the
Borrower or any Subsidiary); or
(h) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
or
(i) an involuntary case or other proceeding shall be
commenced against the Borrower or any Subsidiary seeking
liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or
an order for relief shall be entered against the Borrower or
any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect; or
(j) the Borrower or any member of the Controlled Group
shall fail to pay when due any material amount which it shall
have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA; or notice of intent to terminate a Plan or
Plans shall be filed under Title IV of ERISA by the Borrower,
any member of the Controlled Group, any plan administrator or
any combination of the foregoing; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause
a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of
any such Plan or Plans to enforce Section 515 or 4219(c)(5)
of ERISA and such proceeding shall not have been dismissed
within 30 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such Plan or Plans must be terminated;
or the Borrower or any other member of the Controlled Group
shall enter into, contribute or be obligated to contribute
to, terminate or incur any withdrawal liability with respect
to, a Multiemployer Plan; provided, that no Default or Event
of Default shall arise under this paragraph (j) so long as
the maximum potential liability to the Borrower or any member
of the Controlled Group shall be not greater than $500,000;
or
(k) one or more judgments or orders for the payment of
money in an aggregate amount in excess of $500,000 shall be
rendered against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied and unstayed for
a period of 30 days; or
(l) a federal tax lien shall be filed against the
Borrower under Section 6323 of the Code or a lien of the PBGC
shall be filed against the Borrower under Section 4068 of
ERISA and in either case such lien shall (i) secure an
obligation, or asserted obligation, in excess of $500,000 and
(ii) remain undischarged or unstayed for a period of 25 days
after the date of filing; or
(m) (i) any Person or two or more Persons acting in
concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 20%
or more of the outstanding shares of the voting stock of the
Borrower; or (ii) as of any date a majority of the Board of
Directors of the Borrower consists of individuals who were
not either (A) directors of the Borrower as of the
corresponding date of the previous year, (B) selected or
nominated to become directors by the Board of Directors of
the Borrower of which a majority consisted of individuals
described in clause (A), or (C) selected or nominated to
become directors by the Board of Directors of the Borrower of
which a majority consisted of individuals described in clause
(A) and individuals described in clause (B); or
(n) the occurrence of any event, act, occurrence, or
condition which the Banks determine either does or has a
reasonable probability of causing a Material Adverse Effect;
or
(o) (i) any of the Subsidiary Guaranties shall cease to
be enforceable or (ii) the Borrower or any Subsidiary
Guarantor shall assert that any Loan Document is not
enforceable; or
(p) an "Event of Default" shall occur under the
Acquisition Credit Agreement; provided, that, should any such
"Event of Default" be waived by the Banks, then, such waiver
shall operate as a waiver of an Event of Default arising
under this Section 6.01(p) as a result of same.
then, and in every such event, the Agent shall, if requested by
the Required Banks, (i) by notice to the Borrower terminate the
Commitments and they shall thereupon terminate, and (ii) by
notice to the Borrower declare the Notes (together with accrued
interest thereon) to be, and the Notes shall thereupon become,
immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by
the Borrower together with interest at the Default Rate accruing
on the principal amount thereof from and after the date of such
Event of Default; provided that if any Event of Default specified
in paragraph (h) or (i) above occurs with respect to the
Borrower, without any notice to the Borrower or any other act by
the Agent or the Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
waived by the Borrower together with interest thereon at the
Default Rate accruing on the principal amount thereof from and
after the date of such Event of Default. Notwithstanding the
foregoing, the Agent shall have available to it all other
remedies at law or equity, and shall exercise any one or all of
them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Agent shall give
notice to the Borrower of any Default under Section 6.01(c)
promptly upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment; Powers and Immunities. Each
Bank hereby irrevocably appoints and authorizes the Agent to act
as its agent hereunder and under the other Loan Documents with
such powers as are specifically delegated to the Agent by the
terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. The Agent: (a) shall have no
duties or responsibilities except as expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason
of this Agreement or any other Loan Document be a trustee for any
Bank; (b) shall not be responsible to the Banks for any recitals,
statements, representations or warranties contained in this
Agreement or any other Loan Document, or in any certificate or
other document referred to or provided for in, or received by any
Bank under, this Agreement or any other Loan Document, or for the
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or any
other document referred to or provided for herein or therein or
for any failure by the Borrower to perform any of its obligations
hereunder or thereunder; (c) shall not be required to initiate or
conduct any litigation or collection proceedings hereunder or
under any other Loan Document except to the extent requested by
the Required Banks, and then only on terms and conditions
satisfactory to the Agent, and (d) shall not be responsible for
any action taken or omitted to be taken by it hereunder or under
any other Loan Document or any other document or instrument
referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or
wilful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence
or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. The provisions of this Article VII are
solely for the benefit of the Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and
duties under this Agreement and under the other Loan Documents,
the Agent shall act solely as agent of the Banks and does not
assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for the
Borrower. The duties of the Agent shall be ministerial and
administrative in nature, and the Agent shall not have by reason
of this Agreement or any other Loan Document a fiduciary
relationship in respect of any Bank.
SECTION 7.02. Reliance by Agent. The Agent shall be
entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telefax,
telegram or cable) believed by it to be genuine and correct and
to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by the Agent.
As to any matters not expressly provided for by this Agreement or
any other Loan Document, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and
thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action
taken or failure to act pursuant thereto shall be binding on all
of the Banks.
SECTION 7.03. Defaults. The Agent shall not be deemed
to have knowledge of the occurrence of a Default or an Event of
Default (other than the nonpayment of principal of or interest on
the Loans) unless the Agent has received notice from a Bank or
the Borrower specifying such Default or Event of Default and
stating that such notice is a "Notice of Default". In the event
that the Agent receives such a notice of the occurrence of a
Default or an Event of Default, the Agent shall give prompt
notice thereof to the Banks. The Agent shall give each Bank
prompt notice of each nonpayment of principal of or interest on
the Loans whether or not it has received any notice of the
occurrence of such nonpayment. The Agent shall (subject to
Section 9.06) take such action hereunder with respect to such
Default or Event of Default as shall be directed by the Required
Banks, provided that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.
SECTION 7.04. Rights of Agent as a Bank. With respect
to the Loans made by it, Wachovia in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any
other Bank and may exercise the same as though it were not acting
as the Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include Wachovia in its individual
capacity. The Agent may (without having to account therefor to
any Bank) accept deposits from, lend money to and generally
engage in any kind of banking, trust or other business with the
Borrower (and any of its Affiliates) as if it were not acting as
the Agent, and the Agent may accept fees and other consideration
from the Borrower (in addition to any agency fees and arrangement
fees heretofore agreed to between the Borrower and the Agent) for
services in connection with this Agreement or any other Loan
Document or otherwise without having to account for the same to
the Banks.
SECTION 7.05. Indemnification. Each Bank severally
agrees to indemnify the Agent, to the extent the Agent shall not
have been reimbursed by the Borrower, ratably in accordance with
its Commitment, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements)
or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other Loan
Document or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or
thereby (excluding, unless an Event of Default has occurred and
is continuing, the normal administrative costs and expenses
incident to the performance of its agency duties hereunder) or
the enforcement of any of the terms hereof or thereof or any such
other documents; provided, however that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross
negligence or wilful misconduct of the Agent. If any indemnity
furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is
furnished.
SECTION 7.06. Payee of Note Treated as Owner. The Agent
may deem and treat the payee of any Note as the owner thereof for
all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the
Agent and the provisions of Section 9.08(c) have been satisfied.
Any requests, authority or consent of any Person who at the time
of making such request or giving such authority or consent is the
holder of any Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of that Note or of any
Note or Notes issued in exchange therefor or replacement thereof.
SECTION 7.07. Nonreliance on Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance
on the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis of the Borrower and decision to enter into this
Agreement and that it will, independently and without reliance
upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Loan Documents.
The Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement or
any of the other Loan Documents or any other document referred to
or provided for herein or therein or to inspect the properties or
books of the Borrower or any other Person. Except for notices,
reports and other documents and information expressly required to
be furnished to the Banks by the Agent hereunder or under the
other Loan Documents, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or
business of the Borrower or any other Person (or any of their
Affiliates) which may come into the possession of the Agent.
SECTION 7.08. Failure to Act. Except for action
expressly required of the Agent hereunder or under the other Loan
Documents, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction by the Banks
of their indemnification obligations under Section 7.05 against
any and all liability and expense which may be incurred by the
Agent by reason of taking, continuing to take, or failing to take
any such action.
SECTION 7.09. Resignation or Removal of Agent. Subject
to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving notice
thereof to the Banks and the Borrower and the Agent may be
removed at any time with or without cause by the Required Banks.
Upon any such resignation or removal, the Required Banks shall
have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within 30 days after the
retiring Agent's notice of resignation or the Required Banks'
removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent. Any successor
Agent shall be a bank which has a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII
shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
the Agent hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period:
(a) the Agent reasonably determines that deposits in
Dollars (in the applicable amounts) are not being offered in
the relevant market for such Interest Period, or
(b) the Required Banks advise the Agent that the London
Interbank Offered Rate, as the case may be, as determined by
the Agent will not adequately and fairly reflect the cost to
such Banks of funding Euro-Dollar Loans for such Interest
Period,
the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist,
the obligations of the Banks to make Euro-Dollar Loans specified
in such notice shall be suspended. Unless the Borrower notifies
the Agent prior to the time of any Borrowing of Euro-Dollar Loans
for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, such Borrowing shall instead
be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date hereof,
the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof (any such agency being referred to as an
"Authority" and any such event being referred to as a "Change of
Law"), or compliance by any Bank (or its Lending Office) with any
request or directive (whether or not having the force of law) of
any Authority shall make it unlawful or impossible for any Bank
(or its Lending Office) to make, maintain or fund its Euro-Dollar
Loans and such Bank shall so notify the Agent, the Agent shall
forthwith give notice thereof to the other Banks and the
Borrower, whereupon until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make Euro-Dollar
Loans shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different
Lending Office if such designation will avoid the need for giving
such notice and will not, in the reasonable judgment of such
Bank, be otherwise disadvantageous to such Bank. If such Bank
shall determine that it may not lawfully continue to maintain and
fund any of its outstanding Euro-Dollar Loans to maturity and
shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each
Euro-Dollar Loan of such Bank, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Dollar Loan,
the Borrower shall borrow a Base Rate Loan in an equal principal
amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of
the other Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return. (a) If
after the date hereof, a Change of Law or compliance by any Bank
(or its Lending Office) with any request or directive (whether or
not having the force of law) of any Authority:
(i) shall subject any Bank (or its Lending Office) to
any tax, duty or other charge with respect to its Euro-Dollar
Loans, its Notes or its obligation to make Euro-Dollar Loans,
or shall change the basis of taxation of payments to any Bank
(or its Lending Office) of the principal of or interest on
its Euro-Dollar Loans or any other amounts due under this
Agreement in respect of its Euro-Dollar Loans or its
obligation to make Euro-Dollar Loans (except for changes in
the tax or rate of tax on the overall net income of such Bank
or its Lending Office, as the case may be, or franchise taxes
imposed by the jurisdiction or any political subdivision or
taking authority in which such Bank's principal executive
office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board
of Governors of the Federal Reserve System, but excluding
with respect to any Euro-Dollar Loan any such requirement
included in an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Lending Office); or
(iii) shall impose on any Bank (or its Lending Office)
or on the United States market for the London interbank
market any other condition affecting its Euro-Dollar Loans,
its Notes or its obligation to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to
such Bank (or its Lending Office) of making or maintaining any
Euro-Dollar Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Lending Office) under this
Agreement or under its Notes with respect thereto, by an amount
deemed by such Bank to be material, then, within 15 days after
demand by such Bank (with a copy to the Agent), the Borrower
shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction. In
determining such amount, such Bank may use any reasonable
averaging and attribution methods generally utilized by such Bank
to determine such amounts on a non-discriminatory portfolio
basis. Before giving any notice pursuant to this Section, such
Bank shall designate a different Lending Office if such
designation will avoid the need for giving such notice, and will
not, in the reasonable judgment of such Bank, be otherwise
disadvantageous to such Bank.
(b) If any Bank shall have determined that after the
date hereof the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof, or
compliance by any Bank (or its Lending Office) with any request
or directive regarding capital adequacy (whether or not having
the force of law) of any Authority, has or would have the effect
of reducing the rate of return on such Bank's capital as a
consequence of its obligations hereunder to a level below that
which such Bank could have achieved but for such adoption, change
or compliance (taking into consideration such Bank's policies
with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within 15 days after
demand by such Bank, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for
such reduction.
(c) Each Bank will promptly notify the Borrower and the
Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation
pursuant to this Section and will designate a different Lending
Office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment of
such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section
and setting forth the additional amount or amounts to be paid
(together with an explanation, including calculations, of how
such amounts were determined) to it hereunder shall constitute
rebuttable presumptive evidence of the amount payable to any
relevant Bank. In determining such amount, such Bank may use any
reasonable averaging and attribution methods generally utilized
by such Bank to determine such amounts on a non-discriminatory
portfolio basis.
(d) The provisions of this Section 8.03 shall be
applicable with respect to any Participant, Assignee or other
Transferee, and any calculations required by such provisions
shall be made based upon the circumstances of such Participant,
Assignee or other Transferee.
SECTION 8.04. Base Rate Loans Substituted for Affected
Euro-Dollar Loans. If (i) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section
8.03, and the Borrower shall, by at least 5 Euro-Dollar Business
Days' prior notice to such Bank through the Agent, have elected
that the provisions of this Section shall apply to such Bank,
then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for
compensation no longer apply:
(a) all Loans which would otherwise be made by such
Bank as Euro-Dollar Loans, and shall be made instead as Base
Rate Loans, and
(b) after each of its Euro-Dollar Loans has been
repaid, all payments of principal which would otherwise be
applied to repay such Euro-Dollar Loans shall be applied to
repay its Base Rate Loans instead.
SECTION 8.05. Compensation. Upon the request of any
Bank, delivered to the Borrower and the Agent, the Borrower shall
pay to such Bank such amount or amounts as shall compensate such
Bank for any loss, cost or expense incurred by such Bank as a
result of:
(a) any payment or prepayment (pursuant to Section 8.02
or otherwise) of a Euro-Dollar Loan on a date other than the last
day of an Interest Period for such Euro-Dollar Loan; or
(b) any failure by the Borrower to prepay a Euro-Dollar
Loan on the date for such prepayment specified in the relevant
notice of prepayment hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar
Loan on the date for the Euro-Dollar Borrowing of which such
Euro-Dollar Loan is a part specified in the applicable Notice of
Borrowing delivered pursuant to Section 2.02;
such compensation to include, without limitation, an amount equal
to the excess, if any, of (x) the amount of interest which would
have accrued on the amount so paid or prepaid or not prepaid or
borrowed for the period from the date of such payment, prepayment
or failure to prepay or borrow to the last day of the then
current Interest Period for such Euro-Dollar Loan (or, in the
case of a failure to prepay or borrow, the Interest Period for
such Euro-Dollar Loan which would have commenced on the date of
such failure to prepay or borrow) at the applicable rate of
interest for such Euro-Dollar Loan provided for herein over (y)
the amount of interest (as reasonably determined by such Bank)
such Bank would have paid on deposits in Dollars of equal or
comparable amounts having terms comparable to such period placed
with it by leading banks in the London interbank market.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telex, telecopier or similar writing) and
shall be given to such party at its address or telecopier or
telex number set forth on the signature pages hereof or such
other address or telecopier or telex number as such party may
hereafter specify for the purpose by notice to each other party.
Each such notice, request or other communication shall be
effective (i) if given by telecopier or telex, when such
telecopier or telex is transmitted to the telecopier or telex
number specified in this Section and the appropriate confirmation
or answerback is received, (ii) if given by certified mail
return-receipt requested, on the date set forth on the receipt
(provided, that any refusal to accept any such notice shall be
deemed to be notice thereof as of the time of any such refusal),
addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section; provided that
notices to the Agent under Article II or Article VIII shall not
be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the
Agent, any Bank or the Borrower in exercising any right, power or
privilege hereunder or under any Note shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes. The Borrower
shall pay (i) all reasonable out-of-pocket expenses of the Agent
and the Banks, including reasonable fees and disbursements of
Jones, Day, Reavis & Pogue and the internal counsel of First
Chicago, in connection with the preparation of this Agreement and
the other Loan Documents, any waiver or consent hereunder or
thereunder or any amendment and (ii) if a Default occurs, all
reasonable out-of-pocket expenses incurred by the Agent and any
Bank, including reasonable fees and disbursements of counsel,
including, without limitation, the internal counsel of First
Chicago, in connection with such Default and collection and other
enforcement proceedings resulting therefrom, including reasonable
out-of-pocket expenses incurred in enforcing this Agreement and
the other Loan Documents. The Borrower shall indemnify the Agent
and each Bank against any transfer taxes, documentary taxes,
assessments or charges made by any Authority by reason of the
execution and delivery of this Agreement or the other Loan
Documents.
SECTION 9.04. Indemnification. (a) The Borrower shall
indemnify the Agent, the Banks and each affiliate thereof and
their respective directors, officers, employees and agents (each
an "Indemnified Party") from, and hold each of them harmless
against, any and all losses, liabilities, claims or damages to
which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any
actual or proposed use by the Borrower of the proceeds of any
extension of credit by any Bank hereunder or breach by the
Borrower of this Agreement or any other Loan Document or from any
investigation, litigation or other proceeding (including any
threatened investigation or proceeding) relating to the foregoing
(an "Indemnity Proceeding"), and the Borrower shall reimburse
each Indemnified Party, upon demand for any reasonable expenses
(including, without limitation, reasonable legal fees) incurred
in connection with any such investigation or proceeding ("Claims
and Expenses"); but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross
negligence or wilful misconduct of the Indemnified Party;
provided, that should the Borrower pay any amounts to the Agent
or the Banks due to this Section, and it shall be determined that
the harm being indemnified against resulted from the Agent's or
any Bank's gross negligence or wilful misconduct, then such party
receiving such payment shall rebate such payment to the Borrower,
together with interest thereon accruing at the Federal Funds Rate
from the date such payment was made until the date such rebate is
received by the Borrower (calculated for the actual number of
days elapsed on the basis of a 365 day year).
(b) If the Borrower is required to indemnify an
Indemnified Party pursuant hereto and has provided evidence
reasonably satisfactory to such Indemnified Party that the
Borrower has the financial wherewithal to reimburse such
Indemnified Party for any amount paid by such Indemnified Party
with respect to such Indemnity Proceeding, unless such
Indemnified Party shall have an important general interest
(i.e. an interest having general application to its business
other than solely with respect to the Loans under this Agreement)
in settling or compromising such Indemnity Proceeding, such
Indemnified Party shall not settle or compromise any such
Indemnity Proceeding without the prior written consent of the
Borrower (which consent shall not be unreasonably withheld or
delayed).
(c) If a claim is to be made by an Indemnified Party
under this Section, the Indemnified Party shall give written
notice to the Borrower promptly after the Indemnified Party
receives actual notice of any Claims and Expenses incurred or
instituted for which the indemnification is sought; provided,
that, the failure to give such prompt notice shall not decrease
the Claims and Expenses payable by the Borrower. If requested by
the Borrower in writing, and so long as (i) no Default or Event
of Default shall have occurred and be continuing and (ii) the
Borrower has acknowledged in writing to the Indemnified Party
that the Borrower shall be obligated under the terms of its
indemnity hereunder in connection with such Indemnity Proceeding,
the Borrower may, at its election, conduct the defense of any
such Indemnified Proceeding to the extent such contest may be
conducted in good faith on legally supported grounds, unless such
Indemnified Party shall have an important general interest
(i.e. an interest having general application to its business
other than solely with respect to the Loans under this Agreement)
in settling or compromising such Indemnity Proceeding (in which
case such Indemnified Party shall conduct the defense of same).
If any lawsuit or enforcement action is filed against any
Indemnified Party entitled to the benefit of indemnity under this
Section, written notice thereof shall be given to the Borrower as
soon as practicable (and in any event within 15 days after the
service of the citation or summons). Notwithstanding the
foregoing, the failure so to notify the Borrower as provided in
this Section will not relieve the Borrower from liability
hereunder. After such notice, the Borrower shall be entitled, if
it so elects, to take control of the defense and investigation of
such lawsuit or action and to employ and engage counsel of its
own choice reasonably acceptable to the Indemnified Party to
handle and defend the same, at the Borrower's cost, risk and
expense; provided however, that the Borrower and its counsel
shall proceed with diligence and in good faith with respect
thereto; and, provided, further, that, should an important
general interest (i.e. an interest having general application to
its business other than solely with respect to the Loans under
this Agreement) of the Indemnified Party be at issue, then, the
Indemnified Party may conduct the defense of any Indemnity
Proceeding. If (i) the engagement of such counsel by the Borrower
would present a conflict of interest which would prevent such
counsel from effectively defending such action on behalf of the
Indemnified Party, (ii) the defendants in, or targets of, any
such lawsuit or action include both the Indemnified Party and
Borrower, and the Indemnified Party reasonably concludes that
there may be legal defenses available to it that are different
from or in addition to those available to the Borrower, (iii) the
Borrower fails to assume the defense of the lawsuit or action or
to employ counsel reasonably satisfactory to such Indemnified
Party, in either case in a timely manner, or (iv) a Default or
Event of Default shall occur and be continuing, then such
Indemnified Party may employ separate counsel to represent or
defend it in any such action or proceeding and the Borrower will
pay the fees and disbursements of such counsel; provided, however
that each Indemnified Party shall endeavor, but shall not be
obligated, in connection with any matter covered by this Section
which also involves other Indemnified Parties, to use reasonable
efforts to avoid unnecessary duplication of efforts by counsel
for all indemnities. Should the Borrower be entitled to conduct
the defense of any Indemnity Proceeding pursuant to the terms of
this Section, the Indemnified Party shall cooperate (with all
Claims and Expenses associated therewith to be paid by the
Borrower) in all reasonable respects with the Borrower and such
attorneys in the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom; provided, however
that the Indemnified Party may, at its own cost (except as set
forth in, and in accordance with, the foregoing sentence),
participate in the investigation, trial and defense of such
lawsuit or action and any appeal arising therefrom.
SECTION 9.05 Sharing of Setoffs. Each Bank agrees that
if it shall, by exercising any right of setoff or counterclaim or
otherwise, receive payment of a proportion of the aggregate
amount of principal and interest owing with respect to the Note
held by it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of all principal
and interest owing with respect to the Note held by such other
Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the other
Banks owing to such other Banks, and such other adjustments shall
be made, as may be required so that all such payments of
principal and interest with respect to the Notes held by the
Banks owing to such other Banks shall be shared by the Banks pro
rata; provided that (i) nothing in this Section shall impair the
right of any Bank to exercise any right of setoff or counterclaim
it may have and to apply the amount subject to such exercise to
the payment of indebtedness of the Borrower other that its
indebtedness under the Notes, and (ii) if all or any portion of
such payment received by the purchasing Bank is thereafter
recovered from such purchasing Bank, such purchase from each
other Bank shall be rescinded and such other Bank shall repay to
the purchasing Bank the purchase price of such participation to
the extent of such recovery together with an amount equal to such
other Bank's ratable share (according to the proportion of (x)
the amount of such other Bank's required repayment to (y) the
total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank
in respect of the total amount so recovered. The Borrower
agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note,
whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of setoff or counterclaim and other rights
with respect to such participation as fully as if such holder of
a participation were a direct creditor of the Borrower in the
amount of such participation.
SECTION 9.06. Amendments and Waivers. (a) Except as
otherwise specifically provided herein, any provision of this
Agreement, the Notes or any other Loan Documents may be amended
or waived if, but only if, such amendment or waiver is in writing
and is signed by the Borrower and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the
Agent); provided that, except as provided in the next succeeding
proviso, no such amendment or waiver shall, unless signed by all
Banks, (i) change the Commitment of any Bank or subject any Bank
to any additional obligation, (ii) change the principal of or
rate of interest on any Loan or any fees hereunder, (iii) change
the date fixed for any payment of principal of or interest on any
Loan or any fees hereunder, (iv) change the amount of principal,
interest or fees due on any date fixed for the payment thereof,
(v) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of Banks,
which shall be required for the Banks or any of them to take any
action under this Section or any other provision of this
Agreement, (vi) change the manner of application of any payments
made under this Agreement or the Notes, or (vii) release any
Guarantee given to support payment of the Loans.
(b) The Borrower will not solicit, request or negotiate
for or with respect to any proposed waiver or amendment of any of
the provisions of this Agreement unless each Bank shall be
informed thereof by the Borrower and shall be afforded an
opportunity of considering the same and shall be supplied by the
Borrower with both (i) reasonably sufficient information to
enable it to make an informed decision with respect thereto, and
(ii) substantially the same information as supplied by the
Borrower to any other Bank. Executed or true and correct copies
of any waiver or consent effected pursuant to the provisions of
this Agreement shall be delivered by the Borrower to each Bank
forthwith following the date on which the same shall have been
executed and delivered by the requisite percentage of Banks. The
Borrower will not, directly or indirectly, pay or cause to be
paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any Bank (in its
capacity as such) as consideration for or as an inducement to the
entering into by such Bank of any waiver or amendment of any of
the terms and provisions of this Agreement unless such
remuneration is concurrently paid, on the same terms, ratably to
all such Banks.
SECTION 9.07. No Margin Stock Collateral. Each of the
Banks represents to the Agent, each of the other Banks and the
Borrower that it in good faith is not, directly or indirectly (by
negative pledge or otherwise), relying upon any Margin Stock as
collateral in the extension or maintenance of the credit provided
for in this Agreement.
SECTION 9.08. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns; provided that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without
the prior written consent of the Agent and the Banks.
(b) Subject to Section 9.08(f) below, any Bank may at
any time sell to one or more Persons (each a "Participant")
participating interests in any Loan owing to such Bank, any Note
held by such Bank, any Commitment hereunder or any other interest
of such Bank hereunder. In the event of any such sale by a Bank
of a participating interest to a Participant, such Bank's
obligations under this Agreement shall remain unchanged, such
Bank shall remain solely responsible for the performance thereof,
such Bank shall remain the holder of any such Note for all
purposes under this Agreement, and the Borrower and the Agent
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this
Agreement. In no event shall a Bank that sells a participation
be obligated to the Participant to take or refrain from taking
any action hereunder except that such Bank may agree that it will
not (except as provided below), without the consent of the
Participant, agree to (i) the change of any date fixed for the
payment of principal of or interest on the related loan or loans,
(ii) the change of the amount of any principal, interest or fees
due on any date fixed for the payment thereof with respect to the
related loan or loans, (iii) the change of the principal of the
related loan or loans, (iv) any change in the rate at which
either interest is payable thereon or (if the Participant is
entitled to any part thereof) commitment fee is payable hereunder
from the rate at which the Participant is entitled to receive
interest or commitment fee (as the case may be) in respect of
such participation, or (v) the release of any Guarantee given to
support payment of the Loans. Each Bank selling a participating
interest in any Loan, Note, Commitment or other interest under
this Agreement shall, within 10 Domestic Business Days of such
sale, provide the Borrower and the Agent with written
notification stating that such sale has occurred and identifying
the Participant and the interest purchased by such Participant.
The Borrower agrees that each Participant shall be entitled to
the benefits of Article VIII with respect to its participation in
Loans outstanding from time to time.
(c) Subject to Section 9.08(f) below, any Bank may at
any time assign to one or more banks or financial institutions
(each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes, and
such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance in the form attached
hereto as Exhibit D, executed by such Assignee, such transferor
Bank and the Agent (and, in the case of an Assignee that is not
then a Bank, by the Borrower); provided that (i) no interest may
be sold by a Bank pursuant to this paragraph (c) unless the
Assignee shall agree to assume ratably equivalent portions of the
transferor Bank's Commitment, (ii) the amount of the Commitment
of the assigning Bank subject to such assignment (determined as
of the effective date of the assignment) shall be equal to
$5,000,000 (or any larger multiple of $1,000,000), and (iii) no
interest may be sold by a Bank pursuant to this paragraph (c) to
any Assignee that is not then a Bank, or an Affiliate of a Bank,
without the prior written consent of the Borrower for so long as
no Event of Default shall be in existence, which consent shall
not be unreasonably withheld. Upon (A) execution of the
Assignment and Acceptance by such transferor Bank, such Assignee,
the Agent and (if applicable) the Borrower, (B) delivery of an
executed copy of the Assignment and Acceptance to the Borrower
and the Agent, (C) payment by such Assignee to such transferor
Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, and (D) payment of a
processing and recordation fee of $2,500 to the Agent, such
Assignee shall for all purposes be a Bank party to this Agreement
and shall have all the rights and obligations of a Bank under
this Agreement to the same extent as if it were an original party
hereto with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further
consent or action by the Borrower, the Banks or the Agent shall
be required. Upon the consummation of any transfer to an
Assignee pursuant to this paragraph (c), the transferor Bank, the
Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is issued to such Assignee and, if
necessary, a new Note shall be issued to the transferor Bank.
(d) Subject to the provisions of Section 9.09, the
Borrower authorizes each Bank to disclose to any Participant,
Assignee or other transferee (each a "Transferee") and any
prospective Transferee any and all financial information in such
Bank's possession concerning the Borrower which has been
delivered to such Bank by the Borrower pursuant to this Agreement
or which has been delivered to such Bank by the Borrower in
connection with such Bank's credit evaluation prior to entering
into this Agreement.
(e) No Transferee shall be entitled to receive any
greater payment under Section 8.03 than the transferor Bank would
have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's
prior written consent or by reason of the provisions of Section
8.02 or 8.03 requiring such Bank to designate a different Lending
Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
(f) Notwithstanding anything to the contrary contained
hereinabove, unless an Event of Default shall have occurred and
be continuing, (i) Wachovia Bank of Georgia, N.A. and The First
National Bank of Chicago shall not sell participations in or
assign more than 49% of each such Bank's Commitment as in effect
as of the Closing Date (other than to Affiliates of each such
Bank), (ii) no other Bank may participate or assign more than
51% of its Commitment (other than to one of its Affiliates) as in
effect on the date that it becomes a Bank without the prior
written consent of the Agent, the Borrower (which consent shall
not be unreasonably withheld) and the Required Banks and (iii) no
Bank may assign or sell a participation in any of its rights or
obligations hereunder unless such Bank sells an equal percentage
interest in its rights and obligations under the Acquisition
Credit Agreement. If an Event of Default shall be in existence,
then the Banks may sell any number of participations and
assignments in the Loans if such transfers are otherwise in
compliance with the terms of this Agreement.
SECTION 9.09. Confidentiality. Each Bank agrees to
exercise its best efforts and in any event not less than the same
degree of care as it uses to maintain its own confidential
information in maintaining the confidentiality of any information
delivered or made available by the Borrower to it which is
clearly indicated to be confidential information from any one
other than persons employed or retained by such Bank who are or
are expected to become engaged in evaluating, approving,
structuring or administering the Loans; provided, however that
nothing herein shall prevent any Bank from disclosing such
information (i) to any other Bank, (ii) upon the order of any
court or administrative agency, (iii) upon the request or demand
of any regulatory agency or authority having jurisdiction over
such Bank, (iv) which has been publicly disclosed by means which
are not violative of this Section 9.09, (v) to the extent
reasonably required in connection with any litigation to which
the Agent, any Bank or their respective Affiliates may be a
party, (vi) to the extent reasonably required in connection with
the exercise of any right, power of remedy hereunder or under any
of the other Loan Documents, (vii) to such Bank's legal counsel
and independent auditors and (viii) to any actual or proposed
Participant, Assignee or other Transferee of all or part of its
rights hereunder which has agreed in writing (aa) to be bound by
the provisions of this Section 9.09 and (bb) that the Borrower is
a third party beneficiary of such agreement, and (cc) to return
all copies of the confidential information to the Agent if the
proposed assignment or participation is not consummated.
SECTION 9.10. Representation by Banks. Each Bank hereby
represents that it is a commercial lender or financial
institution which makes Loans in the ordinary course of its
business and that it will make its Loans hereunder for its own
account in the ordinary course of such business; provided,
however that, subject to Section 9.08, the disposition of the
Note or Notes held by that Bank shall at all times be within its
exclusive control.
SECTION 9.11. Obligations Several. The obligations of
each Bank hereunder are several, and no Bank shall be responsible
for the obligations or commitment of any other Bank hereunder.
Nothing contained in this Agreement and no action taken by Banks
pursuant hereto shall be deemed to constitute the Banks to be a
partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Bank
shall be a separate and independent debt, and each Bank shall be
entitled to protect and enforce its rights arising out of this
Agreement or any other Loan Document and it shall not be
necessary for any other Bank to be joined as an additional party
in any proceeding for such purpose.
SECTION 9.12. Georgia Law. This Agreement and each Note
shall be construed in accordance with and governed by the law of
the State of Georgia.
SECTION 9.13. Interpretation. No provision of this
Agreement or any of the other Loan Documents shall be construed
against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or
dictated such provision.
SECTION 9.14. WAIVER OF JURY TRIAL; CONSENT TO
JURISDICTION. THE BORROWER (A) AND EACH OF THE BANKS AND THE
AGENT IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY OF THE
OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, (B) SUBMITS TO THE NONEXCLUSIVE PERSONAL
JURISDICTION IN THE STATE OF GEORGIA, THE COURTS THEREOF AND THE
UNITED STATES DISTRICT COURTS SITTING THEREIN, FOR THE
ENFORCEMENT OF THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS, AND (C) WAIVES ANY AND ALL PERSONAL RIGHTS UNDER THE
LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING,
WITHOUT LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR
VENUE WITHIN THE STATE OF GEORGIA FOR THE PURPOSE OF LITIGATION
TO ENFORCE THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS.
NOTHING HEREIN CONTAINED, HOWEVER, SHALL PREVENT THE AGENT FROM
BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST THE BORROWER
PERSONALLY, AND AGAINST ANY ASSETS OF THE BORROWER, WITHIN ANY
OTHER STATE OR JURISDICTION.
SECTION 9.15. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective
authorized officers as of the day and year first above written.
NATIONAL DATA CORPORATION (SEAL)
By:
Title:
National Data Plaza
Atlanta, GA 30329-2010
Attention: E. Michael Ingram, Esq.
Telecopier number: 404-728-2990
Confirmation number: 404-728-2504
COMMITMENTS WACHOVIA BANK OF GEORGIA, N.A.,
as Agent and as a Bank (SEAL)
By:
Title:
$7,500,000.00
Lending Office
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Atlanta Corporate Group
Telex number: 461105
Answerback: WACH INT ATL
Telecopier number: 404-332-5016
Confirmation number: 404-332-5920
THE FIRST NATIONAL BANK
OF CHICAGO (SEAL)
By:
$7,500,000.00 Title:
Lending Office
One First National Plaza
Mail Suite 0374
Chicago, Illinois 60670-0374
Attention: Aloysius R. Chircop
Telecopier number 312-732-3885
Confirmation number 312-732-1491
TOTAL COMMITMENTS:
$15,000,000.00
----------------------------------------------------------------------
$40,000,000
ACQUISITION CREDIT AGREEMENT
dated as of
July 29, 1994
among
NATIONAL DATA CORPORATION
The Banks Listed Herein
and
WACHOVIA BANK OF GEORGIA, N.A.,
as Agent
TABLE OF CONTENTS
CREDIT AGREEMENT
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and Determinations 13
SECTION 1.03. References 14
SECTION 1.04. Use of Defined Terms 14
SECTION 1.05. Terminology 14
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend 14
SECTION 2.02. Method of Borrowing 14
SECTION 2.03. Notes 16
SECTION 2.04. Maturity of Loans 17
SECTION 2.05. Interest Rates 17
SECTION 2.06. Fees 18
SECTION 2.07. Optional Termination or Reduction of the
Commitments 19
SECTION 2.08. Mandatory Reduction and Termination of
Commitments 19
SECTION 2.09. Optional Prepayments 19
SECTION 2.10. Mandatory Prepayments 20
SECTION 2.11. General Provisions as to Payments 20
SECTION 2.12. Computation of Interest and Fees 20
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing 21
SECTION 3.02. Conditions to All Borrowings 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power 23
SECTION 4.02. Corporate and Governmental Authorization;
No Contravention 23
SECTION 4.03. Binding Effect 23
SECTION 4.04. Financial Information 24
SECTION 4.05. No Litigation 24
SECTION 4.06. Compliance with ERISA 24
SECTION 4.07. Taxes 24
SECTION 4.08. Subsidiaries 25
SECTION 4.09. Not an Investment Company 25
SECTION 4.10. Ownership of Property; Liens 25
SECTION 4.11. No Default 25
SECTION 4.12. Full Disclosure 25
SECTION 4.13. Environmental Matters 25
SECTION 4.14. Capital Stock 26
SECTION 4.15. Margin Stock 26
SECTION 4.16. Insolvency 26
ARTICLE V
COVENANTS
SECTION 5.01. Information 27
SECTION 5.02 Inspection of Property, Books and Records 29
SECTION 5.03. Ratio of Consolidated Cash Flow to
Consolidated Debt 29
SECTION 5.04. Minimum Consolidated Net Worth 29
SECTION 5.05. Restricted Payments 30
SECTION 5.06. Fixed Charges Coverage 30
SECTION 5.07. Loans or Advances 30
SECTION 5.08. Investments; Acquisitions 31
SECTION 5.09. Negative Pledge 31
SECTION 5.10. Debt 33
SECTION 5.11. Maintenance of Existence 33
SECTION 5.12. Dissolution 33
SECTION 5.13. Consolidations, Mergers and Sales of Assets 34
SECTION 5.14. Use of Proceeds 34
SECTION 5.15. Compliance with Laws; Payment of Taxes 35
SECTION 5.16. Insurance 35
SECTION 5.17. Change in Fiscal Year 35
SECTION 5.18. Maintenance of Property 35
SECTION 5.19. Environmental Notices 35
SECTION 5.20. Environmental Matters 35
SECTION 5.21. Environmental Release 36
SECTION 5.22. Future Subsidiaries 36
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default 36
SECTION 6.02. Notice of Default 39
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment; Powers and Immunities 40
SECTION 7.02. Reliance by Agent 40
SECTION 7.03. Defaults 41
SECTION 7.04. Rights of Agent as a Bank 41
SECTION 7.05. Indemnification 41
SECTION 7.06. Payee of Note Treated as Owner 42
SECTION 7.07. Nonreliance on Agent and Other Banks 42
SECTION 7.08. Failure to Act 42
SECTION 7.09. Resignation or Removal of Agent 43
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair 43
SECTION 8.02. Illegality 44
SECTION 8.03. Increased Cost and Reduced Return 44
SECTION 8.04. Base Rate Loans Substituted for Affected
Euro-Dollar Loans 46
SECTION 8.05. Compensation 46
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices 47
SECTION 9.02. No Waivers 47
SECTION 9.03. Expenses; Documentary Taxes 48
SECTION 9.04. Indemnification 48
SECTION 9.05. Sharing of Setoffs 50
SECTION 9.06. Amendments and Waivers 51
SECTION 9.07. No Margin Stock Collateral 52
SECTION 9.08. Successors and Assigns 52
SECTION 9.09. Confidentiality 54
SECTION 9.10. Representation by Banks 55
SECTION 9.11. Obligations Several 55
SECTION 9.12. Georgia Law 55
SECTION 9.13. Interpretation 55
SECTION 9.14. WAIVER OF JURY TRIAL; CONSENT TO
JURISDICTION 55
SECTION 9.15. Counterparts 56
EXHIBIT A Form of Note
EXHIBIT B Form of Opinion of Counsel for the Borrower
EXHIBIT C Form of Opinion of Special Counsel for the
Banks and the Agent
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Subsidiary Guaranty
EXHIBIT H Form of Activation Notice
EXHIBIT I Form of Deactivation Notice
EXHIBIT J Form of Termination and Release Agreement
SCHEDULE 4.01 List of Jurisdictions in which the Borrower is
Qualified to Transact Business
SCHEDULE 4.08 List of Subsidiaries/Jurisdictions where Qualified to
Transact Business
ACQUISITION CREDIT AGREEMENT
AGREEMENT dated as of July 29, 1994 among NATIONAL
DATA CORPORATION, the BANKS listed on the signature pages hereof and
WACHOVIA BANK OF GEORGIA, N.A., as Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in
this Section 1.01 shall, for all purposes of this Agreement and any
amendment hereto (except as herein otherwise expressly provided or
unless the context otherwise requires), have the meanings set forth
herein:
"Activated Commitment" shall mean that portion of each
Bank's Commitment which shall have been activated (and not later
deactivated) as a result of the Borrower's delivery of an Activation
Notice pursuant to Section 2.01.
"Activation Date" means the first date upon which the
Borrower delivers an Activation Notice to the Agent.
"Activation Notice" means a notice of activation of
the Commitments substantially in the form of Exhibit "H".
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.05(c).
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, controls the Borrower
(a "Controlling Person"), (ii) any Person (other than the Borrower or
a Subsidiary) which is controlled by or is under common control with a
Controlling Person, or (iii) any Person (other than a Subsidiary) of
which the Borrower owns, directly or indirectly, 20% or more of the
common stock or equivalent equity interests. As used herein, the term
"control" means possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agent" means Wachovia Bank of Georgia, N.A., a
national banking association organized under the laws of the United
States of America, in its capacity as agent for the Banks hereunder,
its successors and permitted assigns in such capa city, and any other
Person appointed as Agent in accordance with Section 7.09.
"Agreement" means this Acquisition Credit Agreement,
together with all amendments and supplements hereto.
"Applicable Margin" has the meaning set forth in
Section 2.05(a).
"Assignee" has the meaning set forth in Section
9.08(c).
"Assignment and Acceptance" means an Assignment and
Acceptance executed in accordance with Section 9.08(c) in the form
attached hereto as Exhibit D.
"Authority" has the meaning set forth in Section 8.02.
"Bank" means each bank listed on the signature pages
hereof as having a Commitment, and its successors and permitted
assigns.
"Base Rate" means for any Base Rate Loan for any day,
the rate per annum equal to the higher as of such day of (i) the Prime
Rate, and (ii) one-half of one percent above the Federal Funds Rate.
For purposes of determining the Base Rate for any day, changes in the
Prime Rate shall be determined as at the end of any day and shall be
effective on the date of each such change.
"Base Rate Loan" means a Loan to be made as a Base
Rate Loan pursuant to the applicable Notice of Borrowing, Section
2.02(f), or Article VIII, as applicable.
"Borrower" means National Data Corporation, a Delaware
corporation, and its successors and permitted assigns.
"Borrowing" means a borrowing hereunder consisting of
Loans made to the Borrower at the same time by the Banks pursuant to
Article II. A Borrowing is a "Base Rate Borrowing" if such Loans are
Base Rate Loans or a "Euro-Dollar Borrowing" if such Loans are Euro-
Dollar Loans.
"Capital Expenditures" means for any period the sum of
all capital expenditures incurred during such period by the Borrower
and its Consolidated Subsidiaries, as determined in accordance with
GAAP.
"Capital Stock" means any nonredeemable capital stock
of the Borrower or any Consolidated Subsidiary (to the extent issued
to a Person other than the Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. 9601 et. seq. and
its implementing regulations and amendments.
"CERCLIS" means the Comprehensive Environmental
Response Compensation and Liability Inventory System established
pursuant to CERCLA.
"Change of Law" shall have the meaning set forth in
Section 8.02.
"Closing Date" means July 29, 1994.
"Code" means the Internal Revenue Code of 1986, as
amended, or any successor Federal tax code.
"Commitment" means, as to any Bank, the obligation of
such Bank to make Loans in an aggregate principal amount at any time
outstanding up to but not exceeding the amount set forth opposite such
Bank's name on the signature pages hereof (as the same may be reduced
from time to time pursuant to the provisions of this Agreement).
"Compliance Certificate" has the meaning set forth in
Section 5.01(c).
"Consolidated Cash Flow" means, without duplication,
as at any date of determination for any period, the remainder of (i)
Income Available for Fixed Charges for such period minus (ii) all
payment obligations of the Borrower and its Consolidated Subsidiaries
for such period under all operating leases and rental agreements.
"Consolidated Debt" means at any date the Debt of the
Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"Consolidated Fixed Charges" means, without
duplication, as at any date of determination, the sum of (i)
Consolidated Interest Expense, (ii) all payment obligations of the
Borrower and its Consolidated Subsidiaries under all operating leases
and rental agreements and (iii) any Consolidated Debt scheduled to be
paid within 1 year of such date of determination.
"Consolidated Interest Expense" for any period means,
without duplication, interest, whether expensed or capitalized, in
respect of outstanding Consolidated Debt of the Borrower and its
Consolidated Subsidiaries during such period; provided, that, in
determining Consolidated Interest Expense, interest on Debt referred
to in clauses (viii) and (ix) of the definition of Debt shall only be
included to the extent that the Borrower's or any Consolidated
Subsidiary's obligation to pay such Debt is not contingent in nature,
as of any date of determination.
"Consolidated Net Income" means, for any period, the
Net Income of the Borrower and its Consolidated Subsidiaries
determined on a consolidated basis, but excluding (i) extraordinary
items and (ii) any equity interests of the Borrower or any Subsidiary
in the unremitted earnings of any Person that is not a Subsidiary.
"Consolidated Net Worth" means, at any time, the
shareholders' equity of the Borrower and its Consolidated
Subsidiaries, as set forth or reflected on the most recent
consolidated balance sheet of the Borrower and its Consolidated Subs
idiaries prepared in accordance with GAAP, but excluding any
Redeemable Preferred Stock of the Borrower or any of its Consolidated
Subsidiaries. Shareholders' equity generally would include, but not
be limited to (i) the par or stated value of all outstanding Capital
Stock, (ii) capital surplus, (iii) retained earnings, and (iv) various
deductions such as (A) purchases of treasury stock, (B) valuation
allowances, (C) receivables due from an employee stock ownership plan,
(D) employee stock ownership plan debt guarantees, and (E) translation
adjustments for foreign currency transactions.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which, in accordance with
GAAP, would be consolidated with those of the Borrower in its
consolidated financial statements as of such date.
"Controlled Group" means all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower,
are treated as a single employer under Secti on 414 of the Code.
"Deactivation Notice" means a notice of deactivation
of the Commitments, or a portion thereof, substantially in the form of
Exhibit "I".
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such
Person to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital
leases, (v) all obligations of such Person to reimburse any bank or
other Person in respect of amounts payable under a banker's
acceptance, (vi) all Redeemable Preferred Stock of such Person (in the
event such Person is a corporation), (vii) all obligations (regardless
of whether contingent or absolute) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of
credit or similar instrument, (viii) all Debt of others secured by a
Lien on any asset of such Person, whether or not such Debt is assumed
by such Person, and (ix) all Debt of others Guaranteed by such Person.
"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.
"Default Rate" means, with respect to any Loan, on any
day, the sum of 2.0% plus the then highest interest rate (including
the Applicable Margin) which may be applicable to any Loans hereunder
(irrespective of whether any such class of Loans are actually
outstanding hereunder).
"Depreciation" means for any period the sum of all
depreciation expenses of the Borrower and its Consolidated
Subsidiaries for such period, as determined in accordance with GAAP.
"Dividends" means for any period the sum of all
dividends paid or declared during such period in respect of any
Capital Stock and Redeemable Preferred Stock (other than dividends
paid or payable in the form of additional Capital Stock ).
"Dollars" or "$" means dollars in lawful currency of
the United States of America.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in Georgia are
authorized by law to close.
"Environmental Authorizations" means all licenses,
permits, orders, approvals, notices, registrations or other legal
prerequisites for conducting the business of the Borrower required by
any Environmental Requirement.
"Environmental Authority" means any foreign, federal,
state, local or regional government that exercises any form of
jurisdiction or authority under any Environmental Requirement.
"Environmental Judgments and Orders" means all
judgments, decrees or orders arising from or in any way associated
with any Environmental Requirements, whether or not entered upon
consent or written agreements with an Environmental Authority or other
entity arising from or in any way associated with any Environmental
Requirement, whether or not incorporated in a judgment, decree or
order.
"Environmental Liabilities" means any liabilities,
whether accrued, contingent or otherwise, arising from and in any way
associated with any Environmental Requirements.
"Environmental Notices" means notice from any
Environmental Authority or by any other person or entity, of possible
or alleged noncompliance with or liability under any Environmental
Requirement, including without limitation any complaints, citations,
demands or requests from any Environmental Authority or from any other
person or entity for correction of any, violation of any Environmental
Requirement or any investigations concerning any violation of any
Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated with
any Environmental Requirement.
"Environmental Releases" means releases as defined in
CERCLA or under any applicable state or local environmental law or
regulation.
"Environmental Requirements" means any legal
requirement relating to health, safety or the environment and
applicable to the Borrower, any Subsidiary or the Properties,
including but not limited to any such requirement under CERCLA o r
similar state legislation and all federal, state and local laws,
ordinances, regulations, orders, writs, decrees and common law.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor law. Any
reference to any provision of ERISA shall also be deemed to be a
reference to any successor provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business
Day on which dealings in Dollar deposits are carried out in the London
interbank market.
"Euro-Dollar Loan" means a Loan to be made as a Euro-
Dollar Loan pursuant to the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.05(c).
"Event of Default" has the meaning set forth in
Section 6.01.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upward, if necessary, to the next higher 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day,
provided that (i) if the day for which such rate is to be determined
is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (ii) if such
rate is not so published for any day, the Federal Funds Rate for such
day shall be the average rate charged to the Agent on such day on such
transactions, as determined by the Agent.
"Financial Institution" has the meaning ascribed
thereto in O.C.G.A. 7-1-4(21) as of the date hereof.
"First Chicago" means The First National Bank of
Chicago, a national banking association and its successors and
permitted assigns.
"Fiscal Quarter" means any fiscal quarter of the
Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles
applied on a basis consistent with those which, in accordance with
Section 1.02, are to be used in making the calculations for purposes
of determining compliance with the terms of this Agreement.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any ob ligation,
direct or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to provide collateral
security, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in
the o rdinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Hazardous Materials" includes, without limitation,
(a) solid or hazardous waste, as defined in the Resource Conservation
and Recovery Act of 1980, 42 U.S.C. 6901 et. seq. and its
implementing regulations and amendments, or in any applicable state or
local law or regulation, (b) "hazardous substance", "pollutant", or
"contaminant" as defined in CERCLA, or in any applicable state or
local law or regulation, (c) gasoline, or any other petroleum product
or by-product, including, crude oil or any fraction thereof (d) toxic
substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation or (e)
insecticides, fungicides, or rodenticides, as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act of 1975, or in any
applicable state or local law or regulation, as each such Act, statute
or regulation may be amended from time to time.
"Income Available for Fixed Charges" for any period
means the sum of (i) Consolidated Net Income, (ii) taxes on income,
(iii) depreciation, (iv) interest expense, (v) all payment obligations
of the Borrower and its Consolidated Subsid iaries for such period
under all operating leases and rental agreements, and (vi)
amortization of intangible assets, all determined with respect to the
Borrower and its Consolidated Subsidiaries on a consolidated basis for
such period and in accordan ce with GAAP.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in the
first, second or third month thereafter, as the Borrow er may elect in
the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest
Period determined pursuant to paragraph (c) below) which would
otherwise end on a day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar Bus iness 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 appropriate
subsequent calendar month) shall, subject to paragraph (c) below, end
on the last Euro-Dollar Business Day of the appropriate subsequent
calendar month; and
(c) any Interest Period which begins before the
Termination Date and would otherwise end after the
Termination Date shall end on the Termination
Date.
(2) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days
thereafter; provided that:
(a) any Interest Period (other than an Interest
Period determined pursuant to paragraph (b) below) which would
otherwise end on a day which is not a Domestic Business Day shall be
extended to the next succeeding Domestic Business Day; and
(b) any Interest Period which begins before the
Termination Date and would otherwise end after
the Termination Date shall end on the
Termination Date.
"Investment" means any investment in any Person,
whether by means of purchase or acquisition of obligations or
securities of such Person, capital contribution to such Person, loan
or advance to such Person, making of a time deposit with such Person,
Guarantee or assumption of any obligation of such Person or otherwise.
"Lending Office" means, as to each Bank, its office
located at its address set forth on the signature pages hereof (or
identified on the signature pages hereof as its Lending Office) or
such other office as such Bank may hereafter designate as its Lending
Office by notice to the Borrower and the Agent.
"Lien" means, with respect to any asset, any mortgage,
deed to secure debt, deed of trust, lien, pledge, charge, security
interest, security title, preferential arrangement, which has the
practical effect of constituting a security in terest or encumbrance,
or encumbrance or servitude of any kind in respect of such asset to
secure or assure payment of a Debt or a Guarantee, whether by
consensual agreement or by operation of statute or other law. For the
purposes of this Agreement , the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means, as to any Bank, a Loan made by such Bank
pursuant to Section 2.01.
"Loan Documents" means this Agreement, the Notes, the
Subsidiary Guaranties, any other document evidencing, relating to or
securing the Loans, and any other document or instrument delivered in
connection with this Agreement, the Notes , the Loans or the
Subsidiary Guaranties, as such documents and instruments may be
amended or supplemented from time to time.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.05(c).
"Long-Term Debt" means at any date any Consolidated
Debt which matures (or the maturity of which may at the option of the
Borrower or any Consolidated Subsidiary be extended such that it
matures) more than one year after such date.
"Margin Stock" means "margin stock" as defined in
Regulations G, T, U or X.
"Material Adverse Effect" means, with respect to any
event, act, condition or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration, or governmental
investigation or proceeding), whether singly or in conjunction with
any other event or events, act or acts, condition or conditions,
occurrence or occurrences, whether or not related, a material adverse
change in, or a material adverse effect upon, any of (a) the financial
condition, operations, business, properties or prospects of Borrower
and its Consolidated Subsidiaries taken as a whole, (b) the rights and
remedies of the Agent or the Banks under the Loan Documents, or the
ability of the Borrower or any Subsidiary Guarantor to perform its
obligations under the Loan Documents to which it is a party, as
applicable, or (c) the legality, validity or enforceability of any
Loan Document.
"Multiemployer Plan" shall have the meaning set forth
in Section 4001(a)(3) of ERISA.
"NDPS" means National Data Payment Systems, Inc., a
New York corporation, and its successors and permitted assigns.
"Net Income" means, as applied to any Person for any
period, the aggregate amount of net income of such Person, after
taxes, for such period, as determined in accordance with GAAP.
"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, together with all
amendments, consolidations, modifications, renewals, and supplements
thereto.
"Notice of Borrowing" has the meaning set forth in
Section 2.02.
"Obligations" means any and all Debt, liabilities and
obligations of Borrower to the Agent or any of the Banks pursuant to
this Agreement or any of the other Loan Documents.
"Participant" has the meaning set forth in Section
9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an unincorporated association, a trust or any other
entity or organization, including, but not limited to, a government or
political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (i)
maintained by a member of the Controlled Group for employees of any
member of the Controlled Group or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which
more than one employer makes contributions and to which a member of
the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions.
"Prime Rate" refers to that interest rate so
denominated and set by Wachovia from time to time as an interest rate
basis for borrowings. The Prime Rate is but one of several interest
rate bases used by Wachovia. Wachovia lends at interest rates above
and below the Prime Rate.
"Properties" means, as of the date of any
determination, all real property currently owned, leased or otherwise
used or occupied by the Borrower or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any
preferred stock issued by such Person which is at any time prior to
the Termination Date either (i) mandatorily redeemable (by sinking
fund or similar payments or otherwise) or (ii) redeemable at the
option of the holder thereof.
"Regulation G" means Regulation G of the Board of
Governors of the Federal Reserve System, as in effect from time to
time, together with all official rulings and interpretations issued
thereunder.
"Regulation T" means Regulation T of the Board of
Governors of the Federal Reserve System, as in effect from time to
time, together with all official rulings and interpretations issued
thereunder.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from time to
time, together with all official rulings and interpretations issued
thereunder.
"Regulation X" means Regulation X of the Board of
Governors of the Federal Reserve System, as in effect from time to
time, together with all official rulings and interpretations issued
thereunder.
"Required Banks" means at any time Banks having at
least 67% of the aggregate amount of the Commitments or, if the
Commitments are no longer in effect, Banks holding at least 67% of the
aggregate outstanding principal amount of the Notes.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital stock (except
dividends payable solely in shares of its capital stock) or (ii) any
payment on account of the purchase, redemption, retirement or
acquisition of (a) any shares of the Borrower's capital stock (except
shares acquired upon the conversion thereof into other shares of its
capital stock) or (b) any option, warrant or other right to acquire
shares of the Borrower's capital stock.
"Sanwa" means Sanwa Business Credit Corporation.
"Sanwa Letter Agreement" means that certain Letter
Agreement, dated October 30, 1992, between Technology Sales and
Leasing Co., Inc. and Sanwa, together with all amendments and
supplements thereto.
"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.
"Subsidiary Guarantor" means a Subsidiary which has
executed a Subsidiary Guaranty in connection herewith or pursuant to
Section 5.22.
"Subsidiary Guaranties" means any one or more or all,
as the context shall require or permit, of those certain Subsidiary
Guaranty Agreements, substantially in the form of Exhibit "G" (with
such revisions as are necessary in order to reflect the date on which
such are being executed, the parties thereto and hereto, and any
other necessary changes which relate to matters of appropriate
references therein), executed and delivered by the Subsidiary
Guarantors from time to time in favor of the Agent, for the ratable
benefit of the Banks, including, without limitation, the Subsidiary
Guaranty made by certain Subsidiary Guarantors on even date herewith,
together with all amendments and supplements thereto.
"Termination Date" means August 2, 1996, or such later
date as may be agreed upon by each of the Banks and the Agent.
"Third Parties" means all lessees, sublessees,
licensees and other users of the Properties, excluding those users of
the Properties in the ordinary course of the Borrower's business and
on a temporary basis.
"Transferee" has the meaning set forth in Section
9.08(d).
"Unfunded Vested Liabilities" means, with respect to
any Plan at any time, the amount (if any) by which (i) the present
value of all vested nonforfeitable benefits under such Plan exceeds
(ii) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or
the Plan under Title IV of ERISA.
"Unused Commitment" means at any date, with respect to
any Bank, an amount equal to its Commitment less the aggregate
outstanding principal amount of its Loans.
"Wachovia" means Wachovia Bank of Georgia, N.A., a
national banking association and its successors and permitted assigns.
"Wachovia Letter of Credit" means that certain
Irrevocable Standby Letter of Credit LC870-008806 issued by Wachovia
(formerly known as The First National Bank of Atlanta) in favor of
Texas Commerce Bank for the account of the Borrower , together with
all amendments and supplements thereto, and renewals thereof.
"Wachovia Letter of Credit Obligations" means at any
time the sum of the aggregate (i) unfunded amount of the Wachovia
Letter of Credit, plus (ii) amounts owing to Wachovia by the Borrower
due to payments made by Wachovia under the Wachovia Letter of Credit
which have not been reimbursed by the Borrower.
"Wholly Owned Subsidiary" means any Subsidiary all of
the shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
"Working Capital Credit Agreement" means that certain
Working Capital Credit Agreement, dated as of even date herewith,
among the Borrower, the banks from time to time party thereto, and
Wachovia Bank of Georgia, N.A., as the agent thereunder, together
with all amendments and supplements thereto.
SECTION 1.02. Accounting Terms and Determinations
Unless otherwise specified herein, all terms of an accounting character
used herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered
hereunder shall be prepared in accordance with GAAP, applied on a
basis consistent (except for changes concurred in by the Borrower's
independent public accountants or otherwise required by a change in
GAAP) with the most recent audited consolidated financial statements
of the Borrower and its Consolidated Subsidiaries delivered to the
Banks unless with respect to any such change concurred in by the B
orrower's independent public accountants or required by GAAP, in
determining compliance with any of the provisions of any of the Loan
Documents: (i) the Borrower shall have objected to determining such
compliance on such basis at the time of delivery of such financial
statements, or (ii) the Required Banks shall so object in writing
within 30 days after the delivery of such financial statements, in
either of which events such calculations shall be made on a basis
consistent with those used in th e preparation of the latest
financial statements as to which such objection shall not have been
made (which, if objection is made in respect of the first financial
statements delivered under Section 5.01, shall mean the financial
statements referred to in Section 4.04).
SECTION 1.03. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits", "Schedules",
"Sections" and other Subdivisions are references to Articles, exhibits,
schedules, sections and other subdivisions hereof.
SECTION 1.04. Use of Defined Terms. All terms
defined in this Agreement shall have the same defined meanings when
used in any of the other Loan Documents, unless otherwise defined
therein or unless the context shall require otherwise.
SECTION 1.05. Terminology. All personal pronouns used
in this Agreement, whether used in the masculine, feminine or neuter
gender, shall include all other genders; the singular shall include
the plural, and the plural shall include the singular. Titles of
Articles and Sections in this Agreement are for convenience only,
and neither limit nor amplify the provisions of this Agreement.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. Each Bank
severally agrees, on the terms and conditions set forth herein, to
make Loans as follows:
Following the Agent's receipt of an Activation Notice
(subject to the provisions thereof), from time to time prior to the
Termination Date, each Bank shall make Loans to the Borrower in an
aggregate principal amount at any one time ou tstanding which shall
not exceed its Activated Commitment. Pursuant to the terms of (i) an
Activation Notice, the Commitments may be activated in increments of
$10,000,000, and (ii) a Deactivation Notice, the Activated Commitments
may be deactivated in increments of $10,000,000. Each Borrowing under
this Section 2.01 shall be in an aggregate principal amount of
$1,000,000 or any larger multiple of $500,000 (except that any such
Borrowing may be in any lesser amount equal to the aggregate amount of
the activated portion the Unused Commitments) and shall be made from
the several Banks ratably in accordance with their respective
Commitments. Within the foregoing limits, the Borrower may borrow
under this Section 2.01, repay or, to the extent permitted by Section
2.09, prepay Loans and reborrow under this Section 2.01 at any time
before the Termination Date.
SECTION 2.02. Method of Borrowing. (a) The Borrower
shall give the Agent notice (a "Notice of Borrowing"), which shall be
substantially in the form of Exhibit E, on the same day (before 10:30
A.M., Atlanta, Georgia time) for each Base Rate Borrowing, and at
least 3 Euro-Dollar Business Days before each Euro-Dollar Borrowing,
specifying:
(i) the date of such 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,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are
to be Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the Interest Period applicable
thereto, subject to the provisions of the
definition of Interest Period.
provided that, no Notice of Borrowing (other than a Notice of
Borrowing delivered solely for the purpose of repaying an existing
Borrowing) may be delivered hereunder until a period of 4 Domestic
Business Days' shall have elapsed after the Borrower shall have
furnished to the Agent and the Banks a description of the intended use
of the proceeds of a relevant Borrowing, and setting forth in such
detail as the Agent or any Bank shall reasonably request, the
Borrower's pro forma compliance with the covenants contained in the
Compliance Certificate immediately preceding and immediately following
the consummation of the proposed acquisition.
(b) Upon receipt of a Notice of Borrowing the
Agent shall promptly notify each Bank of the contents thereof and of
such Bank's ratable share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 1:00 P.M. (Atlanta, Georgia time)
on the date of each Borrowing, each Bank shall (except as provided in
paragraph (d) of this Section) make available its ratable share of
such Borrowing, in Federal or other funds im mediately available in
Atlanta, Georgia, to the Agent at its address referred to in Section
9.01. Unless the Agent determines that any applicable condition
specified in Article III has not been satisfied, the Agent will make
the funds so received fr om the Banks available to the Borrower by
4:00 P.M. (Atlanta, Georgia time) on the date of a Borrowing at the
Agent's aforesaid address. Unless the Agent receives notice from a
Bank, at the Agent's address referred to in or specified pursuant to
Sec tion 9.01, no later than 12:00 P.M. (local time at such address)
on the date of a Borrowing stating that such Bank will not make a Loan
in connection with such Borrowing, the Agent shall be entitled to
assume that such Bank will make a Loan in connection with such
Borrowing and, in reliance on such assumption, the Agent may (but
shall not be obligated to) make available such Bank's ratable share of
such Borrowing to the Borrower for the account of such Bank. If the
Agent makes such Bank's ratable share available to the Borrower and
such Bank does not in fact make its ratable share of such Borrowing
available on such date, the Agent shall be entitled to recover such
Bank's ratable share from such Bank or the Borrower (and for such
purpose shall be entitled to charge such amount to any account of the
Borrower maintained with the Agent), together with interest thereon
for each day during the period from the date of such Borrowing until
such sum shall be paid in full at a rate per annum equal to the
Federal Funds Rate for each such day during such period, provided that
any such payment by the Borrower of such Bank's ratable share and
interest thereon shall be without prejudice to any rights that the
Borrower may have against such Bank. If the Agent does not exercise
its option to advance funds for the account of such Bank, it shall
forthwith notify the Borrower of such decision.
(d) If any Bank makes a new Loan hereunder on a day on
which the Borrower is to repay all or any part of an outstanding Loan
from such Bank, such Bank shall apply the proceeds of its new Loan to
make such repayment and only an amount equal to the difference (if
any) between the amount being borrowed and the amount being repaid
shall be made available by such Bank to the Agent as provided in
paragraph (c) of this Section, or remitted by the Borrower to the
Agent as provided in Section 2.11, as the case may be.
(e) Notwithstanding anything to the contrary
contained in this Agreement, no Euro-Dollar Borrowing may be made if
there shall have occurred a Default or an Event of Default, which
Default or Event of Default shall not have been cu red or waived.
(f) In the event that a Notice of Borrowing fails to
specify whether the Loans comprising such Borrowing are to be Base
Rate Loans or Euro-Dollar Loans, such Loans shall be made as Base Rate
Loans. If the Borrower is otherwise entitl ed under this Agreement to
repay any Loans maturing at the end of an Interest Period applicable
thereto with the proceeds of a new Borrowing, and the Borrower fails
to repay such Loans using its own moneys and fails to give a Notice of
Borrowing in c onnection with such new Borrowing, a new Borrowing
shall be deemed to be made on the date such Loans mature (in
accordance with Section 2.04) in an amount equal to the principal
amount of the Loans so maturing, and the Loans comprising such new
Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary
contained herein, there shall not be more
than 8 interest rates (including the
Applicable Margins) applicable to the Loans
at any given time.
SECTION 2.03. 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 Lending Office in an amount equal to the original
principal amount of such Bank's Commitment.
(b) Upon receipt of each Bank's Note pursuant to
Section 3.01, the Agent shall mail such Note to such Bank. Each Bank
shall record, and prior to any transfer of each of its Notes shall
endorse on the schedule forming a part thereof a ppropriate notations
to evidence, the date, amount and maturity of each Loan made by it,
the date and amount of each payment of principal made by the Borrower
with respect thereto and whether such Loan is a Base Rate Loan or
Euro-Dollar Loan, and suc h schedule shall constitute rebuttable
presumptive evidence of the principal amount owing and unpaid on such
Bank's Notes; provided that the failure of any Bank to make any such
recordation or endorsement shall not affect the obligation of the
Borrow er hereunder or under the Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Notes and to
attach to and make a part of any Note a continuation of any such
schedule as and when required.
SECTION 2.04. Maturity of Loans. Each Loan included
in any Borrowing shall mature, and the principal amount thereof shall
be due and payable, on the last day of the Interest Period applicable
to such Borrowing. The entire principal balance of the Loans,
together with all accrued but unpaid interest thereon, shall be due
and payable on the Termination Date.
SECTION 2.05. Interest Rates. (a) "Applicable Margin"
means (i) for any Base Rate Loan, 0.0%, and (ii) for any Euro-Dollar
Loan, 1.50%.
(b) Each Base Rate Loan shall bear interest on the
outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at a rate per annum equal to the
Base Rate for such day plus the Applicable Margin. Such interest
shall be payable for each Interest Period on the last day thereof.
Any overdue principal of and, to the extent permitted by applicable
law, overdue interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal
to the Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the
Applicable Margin plus the applicable Adjusted London I nterbank
Offered Rate for such Interest Period; provided that if any Euro-
Dollar Loan shall, as a result of paragraph (1)(c) of the definition
of Interest Period, have an Interest Period of less than 1 month, such
Euro-Dollar Loan shall bear interest during such Interest Period at
the rate applicable to Base Rate Loans during such period. Any
overdue principal of and, to the extent permitted by law, overdue
interest on any Euro-Dollar Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the
Default Rate.
The "Adjusted London Interbank Offered Rate"
applicable to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the next higher
1/16th of 1%) by dividing (i) the applicable London Interbank Offered
Rate for such Interest Period by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar
Loan, the rate per annum determined on the basis of the offered rate
for deposits in Dollars of amounts equal or comparable to the
principal amount of such Euro-Dollar Loan offered for a term
comparable to such Interest Period, which rates appear on the Reuters
Screen LIBO Page as of 11:00 A.M., London time, 2 Euro-Dollar Business
Days prior to the first day of such Interest Period, provided that (i)
if more than one such offered rate appears on the Reuters Screen LIBO
Page, the "London Interbank Offered Rate" will be the arithmetic
average (rounded upward, if necessary, to the next higher 1/16th of
1%) of such offered rates; (ii) if no such offered rates appear on
such page, the "London Interbank Offered Rate" for such Interest
Period will be the arithmetic average (rounded upward, if necessary,
to the next higher 1/16th of 1%) of rates quoted by not less than two
major banks in New York City, selected by the Agent, at approximately
10:00 A.M., New York City time, 2 Euro-Dollar Business Days prior to
the first day of such Interest Period, for deposits in Dollars offered
to leading European banks for a term comparable to such Interest
Period in an amount equal or comparable to the principal amount of
such Euro-Dollar Loan.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest
rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States
office of any Bank to United States residents).
(d) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt notice
to the Borrower and the Banks by telecopier, telex or cable of each
rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
SECTION 2.06. Fees. (a) The Borrower shall pay to the
Agent for the account of each Bank a facility fee calculated at the
rate of (i) 0.375% per annum on the total amount of the Commitments
that do not constitute Activated Commitments, and (ii) 0.50% per annum
on the total amount of the Activated Commitments. Such facility fees
shall accrue from and including the Closing Date to but excluding the
Termination Date and shall be payable, in arrears, on each March 31,
June 30, September 30, and December 31, and on the Termination Date.
(b) The Borrower shall pay to the Agent, for the
account and sole benefit of the Agent, (i) on the Closing Date, a
fully earned and non-refundable arrangement fee in the amount of
$5,000, and (ii) contemporaneously with the delivery of each
Deactivation Notice (other than the first Deactivation Notice so
delivered), a deactivation fee in the amount of $1,000.
SECTION 2.07. Optional Termination or Reduction of the
Commitments. The Borrower may, upon at least 3 Domestic Business
Days' notice to the Agent, terminate at any time, or proportionately
reduce from time to time by an aggregate amount of at least
$1,000,000, the Commitments. If the Commitments are terminated in
their entirety, all accrued fees (as provided under Section 2.06)
shall be due and payable on the effective date of such termination and
shall not thereafter accrue.
SECTION 2.08. Mandatory Reduction and Termination of
Commitments. The Commitments shall be reduced permanently to the
extent of any payments which are required by Section 2.10(b),
irrespective of whether any Loans are actually outstanding; provided,
however, that the Commitments shall not be reduced by an amount
required to be paid due to Section 2.10(b)(ii) unless and then only to
the extent that there are Loans outstanding hereunder at the time of
any equity offering of securities referred to in Section 2.10(b)(ii).
The Commitments shall terminate on the Termination Date and any Loans
then outstanding (together with accrued interest thereon) sha ll be
due and payable on such date.
SECTION 2.09. Optional Prepayments. (a) The Borrower
may, on any Domestic Business Day, by notice to the Agent prior to
10:30 A.M. (Atlanta, Georgia time) on such date, prepay any Base Rate
Borrowing in whole at any time, or from time to time in part in
amounts aggregating at least $500,000, by paying the principal amount
to be prepaid together with accrued interest thereon to the date of
prepayment. Each such optional prepayment shall be applied to prepay
ratably the Base Rate Loans of the several Banks included in such Base
Rate Borrowing.
(b) Subject to Section 8.05, the Borrower may, on
any Euro-Dollar Business Day, by notice to the Agent prior to 10:30
A.M. (Atlanta, Georgia time) on such date, prepay any Euro-Dollar Loan
in whole at any time, or from time to time in part, prior to the
maturity thereof, in amounts aggregating at least $1,000,000 (except
that any such prepayment may be in any lesser amount equal to the
entire outstanding balance of any relevant Euro-Dollar Loan), by
paying the principal amount to be prepaid together with accrued
interest thereon to the date of the prepayment.
(c) Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify each Bank of
the contents thereof and of such Bank's ratable share of such
prepayment and such notice shall not thereafter be revocable by the
Borrower.
SECTION 2.10. Mandatory Prepayments. (a) On each date
on which the Commitments are reduced pursuant to Section 2.07 or
Section 2.08, the Borrower shall repay or prepay such principal a
mount of the outstanding Loans, if any (together with interest accrued
thereon), as may be necessary so that after such payment the aggregate
unpaid principal amount of the Loans does not exceed the aggregate
amount of the Commitments as then reduced .
(b) After deducting therefrom all reasonable and
customary costs and expenses incurred directly in connection
therewith, (i) 100% of all amounts received by the Borrower or any
Subsidiary from a debt offering or private placement transaction, (ii)
50% of all amounts received by the Borrower or any Subsidiary from a
securities offering, or (iii) 100% of all amounts received by the
Borrower or any Subsidiary from borrowed monies not permitted by the
terms hereof, shall be immediately applied by the Borrower to the
outstanding Loans hereunder.
SECTION 2.11. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and interest
on, the Loans and of facility fees hereunder, not later than 10:30
A.M. (Atlanta, Georgia time) on the date when due, in Federal or
other funds immediately available in Atlanta, Georgia, to the Agent at
its address referred to in Section 9.01. The Agent will promptly
distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks.
(b) Whenever any payment of principal of, or
interest on, the Base Rate Loans or of facility fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar Business Day,
the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day.
SECTION 2.12. Computation of Interest and Fees.
Interest on Base Rate Loans shall be computed on the basis of a year
of 365 days and paid for the actual number of days elapsed (including
the first day but excluding the last day). Interest on Euro-Dollar
Loans shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed, calculated as to each Interest
Period from and including the first day thereof to but excluding the
last day thereof. Facility fees and any other fees payable hereunder
shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding
the last day).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to First Borrowing.
The obligation of each Bank to make a Loan on the occasion of the
first Borrowing is subject to the satisfaction of the conditions s et
forth in Section 3.02 and receipt by the Agent of the following (in
sufficient number of counterparts (except as to the Notes) for
delivery of a counterpart to each Bank and retention of one
counterpart by the Agent):
(a) from each of the parties to the Loan Documents
of either (i) a duly executed counterpart of each of the Loan
Documents signed by such party or (ii) a telex or facsimile
transmission stating that such party has duly executed a counterpart
of each of the Loan Documents and sent such counterparts to the Agent;
(b) a duly executed Note for the account of each
Bank complying with the provisions of Section
2.03;
(c) a duly executed Subsidiary Guaranty, dated as
of the Closing Date, substantially in the form
of Exhibit G;
(d) an opinion (together with any opinions of
local counsel relied on therein) of (i) Michael Ingram, general
counsel to the Borrower and its Subsidiaries, and (ii) Alston & Bird,
special counsel for the Borrower and the Subsidiar y Guarantors, in
each case dated as of the Closing Date, substantially in the form of
Exhibit B and covering such additional matters relating to the
transactions contemplated hereby as the Agent or any Bank may
reasonably request;
(e) an opinion of Jones, Day, Reavis & Pogue
special counsel for the Banks and the Agent, dated the date of the
Closing Date, substantially in the form of Exhibit C and covering
such additional matters relating to the transactions contemplated
hereby as the Agent or any Bank may reasonably request;
(f) a certificate, dated as of the Closing Date,
signed on behalf of the Borrower by a principal financial officer of
the Borrower, to the effect that (i) no Default has occurred and is
continuing on the Closing Date and (ii) the representations and
warranties of the Borrower contained in Article IV are true on and as
of the Closing Date;
(g) a duly executed Termination and Release
Agreement, dated as of the Closing Date,
substantially in the form of Exhibit J;
(h) all documents which the Agent or any Bank may
reasonably request relating to the existence of the Borrower or any
Subsidiary Guarantor, the corporate authority for and the validity of
the Loan Documents to which it is a party, and any other matters
relevant hereto, all in form and substance satisfactory to the Agent,
including, without limitation, a certificate of incumbency of the
Borrower and each Subsidiary Guarantor, signed by its respective
Secretary or an Assistant Secretary, certifying as to the names, true
signatures and incumbency of its respective officer or officers
authorized to execute and deliver the Loan Documents to which it is
a party, and certified copies of the following items as to the
Borrower a nd each Subsidiary Guarantor: (i) its Certificate of
Incorporation, (ii) its Bylaws, (iii) a certificate of the Secretary
of State of (x) the States of Delaware and Georgia as to the good
standing of the Borrower as a Delaware corporation, and (y) the state
of incorporation of each Subsidiary Guarantor as to its good standing
therein, and (iv) the action taken by its Board of Directors
authorizing its execution, delivery and performance of the Loan
Documents to which it is a party; and
(i) a Notice of Borrowing.
SECTION 3.02. Conditions to All Borrowings.
The obligation of each Bank to make a Loan on the occasion of each
Borrowing is subject to the satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing;
(b) the fact that, immediately after such
Borrowing, no Default shall have occurred and
be continuing;
(c) the fact that the representations and
warranties of the Borrower contained in Article IV of this Agreement
shall be true on and as of the date of such Borrowing except for
changes permitted herein and except to the extent that such
representations and warranties relate solely to an earlier date; and
(d) the fact that, immediately after such
Borrowing, the aggregate outstanding principal
amount of the Loans of each Bank will not
exceed the amount of its Commitment.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts
specified in paragraphs (b), (c) and (d) of this Section; provided
that such Borrowing shall not be deemed to be such a representation
and warranty to the effect set forth in Section 4.04(b) as to any
event, act or condition having a Material Adverse Effect which has
theretofore been disclosed in writing by the Borrower to the Banks if
the aggregate outstanding principal amount of the Loans immediately
after such Borrowing will not exceed the aggregate outstanding
principal amount thereof immediately before such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
On the Activation Date, and at such other times as
specified in Section 3.02, the Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, is
duly qualified to transact business in every jurisdiction set forth on
Schedule 4.01 and the failure of the Borrower to be so qualified in
any other jurisdiction could not reasonably be expected to have or
cause a Material Adverse Effect, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted, except where the failure to
have any such licenses, authorizations, consents and approvals could n
ot reasonably be expected to have or cause a Material Adverse Effect.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention. The execution, delivery and
performance by the Borrower of this Agreement, the Notes and the
other Loan Documents (i) are within the Borrower's corporate powers,
(ii) have been duly authorized by all necessary corporate action,
(iii) require no action by or in respect of or filing with, any
governmental body, agency or official, (iv) do not contravene, or
constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the
Borrower or of any material agreement, judgment, injunction, order,
decree or other i nstrument binding upon the Borrower or any of its
Subsidiaries, and (v) do not result in the creation or imposition of
any Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower enforceable
in accordance with its terms, and the Notes and the other Loan
Documents to which the Borrower is a party, when executed and
delivered in accordance with this Agreement, will constitute valid and
binding obligations of the Borrower enforceable in accordance with
their respective terms, provided that the enforceability hereof and
thereof is subject in each case to general principles of equity and to
bankruptcy, insolvency, fraudulent transfer, and similar laws
affecting the enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) The
consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of May 31, 1993, and the related consolidated
statements of income, shareholders' equity and cash flows for the
Fiscal Year then ended, reported on by Arthur Andersen & Co., copies
of which have been delivered to each of the Banks, and the unaudited
consolidated financial statements of the Borrower for the interim
period ended February 28, 1994, copies of which have been delivered to
each of the Banks, fairly present in all material respects, in
conformity with GAAP (subject to normal, recurring, year-end audit
adjustments), the consolidated financial po sition of the Borrower and
its Consolidated Subsidiaries as of such dates and their consolidated
results of operations and cash flows for such periods stated.
(b) Since May 31, 1993, there has been no event,
act, condition or occurrence having a Material
Adverse Effect.
SECTION 4.05. No Litigation. There is no action, suit
or proceeding pending, or to the knowledge of the Borrower threatened,
against or affecting the Borrower or any of its Subsidiaries before
any court or arbitrator or any governmental body, agency or official
which could reasonably be expected to have or cause a Material Adverse
Effect.
SECTION 4.06. Compliance with ERISA. (a) The Borrower
and each member of the Controlled Group have fulfilled their
obligations under the minimum funding standards of ERISA and the Code
with respect to each Plan and are in compliance in all material
respects with the presently applicable provisions of ERISA and the
Code, and have not incurred any liability to the PBGC under Title IV
of ERISA.
(b) Neither the Borrower nor any member of the
Controlled Group is or ever has been obligated
to contribute to any Multiemployer Plan.
SECTION 4.07. Taxes. There have been filed on behalf
of the Borrower and its Subsidiaries all Federal, state and local
income, excise, property and other tax returns which are required to
be filed by them and all taxes due pursuant to such returns or
pursuant to any assessment received by or on behalf of the Borrower or
any Subsidiary have been paid or contested as permitted by Section
5.15. The charges, accruals and reserves on the books of the Borrower
and its Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower, adequate. United States income
tax returns of the Borrower and its Subsidiaries' have been examined
and closed through the Fiscal Year ended May 31, 1992.
SECTION 4.08. Subsidiaries. Each of the Subsidiary
Guarantors is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, is
qualified to transact business in every jurisdiction set forth in
Schedule 4.08 and the failure of any such Subsidiary Guarantor to be
so qualified in any other jurisdictions could not reasonably be
expected to have or cause a Material Adverse Effect, and has all
corporate powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted, except where the failure to have any such licenses,
authorizations, consents and approvals could not reasonably be
expected to have or cause a Material Adverse Effect. The Borrower has
no Subsidiaries except for those Subsidiaries listed on Schedule 4.08,
which accurately sets forth their respective jurisdictions of
incorporation.
SECTION 4.09. Not an Investment Company. The Borrower
is not an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 4.10. Ownership of Property; Liens. Each of
the Borrower and its Consolidated Subsidiaries has title to its
properties sufficient for the conduct of its business, and none of
such property is subject to any Lien except as permitted in Section
5.09.
SECTION 4.11. No Default. Neither the Borrower nor
any of its Consolidated Subsidiaries is in default under or with
respect to any agreement, instrument or undertaking to which it is a
party (including, without limitation, the Subsidiary Guaranties) or by
which it or any of its property is bound which could reasonably be
expected to have or cause a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
SECTION 4.12. Full Disclosure. All (i) information,
whether written or oral, heretofore furnished by either the chief
executive officer, chief financial officer, chief accounting officer,
controller or chief legal officer of the Borrower, and (ii) written
information heretofore furnished by any of the other employees of the
Borrower, to the Agent or any Bank for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
such information hereafter furnished by such representatives of the
Borrower to the Agent or any Bank will be, true, accurate and complete
in every material respect or based on reasonable estimates on the date
as of which such information is stated or certified. The Borrower has
disclosed to the Banks in writing any and all facts known to the
Borrower, after due inquiry, which could reasonably be expected to
have or cause a Material Adverse Effect.
SECTION 4.13. Environmental Matters. (a) Neither the
Borrower nor any Subsidiary is subject to any Environmental Liability
which could reasonably be expected to have or cause a Material
Adverse Effect and, to the best of the Borrower's knowledge, neither
the Borrower nor any Subsidiary has been designated as a potentially
responsible party under CERCLA or under any state statute similar to
CERCLA. To the best of the Borrower's knowledge, none of the
Properties has been identified on any current or proposed (i)
National Priorities List under 40 C.F.R. 300, (ii) CERCLIS list or
(iii) any list arising from a state statute similar to CERCLA.
(b) No Hazardous Materials are being, and, to the
best of the Borrower's knowledge, have been, used, produced,
manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled at, or shipped or
transported to or from the Properties or are otherwise present at,
on, in or under the Properties, or, to the best of the knowledge of
the Borrower, without independent inquiry, at or from any adjacent
site or facility, except for Hazardous Materials used, produced,
manufactured, processed, treated, recycled, generated, stored,
disposed of, managed, or otherwise handled in minimal amounts in the
ordinary course of business in compliance in all material respects
with all applicable Environmen tal Requirements.
(c) Borrower and each of its Subsidiaries is in
compliance in all material respects with all Environmental
Requirements in connection with the operation of the Properties and
Borrower's and each of its Subsidiary's respective businesses.
SECTION 4.14. Capital Stock. All Capital Stock,
debentures, bonds, notes and all other securities of the Borrower and
its Subsidiaries presently issued and outstanding are validly and
properly issued in accordance with all applicable laws, including but
not limited to, the "Blue Sky" laws of all applicable states and the
federal securities laws. The issued shares of Capital Stock of the
Borrower's Wholly Owned Subsidiaries is owned by the Borrower free and
clear of any Lien or adverse claim. At least a majority of the issued
shares of Capital Stock of each of the Borrower's other Subsidiaries
(other than Wholly Owned Subsidiaries) is owned by the Borrower free
and clear of any Lien or adverse claim.
SECTION 4.15. Margin Stock. Neither the Borrower nor
any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of purchasing or carrying any
Margin Stock, and no part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit to others for
the purpose of purchasing or carrying any Margin Stock, or be used for
any purpose which violates, or which is inconsistent with, the
provisions of Regulation X.
SECTION 4.16. Insolvency. After giving effect to the
execution and delivery of the Loan Documents and the making of the
Loans under this Agreement, the Borrower will not be "insolvent,"
within the meaning of such term as used in O.C.G.A. 18-2-22 or as
defined in 101 of Title 11 of the United States Code, as amended from
time to time, or be unable to pay its debts generally as such debts
become due, or have an unreasonably small capital to engage in any
business or transaction, whether current or contemplated.
ARTICLE V
COVENANTS
The Borrower agrees that, from and after the
Activation Date and for so long as any Bank has any Commitment
hereunder or any amount payable hereunder or under any Note remains
unpaid (provided, that the Borrower shall comply with Section 5.01 at
all times, regardless of whether the Activation Date shall have
occurred):
SECTION 5.01. Information. The Borrower will deliver
to each of the Banks:
(a) as soon as available and in any event within
95 days after the end of each Fiscal Year, a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of the end
of such Fiscal Year and the related consolidated statements of income,
shareholders' equity and cash flows for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous
fiscal year, all certified by Arthur Andersen & Co. or other
independent public accountants of nationally recognized standing, with
such certification to be free of exceptions and qualifications not
acceptable to the Required Banks; provided, that delivery pursuant to
paragraph (i) below of copies of the Annual Report on Form 10-K of the
Borrower for such Fiscal Year filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
5.01(a);
(b) as soon as available and in any event within
50 days after the end of each of the first three quarters of each
Fiscal Year, a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter and the
related statement of income and statement of cash flows for such
quarter and for the portion of the Fiscal Year ended at the end of
such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of
the previous Fiscal Year, all certified (subject to normal year-end
adjustments) as to fairness of presentation in all material respects,
generally accepted accounting principles and consistency by the chief
financial officer or the chief accounting officer of the Borrower;
provided, that delivery pursuant to clause (g) below of copies of the
Quarterly Report on Form 10-Q of the Borrower for such Fiscal Quarter
filed with the Securities and Exchange Commission sh all be deemed to
satisfy the requirements of this Section 5.01(b);
(c) simultaneously with the delivery of each set
of financial statements referred to in Sections 5.01(a) and (b) above,
a certificate, substantially in the form of Exhibit F (a "Compliance
Certificate"), of the chief financial officer or the chief accounting
officer of the Borrower (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in
compliance with the requirements of Sections 5.03 through 5.10,
inclusive, on the date of such financial statements and (ii) stating
whether any Default exists on the date of such certificate and, if any
Default then exists, setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect there
to;
(d) simultaneously with the delivery of each set
of annual financial statements referred to in paragraph (a) above, a
statement of the firm of independent public accountants which reported
on such statements to the effect that nothing has come to their
attention in the course of their audit to cause them to believe that
any Default existed on the date of such financial statements;
(e) within 5 Domestic Business Days after the
chief executive officer, chief financial officer, chief accounting
officer, controller or chief legal officer of the Borrower (or any
other individual having similar duties and responsibilities as any of
the foregoing although not having the same title) becomes aware of the
occurrence of any Default, a certificate of the chief financial
officer or the chief accounting officer or such other Person of the
Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies
of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of
all registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and annual,
quarterly or monthly reports which the Borrower shall have filed with
the Securities and Exchange Commission;
(h) if and when any member of the Controlled Group
(i) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable event,
a copy of the notice of such reportable event given or required to be
given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA, a copy of such notice;
or (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate or appoint a trustee to administer any Plan, a
copy of such notice; and
(i) from time to time such additional information
regarding the financial position or business
of the Borrower and its Subsidiaries as the
Agent, at the request of any Bank, may
reasonably request.
SECTION 5.02 Inspection of Property, Books and
Records. The Borrower will (i) keep, and cause each Subsidiary to
keep, proper books of record and account in which full, true and
correct entries in conformity with GAAP shall be made of all dealings
and transactions in relation to its business and activities; and (ii)
permit, and cause each Subsidiary to permit, representatives of any
Bank at such Bank's expense prior to the occurrence of a Default and
at the Borrower's expense after the occurrence of a Default to visit
and inspect any of their respective properties, to examine and make
abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants.
The Borrower agrees to cooperate and assist in such visits and
inspections, in each case at such reasonable times and as of ten as
may reasonably be desired. Notwithstanding the foregoing, prior to
the occurrence of a Default, no Bank may engage in (i) more than 2
inspections per Fiscal Year or (ii) discussions with the Borrower's
independent public accountants, unless the Borrower shall have
otherwise consented to same.
SECTION 5.03. Ratio of Consolidated Cash Flow to
Consolidated Debt. At the end of each Fiscal Quarter, commencing with
the Fiscal Quarter ending May 31, 1 994, the ratio of Consolidated
Cash Flow for the immediately preceding 4 Fiscal Quarters then ended
to Consolidated Debt, shall be greater than 0.40 to 1.0; provided,
that, in determining compliance with this Section 5.03, any
Consolidated Debt relating to recourse obligations resulting from the
sale of equipment lease and software license agreements, to the extent
such Debt is permitted by Section 5.10(iv) hereof, shall not be
included.
SECTION 5.04. Minimum Consolidated Net Worth.
Consolidated Net Worth will at no time be less than the sum of (i)
$100,000,000 plus (ii) 25.0% of cumulative Consolidated Net Income
after the Closing Date (taken as one accounting period), calculated
quarterly but excluding from such calculations of Consolidated Net
Income for purposes of this Section, any Fiscal Quarter in which
Consolidated Net Income is negative.
SECTION 5.05. Restricted Payments. The Borrower will
not declare or make any Restricted Payment during any Fiscal Year
unless, after giving effect thereto, the aggregate of all Restricted
Payments declared or made during such Fiscal Year does not exceed
$6,000,000 and no Default shall be in existence (which has not been
specifically waived in writing pursuant to Section 9.06) either
immediately preceding or succeeding the making or declaration of any
such Restricted Payment.
SECTION 5.06. Fixed Charges Coverage. At the end of
each Fiscal Quarter, commencing with the Fiscal Quarter ending May
31, 1994, the ratio of Income Available for Fixed Charges for the
immediately preceding 4 Fiscal Quarters then ended to the sum of (i)
Consolidated Fixed Charges, (ii) Dividends, (iii) Capital
Expenditures (excluding Capital Expenditures which constitute
acquisitions permitted by clauses (x) and (y) of Section 5.0 8(b)),
and (iv) to the extent not already counted in determining
Consolidated Fixed Charges, principal payments scheduled to be made
under any "earn-out" agreements of the Borrower, in each case for the
immediately preceding 4 Fiscal Quarters then en ded, shall not have
been less than 1.10 to 1.0; provided, that, notwithstanding the
foregoing, in determining Consolidated Fixed Charges for purposes of
this Section 5.06 only, (i) for so long as the Termination Date shall
be more than 1 year from an y date of determination, 25.0% of the
Loans outstanding under this Agreement shall be deemed to be
Consolidated Debt scheduled to be paid within 1 year, (ii) if the
Termination Date shall be less than 1 year from any date of
determination, 33.34% of the Loans outstanding under this Agreement
shall be deemed to be Consolidated Debt scheduled to be paid within 1
year, and (iii) the Loans outstanding under the Working Capital
Credit Agreement shall be excluded from the definition of
Consolidated Debt.
SECTION 5.07. Loans or Advances. Neither the Borrower
nor any of its Subsidiaries shall make loans or advances to any Person
except: (i) loans or advances to employees not exceeding $1,000,000 in
the aggregate principal amount outstanding at any time for the
Borrower and its Subsidiaries, in each case made in the ordinary
course of business and consistent with practices existing on the
Closing Date, (ii) deposits required by government agencies or public
utilities, (iii) loans or advances to Subsidiary Guarantors or to the
Borrower, and (iv) travel advances to employees not exceeding $500,000
in the aggregate principal amount outstanding at any time for the
Borrower and its Subsidiaries, in each case made in the ordinary
course of business and consistent with practices existing on the
Closing Date; provided that after giving effect to the making of any
loans, advances or deposits permitted by clause (i), (ii), (iii) and
(iv) of this Section, no Default shall be in existence (which has not
been specifically waived in writing pursuant to Section 9.06).
SECTION 5.08. Investments; Acquisitions. (a) Neither
the Borrower nor any of its Subsidiaries shall make Investments in any
Person except as permitted by Section 5.07, Section 5.08 (b), and
except Investments in (i) direct obligations of the United States
Government maturing within one year, (ii) certificates of deposit
issued by a bank rated A-1 or better by Standard & Poor's corporation
or P1 or better by Moody's Investors Service Inc., (iii) commercial
paper rated A-1 or the equivalent thereof by Standard & Poor's
Corporation or P1 or the equivalent thereof by Moody's Investors
Service, Inc. and in either case maturing within 6 months after the
date of acquisition, (iv) Subsidiary Guarantors, and/or (v) tender
bonds the payment of the principal of and interest on which is fully
supported by a letter of credit issued by a United States bank whose
long-term certificates of deposit are rated at least AA or the equival
ent thereof by Standard & Poor's Corporation and Aa or the equivalent
thereof by Moody's Investors Service, Inc.; provided, that this
Section shall not prohibit the Borrower's Guarantee of certain
obligations of Technology Sales and Leasing Co., Inc. under the Sanwa
Letter Agreement to the extent that such Guarantee and the Debt
Guaranteed pursuant thereto is not prohibited by Section 5.10.
(b) Without the prior written consent of the Agent
and the Required Banks, the Borrower will not, and it will not permit
any Subsidiary to, acquire, whether directly or through the purchase
of stock, convertible notes or otherwise , any assets (including,
without limitation, stock) other than the acquisition of the assets of
a Subsidiary Guarantor or of fixed assets (which fixed assets do not
constitute all or substantially all of the assets of the Person from
whom such assets are acquired) unless (x) such acquisition is of a
business which is similar (as to product sold or service rendered) to
the Borrower's, or any relevant Subsidiary's business, (y) such
acquisition is to be made upon a negotiated basis with the approval of
the board of directors of the Person to be acquired, or of the
percentage of ownership interests required by the charter documents of
such Person to approve any such acquisition, and (z) no Default shall
be in existence or be caused thereby (which has not been specifically
waived in writing pursuant to Section 9.06).
SECTION 5.09. Negative Pledge. Neither the Borrower
nor any Consolidated Subsidiary will create, assume or suffer to exist
any Lien on any asset now owned or hereafter acquired by it, except
for the following:
(a) Liens existing on the date of this Agreement
securing Debt outstanding on the date of this
Agreement in an aggregate principal amount not
exceeding $22,263,000.00;
(b) any Lien existing on any asset of any
corporation at the time such corporation
becomes a Consolidated Subsidiary and not
created in contemplation of such event;
(c) any Lien on any asset securing Debt
(including, without limitation, a capital lease) incurred or assumed
for the purpose of financing all or any part of the cost of acquiring
or constructing such asset, provided that such Lien attaches to such
asset concurrently with or within 18 months after the acquisition or
completion of construction thereof;
(d) any Lien on any asset of any corporation
existing at the time such corporation is
merged or consolidated with or into the
Borrower or a Consolidated Subsidiary and not
created in contemplation of such event;
(e) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a
Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any (i)
Subsidiary to the Borrower or (ii) Subsidiary
Guarantor to another Subsidiary Guarantor;
(g) any Lien arising out of the refinancing,
extension, renewal or refunding of any Debt secured by any Lien
permitted by any of the foregoing paragraphs of this Section, provided
that (i) such Debt is not secured by any additional assets, and (ii)
the amount of such Debt secured by any such Lien is not increased;
(h) Liens incidental to the conduct of its
business or the ownership of its assets, including, without
limitation, Liens of materialmen and landlords, which (i) do not
secure Debt and (ii) do not in the aggregate materially detract from
the value of its assets or materially impair the use thereof in the
operation of its business;
(i) any Lien in respect of any taxes which are
either (x) not, as at any date of
determination, due and payable or (y) being
contested in good faith as permitted by
Section 5.15;
(j) Liens in respect of judgments or awards for
which appeals or proceedings for review are being prosecuted and in
respect of which a stay of execution upon any such appeal or
proceeding for review shall have been secured, provided that such
Person shall have established reserves which are adequate under GAAP
for such judgments or awards;
(k) Liens existing on the date of this Agreement
created by NDPS on certain of its assets, and
securing certain indemnity obligations of NDPS
to the sellers of the merchant credit card
processing contracts;
(l) Liens securing the Borrower's and/or
Technology Sales and Leasing Co., Inc.'s recourse obligations to Sanwa
in respect of certain equipment lease and software license agreements
sold to Sanwa by the Borrower or by Technology Sales and Leasing Co.,
Inc. and Guaranteed by the Borrower from time to time; provided, that
such Liens shall only attach to property which has been sold to Sanwa;
and
(m) Liens not otherwise permitted by the foregoing
paragraphs of this Section securing Debt
(other than indebtedness represented by the
Notes) in an aggregate principal amount at any
time outstanding not to exceed $5,000,000.
Provided Liens permitted by the foregoing paragraphs (a) through (m)
inclusive (excluding (l)) shall at no time secure Debt in an aggregate
amount greater than $38,263,000.00.
SECTION 5.10. Debt. The Borrower will not, nor will
it permit any Subsidiary to incur, any Debt other than (i) Debt
arising under this Agreement, the Working Capital Credit Agreement, or
the other Loan Documents, (ii) the Wachovia Letter of Credit
Obligations, (iii) Debt in existence on the date hereof and secured by
Liens permitted by Section 5.09, (iv) Debt incurred after the date
hereof in an aggregate amount up to $10,000,000 at any time
outstanding, resulting from the periodic sale of equipment lease and
software license agreements; provided, however, that for purposes of
this clause (iv), all of the Borrower's or any Subsidiary's
obligations resulting from the sale of equipment lease and software
license agreements shall be counted as Debt only if and to the extent
that there is any recourse to the Borrower or such Subsidiary or to
the assets of the Borrower or such Subsidiary; (v) Debt in respect of
a private placement transaction provided that all amounts received by
the Borrower or any Subsidiary shall have been paid to the Agent
pursuant to Section 2.10(b) and the Commitments shall have been
reduced in such amount pursuant to Section 2.08, and (vi) other Debt
which shall not exceed $22,000,000.00 in the aggregate at any given
time, after the date hereof; provided, that, at no time shall the
aggregate amount of Debt owing to Financial Institutions (other than
Wachovia and First Chicago to the extent permitted herein) exceed
$10,000,000.
SECTION 5.11. Maintenance of Existence. The Borrower
shall, and shall cause each Subsidiary to, maintain its corporate
existence and carry on its business in substantially the same manner
and in substantially the same fields as such business is now carried
on and maintained; provided, that the (i) Borrower may dissolve
Subsidiaries pursuant to Section 5.12 and (ii) the Borrower or any
Subsidiary may discontinue a business line pursuant to Section 5.13.
SECTION 5.12. Dissolution. Neither the Borrower nor
any of its Subsidiaries shall suffer or permit dissolution or
liquidation either in whole or in part or redeem or retire any shares
of its own stock or that of any Subsidiary, except through corporate
reorganization to the extent permitted by Section 5.13; provided, that
the Borrower may dissolve Subsidiaries from time to time if (i) the
Board of Directors of the Borrower has determined that such
dissolution is desirable, and (ii) the Borrower has provided the Banks
with evidence satisfactory to the Banks, in their reasonable judgment,
that such dissolution could not reasonably be expected to have or
cause a Material Adverse Effect.
SECTION 5.13. Consolidations, Mergers and Sales of
Assets. The Borrower will not, nor will it permit any Subsidiary to,
consolidate or merge with or into, or sell, lease or otherwise
transfer all or any substantial part of its assets to, any other
Person, or discontinue or eliminate any business line or segment,
provided that (a) the Borrower may merge with another Person if (i)
such Person was organized under the laws of the United States of
America or one of its states, (ii) the Borrower is the corporation
surviving such merger and (iii) immediately after giving effect to
such merger, no Default shall have occurred and be continuing, (b)
Subsidiary Guarantors may merge with and sell assets to, one another
and the Borrower, (c) the Borrower and the Subsidiaries may eliminate
or discontinue business lines and segments from time to time if such
action (i) has been approved by the Board of Directors of the
Borrower, and (ii) the Borrower or any such Subsidiary provides the
Required Banks with evidence satisfactory to the Required Banks, in
their reasonable judgment, that such elimination or discontinuance
will not jeopardize the Borrower's or any Subsidiary Guarantor's
ability to perform under any of the Loan Documents, (d) so long as no
Default shall be in existence either immediately prior to or
following any asset disposition, the Borrower may sell or otherwise
dispose of (x) any of its eq uipment lease and software license
agreements and (y) any of its other assets in an amount of up to
$10,000,000 in fair market value during each consecutive 12 month
period and (e) during the existence of a Default which does not
constitute an Event of Default, the Borrower may continue to sell
equipment leases and software license agreements to Sanwa on the same
terms on which such sales customarily were consummated prior to such
Default.
SECTION 5.14. Use of Proceeds. The proceeds of the
Loans may be used for acquisitions not otherwise prohibited herein
(including, without limitation, pursuant to Section 5.08(b)). No
portion of the proceeds of the Loans will be used by the Borrower (i)
in connection with any hostile tender offer for, or other hostile
acquisition of, stock of any corporation with a view towards
obtaining control of such other corporation, (ii) directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any Margin Stock, or (iii) for
any purpose in violation of any applicable law or regulation.
SECTION 5.15. Compliance with Laws; Payment of
Taxes. The Borrower will, and will cause each of its Subsidiaries and
each member of the Controlled Group to, comply in a ll material
respects with applicable laws (including but not limited to ERISA),
regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of
such compliance is being contested in good faith through appropriate
proceedings. The Borrower will, and will cause each of its
Subsidiaries to, pay, prior to the accrual of any penalty in respect
thereof, all taxes, assessments, governmental charges, claims for
labor, supplies, rent and other obligations which, if unpaid, might
become a Lien against the property of the Borrower or any Subsidiary,
except liabilities being contested in good faith and against which, if
reasonably requested by the Agent, the Borrower will set up reserves
in accordance with GAAP.
SECTION 5.16. Insurance. The Borrower will maintain,
and will cause each of its Subsidiaries to maintain (either in the
name of the Borrower or in such Subsidiary's own name), with
financially sound and reputable insurance companies, insurance on all
its property in at least such amounts and against at least such risks
as are usually insured against in the same general area by companies
of established repute engaged in the same or similar business.
SECTION 5.17. Change in Fiscal Year. The Borrower
will not change its Fiscal Year without the consent of the Required
Banks, which consent shall not be unreasonably withheld.
SECTION 5.18. Maintenance of Property. The Borrower
shall, and shall cause each Subsidiary to, maintain all of its
properties and assets in good condition, repair and working order,
ordinary wear and tear excepted.
SECTION 5.19. Environmental Notices. Upon obtaining
knowledge thereof, the Borrower shall furnish to the Banks and the
Agent prompt written notice of all Environmental Liabilities, pend
ing, threatened or anticipated Environmental Proceedings,
Environmental Notices, Environmental Judgments and Orders, and
Environmental Releases at, on, in, under or in any way affecting the
Properties or any adjacent property, and all facts, events, or
conditions that could lead to any of the foregoing if any of the
foregoing could reasonably be expected to have or cause a Material
Adverse Effect; provided, that should the Borrower or any Subsidiary
receive any written notice with respect to any of the foregoing, then
the Borrower shall provide the Banks and the Agent with a copy of
same, regardless of whether the facts, events or conditions described
therein might have or cause a Material Adverse Effect.
SECTION 5.20. Environmental Matters. The Borrower
will not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of,
mana ge at, or otherwise handle, or ship or transport to or from the
Properties any Hazardous Materials except for Hazardous Materials
used, produced, manufactured, processed, treated, recycled, generated,
stored, disposed, managed, or otherwise handled in the ordinary course
of business in compliance in all material respects with all applicable
Environmental Requirements.
SECTION 5.21. Environmental Release. The Borrower
agrees that upon the occurrence of an Environmental Release it will
act promptly to investigate the extent of, and to take appropriate
remedial action to remedy, such Environmental Release, to the extent
required by any applicable Environmental Requirement or any
Environmental Judgment and Order.
SECTION 5.22. Future Subsidiaries. The Borrower shall
cause all of its Subsidiaries not existing as of the date hereof to
execute and deliver Subsidiary Guaranties, and other Loan Documen ts
related thereto, as requested by the Agent, within 25 Business Days of
the creation or acquisition of any such Subsidiary by the Borrower.
The delivery of such documents and instruments shall be accompanied by
such other documents as the Agent may reasonably request (e.g.,
certificates of incorporation, articles of incorporation and bylaws,
opinion letters, and appropriate resolutions of the Board of Directors
of any such Subsidiary Guarantor).
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of
the following events ("Events of Default") shall have occurred and be
continuing at any time on or after the Activation Date (provided,
that, regardless of the occurrence of the Activation Date, an "Event
of Default" shall arise hereunder (i) if the Borrower shall either (x)
not pay within 5 Domestic Business Days after the date when due, the
fees required in Section 2.06 or (y) fail to comply with Section 5.01
within the time period specified in Section 6.01(c) or (ii) any of the
events or conditions referred to in Section 6.01(h) or 6.01(i) shall
exist):
(a) the Borrower shall fail to pay when due any
principal of any Loan or shall fail to pay any interest on any Loan
within 3 Domestic Business Days after such interest shall become due,
or shall fail to pay any fee or other amount payable hereunder within
5 Domestic Business Days after such fee or other amount becomes due;
or
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.02(ii),
5.03 to 5.14, inclusive, or 5.22; or
(c) the Borrower shall fail to observe or perform
any covenant or agreement contained or incorporated by reference in
this Agreement (other than those covered by paragraph (a) or (b)
above) and such failure shall not have been cured within 30 days after
the earlier to occur of (i) written notice thereof has been given to
the Borrower by the Agent at the request of any Bank or (ii) the
Borrower otherwise becomes aware of any such failure; or
(d) any representation, warranty, certification or
statement made or incorporated by reference in Article IV or in any
certificate, financial statement or other document delivered pursuant
to this Agreement shall prove to have been incorrect or misleading in
any material respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to
make any payment in respect of Debt
outstanding in the aggregate principal amount
of $500,000 or greater (other than the Notes)
when due or within any applicable grace
period; or
(f) an "Event of Default" shall occur under any of the
other Loan Documents; provided, that, should any such "Event of
Default" be waived by the Banks, then, such waiver shall operate as a
waiver of an Event of Default arising under this Section 6.01(f) as a
result of same; or
(g) any event or condition shall occur which results
in the acceleration of the maturity of Debt outstanding of the
Borrower or any Subsidiary in the aggregate principal amount of
$500,000 or greater (including, without limitation, any "put" of such
Debt to the Borrower or any Subsidiary) or enables the holders of such
Debt or any Person acting on such holders' behalf to accelerate the
maturity thereof (including, without limitation, any "put" of such
Debt to the Borrower or any Subsidiary); or
(h) the Borrower or any Subsidiary shall commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; or
(i) an involuntary case or other proceeding shall
be commenced against the Borrower or any Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower or
any Subsidiary under the federal bankruptcy laws as now or hereafter
in effect; or
(j) the Borrower or any member of the Controlled
Group shall fail to pay when due any material amount which it shall
have become liable to pay to the PBGC or to a Plan under Title IV of
ERISA; or notice of intent to terminate a Plan or Plans shall be filed
under Title IV of ERISA by the Borrower, any member of the Controlled
Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such
Plan or Plans or a proceeding shall be instituted by a fiduciary of
any such Plan or Plans to enforce Section 515 or 4219(c)(5) of ERISA
and such proceeding shall not have been dismissed within 30 d ays
thereafter; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any such Plan
or Plans must be terminated; or the Borrower or any other member of
the Controlled Group shall enter into, contribute or be obligated to
contribute to, terminate or incur any withdrawal liability with
respect to, a Multiemployer Plan; provided, that no Default or Event
of Default shall arise under this paragraph (j) so long as the maximum
potential liability to the Borrower or any member of the Controlled
Group shall be not greater than $500,000; or
(k) one or more judgments or orders for the
payment of money in an aggregate amount in excess of $500,000, shall
be rendered against the Borrower or any Subsidiary and such judgment
or order shall continue unsatisfied and unstayed for a period of 30
days; or
(l) a federal tax lien shall be filed against the
Borrower under Section 6323 of the Code or a lien of the PBGC shall be
filed against the Borrower under Section 4068 of ERISA and in either
case such lien shall (i) secure an obligation, or asserted obligation,
in excess of $500,000 and (ii) remain undischarged or unstayed for a
period of 25 days after the date of filing; or
(m) (i) any Person or two or more Persons acting
in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934) of 20% or more of the outstanding
shares of the voting stock of the Borrower; or (ii) as of any date a
majority of the Board of Directors of the Borrower consists of
individuals who were not either (A) directors of the Borrower as of
the corresponding date of the previous year, (B) selected or nominated
to become directors by the Board of Directors of the Borrower of which
a majority consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of Director s
of the Borrower of which a majority consisted of individuals described
in clause (A) and individuals described in clause (B); or
(n) the occurrence of any event, act, occurrence,
or condition which the Banks determine either
does or has a reasonable probability of
causing a Material Adverse Effect; or
(o) (i) any of the Subsidiary Guaranties shall
cease to be enforceable or (ii) the Borrower
or any Subsidiary Guarantor shall assert that
any Loan Document is not enforceable; or
(p) an "Event of Default" shall occur under the
Working Capital Credit Agreement; provided, that, should any such
"Event of Default" be waived by the Banks, then, such waiver shall
operate as a waiver of an Event of Default arising under this Section
6.01(p) as a result of same.
then, and in every such event, the Agent shall, if requested by the
Required Banks, (i) by notice to the Borrower terminate the
Commitments and they shall thereupon terminate, and (ii) by notice to
the Borrower declare the Notes (together with accrued interest
thereon) to be, and the Notes shall thereupon become, immediately due
and payable without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower together with
interest at the Default Rate accruing on the principal amount thereof
from and after the date of such Event of Default; provided that if any
Event of Default specified in paragraph (h) or (i) above occurs with
respect to the Borrower, without any notice to the Borrower or any oth
er act by the Agent or the Banks, the Commitments shall thereupon
terminate and the Notes (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by
the Borrower together with interest thereon at the Default Rate
accruing on the principal amount thereof from and after the date of
such Event of Default. Notwithstanding the foregoing, the Agent shall
have available to it all other remedies at law or equity, and shall
exercise any one or all of them at the request of the Required Banks.
SECTION 6.02. Notice of Default. The Agent shall give
notice to the Borrower of any Default under Section 6.01(c) promptly
upon being requested to do so by any Bank and shall thereupon noti fy
all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment; Powers and Immunities.
Each Bank hereby irrevocably appoints and authorizes the Agent to act
as its agent hereunder and under the other Loan Documents with such
powers as are specifically delegated to the Agent by the terms hereof
and thereof, together with such other powers as are reasonably
incidental thereto. The Agent: (a) shall have no duties or
responsibilities except as expressly set forth in this Agreement and
the other Loan Documents, and shall not by reason of this Agreement or
any other Loan Document be a trustee for any Bank; (b) shall not be
responsible to the Banks for any recitals, statements, representations
or warranties contained in this Agreement or any other Loan Document,
or in any certificate or other document referred to or provided for
in, or received by any Bank under, this Agreement or any other Loan
Document, or for the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan
Document or any other document referred to or provided for herein or
therein or for any failure by the Borrower to perform any of its
obligations hereunder or thereunder; (c) shall not be required to
initiate or conduct any litigation or collection proceedings hereunder
or under any other Loan Document except to the extent requested by the
Required Banks, and then only on terms and conditions satisfactory to
the Agent, and (d) shall not be responsible for any action taken or
omitted to be taken by it hereunder or under any other Loan Document
or any other document or instrument referred to or provided for herein
or therein or in connection herewith or therewith, except for its own
gross negligence or wilful misconduct. The Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence
or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The provisions of this Article VII are solely
for the benefit of the Agent and the Banks, and the Borrower shall not
have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement
and under the other Loan Documents, the Agent shall act solely as
agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with
or for the Borrower. The duties of the Agent shall be ministerial and
administrative in nature, and the Agent shall not have by reason of
this Agreement or any other Loan Document a fiduciary relationship in
respect of any Bank.
SECTION 7.02. Reliance by Agent. The Agent shall be
entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telefax, telegram or cable)
believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants or other
experts selected by the Agent. As to any matters not expressly
provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from
acting, hereunder and thereunder in accordance with instructions
signed by the Required Banks , and such instructions of the Required
Banks in any action taken or failure to act pursuant thereto shall be
binding on all of the Banks.
SECTION 7.03. Defaults. The Agent shall not be deemed
to have knowledge of the occurrence of a Default or an Event of
Default (other than the nonpayment of principal of or interest on the
Loans) unless the Agent has received notice from a Bank or the
Borrower specifying such Default or Event of Default and stating that
such notice is a "Notice of Default". In the event that the Agent
receives such a notice of the occurrence of a Default or an Event of
Default, the Agent shall give prompt notice thereof to the Banks. The
Agent shall give each Bank prompt notice of each nonpayment of
principal of or interest on the Loans whether or not it has received
any notice of the occurrence of such nonpayment. The Agent shall
(subject to Section 9.06) take such action hereunder with respect to
such Default or Event of Default as shall be directed by the Required
Banks, provided that, unless and until the Agent shall have received
such directio ns, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best
interests of the Banks.
SECTION 7.04. Rights of Agent as a Bank. With respect
to the Loans made by it, Wachovia in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Agent, and
the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include Wachovia in its individual capacity. The Agent may
(without having to account therefor to any Bank) accept deposits from,
lend money to and generally engage in any kind of banking, trust or
other business with the Borrower (and any of its Affiliates) as if it
were not acting as the Agent, and the Agent may accept fees and other
consideration from the Borrower (in addition to any agency fees and
arrangement fees heretofore agreed to between the Borrower and the
Agent) for services in connection with this Agreement or any other
Loan Document or otherwise without having to account for the same to
the Banks.
SECTION 7.05. Indemnification. Each Bank severally
agrees to indemnify the Agent, to the extent the Agent shall not have
been reimbursed by the Borrower, ratably in accordance with its
Commitment, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including,
without limitation, counsel fees and disbursements) or disbursements
of any kind and nature whatsoever which may be imp osed on, incurred
by or asserted against the Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (excluding, unless an Event of Default
has occurred and is continuing, the normal administrative costs and
expenses incident to the performance of its agency duties hereunder)
or the enforcement of any of the terms hereof or thereof or any such
other documents; provided, however that no Bank shall be liable for
any of the foregoing to the extent they arise from the gross
negligence or wilful misconduct of the Agent. If any indemnity
furnished to the Agent for any purpose shall, in the opinion of the
Agent, be insufficient or become impaired, the Agent may call for
additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.
SECTION 7.06. Payee of Note Treated as Owner. The
Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent
and the provisions of Section 9.08(c) have been satisfied. Any
requests, authority or consent of any Person who at the time of making
such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in
exchange therefor or replacement thereof.
SECTION 7.07. Nonreliance on Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on
the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis
of the Borrower and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any
of the other Loan Documents. The Agent shall not be required to keep
itself informed as to the performance or observance by the Borrower
of this Agreement or any of the other Loan Documents or any other
document referred to or provided for herein or therein or to inspect
the properties or books of the Borrower or any other Person. Except
for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder or under
the other Loan Documents, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning the affairs, financial condition or business of
the Borrower or any other Person (or any of their Affiliates) which
may come into the possession of the Agent.
SECTION 7.08. Failure to Act. Except for action
expressly required of the Agent hereunder or under the other Loan
Documents, the Agent shall in all cases be fully justified in failing
or refus ing to act hereunder and thereunder unless it shall receive
further assurances to its satisfaction by the Banks of their
indemnification obligations under Section 7.05 against any and all
liability and expense which may be incurred by the Agent by reason of
taking, continuing to take, or failing to take any such action.
SECTION 7.09. Resignation or Removal of Agent.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving not
notice thereof to the Banks and the Borrower and the Agent may be
removed at any time with or without cause by the Required Banks.
Upon any such resignation or removal, the Required Banks shall have
the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Banks and shall have accepted
such appointment within 30 days after the retiring Agent's notice of
resignation or the Required Banks' removal of the retiring Agent, then
the retiring Agent may, on behalf of the Banks, appoint a successor
Agent. Any successor Agent shall be a bank which has a combined
capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VII shall continue
in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as the Agent hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any Interest
Period:
(a) the Agent reasonably determines that deposits
in Dollars (in the applicable amounts) are not
being offered in the relevant market for such
Interest Period, or
(b) the Required Banks advise the Agent that the
London Interbank Offered Rate, as the case may be, as determined by
the Agent will not adequately and fairly reflect the cost to such
Banks of funding Euro-Dollar Loans for such Interest Period, the Agent
shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the
Banks to make Euro-Dollar Loans specified in such notice shall be
suspended. Unless the Borrower notifies the Agent prior to the time
of any Borrowing of Euro-Dollar Loans for which a Notice of Borrowing
has previously been given that it elects not to borrow on such date,
such Borrowing shall instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date hereof,
the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof (any
such agency being referred to as an "Authority" and any such event
being referred to as a "Change of Law"), or compliance by any Bank
(or its Lending Office) with any request or directive (whether or not
having the force of law) of any Authority shall make it unlawful or
impossible for any Bank (or its Lending Office) to make, maintain or
fund its Euro-Dollar Loans and such Bank shall so notify the Agent,
the Agent shall forthwith give notice thereof to the other Banks and
the Borrower, whereupon until such Bank notifies the Borrower and the
Agent that the circumstances giving rise to such suspension no longer
exist, the obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Lending Office if such
designation will avoid the need for giving such n otice and will not,
in the reasonable judgment of such Bank, be otherwise disadvantageous
to such Bank. If such Bank shall determine that it may not lawfully
continue to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, the Borrower
shall immediately prepay in full the then outstanding principal
amount of each Euro-Dollar Loan of such Bank, together with accrued
interest thereon. Concurrently with prepaying each such Euro-Dollar
Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar Loans
of the other Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost and Reduced Return.
(a) If after the date hereof, a Change of Law or compliance by any
Bank (or its Lending Office) with any request or directive (whether or
not having the force of law) of any Authority:
(i) shall subject any Bank (or its Lending Office)
to any tax, duty or other charge with respect to its Euro-Dollar
Loans, its Notes or its obligation to make Euro-Dollar Loans, or
shall change the basis of taxation of payments to any Bank (or its
Lending Office) of the principal of or interest on its Euro-Dollar
Loans or any other amounts due under this Agreement in respect of its
Euro-Dollar Loans or its obligation to make Euro-Dollar Loans (except
for changes in the tax or rate of tax on the overall net income of
such Bank or its Lending Office, as the case may be, or franchise
taxes imposed by the jurisdiction or any political subdivision or
taxing authority in which such Bank's principal executive office or
Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding with respect to any Euro-
Dollar Loan any such requirement included in an applicable Euro-Dollar
Reserve Percentage) against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its Lending Office);
or
(iii) shall impose on any Bank (or its Lending Office)
or on the United States market for the London
interbank market any other condition affecting
its Euro-Dollar Loans, its Notes or its
obligation to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to such
Bank (or its Lending Office) of making or maintaining any Euro-Dollar
Loan, or to reduce the amount of any sum received or receivable by
such Bank (or its Lending Office) under this Agreement or under its
Notes with respect thereto, by an amount deemed by such Bank to be
material, then, within 15 days after demand by such Bank (with a copy
to the Agent), the Borrower shall pay to such Bank such additional
amount or amounts as will compensate such Bank for such increased cost
or reduction. In determining such amount, such Bank may use any
reasonable averaging and attribution methods generally utilized by
such Bank to determine such amounts on a non-discriminatory portfolio
basis. Before giving any notice pursuant to this Section, such Bank
shall designate a different Lending Office if such designation will
avoid the need for giving such notice, and will not, in the reasonable
judgment of such Bank, be otherwise disadvantageous to such Bank.
(b) If any Bank shall have determined that after the
date hereof the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof, or compliance by any
Bank (or its Lending Office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
Authority, has or would have the effect of reducing the rate of return
on such Bank's capital as a consequence of its obligations hereunder
to a level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within 15 days after
demand by such Bank, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such
reduction.
(c) Each Bank will promptly notify the Borrower
and the Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation pursuant
to this Section and will designate a different Lending Office if
such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any
Bank claiming compensation under this Section and setting forth the
additional amount or amounts (together with an explanation, including
calculations, of how such amounts were determined) to be paid to it
hereunder shall constitute rebuttable presumptive evidence of th e
amount payable to any relevant Bank. In determining such amount, such
Bank may use any reasonable averaging and attribution methods
generally utilized by such Bank to determine such amounts on a non-
discriminatory portfolio basis.
(d) The provisions of this Section 8.03 shall be
applicable with respect to any Participant, Assignee or other
Transferee, and any calculations required by such provisions shall be
made based upon the circumstances of such Participant, Assignee or
other Transferee.
SECTION 8.04. Base Rate Loans Substituted for Affected
Euro-Dollar Loans. If (i) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section 8.03,
and the Borrower shall, by at least 5 Euro-Dollar Business Days' prior
notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and
until such Bank notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by
such Bank as Euro-Dollar Loans, and shall be
made instead as Base Rate Loans, and
(b) after each of its Euro-Dollar Loans has been
repaid, all payments of principal which would
otherwise be applied to repay such Euro-Dollar
Loans shall be applied to repay its Base Rate
Loans instead.
SECTION 8.05. Compensation. Upon the request of any
Bank, delivered to the Borrower and the Agent, the Borrower shall pay
to such Bank such amount or amounts as shall compensate such Bank for
any loss, cost or expense incurred by such Bank as a result of:
(a) any payment or prepayment (pursuant to Section
8.02 or otherwise) of a Euro-Dollar Loan on a
date other than the last day of an Interest
Period for such Euro-Dollar Loan; or
(b) any failure by the Borrower to prepay a Euro-
Dollar Loan on the date for such prepayment
specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-
Dollar Loan on the date for the Euro-Dollar
Borrowing of which such Euro-Dollar Loan is a
part specified in the applicable Notice of
Borrowing delivered pursuant to Section 2.02;
such compensation to include, without limitation, an amount equal to
the excess, if any, of (x) the amount of interest which would have
accrued on the amount so paid or prepaid or not prepaid or borrowed
for the period from the date of such payment, prepayment or failure to
prepay or borrow to the last day of the then current Interest Period
for such Euro-Dollar Loan (or, in the case of a failure to prepay or
borrow, the Interest Period for such Euro-Dollar Loan which would have
commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Euro-Dollar Loan provided for
herein over (y) the amount of interest (as reasonably determined by
such Bank) such Bank would have paid on deposits in Dollars of equal
or comparable amounts having terms comparable to such period placed
with it by leading banks in the London interbank market.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including bank wire, telex, telecopier or similar writing) and shall
be given to such party at its address or telecopier or telex number
set forth on the signature pages hereof or such other address or
telecopier or telex number as such party may hereafter specify for
the purpose by notice to each other party. Each such notice, request
or other communication shall be effective (i) if given by
telecopier or telex, when such telecopier or telex is transmitted to
the telecopier or telex number specified in this Section and the
appropriate confirmation or answerback is received, (i i) if given by
certified mail return-receipt requested, on the date set forth on the
receipt (provided, that any refusal to accept any such notice shall
be deemed to be notice thereof as of the time of any such refusal),
addressed as aforesaid or (ii i) if given by any other means, when
delivered at the address specified in this Section; provided that
notices to the Agent under Article II or Article VIII shall not be
effective until received.
SECTION 9.02. No Waivers. No failure or delay by the
Agent, any Bank or the Borrower in exercising any right, power or
privilege hereunder or under any Note shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by
law.
SECTION 9.03. Expenses; Documentary Taxes. The
Borrower shall pay (i) all reasonable out-of-pocket expenses of the
Agent and the Banks, including reasonable fees and disbursements of
Jones, Day, Reavis & Pogue and the internal counsel of First Chicago,
in connection with the preparation of this Agreement and the other
Loan Documents, any waiver or consent hereunder or thereunder or any
amendment and (ii) if a Default occurs, all reasonable out-of-pocket
expenses incurred by the Agent and any Bank, including reasonable
fees and disbursements of counsel, including, without limitation, the
internal counsel of First Chicago, in connection with such Default
and collection and other enforcement proceedings resulting therefrom,
including reasonable out-of-pocket expenses incurred in enforcing
this Agreement and the other Loan Documents. The Borrower shall
indemnify the Agent and each Bank against any transfer taxes,
documentary taxes, assessments or charges made by any Authority by
reason of the execution and delivery of this Agreement or the other
Loan Documents.
SECTION 9.04. Indemnification. (a) The Borrower shall
indemnify the Agent, the Banks and each affiliate thereof and their
respective directors, officers, employees and agents (each an
"Indemnified Party") from, and hold each of them harmless against, any
and all losses, liabilities, claims or damages to which any of them
may become subject, insofar as such losses, liabilities, claims or
damages arise out of or result from any actual or proposed use by the
Borrower of the proceeds of any extension of credit by any Bank
hereunder or breach by the Borrower of this Agreement or any other
Loan Document or from any investigation, litigation or other
proceeding (including any threatened in vestigation or proceeding)
relating to the foregoing (an "Indemnity Proceeding"), and the
Borrower shall reimburse each Indemnified Party, upon demand for any
reasonable expenses (including, without limitation, reasonable legal
fees) incurred in connection with any such investigation or proceeding
("Claims and Expenses"); but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence
or wilful misconduct of the Indemnified Party; provided, that should
the Borrower pay any amounts to the Agent or the Banks due to this
Section, and it shall be determined that the harm being indemnified
against resulted from the Agent's or any Bank's gross negligence or
wilful misconduct, then such party receiving such payment shall rebate
such payment to the Borrower, together with interest thereon accruing
at the Federal Funds Rate from the date such payment was made until
the date such rebate is received by the Borrower (calculated for the
actual number of days elapsed on the basis of a 365 day year).
(b) If the Borrower is required to indemnify an
Indemnified Party pursuant hereto and has provided evidence reasonably
satisfactory to such Indemnified Party that the Borrower has the
financial wherewithal to reimburse such Indemnified Party for any
amount paid by such Indemnified Party with respect to such Indemnity
Proceeding, unless such Indemnified Party shall have an important
general interest (i.e. an interest having general application to its
business other than solely with respect to the Loans under this
Agreement) in settling or compromising such Indemnity Proceeding, such
Indemnified Party shall not settle or compromise any such Indemnity
Proceeding without the prior written consent of the Borrower (which
consent shall not be unreasonably withheld or delayed).
(c) If a claim is to be made by an Indemnified
Party under this Section, the Indemnified Party shall give written
notice to the Borrower promptly after the Indemnified Party receives
actual notice of any Claims and Expenses incurred or instituted for
which the indemnification is sought; provided, that, the failure to
give such prompt notice shall not decrease the Claims and Expenses
payable by the Borrower. If requested by the Borrower in writing, and
so long as (i) no Default or Event of Default shall have occurred and
be continuing and (ii) the Borrower has acknowledged in writing to the
Indemnified Party that the Borrower shall be obligated under the terms
of its indemnity hereunder in connection with such Indemnity
Proceeding, the Borrower may, at its election, conduct the defense of
any such Indemnified Proceeding to the extent such contest may be
conducted in good faith on legally supported grounds, unless such
Indemnified Party shall have an important general interest (i.e. an
interest having general application to its business other than solely
with respect to the Loans under this Agreement) in settling or
compromising such Indemnity Proceeding (in which case such Indemnified
Party shall conduct the defense of same). If any lawsuit or
enforcement action is filed against any Indemnified Party entitled to
the benefit of indemnity under this Section, written notice thereof
shall be given to the Borrower as soon as practicable (and in any
event within 15 days after the service of the citation or summons).
Notwithstanding the foregoing, the failure so to notify the Borrower
as provided in this Section will not relieve the Borrower from
liability hereunder. After such notice, the Borrower shall be
entitled, if it so elects, to take control of the defense and
investigation of such lawsuit or action and to employ and engage
counsel of its own choice reasonably acceptable to the Indemnified
Party to handle and defend the same, at the Borrower's cost, risk and
expense; provided however, that the Borrower and its counsel shall
proceed with diligence and in good faith with respect thereto; and,
provided, further, that, should an important general interest (i.e. an
interest having general application to its business other than solely
with respect to the Loans under this Agreement) of the Indemnified
Party be at issue, then, the Indemnified Party may conduct the defense
of any Indemnity Proceeding. If (i) the engagement of such counsel by
t he Borrower would present a conflict of interest which would prevent
such counsel from effectively defending such action on behalf of the
Indemnified Party, (ii) the defendants in, or targets of, any such
lawsuit or action include both the Indemnified Party and Borrower, and
the Indemnified Party reasonably concludes that there may be legal
defenses available to it that are different from or in addition to
those available to the Borrower, (iii) the Borrower fails to assume
the defense of the lawsuit or action or to employ counsel reasonably
satisfactory to such Indemnified Party, in either case in a timely
manner, or (iv) a Default or Event of Default shall occur and be
continuing, then such Indemnified Party may employ separate counsel to
represent or defend it in any such action or proceeding and the
Borrower will pay the fees and disbursements of such counsel;
provided, however that each Indemnified Party shall endeavor, but
shall not be obligated, in connection with any matter cove red by this
Section which also involves other Indemnified Parties, to use
reasonable efforts to avoid unnecessary duplication of efforts by
counsel for all indemnities. Should the Borrower be entitled to
conduct the defense of any Indemnity Proceeding pursuant to the terms
of this Section, the Indemnified Party shall cooperate (with all
Claims and Expenses associated therewith to be paid by the Borrower)
in all reasonable respects with the Borrower and such attorneys in the
investigation, trial and defense of such lawsuit or action and any
appeal arising therefrom; provided, however that the Indemnified Party
may, at its own cost (except as set forth in, and in accordance with,
the foregoing sentence), participate in the investigation, trial and
defense of such lawsuit or action and any appeal arising therefrom.
(d) The Agent and each Bank agree that in the
event that any Indemnity Proceeding is asserted or threatened in
writing or instituted against it or any other party entitled to
indemnification hereunder, the Agent or such Bank shall promptly
notify the Borrower thereof in writing and agree, to the extent
appropriate, to consult with the Borrower with a view to minimizing
the cost to the Borrower of its obligations under this Section;
provided, that, the failure to so notify the Borrower will not
relieve the Borrower from liability hereunder.
SECTION 9.05. Sharing of Setoffs. Each Bank agrees
that if it shall, by exercising any right of setoff or counterclaim
or otherwise, receive payment of a proportion of the aggregate amount
of principal and interest owing with respect to the Note held by it
which is greater than the proportion received by any other Bank in
respect of the aggregate amount of all principal and interest owing
with respect to the Note held by such other Bank, the Bank receiving
such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks owing to such
other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with
respect to the Notes held by the Banks owing to such other Banks
shall be shared by the Banks pro rata; provided that (i) nothing in
this Section shall impair the right of any Bank to exercise any right
of setoff or counter claim it may have and to apply the amount
subject to such exercise to the payment of indebtedness of the
Borrower other that its indebtedness under the Notes, and (ii) if all
or any portion of such payment received by the purchasing Bank is
thereafter recovered from such purchasing Bank, such purchase from
each other Bank shall be rescinded and such other Bank shall repay to
the purchasing Bank the purchase price of such participation to the
extent of such recovery together with an amount equal to such other
Bank's ratable share (according to the proportion of (x) the amount
of such other Bank's required repayment to (y) the total amount so
recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount
so recovered. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of setoff or
counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of
the Borrower in the amount of such participation.
SECTION 9.06. Amendments and Waivers. (a) Except as
otherwise specifically provided herein, any provision of this
Agreement, the Notes or any other Loan Documents may be amended or wai
ved 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, except as provided in the next succeeding proviso, no such
amendment or waiver shall, unless signed by all Banks, (i) change the
Commitment of any Bank or subject any Bank to any additional
obligation, (ii) change the principal of or rate of interest on any
Loan or any fees hereunder, (iii) change the date fixed for any
payment of principal of or interest on any Loan or any fees hereunder,
(iv) change the amount of principal, interest or fees due on any date
fixed for the payment thereof, (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes,
or the number of Banks, which shall be required for the Banks or any
of them to take any action under this Section or any other provision
of this Agreement, (vi) change the manner of application of any
payments made under this Agreement or the Notes, or (vii) release any
Guarantee given to support payment of the Loans.
(b) The Borrower will not solicit, request or
negotiate for or with respect to any proposed waiver or amendment of
any of the provisions of this Agreement unless each Bank shall be
informed thereof by the Borrower and shall be afforded an opportunity
of considering the same and shall be supplied by the Borrower with
both (i) reasonably sufficient information to enable it to make an
informed decision with respect thereto, and (ii) substantially the
same information as supplied by the Borrower to any other Bank.
Executed or true and correct copies of any waiver or consent effected
pursuant to the provisions of this Agreement shall be delivered by the
Borrower to each Bank forthwith following the date on which the same
shall have been executed and delivered by the requisite percentage of
Banks. The Borrower will not, directly or indirectly, pay or cause to
be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any Bank (in its capacity as such) as
consideration for or as an inducement to the entering into by such
Bank of any waiver or amendment of any of the terms and provisions of
this Agreement unless such remuneration is concurrently paid, on the
same terms, ratably to all such Banks.
SECTION 9.07. No Margin Stock Collateral. Each of the
Banks represents to the Agent, each of the other Banks and the
Borrower that it in good faith is not, directly or indirectly ( by
negative pledge or otherwise), relying upon any Margin Stock as
collateral in the extension or maintenance of the credit provided for
in this Agreement.
SECTION 9.08. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and ass
igns; provided that the Borrower may not assign or otherwise transfer
any of its rights under this Agreement without the prior written
consent of the Agent and the Banks.
(b) Subject to Section 9.08(f) below, any Bank may
at any time sell to one or more Persons (each a "Participant")
participating interests in any Loan owing to such Bank, any Note held
by such Bank, any Commitment hereunder or any other interest of such
Bank hereunder. In the event of any such sale by a Bank of a
participating interest to a Participant, such Bank's obligations under
this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the perfo rmance thereof, such Bank shall remain the
holder of any such Note for all purposes under this Agreement, and the
Borrower and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under
this Agreement. In no event shall a Bank that sells a participation
be obligated to the Participant to take or refrain from taking any
action hereunder except that such Bank may agree that it will not
(except as provided below), without the consent of the Participant,
agree to (i) the change of any date fixed for the payment of principal
of or interest on the related loan or loans, (ii) the change of the
amount of any principal, interest or fees due on any date fixed for
the payment there of with respect to the related loan or loans, (iii)
the change of the principal of the related loan or loans, (iv) any
change in the rate at which either interest is payable thereon or (if
the Participant is entitled to any part thereof) commitment fee is
payable hereunder from the rate at which the Participant is entitled
to receive interest or commitment fee (as the case may be) in respect
of such participation, or (v) the release of any Guarantee given to
support payment of the Loans. Each Bank selling a participating
interest in any Loan, Note, Commitment or other interest under this
Agreement shall, within 10 Domestic Business Days of such sale,
provide the Borrower and the Agent with written notification stating
that such sale has oc curred and identifying the Participant and the
interest purchased by such Participant. The Borrower agrees that each
Participant shall be entitled to the benefits of Article VIII with
respect to its participation in Loans outstanding from time to ti me.
(c) Subject to Section 9.08(f) below, any Bank may at
any time assign to one or more banks or financial institutions (each
an "Assignee") all, or a proportionate part of all, of its rights and
obligations under this Agreement and the Notes, and such Assignee
shall assume all such rights and obligations, pursuant to an
Assignment and Acceptance in the form attached hereto as Exhibit D,
executed by such Assignee, such transferor Bank and the Agent (and, in
the case of an Assignee that is not then a Bank, by the Borrower);
provided that (i) no interest may be sold by a Bank pursuant to this
paragraph (c) unless the Assignee shall agree to assume ratably
equivalent portions of the transferor Bank's Commitment, (ii) the
amount of the Commitment of the assigning Bank subject to such
assignment (determined as of the effective date of the assignment)
shall be equal to $5,000,000 (or any larger multiple of $1,000,000),
and (iii) no interest may be sold by a Bank pursuant to this paragraph
(c) to any Assignee that is not then a Bank, or an Affiliate of a
Bank, without the prior written consent of the Borrower for so long as
no Event of Default shall be in existence, which consent shall not be
unreasonably withheld. Upon (A ) execution of the Assignment and
Acceptance by such transferor Bank, such Assignee, the Agent and (if
applicable) the Borrower, (B) delivery of an executed copy of the
Assignment and Acceptance to the Borrower and the Agent, (C) payment
by such Assi gnee to such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank and such Assignee,
and (D) payment of a processing and recordation fee of $2,500 to the
Agent, such Assignee shall for all purposes be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank
under this Agreement to the same extent as if it were an original
party hereto with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further
consent or action by the Borrower, the Banks or the Agent shall be
required. Upon the consummation of any transfer to an Assignee
pursuant to this paragraph (c), the transferor Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if required, a
new Note is issued to such Assignee and, if necessary, a new Note
shall be issued to the transferor Bank.
(d) Subject to the provisions of Section 9.09, the
Borrower authorizes each Bank to disclose to any Participant, Assignee
or other transferee (each a "Transferee") and any prospective
Transferee any and all financial information in such Bank's possession
concerning the Borrower which has been delivered to such Bank by the
Borrower pursuant to this Agreement or which has been delivered to
such Bank by the Borrower in connection with such Bank's credit
evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any
greater payment under Section 8.03 than the transferor Bank would have
been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Lending Office under
certain circumstances or at a time when the circumstances giving rise
to such greater payment did not exist.
(f) Notwithstanding anything to the contrary contained
hereinabove, unless an Event of Default shall have occurred and be
continuing, (i) Wachovia Bank of Georgia, N.A. and The First National
Bank of Chicago shall not sell participations in or assign more than
49% of each such Bank's Commitment as in effect as of the Closing Date
(other than to Affiliates of each such Bank), (ii) no other Bank may
participate or assign more than 51% of its Commitment (other than to
one of its Affiliates) as in effect on the date that it becomes a Bank
without the prior written consent of the Agent, the Borrower (which
consent shall not be unreasonably withheld) and the Required Banks and
(iii) no Bank may assign or sell a participation in any of its rights
or obligations hereunder unless such Bank sells an equal percentage
interest in its rights and obligations under the Working Capital
Credit Agreement. If an Event of Default shall be in existence, then
the Banks may sell any number of participations and assignments in the
Loans if such transfers are otherwise in compliance with the terms of
this Agreement.
SECTION 9.09. Confidentiality. Each Bank agrees to
exercise its best efforts and in any event not less than the same
degree of care as it uses to maintain its own confidential information
in maintaining the confidentiality of any information delivered or
made available by the Borrower to it which is clearly indicated to be
confidential information from any one other than persons employed or
retained by such Bank who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans;
provided, however that nothing herein shall prevent any Bank from
disclosing such information (i) to any other Bank, (ii) upon the order
of any court or administrative agency, (iii) upon the request or
demand of any regulatory agency or authority having jurisdiction over
such Bank, (iv) which has been publicly disclosed by means which are
not violative of this Section 9.09, (v) to the extent reasonably
required in connection with any litigation to which the Agent, any
Bank or their respective Affiliates may be a party, (vi) to the extent
reasonably required in connection with the exercise of any right,
power of remedy hereunder or under any of the other Loan Documents,
(vii) to such Bank's legal counsel and independent auditors and (viii)
to any actual or proposed Participant, Assignee or other Transferee of
all or part of its rights hereunder which has agreed in writing (aa)
to be bound by the provision s of this Section 9.09 and (bb) that the
Borrower is a third party beneficiary of such agreement, and (cc) to
return all copies of the confidential information to the Agent if the
proposed assignment or participation is not consummated.
SECTION 9.10. Representation by Banks. Each Bank
hereby represents that it is a commercial lender or financial
institution which makes Loans in the ordinary course of its business
and that it will make its Loans hereunder for its own account in the
ordinary course of such business; provided, however that, subject to
Section 9.08, the disposition of the Note or Notes held by that Bank
shall at all times be within its exclusive control.
SECTION 9.11. Obligations Several. The obligations of
each Bank hereunder are several, and no Bank shall be responsible for
the obligations or commitment of any other Bank hereunder. Nothing
contained in this Agreement and no action taken by Banks pursuant
hereto shall be deemed to constitute the Banks to be a partnership, an
association, a joint venture or any other kind of entity. The amounts
payable at any time hereunder to each Bank shall be a separate and
independent debt, and each Bank shall be entitled to protect and
enforce its rights arising out of this Agreement or any other Loan
Document and it shall not be necessary for any other Bank to be joined
as an additional party in any proceeding for such purpose.
SECTION 9.12. Georgia Law. This Agreement and each
Note shall be construed in accordance with and governed by the law of
the State of Georgia.
SECTION 9.13. Interpretation. No provision of this
Agreement or any of the other Loan Documents shall be construed
against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such
party having or being deemed to have structured or dictated such
provision.
SECTION 9.14. WAIVER OF JURY TRIAL; CONSENT TO
JURISDICTION. THE BORROWER (A) AND EACH OF THE BANKS AND THE AGENT
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
(B) SUBMITS TO THE NONEXCLUSIVE PERSONAL JURISDICTION IN THE STATE OF
GEORGIA, THE COURTS THEREOF AND THE UNITED STATES DISTRICT COURTS
SITTING THEREIN, FOR THE ENFORCEMENT OF THIS AGREEMENT, THE NOTES AND
THE OTHER LOAN DOCUMENTS, AND (C) WAIVES ANY AND ALL PERSONAL RIGHTS
UNDER THE LAW OF ANY JURISDICTION TO OBJECT ON ANY BASIS (INCLUDING,
WITHOUT LIMITATION, INCONVENIENCE OF FORUM) TO JURISDICTION OR VENUE
WITHIN THE STATE OF GEORGIA FOR THE PURPOSE OF LITIGATION TO ENFORCE
THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS. NOTHING HEREIN
CONTAINED, HOWEVER, SHALL PREVENT THE AGENT FROM BRINGING ANY ACTION
OR EXERCISING ANY RIGHTS AGAINST THE BORROWER PERSONALLY, AND AGAINST
ANY ASSETS OF THE BORROWER, WITHIN ANY OTHER STATE OR JURISDICTION.
SECTION 9.15. Counterparts. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed, under seal, by their respective
authorized officers as of the day and year first above written.
NATIONAL DATA CORPORATION (SEAL)
By:
Title:
National Data Plaza
Atlanta, GA 30329-2010
Attention: E. Michael Ingram, Esq.
Telecopier number: 404-728-2990
Confirmation number: 404-728-2504
COMMITMENTS WACHOVIA BANK OF GEORGIA, N.A.,
as Agent and as a Bank (SEAL)
By:
Title:
$20,000,000.00
Lending Office
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Attention: Atlanta Corporate Group
Telex number: 461105
Answerback: WACH INT ATL
Telecopier number: 404-332-5016
Confirmation number: 404-332-5920
THE FIRST NATIONAL BANK
OF CHICAGO (SEAL)
By:
$20,000,000.00 Title:
Lending Office
One First National Plaza
Mail Suite 0374
Chicago, Illinois 60670-0374
Attention: Aloysius R. Chircop
______________________
Telecopier number 312-732-3885
Confirmation number 312-732-1491
TOTAL COMMITMENTS:
$40,000,000.00
- - --------------------------------------------------------------------
FIRST RENEWAL
EMPLOYMENT AGREEMENT
THIS FIRST RENEWAL EMPLOYMENT AGREEMENT (this "Agreement"),
is made and entered into effective as of the 18th day of May,
1995, by and between ROBERT A. YELLOWLEES, an individual resident
of the State of Georgia (hereinafter referred to as "Employee"),
and NATIONAL DATA CORPORATION, a Delaware corporation
(hereinafter referred to as the "Company").
W I T N E S E T H:
WHEREAS, the Company desires to continue to employ Employee
in an executive capacity, and Employee desires to continue to be
employed by the Company, on the terms and conditions hereinafter
set forth; and
WHEREAS, the Employee's original Employment Agreement
provides for extension on or before May 17, 1994;
NOW, THEREFORE, in consideration of the premises and the
mutual promises and agreements contained herein, the parties
hereto, intending to be legally bound, hereby agree as follows:
Section 1. Employment; Position as Director.
1.1 Officer Positions. Subject to the terms and conditions
hereof, the Company hereby extends the employment of Employee and
Employee hereby accepts such extension of employment. Employee
shall continue to serve as President and Chief Executive Officer
and Chairman of the Board of the Company and shall perform such
duties as are assigned to him from time to time by the Board of
Directors. The Board of Directors shall have the right
subsequently to elect as President of the Company an individual
other than Employee, but at all times during the term of this
Agreement Employee shall serve as Chief Executive Officer and at
all times during the term of this Agreement shall serve as
Chairman of the Board. Employee shall devote his full business
time and best efforts to rendering services on behalf of the
Company. It is understood that Employee will continue to serve
as a member of the Board of Directors and Chairman of Spectrum
Research Group, Inc. on an ongoing basis.
1.2 Position as Director. During the term of this
Agreement, the Company shall use its best efforts to cause
Employee to continue to be nominated and elected as a member of
the Board of Directors of the Company. Employee shall not be
entitled to additional compensation for his service as a
Director. The Company agrees that Employee's service as a
Director while he remains an employee of the Company shall be
credited for purposes of determination of eligibility for
benefits under and computation of the amount of benefits payable
pursuant to the Retirement Plan for Non-Employee Directors of the
Company.
Section 2. Term.
The employment of Employee hereunder shall continue pursuant
to the term of this Agreement effective as of May 18, 1995, and,
unless sooner terminated pursuant to Section 5 of this Agreement
with the consequences of termination set forth in such Section 5
and unless extended as provided below, shall continue through May
17, 1998. The employment of Employee hereunder may be further
extended thereafter for terms of three years each upon the mutual
agreement of Employee and the Company to so extend on or before
the date one year prior to the expiration of any such term.
Section 3. Compensation; Bonuses; Expenses.
3.1 Salary. Employee shall be paid a salary during the
term of his employment hereunder at the initial rate of $470,000
per annum, subject to review by the Board on or about May 18,
1995, the inception date of this Agreement. Such salary shall be
subject to annual review and possible increase by the Board of
Directors but shall not be decreased during the term of this
Agreement.
3.2 Option Grants.
(a) The Company, in accordance with and subject to the
terms and conditions of the Company's 1987 Stock Option Plan,
hereby covenants and agrees to grant to Employee, effective as of
May 18, 1995, a non-qualified stock option consisting of three
components (collectively the "Options") to purchase an aggregate
of 300,000 shares of Common Stock. Each Option Agreement shall
have a term of ten years and shall include the following
additional provisions:
(A) One-third of the shares will have an
exercise price equal to the closing price of Company common stock
on the date the grant is formally approved by the Board,
contemplated to be May/June of 1995, but not less than $15.00 per
share. The options awarded under this grant shall vest as
follows; 20% on May 17, 1997, and additional 25% on May 17, 1998,
an additional 25% on May 17, 1999, and an additional 30% on May
17, 2000.
(B) One-third of the shares will have an exercise
price equal to 112% of the exercise price for the
shares described in (A) above. The options awarded under this
paragraph shall vest as follows; 20% on May 17, 1998, and
additional 25% on May 17, 1999, an additional 25% on May 17,
2000, and an additional 30% on May 17, 2001.
(C) One-third of the shares will have an exercise
price equal to 124% of the exercise price for the
shares described in (A) above. The options awarded under this
grant shall vest as follows; 20% on May 17, 1999, an additional
25% on May 17, 2000, an additional 25% on May 17,2001, and an
additional 30% on May 17, 2002.
The Company and Employee shall enter into Option Agreements to
set forth the terms of each option grant, which Option Agreements
shall provide for the immediate and full vesting of the Options
in the event of (i) a Change in Control of the Company (as
defined in Section 5.2 hereof), (ii) the death or physical or
mental incapacity (as defined in Section 5.1 hereof) of Employee,
(iii) the termination of employment of Employee to the extent and
as provided in Section 5 hereof or (iv) this Agreement is not
renewed for an additional three year term as set forth in Section
2 above.
(b) Employee also shall be eligible for additional
stock option grants by the Company. Any such additional grants
shall be in recognition of exceptional performance by Employee as
determined by the Company.
3.3 Additional Bonuses. The Company, upon recommendation
by the Compensation Committee of the Board of Directors and
approval by the Board of Directors, shall establish additional
bonus arrangements for Employee with respect to the Company's
fiscal years beginning on June 1, 1995 and thereafter during the
term of this Agreement. The target amount for each such bonus
shall be equal to Employee's base salary for the fiscal year for
which the bonus is to be paid. Such bonuses shall be based upon
specific performance objectives agreed upon by the Employee and
the compensation committee of the Company's board of directors.
The bonuses under this Section 3.3 may range from none to 150% of
the target amounts established as provided above. The bonuses
under this Section 3.3 shall, at Employee's request, be paid in
whole or in part in shares of Common Stock. The Company agrees
that in the event all or any portion of any such bonus shall be
paid in shares of Common Stock, the Company shall take any
reasonable actions necessary to enable Employee to dispose of
such shares without limitation under the Securities Act of 1933,
as amended. In the event of (i) a Change in Control of the
Company (as defined in Section 5.2 hereof), (ii) the death or
physical or mental incapacity (as defined in Section 5.1 hereof)
of Employee or (iii) the termination of employment of Employee to
the extent and as provided in Section 5 hereof, the Company shall
immediately pay to Employee or his successor in interest 75% of
the target amount of the bonus under this Section 3.3 for the
fiscal year in which such event occurs.
3.4 Expenses. The Company shall reimburse Employee for all
reasonable expenses incurred by Employee in connection with
performance of Employee's duties hereunder and vouched to the
reasonable satisfaction of the Company pursuant to its standard
procedures.
Section 4. Additional Employment Benefits.
Employee shall have the right to participate in such
medical, dental, disability, hospitalization, life insurance and
other benefit plans (such as pension and profit sharing plans)
and perquisites as the Company shall maintain from time to time
for the benefit of executive employees of the Company, on the
terms and subject to the conditions set forth in such plans. In
addition, the Company shall maintain on behalf of Employee, or
reimburse Employee for the premiums paid for, whole life
insurance policies in the face amount of $2 million, currently
maintained as term insurance by and on the life of Employee.
Such policies shall be payable to a beneficiary or beneficiaries
designated by Employee, and the cash values and other benefits
associated with such policies shall be paid to or otherwise
enjoyed by such beneficiary or beneficiaries, or otherwise
Employee. The Company also shall pay for disability income
insurance for Employee as requested by Employee in addition to
the amounts paid pursuant to the Company's existing disability
insurance plan; provided, however, that total payments by the
Company for life insurance and disability income insurance under
this Section 4 shall not exceed $55,000 per annum.
Section 5. Termination; Effect of Termination.
5.1 Termination. Anything in this Agreement to the
contrary notwithstanding, this Agreement and the employment of
Employee pursuant hereto shall terminate upon the first to occur
of the following events:
(i) The death of Employee;
(ii) The lapse of thirty (30) days following the
date on which the Company shall give written notice to Employee
of termination of his employment hereunder by reason of his
physical or mental incapacity. Employee shall be deemed to be
physically or mentally incapacitated for purposes of this
Agreement if by reason of any physical or mental incapacity he
has been unable, or it is reasonably expected that he will be
unable, for a period of at least one hundred eighty (180)
substantially continuous days to perform his regular duties and
responsibilities hereunder in a reasonably satisfactory manner.
In the event of any disagreement between Employee and the Company
as to whether Employee is physically or mentally incapacitated
such as to permit the Company to terminate his employment
pursuant to this paragraph (ii), the question of such incapacity
shall be submitted to an impartial and reputable physician for
determination, selected by mutual agreement of Employee and the
Company or, failing such agreement, selected by two physicians
(one of which shall be selected by the Company and the other by
Employee), and such determination of the question of such
incapacity by such physician shall be final and binding on
Employee and the Company. The Company shall pay the reasonable
fees and expenses of such physician; or
(iii) The lapse of fifteen (15) days following
written notice by the Company to Employee of termination for
"cause," which notice shall reasonably describe the cause for
which Employee's employment is being terminated. For purposes of
this Agreement, "cause" shall mean:
(A) Continued neglect of duties for which
Employee is employed after receipt of initial
notice thereof from the Board of Directors and failure to remedy
such neglect of duties after agreement by the Company and
Employee to a reasonable plan and schedule for remediation
of such neglect of duties;
(B) Misconduct involving moral turpitude in
the performance of duties for which Employee is
employed, including, without limitation, the commission of fraud,
misappropriation or embezzlement by Employee; or
(C) Employee's conviction for, or plea of
guilty in connection with, the commission of any
felony in the performance of Employee's duties.
5.2 Effect.
(a) Upon termination of this Agreement and Employee's
employment for any reason, Employee shall be entitled to receive
the compensation pursuant to Section 3 hereof owed to Employee
but unpaid for performance rendered under this Agreement as of
the date of termination ("Employee's Termination Date") and any
additional compensation he may be entitled to receive under the
terms of any employee benefit plan of the Company.
(b) In addition to the compensation under paragraph
(a) above, upon termination of this Agreement and Employee's
employment prior to the expiration of the initial term of this
Agreement as provided by Section 2 hereof, or prior to the
expiration of any renewal term as provided by such Section if
this Agreement is renewed, (i) upon the physical or mental
incapacity of Employee, (ii) by the Company other than pursuant
to Section 5.1(iii)(B) or 5.1(iii)(C) above or (iii) by Employee
following an Employee Status Change (as defined below) within
three years after a Change in Control of the Company (as defined
below):
(A) The Company shall pay Employee the Severance
Benefit (as defined and in the manner described
below);
(B) All Restricted Stock awarded to Employee at
any time during his employment with the Company
shall be immediately and fully vested as of Employee's Termination
Date;
(C) All stock options awarded to Employee under
any employee stock option plan at any time during his employment
with the Company shall be fully vested as of Employee's
Termination Date; and
(D) The Company shall pay Employee 75% of the
target amount of the bonus provided under Section 3.3 hereof for
the fiscal year in which the employment of Employee terminates.
Also upon termination of this Agreement (i) by the Company other
than pursuant to Section 5.1(iii)(B) or 5.1(iii)(C) above or (ii)
by Employee following an Employee Status Change within three
years after a Change in Control of the Company, the Company shall
maintain in full force and effect, for Employee's benefit until
the earlier of (1) three years after Employee's Termination Date
or (2) commencement of Employee's full-time employment with a new
employer, all Benefit Plans (as defined below) in which Employee
was entitled to participate immediately prior to Employee's
Termination Date, provided that Employee's continued
participation is possible under the general terms and provisions
of such Benefit Plans.
(c) In addition to the compensation under paragraph
(a) above, upon termination of this Agreement and the employment
of Employee upon the death of Employee:
(A) All Restricted Stock awarded to Employee at
any time during his employment with the Company
shall be immediately and fully vested as of Employee's Termination
Date; and
(B) All stock options awarded to Employee under
any employee stock option plan at any time during his employment
with the Company shall be fully vested as of Employee's
Termination Date.
For purposes of this Agreement:
(x) A "Change in Control" of the Company shall mean a
change in control of a nature that would be required to be
reported in response to current Item 5(f) of Schedule 14A of
Regulation 14A promulgated under the Securities Act of 1934, as
amended and as in effect on the date of this Agreement (the "1934
Act"); provided that, without limitation, such a change in
control shall be deemed to have occurred if: (i) a third person,
including a "group" as defined in Section 13(d)(3) of the 1934
Act, becomes the beneficial owner, as defined by Rule 13(d)(3)
under the 1934 Act as in effect on the date of this Agreement, of
securities of any class or classes of the Company representing
30% or more of the voting power of the Company's then outstanding
securities; or (ii) the Company is a party to a merger or other
business combination pursuant to which the Company does not
survive or survives only as a subsidiary of another corporation
or otherwise does not remain an independent corporation; or (iii)
all or substantially all of the assets of the Company are sold or
otherwise disposed of; or (iv) at any time less than a majority
of the members of the Board of Directors of the Company shall be
persons who were either nominated for election by the Board or
were elected by the Board, or otherwise less than a majority of
the Board of Directors of the Company shall be persons who are
independent of any third person referred to in subparagraph (i)
above of this paragraph (x); or (v) any combination of the
foregoing occurs.
(y) An "Employee Status Change" shall mean the
happening of any one or more of the following events after a
Change in Control of the Company;
(i) Without the express written consent of
Employee, the Company's assignment of Employee to
any duties inconsistent with his positions, duties,
responsibilities or status with the Company immediately prior to
the Change in Control or a substantial reduction of his duties or
responsibilities, in each case as reasonably determined by
Employee; or
(ii) A reduction by the Company in
Employee's salary in effect immediately prior to the change in
Control; or
(iii) Any failure by the Company to continue
in effect any benefit plan or arrangement (including, without
limitation, the Company's group life, medical, accident and
disability plans and perquisites afforded executive employees) in
which Employee is participating at the time of a Change in
Control (or any other plans or arrangements provided Employee
with substantially similar benefits) (referred to in this
Agreement as "Benefit Plans"), or the taking of any action by the
Company which would adversely affect Employee's participation in
or materially reduce his benefits under any Benefit Plan or
deprive him of any material fringe benefit enjoyed by him at the
time of a Change in Control; or
(iv) Any failure by the Company to continue
in effect any plan or arrangement to receive securities of the
Company (including, without limitation, the Company's Stock
Option Plans, Employee Stock Purchase Plan and Restricted Stock
Plan, and any other plan or arrangement to receive and exercise
stock options, stock appreciation rights, restricted stock or
grants thereof) in which Employee is participating at the time of
a Change in Control (or any other plans or arrangements providing
Employee with substantially similar benefits) (referred to in
this Agreement as "Securities Plans") or the taking of any action
by the Company which would adversely affect Employee's
participation in or materially reduce his benefits under any such
Securities Plan as his participation therein is in effect at the
time of a Change in Control; or
(v) Any failure by the Company's Board or
stockholders, as the case may be, to re-elect Employee to the
corporate office or position held by him immediately prior to the
Change in Control or his removal from any such office including
any seat held at such time on the Company's Board of Directors;
or
(vi) Any breach by the Company of any of
the provisions of this Agreement or any failure by the Company
to carry out any of its obligations hereunder.
(z) The "Severance Benefit" shall mean an amount equal
to three (3) times the greater of (i) the average of Employee's
average annual taxable compensation, including bonuses, from the
Company as reported on Internal Revenue Service Form W-2 during
the three-year period immediately preceding Employee's
Termination Date (or such shorter period that Employee has been
employed by the Company) or (ii) Employee's current year
compensation plus a bonus amount assumed to equal 75% of such
current year salary; provided, however, that if such Severance
Benefit, either alone or together with any other payments or
benefits which Employee has the right to receive from the
Company, would constitute a "parachute payment" (as defined in
Section 280G of the Code), such Severance Benefit shall be
reduced to the largest amount as will result in no portion of the
Severance Benefit being subject to the excise tax imposed by
Section 4999 of the Code. The Severance Benefit shall be payable
in thirty-six (36) equal monthly installments commencing on the
first day of the month following Employee's Termination Date.
Section 6. Confidentiality Agreement. Upon execution of
this Agreement, Employee has entered into and agrees to abide by
the terms of the agreement in the form attached hereto as Exhibit
A relating to confidentiality, non-disclosure and related
obligations of Employee to the Company.
Section 7. Additional Provisions Relating to Change in
Control.
(a) In the event that a third person commences a tender or
exchange offer or a proxy solicitation to elect directors of the
Company with a view to effecting a Change in Control of the
Company, Employee agrees that he shall not voluntarily leave the
employ of the Company, and shall render the services contemplated
in this Agreement, until the third person has abandoned or
terminated such efforts to effect a Change in Control of the
Company or until after such a Change in Control of the Company
has been effected.
(b) In order to ensure the payment of the Severance Benefit
provided for in this Agreement, immediately following the
commencement of any action by a third party with the aim of
effecting a Change in Control of the Company, or the publicly-
announced threat by a third party to commence any such action,
the Company shall establish an irrevocable standby Letter of
Credit issued by a national banking association in favor of
Employee in the amount of the Severance Benefit that would have
been paid to Employee under this Agreement if Employee's
Termination Date had occurred on the date of commencement, or
publicly-announced threat of commencement, of such action by the
third party. Such Letter of Credit shall provide that the issuer
thereof, subject only to Employee's written certification to such
issuer that Employee is entitled to payment of the Severance
Benefit pursuant to this Agreement and that the Company shall
have failed to commence payment of such benefit to Employee,
shall have the unconditional obligation to pay the amount of such
Letter of Credit to Employee in thirty-six (36) equal monthly
installments commencing on the first day of the month following
Employee's Termination Date. In the event that subsequent to
commencement of such installment payments to Employee pursuant to
such Letter of Credit (i) the Company and Employee shall mutually
agree that Employee shall not have been entitled to payment of
the Severance Benefit pursuant to this Agreement or (ii) a court
of competent jurisdiction shall finally adjudge Employee not to
have been entitled to payment of such Severance Benefit and such
judgment shall have been affirmed on appeal or shall not have
been appealed within any time period specified for the filing of
an appeal, Employee shall promptly pay to the Company the total
amount previously paid to Employee by the issuer of such Letter
of Credit and no further payment shall be made to Employee
pursuant to such Letter of Credit.
Section 8. Miscellaneous.
8.1 Withholding. Notwithstanding any of the terms or
provisions of this Agreement, all amounts payable by the Company
to Employee hereunder shall be subject to withholding of such
sums related to taxes as the Company may be required to withhold
pursuant to applicable law or regulation.
8.2 No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights.
(a) Employee shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of
any payment provided for under this Agreement be reduced by any
compensation earned by Employee as a result of employment by
another employer after Employee's Termination Date or otherwise.
(b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts otherwise
payable, or in any way diminish Employee's existing rights, or
rights which would accrue solely as a result of the passage of
time, under any Benefit Plan, Securities Plan, employment
agreement or other contract, plan or arrangement.
8.3 Payment of Certain Costs of Employee. If a dispute
arises regarding the interpretation or enforcement of this
Agreement, and if Employee shall prevail in such dispute, all
legal fees and expenses incurred by Employee in contesting or
disputing any such termination or seeking to obtain or enforce
any right or benefit provided for in this Agreement or in
otherwise pursuing his claim shall be paid by the Company. The
Company further agrees to pay Employee pre-judgment interest on
any money judgment obtained by Employee in such a proceeding
calculated at the prime rate of Wachovia Bank of North Carolina,
N.A., Winston-Salem, North Carolina, as in effect from time to
time from the date that payment(s) to Employee should have been
made under this Agreement.
8.4 Binding Effect.
(a) This Agreement shall inure to the benefit of and
shall be binding upon Employee and his executor, administrator,
heirs, personal representative and assigns, and the Company and
its successors and assigns; provided, however, that Employee
shall not be entitled to assign or delegate any of his rights or
obligations hereunder without the prior written consent of the
Company.
(b) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle Employee to payment of
the Severance Benefit from the Company hereunder in the same
amount and on the same terms as Employee would be entitled
hereunder if he were to terminate his employment pursuant to this
Agreement, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed Employee's Termination Date. As used
in this Agreement, the "Company" shall mean the Company as
defined in the recitals to this Agreement and any successor to
its business and/or assets as provided above in this Section 8.4
which executes and delivers the agreement provided for in this
Section 8.4 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
8.5 Governing Law. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and
governed by and in accordance with, the laws of the State of
Delaware.
8.6 Headings. The section and paragraph headings contained
in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
8.7 Notices. Unless otherwise agreed to in writing by the
parties hereto, all communications provided for hereunder shall
be in writing and shall be deemed to be given when delivered in
person or when deposited in the United States mail, registered or
certified mail, postage prepaid, addressed as follows:
(a) If to Employee:
Mr. Robert A. Yellowlees
2696 Habersham Road, N.W.
Atlanta, Georgia 30305
(b) If to the Company, addressed to:
National Data Corporation
National Data Plaza
Atlanta, Georgia 30329-2010
Attention: Office of Corporate Secretary
or to such other person or address as shall be furnished in
writing by either party to the other prior to the giving of the
applicable notice or communication.
8.8 Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration before a panel of three arbitrators in Atlanta,
Georgia in accordance with the rules of the American Arbitration
Association then in effect. In connection with any such
arbitration proceeding, the Company shall select one arbitrator,
Employee shall select one arbitrator and the two arbitrators so
selected shall select the third arbitrator, and the decision of
any two arbitrators shall be binding upon the parties. Upon
default in the selection of the third arbitrator as provided
above, the American Arbitration Association shall designate such
third arbitrator upon application of either party. Judgment may
be entered on the award of the arbitrators in any court of
competent jurisdiction.
8.9 Separability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
8.10 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
8.11 Entire Agreement. This Agreement (together with the
agreements attached hereto and entered into concurrently
herewith) is intended by the parties hereto to be the final
expression of their agreement with respect to the subject matter
hereof and is the complete and exclusive statement of the terms
thereof, notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement may
be modified only by a written instrument signed by each of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first above written.
NATIONAL DATA CORPORATION
By:____/s/ Ira C. Herbert__________
Ira C. Herbert
Title: Chairman, Compensation Committee
Board of Directors of
National Data Corporation
EMPLOYEE
______/s/ Robert A. Yellowlees______
Robert A. Yellowlees
- - ---------------------------------------------------------------------
RETIREMENT PLAN
FOR NON-EMPLOYEE DIRECTORS
OF
NATIONAL DATA CORPORATION
Dated as of December 19, 1991, as
Amended and Restated as of
April 20, 1994
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND CONSTRUCTION
1.1 Annual Director's Fee
1.2 Benefit Commencement Date
1.3 Board Service
1.4 Change in Control
1.5 Code
1.6 Committee
1.7 Company
1.8 Director
1.9 Effective Date
1.10 ERISA
1.11 Inside Director
1.12 Outside Director
1.13 Participant
1.14 Plan
1.15 Plan Administrator
1.16 Plan Year
1.17 Retirement Date
1.18 Retirement Income
1.19 Spouse
1.20 Subsidiary
1.21 Year of Eligibility Service
ARTICLE 2 PARTICIPATION
2.1 Commencement of Participation
2.2 Participant Contributions
2.3 No Directorship Rights
ARTICLE 3 VESTING AND ELIGIBILITY FOR
RETIREMENT INCOME
3.1 Vesting
3.2 Eligibility for Retirement Income
3.3 Vesting Upon Change in Control
3.4 Forfeiture of Retirement Income
3.5 Availability for Consultation
ARTICLE 4 FORMS AND AMOUNT OF RETIREMENT
INCOME
4.1 Pre-retirement Survivor Benefit
Coverage for the Married
Participant
4.2 Post-retirement Income
4.3 Payment to the Participant's or
Spouse's Representative
4.4 Unclaimed Benefits
4.5 Application for Benefits
4.6 Change in Control
4.7 Deferral of Payments
ARTICLE 5 PLAN TERMINATION
5.1 Termination of Plan
ARTICLE 6 ADMINISTRATION
6.1 Retirement Plan Committee
6.2 Expenses
6.3 Indemnification
6.4 Amendment of the Plan
6.5 Applicable Law
6.6 Non-alienation
6.7 Limitation on Rights
RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS OF NATIONAL
DATA CORPORATION
dated as of December 18, 1991, as amended
and restated as of April 20, 1994.
ARTICLE 1
Definitions and Construction
The headings and subheadings of the various provisions of this Plan have
been inserted for convenient reference. In the event any heading or
subheading conflicts with the context, the context shall govern. As
used in the Plan, the following words and phrases and any derivatives
thereof shall have the meanings set forth below unless the context
clearly indicates otherwise. Definitions of other words and phrases are
set forth throughout the Plan. Section references indicate sections of
the Plan unless otherwise stated. The masculine pronoun includes the
feminine, and the singular number includes the plural and the plural the
singular, whenever applicable.
1.1 Annual Director's Fee. The sum of cash compensation paid for Board
service exclusive of expense reimbursements, compensation for committee
membership and fees for attendance at Board or committee meetings, if
any, plus the market value as of the date of grant of shares (exclusive
of stock options) of Company common stock granted, if any, to the
Outside Director during the calendar year immediately preceding the year
in which the Outside Director retires. Market value of the stock shall
be deemed equal to the average of the high and low selling prices of the
stock on the The New York Stock Exchange, or other market
on which the stock is traded, as reported in the Wall Street Journal on
the date of grant or the last preceding date on which the stock was
traded if no trades occurred on such date.
1.2 Benefit Commencement Date. The first day of the first month for
which Retirement Income is payable to the Participant or to the
surviving Spouse of the Participant on the first day of the first month
for which Retirement Income would have become payable had the
Participant not died before attaining age 70, but who dies after
attaining five years of Board Service as described in Article 4.
1.3 Board Service. The calendar months, before and after the
Effective Date, during which the Outside Director serves on the
Company's Board of Directors; provided that any portion of a month shall
be counted as a whole month; and provided further that, except as
otherwise approved by the Company's Board of Directors, no Outside
Director shall receive credit for Board Service for any period when he
serves as an Inside Director or is otherwise employed by the Company or
by a Subsidiary.
1.4 Change in Control. A change in control of the Company of a nature
that would be required to be reported in response to current Item 5(f)
of Schedule 14A of Regulation 14A promulgated under the Securities Act
of 1934, as amended and as in effect on the effective date of this Plan
(the "1934 Act"); provided that, without limitation, such a change in
control shall be deemed to have occurred if: (i) a third person,
including a "group" as defined in Section 13(d)(3) of the 1934 Act,
becomes beneficial owner, as defined by Rule 13(d)(3) under the 1934
Act as in effect on the effective date of this Plan, of securities of
any class or classes of the Company representing 30% or more of the
voting power of the Company's then outstanding securities; or (ii) the
Company is a party to a merger or other business combination pursuant
to which the Company does not survive or survives only as a subsidiary
of another corporation; or (iii) all or substantially all of the assets
of the Company are sold or otherwise disposed of; or (iv) at any time
less than a majority of the members of the Board of Directors of the
Company shall be persons who were either nominated for election by the
Board or were elected by the Board; or (v) any combination of the
foregoing occurs.
1.5 Code. The Internal Revenue Code of 1986, as amended from time
to time, and regulations and rulings issued under the Code.
1.6 Committee. The Retirement Plan Committee, which shall have
primary responsibility for administering the Plan under Article 6.
1.7 Company. National Data Corporation, a Delaware Corporation.
1.8 Director. A member of the Company's Board of Directors. An
Outside Director is a Director who is not employed by the Company or by
a Subsidiary. An Inside Director is a Director who is employed by the
Company or by a Subsidiary.
1.9 Effective Date. December 18, 1991.
1.10 ERISA. The Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations or rulings issued under
ERISA.
1.11 Inside Director. See Section 1.8.
1.12 Outside Director. See Section 1.8.
1.13 Participant. A Director who is participating in the Plan under
Section 2.1; provided that, except as otherwise approved by the
Company's Board of Directors, no Director shall participate in the Plan
during any period when he serves as an Inside Director or is otherwise
employed by the Company or by a Subsidiary.
1.14 Plan. The Retirement Plan for the Board of Directors of
National Data Corporation, as amended from time to time.
1.15 Plan Administrator. The Company.
1.16 Plan Year. The 12-month period beginning January 1 and ending
December 31 of each year.
1.17 Retirement Date. The first day of the month on or next
following the date when the Participant retires; provided that no
Participant's Retirement Date shall be earlier than the first day of the
month on or after his 70th birthday; further provided, however, that in
the case of a Participant who has not attained the age of 70, but who
has completed ten Years of Eligibility Service as of the date he, for
whatever reason, is no longer a member of the Board of Directors, then
in such case only, Retirement Date shall be defined as the first day of
the month on or next following the date when the Participant retires,
or, for whatever reason, is no longer a member of the Board of Directors.
1.18 Retirement Income. The amount payable to the Participant and/or
his surviving Spouse, as described in Article 4.
1.19 Spouse. The person to whom the Participant is legally married
on his date of death.
1.20 Subsidiary. A corporation with at least 50% of its voting stock
(excluding stock having voting rights conditioned upon default)
currently owned directly or indirectly by the Company.
1.21 Year of Eligibility Service. Solely for purposes of eligibility
to commence participation under Section 2.1, each Outside Director shall
be credited with one Year of Eligibility Service for each twelve
consecutive-month period of Board Servi ce.
ARTICLE 2
Participation
2.1 Commencement of Participation. Each Outside Director is
eligible to participate in the Plan immediately upon becoming an Outside
Director. Except as otherwise approved by the Company's Board of
Directors, each Outside Director's active participation and benefit
accrual shall continue until the earliest of (a) the date he becomes an
Inside Director or is otherwise employed by the Company or by a
Subsidiary, or otherwise ceases to be an Outside Director as defined in
Section 1.8, (b) his date of death, or (c) his Benefit Commencement
Date. Except as otherwise approved by the Company's Board of Directors,
no Inside Director shall participate in the Plan.
2.2 Participant Contributions. Participants shall neither be
required nor permitted to make contributions to the Plan.
2.3 No Directorship Rights. Participation in the Plan shall not
give any Director the right to be retained in service as a Director, or
any right or interest, except as expressly provided in the Plan.
ARTICLE 3
Vesting and Eligibility for Retirement Income
3.1 Vesting. The Participant shall become vested in his Retirement
Income upon attaining five years of Board Service, which Retirement
Income shall be computed as a percentage of the Annual Director's Fee,
according to the following schedule:
Years of Percentage of
Board Service Annual Director's Fee
0 - 4 0%
5 50%
6 60%
7 70%
8 80%
9 90%
10 or more 100%
3.2 Eligibility for Retirement Income. The Participant shall
commence receiving his Retirement Income on the later of (a) the first
day of the month on or after his 70th birthday, or (b) his Retirement
Date,; in the amount described in Section 4.2, subject to payment of
Retirement Income to an Outside Director prior to attaining age 70
based upon the Board of Directors' judgement regarding such Outside
Director's sustained contribution as a member of the Company 's Board.
3.3 Vesting Upon Change in Control. Upon the occurrence of a Change
in Control, for the purposes of Articles 2, 3 and 4 of the Plan, any
Outside Director with less than ten years of Board Service or Years of
Eligibility Service, shall be deemed to have a total of ten years of
Board Service and ten Years of Eligibility Service.
3.4 Forfeiture of Retirement Income.
(a) Early Termination of Outside Directorship. Except as
otherwise approved by the Company's Board of Directors in accordance
with Section 3.2 above, any Participant who ceases to be an Outside
Director prior to attaining five Years of Board Service shall not be
entitled to any Retirement Income.
(b) Prohibited Activity. Notwithstanding any other
provision of the Plan, a Participant who is entitled to a benefit under
this Plan shall forfeit for himself and his spouse any benefit including
a survivor benefit under the Plan if he either (a) enters into
competition with the Company, (b) interferes with the relations between
the Company and any customer, (c) engages in any activity which can
reasonably be expected to result in any decrease of or loss in sales by
the Company, or (d) engages in any activity which can reasonably be
expected to adversely affect the Company's reputation, and the Committee
determines that such activity is detrimental to the Company.
3.5 Availability for Consultation. During the term that a
Participant is receiving monthly Retirement Income under the Plan, the
Participant shall be available at reasonable times and for reasonable
periods, to act as a consultant to the Board upon the request of the
Board.
ARTICLE 4
Forms and Amount of Retirement Income
4.1 Pre-retirement Survivor Benefit Coverage for the Married
Participant. The surviving Spouse of any Participant entitled to a
Retirement Income who dies before receiving his full benefits under
this Plan, shall receive monthly Retirement Income.
The Plan shall provide the pre-retirement spousal survivor
benefit coverage without any charge to the Participant or surviving
Spouse for the cost of coverage. The Participant may not waive this
spousal survivor benefit coverage in favor of any other beneficiary.
(a) Amount of Spouse's Survivor Benefit. The surviving
Spouse of the Participant with a vested Retirement Income who dies
before his Benefit Commencement Date shall receive monthly Retirement
Income in an amount equal to one-twelfth the amount of the Participant's
Annual Director's Fee in effect as of his date of death.
(b) Benefit Commencement Date. The Retirement Income shall
become payable to the surviving Spouse on the later of (i) the first day
of the first month for which Retirement Income would have become payable
had the Participant not died before attaining age 70, or (ii) the first
day of the month next following the Participant's date of death.
(c) Payment Period. The last payment shall be due on the
earliest of (i) the first day of the month in which the Spouse's
remarriage occurs, (ii) the first day of the month in which the Spouse's
death occurs, or (iii) the date when the Spouse and/or the Participant
combined has received the number of payments equal to the number of
months of Board Service accrued by the Participant as of his date of
Retirement Date, subject to the limit set forth in Section 4.2(d).
4.2 Post-retirement Income.
(a) Amount of Retirement Income. Upon the later of (i) the
first day of the month on or after his 70th birthday, or (ii) his
Retirement Date, the Participant shall be eligible to receive monthly
Retirement Income in an amount equal to one-twelfth the amount of his
Retirement Income as computed in Section 3.1 above. After the
Participant's death, the monthly payments shall continue to his
surviving Spouse until the expiration of the payment period described in
subsection (c).
(b) Benefit Commencement Date. The Retirement Income shall
become payable to the Participant on the later of (i)
the first day of the month on or after his 70th
birthday, or (ii) his Retirement Date.
(c) Payment Period. The last payment shall be due on the
earlier of (i) the first day of the month in which occurs the death of
the Participant or his Spouse, whoever is the last to die, (ii) the first
day of the month in which the surviving Spouse's remarriage occurs, or
(iii) the date when the Participant and/or Spouse have received the number
of payments equal to the number of months of Board Service accrued by
the Participant as of his Retirement Date., subject to the limit set forth
in Section 4.2(d).
(d) Retirement Income Limitation. Monthly Retirement Income
shall not exceed the following limits:
(i) 180 months for any Participant with 15 years of
Board Service as of the Effective Date of the
Plan; or
(ii) 120 months for any other Participant.
4.3 Payment to the Participant's or Spouse's Representative. If the
Participant or Spouse, as applicable, is incompetent to handle his/her
affairs or cannot be located on his/her Benefit Commencement Date or
thereafter, the Committee shall make payments to his/her court-appointed
personal representative, or if none is appointed, to his/her next-of-
kin; provided that the Committee may request a court of competent
jurisdiction to determine the payees, in which event all expenses
incurred in obtaining the determination may be charged against the
payee.
4.4 Unclaimed Benefits. In the event the Committee cannot locate,
with reasonable effort, any person entitled to benefits for a period of
seven years, his interest shall be canceled but shall be reinstated to
the extent required by law in the event he subsequently makes a claim
for benefits.
4.5 Application for Benefits. No Participant or Spouse shall be
entitled to receive any Retirement Income until he/she has submitted to
the Committee any required application form or other administrative
form, properly completed.
4.6 Change in Control. Without regard to age, if, after a
Change in Control of the Company, an Outside Director's service as a
director of the Company is terminated, then Retirement Income shall be
paid to such Outside Director in accordance with Section 4.2 of this
Plan, with the date of his termination as a director being deemed his
Retirement Date for purposes of Section 4.2.
4.7 Deferral of Payments. At the election of the Outside Director,
any payments otherwise due under this Plan may be deferred (to a date
not later than attaining the age of 70). In the event deferral is
elected, any deferred benefits shall accrue interest at the prime rate
as quoted by Wachovia Bank, Atlanta, Georgia.
ARTICLE 5
Plan Termination
5.1 Termination of the Plan. The Company expects this Plan to be
continued indefinitely but necessarily reserves the right to terminate
the Plan at any time and from time to time, in whole or in part.
ARTICLE 6
Administration
6.1 Retirement Plan Committee. The Trustees of the Company's
retirement plan shall constitute the Directors' Retirement Plan
Committee (the "Committee").
(a) Actions. The chairman of the Company's retirement plan
Trustees shall serve as chairman of the Committee and shall preside at
each meeting of the Committee. In the event of the chairman's absence
at any meeting, the members present shall select one of their members to
serve as acting chairman. The Committee shall appoint a secretary, who
may or may not be a Committee member, to keep minutes of meetings and to
perform other duties assigned by the Committee. The Committee may a
ppoint such other officers as it deems necessary, who may or may not be
Committee members. Each action of the Committee shall be taken by a
majority vote of all members then in office, provided that the Committee
may establish procedures for taking written votes without a meeting.
The Committee may, by a properly executed resolution, authorize any
member or officer or any other person to sign communications and to
execute documents on its behalf, and may delegate other duties and
responsibilities as it considers to be in the best interest of the Plan.
(b) Powers. The Committee shall have primary responsibility
for the administration of the Plan, and all powers
necessary to enable it to properly perform its duties,
including but not limited to the following powers and
duties:
(1) The Committee may adopt rules and regulations
necessary for the performance of its duties
under the Plan.
(2) The Committee shall have the power to construe
the Plan and to decide all questions arising
under the Plan.
(3) The Committee shall determine the eligibility of
Participants to receive benefits and the amount
of benefits to which any Participant may be
entitled under the Plan.
(4) The Committee shall direct the payment of
benefits from the Company's general treasury,
and shall specify the payee, the amount and the
conditions of each payment.
(5) The Committee shall prepare and distribute to
the Outside Directors plan summaries, notices,
and other information about the Plan in such
manner as it deems proper and in compliance with
applicable law.
(6) The Committee shall provide forms for use by
Participants in applying for benefits.
(7) The Committee, as appropriate, shall appoint an
enrolled actuary to make periodic actuarial
valuations of the Plan's experience and
liabilities and to prepare actuarial statements.
(8) The Committee shall retain legal counsel,
accountants and such other agents as it deems
necessary to properly administer the Plan.
(9) The Committee shall cause to be filed all
reports required under the Code.
6.2 Expenses. The Company shall pay all expenses incurred by the
Committee in administering the Plan, including fees and charges of
actuaries, attorneys, accountants, and consultants.
6.3 Indemnification. The Company shall indemnify and hold harmless
the Committee and each member and each person to whom the Plan
Administrator or the Committee has delegated responsibility under this
Article 6, from all joint or several liability for their acts and
omissions and for the acts and omissions of their duly appointed agents
in the administration of the Plan, except for their own breach of
fiduciary duty and willful misconduct.
6.4 Amendment of the Plan. The Committee shall have the right to
amend the Plan from time to time.
6.5 Applicable Law. The Plan shall be construed in accordance with
the laws of the State of Georgia, except to the extent such laws are
preempted by the Code.
6.6 Non-alienation. No benefits payable under the Plan shall be
subject to the claim or legal process of any creditor of any Participant
or Spouse, and no Participant or Spouse shall alienate, transfer,
anticipate, or assign any benefits under the Plan.
6.7 Limitation on Rights. No person shall have any right or
interest in any portion of the Plan except as specifically provided in
the Plan.
Adopted as of the 18th day of December, 1991. Amended and Restated as
of April 20, 1994.
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