<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from .....................to .......................
Commission file number .........0-28040........................................
.................................BACOU USA, INC................................
(Exact name of registrant as specified in its charter)
............DELAWARE.............. ...........05-0470688................
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
...........10 THURBER BOULEVARD, SMITHFIELD, RHODE ISLAND 02917-1896...........
(Address of principal executive offices)
(Zip Code)
.................................(401) 233-0333................................
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes...X... No......
The number of shares outstanding of the issuer's Common Stock, $.001 par
value, as of August 14, 1997 was 17,313,400.
<PAGE> 2
BACOU USA, INC.
INDEX
Page No.
--------
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
June 30, 1997 and December 31, 1996 3
Consolidated Condensed Statements of Income
Three Months and Six Months ended June 30, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows
Six Months ended June 30, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-13
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
<PAGE> 3
BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,517,809 $ 21,033,261
Trade accounts receivable, net 17,746,038 10,500,190
Inventories 23,086,400 17,483,418
Prepaid expenses and other current assets 3,432,467 992,174
Deferred income taxes 946,000 762,000
------------ ------------
Total current assets 47,728,714 50,771,043
------------ ------------
Property and equipment, net 33,365,773 27,069,129
Intangible assets, net 62,709,250 47,268,964
------------ ------------
Total assets $143,803,737 $125,109,136
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 4,900,000 $ --
Accounts payable 4,231,817 4,015,904
Accrued compensation and benefits 3,767,408 3,162,699
Other accrued expenses 4,058,519 1,786,473
Income taxes payable 929,726 1,652,808
------------ ------------
Total current liabilities 17,887,470 10,617,884
Deferred income taxes 5,132,000 2,084,000
------------ ------------
Total liabilities 23,019,470 12,701,884
------------ ------------
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000
shares authorized, no shares issued and
outstanding
Common stock, $.001 par value, 25,000,000
shares authorized, 17,312,200 shares
issued and outstanding 17,312 17,312
Additional paid-in capital 66,514,906 66,514,906
Retained earnings 54,252,049 45,875,034
------------ ------------
Total stockholders' equity 120,784,267 112,407,252
------------ ------------
Total liabilities and stockholders' equity $143,803,737 $125,109,136
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $32,330,445 $28,806,454 $58,710,887 $55,094,294
Cost of sales 14,861,456 12,225,383 27,243,404 23,950,122
----------- ----------- ----------- -----------
Gross profit 17,468,989 16,581,071 31,467,483 31,144,172
----------- ----------- ----------- -----------
Operating expenses:
Selling 5,392,532 4,443,682 9,940,185 8,559,408
Research and development 97,043 -- 97,043 --
Purchased in-process research and
development 1,300,000 -- 1,300,000 --
General and administrative 2,426,672 2,033,789 4,627,327 3,990,215
Amortization of intangible assets 931,998 1,041,039 1,819,854 2,102,210
----------- ----------- ----------- -----------
Total operating expenses 10,148,245 7,518,510 17,784,409 14,651,833
----------- ----------- ----------- -----------
Operating income 7,320,744 9,062,561 13,683,074 16,492,339
----------- ----------- ----------- -----------
Other expense (income):
Interest expense 97,917 4,961 103,861 811,596
Interest income (218,614) (74,533) (380,528) (102,257)
Other (164,228) (81,762) (296,471) (162,209)
----------- ----------- ----------- -----------
Total other expense (income) (284,925) (151,334) (573,138) 547,130
----------- ----------- ----------- -----------
Income before income taxes 7,605,669 9,213,895 14,256,212 15,945,209
Income taxes 3,360,607 3,565,313 5,879,197 6,190,400
----------- ----------- ----------- -----------
Net income $ 4,245,062 $ 5,648,582 $ 8,377,015 $ 9,754,809
=========== =========== =========== ===========
Net income per common and common
equivalent share $ 0.24 $ 0.33 $ 0.48 $ 0.63
=========== =========== =========== ===========
Weighted average common and common
equivalent shares 17,313,750 17,189,363 17,318,356 15,524,797
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
BACOU USA, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,377,015 $ 9,754,809
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,052,154 3,940,619
Purchased in-process research and development 1,300,000 --
Deferred income taxes 129,801 282,699
Change in assets and liabilities, net of effects of acquired
companies:
Trade accounts receivable (3,638,754) (3,481,365)
Inventories 410,192 1,083,947
Prepaid expenses and other current assets (1,401,338) 598,744
Accounts payable (939,417) (952,120)
Accrued expenses 695,429 291,331
Income taxes (723,079) 2,491,701
------------ ------------
Net cash provided by operating activities 8,262,003 14,010,365
------------ ------------
Cash flows from investing activities:
Capital expenditures (2,368,990) (3,519,199)
Acquisition of businesses, including direct costs
of acquisition, net of cash acquired (28,463,549) (132,771)
------------ ------------
Net cash used in investing activities (30,832,539) (3,651,970)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 8,000,000 --
Repayment of long-term debt (8,000,000) (49,000,000)
Advances from notes payable, net 4,055,084 --
Proceeds from issuance of common stock, net of expenses -- 47,297,933
------------ ------------
Net cash provided by (used in) financing activities 4,055,084 (1,702,067)
------------ ------------
Net increase (decrease) in cash and cash equivalents (18,515,452) 8,656,328
Cash and cash equivalents at beginning of period 21,033,261 1,210,247
------------ ------------
Cash and cash equivalents at end of period $ 2,517,809 $ 9,866,575
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 109,183 $ 832,905
============ ============
Cash paid during the period for income taxes $ 6,207,100 $ 3,416,000
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
BACOU USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. Basis Of Presentation
The accompanying consolidated condensed financial statements ("financial
statements") include the accounts of Bacou USA, Inc. and its wholly-owned
subsidiaries (together the "Company"). The Company designs, manufactures and
sells personal protective equipment, including non-prescription protective
eyewear, frames for prescription eyewear, supplied air and air purifying
respirators, vision screening equipment and laser protective eyewear.
The financial statements have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission for interim financial
information, including the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, certain information and footnote disclosures
normally required in complete financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. In the
opinion of management these financial statements include all adjustments
necessary for a fair presentation of the results of operations for the interim
periods presented. Results of operations for interim periods may not be
indicative of results expected for a full year.
2. Acquisition Of Survivair, Inc.
On May 30, 1997 the Company completed its acquisition of Comasec Holdings, Inc.
(Comasec) and its wholly-owned subsidiary Survivair, Inc. (Survivair), a
manufacturer of respiratory protection products. The acquisition was effected
through merger and redemption transactions which have been accounted for as a
purchase of all of the outstanding common stock of Comasec for $27.4 million in
cash, subject to certain closing adjustments. Accordingly, operating results of
the acquired companies have been included in the accompanying financial
statements of the Company beginning June 1, 1997. For purposes of this filing
these transactions are collectively referred to as the "Acquisition" and
amounts paid to effect the Acquisition are referred to as the "Acquisition
Price".
In accordance with generally accepted accounting principles the Acquisition
Price has been allocated to the fair value of assets purchased and liabilities
assumed. The excess of Acquisition Price over fair value of net assets acquired
has been recorded as goodwill and is being amortized over 40 years. Amounts
recorded as goodwill are subject to future adjustment based on the resolution
of various outstanding closing adjustments relating to the Acquisition. The
fair value of purchased in-process research and development was $1,300,000 and
was charged to operating expenses at the date of acquisition. The Acquisition
Price has been allocated approximately as shown in the following table.
<TABLE>
<S> <C>
Working capital $ 4,000,000
Property and equipment $ 6,100,000
Identifiable intangible assets $ 4,300,000
Purchased in-process research and development $ 1,300,000
Goodwill $11,700,000
</TABLE>
6
<PAGE> 7
The following table presents pro forma results of operations of the Company as
if the Acquisition had occurred as of January 1, 1996 (in thousands). The pro
forma operating results include results of operations for the indicated periods
with adjusted depreciation on property and equipment, increased amortization of
intangible assets and assumed interest expense on the Acquisition Price.
Non-recurring charges resulting from the Acquisition have been excluded from the
pro forma results. The pro forma information given does not purport to be
indicative of the results that actually would have been obtained if the
operations were combined during the periods presented and is not intended to be
a projection of future results or trends.
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------
1997 1996
-------- --------
<S> <C> <C>
Net sales $71,347 $69,855
Net income 10,287 9,739
Net income per common and common
equivalent share $ 0.59 $ 0.63
Weighted average common and common
equivalent shares outstanding 17,318 15,525
</TABLE>
3. Trade Accounts Receivable
An allowance for doubtful accounts is deducted from trade accounts receivable in
the accompanying financial statements. The allowance for doubtful accounts was
$909,397 at June 30, 1997 and $791,531 at December 31, 1996.
4. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------- -----------
<S> <C> <C>
Raw material and supplies ............. $ 7,834,439 $ 6,005,983
Work-in-process ....................... 3,747,428 2,092,083
Finished goods ........................ 11,504,533 9,385,352
----------- -----------
$23,086,400 $17,483,418
=========== ===========
</TABLE>
5. Property, Equipment And Intangible Assets
Depreciation of property and equipment is provided over the estimated useful
lives of the respective assets using the straight-line method. Leasehold
improvements are amortized over the shorter of the lease term or estimated
useful life of the asset. Accumulated depreciation and amortization totaled
$9,787,655 at June 30, 1997 and $7,195,477 at December 31, 1996.
Intangible assets are amortized using the straight-line method over the
estimated periods benefited. Accumulated amortization totaled $10,420,308 at
June 30, 1997 and $8,600,454 at December 31, 1996.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FACTORS THAT MAY AFFECT FUTURE PERFORMANCE
Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. In addition, when used
in this Form 10-Q, words such as "believes," "anticipates," "expects," and
similar expressions are intended to identify forward-looking statements. The
Company cautions that a number of important factors could cause actual outcomes
to differ materially from those expressed in any forward-looking statements
made by, or on behalf of, the Company. Forward-looking statements involve a
number of risks and uncertainties including, but not limited to, continued
demand for current product lines, the success of new product introductions,
continued availability and favorable pricing of raw materials, the effect of
any work stoppages, the success of the Company's acquisition strategy,
competitive pressures, general economic conditions, and regulatory matters. The
Company cannot assure that it will be able to anticipate or respond timely to
changes in any of the factors listed above, which could adversely affect the
operating results in one or more fiscal quarters. Results of operations in any
past period should not be considered indicative of the results to be expected
for future periods. Fluctuations in operating results may also result in
fluctuations in the price of the Company's common stock.
ACQUISITION OF SURVIVAIR, INC.
The Company acquired all of the outstanding capital stock of Comasec on
May 30, 1997. The assets of Comasec consisted primarily of its wholly-owned
subsidiary Survivair, a manufacturer of respiratory protection products. The
acquisition was effected through merger and redemption transactions which have
been accounted for as a purchase of all of the outstanding common stock of
Comasec for $27.4 million in cash, subject to certain closing adjustments.
Operating results of Survivair have been included in the financial statements
of the Company beginning June 1, 1997.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
The following table presents certain items from the Company's consolidated
condensed statements of income, and such amounts as percentages of net sales,
for the periods indicated (in thousands, except percentages).
8
<PAGE> 9
<TABLE>
<CAPTION>
Three Months Ended June 30
--------------------------
1997 1996
---- ----
<S> <C> <C> <C> <C>
Net sales $32,330 100.0% $28,806 100.0%
Cost of sales 14,861 46.0 12,225 42.4
------- ----- ------- -----
Gross profit 17,469 54.0 16,581 57.6
------- ----- ------- -----
Operating expenses:
Selling 5,392 16.7 4,444 15.4
Research and development 97 0.3 -- --
Purchased in-process research
and development 1,300 4.0 -- --
General and administrative 2,427 7.5 2,034 7.1
Amortization of intangible assets 932 2.9 1,041 3.6
------- ----- ------- -----
Total operating expenses 10,148 31.4 7,519 26.1
------- ----- ------- -----
Operating income 7,321 22.6 9,062 31.5
Other expense (income), net (285) (0.9) (152) (0.5)
------- ----- ------- -----
Income before income taxes 7,606 23.5 9,214 32.0
Income taxes 3,361 10.4 3,565 12.4
------- ----- ------- -----
Net income $ 4,245 13.1% $ 5,649 19.6%
======= ===== ======= =====
</TABLE>
Net Sales. Net sales increased 12.2% from $28.8 million for the three
months ended June 30, 1996 to $32.3 million for the three months ended June 30,
1997. Net sales for the 1997 period include one month of sales for Survivair of
$2.4 million. In addition, back-orders at Titmus Optical, Inc. (Titmus) totaling
approximately $1.2 million at March 31, 1997, were eliminated during the second
quarter of 1997 as back-ordered product was shipped. Excluding sales of
discontinued product lines, net sales increased by 16.6% from $27.6 million in
the 1996 period to $32.2 million in the 1997 period.
Export sales represented 10.2% of net sales in the 1997 period and 6.9% of
net sales in the 1996 period. Export sales increased by 67.7% from 1996 to 1997.
Cost of Sales. Cost of sales increased 21.6% from $12.2 million for the
three months ended June 30, 1996 to $14.9 million for the three months ended
June 30, 1997 primarily as a result of the acquisition of Survivair.
Gross Profit. Gross profit increased 5.4% from $16.6 million for the three
months ended June 30, 1996 to $17.5 million for the three months ended June 30,
1997. As a percentage of sales, gross profit was 54.0% in the 1997 period and
57.6% in the 1996 period. The Company's gross margin declined from the 1996
period to the 1997 period primarily due to the acquisition of Survivair. The
gross margin of Survivair is lower than the combined gross margin of the
Company's other subsidiaries. In addition, acquisition-related charges reduced
gross profit by approximately $550,000 during the second quarter of 1997.
Excluding these charges, gross margin for the 1997 period would have been
55.7%. Additional acquisition-related charges will reduce gross profit for the
third quarter of 1997 by approximately $800,000.
9
<PAGE> 10
Operating Expenses. Operating expenses increased from $7.5 million for the
three months ended June 30, 1996 to $10.1 million for the three months ended
June 30, 1997, primarily as a result of the acquisition of Survivair. The
acquisition of Survivair has been accounted for as a purchase and, accordingly,
the Acquisition Price has been allocated to the fair value of assets purchased
and liabilities assumed as of the acquisition date. This allocation included
the fair value of in-process research and development equal to $1.3 million.
Accordingly, a non-recurring charge for purchased in-process research and
development of Survivair, in the amount of $1.3 million, was recorded in the
1997 period. Selling, general and administrative expenses increased from $6.5
million for the three months ended June 30, 1996 to $7.8 million for the three
months ended June 30, 1997, primarily as a result of the acquisition of
Survivair as well as additional advertising and marketing costs during the 1997
period. Although amortization of intangible assets for the 1997 period was
essentially unchanged, compared with the 1996 period, it is expected to
increase by approximately $700,000 on an annual basis as a result of the
Survivair acquisition.
Operating Income. As a result of the foregoing, the Company's operating
income declined from $9.1 million for the three months ended June 30, 1996 to
$7.3 million for the three months ended June 30, 1997.
Income Taxes. The Company's effective income tax rate was approximately
44.0% in the 1997 period and 39.0% in the 1996 period. The effective rate was
higher than the federal statutory rate of 35.0% due primarily to state and
local income taxes, and because a tax benefit could not be recorded in the 1997
period for the non-recurring charge equal to $1.3 million for the purchase of
Survivair's in-process research and development.
Net Income. As a result of the foregoing, the Company's net income totaled
$4.2 million in the 1997 period and $5.6 million in the 1996 period. Excluding
the effect of non-recurring acquisition-related adjustments, the Company's net
income would have been $5.8 million in the 1997 period compared with $5.6
million in the 1996 period.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
The following table presents certain items from the Company's consolidated
condensed statements of income, and such amounts as percentages of net sales,
for the periods indicated (in thousands, except percentages).
10
<PAGE> 11
<TABLE>
<CAPTION>
Six Months Ended June 30
-----------------------------
1997 1996
---- ----
<S> <C> <C> <C> <C>
Net sales $58,711 100.0% $55,094 100.0%
Cost of sales 27,244 46.4 23,950 43.5
------- ----- ------- -----
Gross profit 31,467 53.6 31,144 56.5
------- ----- ------- -----
Operating expenses:
Selling 9,940 16.9 8,560 15.5
Research and development 97 0.2 -- --
Purchased in-process research
and development 1,300 2.2 -- --
General and administrative 4,627 7.9 3,990 7.3
Amortization of intangible
assets 1,820 3.1 2,102 3.8
------- ----- ------- -----
Total operating expenses 17,784 30.3 14,652 26.6
------- ----- ------- -----
Operating income 13,683 23.3 16,492 29.9
Other expense (income), net (573) (1.0) 547 1.0
------- ----- ------- -----
Income before income taxes 14,256 24.3 15,945 28.9
Income taxes 5,879 10.0 6,190 11.2
------- ----- ------- -----
Net income $ 8,377 14.3% $ 9,755 17.7%
======= ===== ======= =====
</TABLE>
Net Sales. Net sales increased 6.6% from $55.1 million for the six months ended
June 30, 1996 to $58.7 million for the six months ended June 30, 1997. Net sales
for the 1997 period include one month of sales for Survivair of $2.4 million.
Excluding sales of discontinued product lines, net sales increased by 11.3% from
$52.5 million in the 1996 period to $58.5 million in the 1997 period.
Export sales represented 10.6% of net sales in the 1997 period and 7.3% of net
sales in the 1996 period. Export sales increased by 57.0% from 1996 to 1997.
Cost of Sales. Cost of sales increased 13.3% from $24.0 million for the six
months ended June 30, 1996 to $27.2 million for the six months ended June 30,
1997. The increase was primarily attributable to the acquisition of Survivair
and, to a lesser extent, higher production costs at Titmus during the first
quarter of 1997.
Gross Profit. Gross profit increased from $31.1 million for the six months ended
June 30, 1996 to $31.5 million for the six months ended June 30, 1997. As a
percentage of net sales, gross profit was 53.6% for the 1997 period and 56.5%
for the 1996 period. The Company's gross margin declined from the 1996 period to
the 1997 period as a result of lower gross margins at Survivair, acquisition -
related charges at Survivair totaling approximately $550,000, and higher
production costs during the first quarter of 1997 at Titmus. Excluding the
acquisition-related charge, the Company's gross margin for the 1997 period
would have been 54.5%.
Operating Expenses. Operating expenses increased from $14.7 million in the 1996
period to $17.8 million in the 1997 period, primarily as a result of the
Acquisition of Survivair. As previously discussed, the Company recorded a
non-recurring charge equal to $1.3 million for purchased in-process research and
development of Survivair in the 1997 period. Selling, general and administrative
expenses increased from $12.6 million for the six months ended June 30, 1996 to
$14.6 million for the six months ended June 30, 1997. This increase was
primarily the result of the acquisition of Survivair as well as additional
advertising and marketing costs in the 1997 period.
11
<PAGE> 12
Amortization of intangible assets declined from $2.1 million for the six months
ended June 30, 1996 to $1.8 million for the six months ended June 30, 1997, as a
result of the intangible asset for a favorable lease interest becoming fully
amortized.
Operating Income As a result of the foregoing, the Company's operating income
declined from $16.5 million for the six months ended June 30, 1996 to $13.7
million for the six months ended June 30, 1997.
Other Expense (Income). Other expense (income) was $0.5 million and $(0.6)
million for the six months ended June 30, 1996 and 1997, respectively. The
Company had outstanding indebtedness totaling $49.0 million at January 1, 1996,
that was fully repaid by April 1996, primarily with proceeds from the Company's
initial public offering. The Company had no significant debt outstanding during
the 1997 period. The change in other expense (income) is primarily due to a
decrease in net interest expense from 1996 to 1997 that resulted from declining
debt balances.
Income Taxes. The Company's effective income tax rate was 41.3% during the
1997 period and 38.8% during the 1996 period. The effective rate was higher
than the federal statutory rate due primarily to state and local taxes and
because a tax benefit could not be recorded in the 1997 period for the
non-recurring charge equal to $1.3 million for the purchase of Survivair's
in-process research and development.
Net Income. As a result of the foregoing, the Company's net income declined
from $9.8 million for the six months ended June 30, 1996 to $8.4 million for the
six months ended June 30, 1997. Excluding the effect of non-recurring
acquisition-related adjustments, the Company's net income would have been $10.0
million in the 1997 period compared with $9.8 million in the 1996 period.
LIQUIDITY AND CAPITAL RESOURCES
Gross cash flow (net income plus non-cash items) totaled $13.9 million
during the 1997 period and $14.0 million during the 1996 period. Earnings before
interest, taxes, depreciation and amortization (EBITDA) and before non-recurring
acquisition-related charges totaled $19.6 million during the 1997 period and
$20.4 million during the 1996 period.
Excluding trade accounts receivable of Survivair at June 30, 1997, the
Company's trade accounts receivable increased from $10.5 million at December 31,
1996 to $14.0 million at June 30, 1997. This increase resulted primarily from
sales volume during the second quarter of 1997 that exceeded sales volume during
the fourth quarter of 1996. Inventories increased from $17.5 million at December
31, 1996 to $23.1 million at June 30, 1997 entirely as a result of the
acquisition of Survivair.
Cash used in investing activities totaled $30.8 million in the 1997 period
compared with $3.6 million in the 1996 period. The 1997 period includes $28.5
million expended for the acquisition of businesses, principally in connection
with the Survivair acquisition. Capital expenditures totaled $2.4 million in the
1997 period and $3.5 million in the 1996 period.
The acquisition of Survivair was financed principally from available cash
balances. The Company borrowed $8.0 million in connection with the acquisition
of Survivair under a term note. This borrowing was repaid in full during the
second quarter of 1997, in part from proceeds from a revolving line of credit
(see below).
12
<PAGE> 13
Effective May 21, 1997 the Company closed on a $28.0 million Revolving Line
of Credit (the "New Facility") with Citizens Bank of Rhode Island ("Citizens").
The New Facility is available to fund future acquisitions and for other general
corporate purposes. Principal outstanding under the New Facility is due in full
on April 30, 1998 and bears interest at the rate per annum equal to LIBOR plus
0.7%. Principal outstanding totaled $4,900,000 at June 30, 1997. The New
Facility is subject to annual renewal and is also subject to various covenants
including a covenant to maintain a ratio of liabilities to tangible net worth
of not more than 1.0:1.0.
The Company had previously maintained an $8.0 million term credit facility
(the "Prior Facility") with Citizens. The Prior Facility was terminated during
May 1997 and all outstanding principal at termination ($3,000,000) was repaid
through advances under the New Facility.
The Company also maintains a $3.0 million revolving line of credit which is
available for use by a wholly-owned subsidiary for its general working capital
purposes. Significant terms and conditions relating to this facility are
consistent with terms and conditions of the New Facility. There were no
principal amounts outstanding under this facility at June 30, 1997.
The Company believes that cash flow from operations together with available
borrowing capacity are sufficient to fund working capital requirements, debt
service requirements, and capital expenditures for the remainder of 1997. The
Company pursues a business strategy which includes acquisitions as an important
element. The Company may incur additional indebtedness, may be required to
negotiate additional credit facilities, or may issue additional common stock in
order to fund investments, if any, resulting from its acquisition strategy.
SEASONALITY
The Company's business has been subject to slight seasonal variations which the
Company has attributed to fluctuations in industrial activity and annual
weather patterns. Historically, net sales from October through December have
been somewhat lower than other periods due to anticipated lower demand in the
more inclement winter months and planned inventory reductions by major
distributors. In addition to seasonality, the Company's business has been
variable period to period due to other factors, including promotional activity
undertaken by the Company in response to competitive pressures, market demand,
production capacity, inventory levels, and other considerations.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard No. 128, "Earnings Per Share,"
(Statement 128) was issued in February 1997. Statement 128 requires dual
presentation of basic earnings per share and diluted earnings per share, and
supersedes previously issued accounting principles concerning determination and
disclosure of earnings per share. The Company is required to adopt the
provisions of Statement 128 for the year ended December 31, 1997; however, these
provisions may not be adopted for interim financial statements issued prior to
December 31, 1997. The Company does not believe Statement 128 will have a
significant impact on the determination of its 1997 earnings per share when the
related provisions are adopted.
Statement of Financial Accounting Standard No. 131, "Disclosures about Segments
of an Enterprise and Related Information," (Statement 131) was issued in June
1997. Statement 131 requires disclosure of financial and descriptive information
about reportable operating segments, and supersedes previously issued accounting
principles concerning segment reporting. The Company is required to adopt the
provisions of Statement 131 for periods beginning after December 15, 1997
(calendar year 1998 for the Company). Statement 131 will, at most, require
certain additional disclosure in the Company's financial statements.
13
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the Annual Meeting of Stockholders held on May 19, 1997, the
following actions were taken:
1. Election of Phillipe Bacou, Christophe Bacou, Walter Stepan, Philip B.
Barr, Jr., Karl F. Ericson and Dr. Herbert A. Wertheim as directors, each
for a one year term. The result of the vote of Stockholders was the same
for each candidate, as follows:
Number of Shares
----------------
For 16,949,100
Against 570
Withheld 0
2. Ratification and approval of the Bacou USA, Inc. 1996 Non-Employee
Directors Stock Option Plan, as described in the Proxy Statement and as
adopted by the Board of Directors of the Company. The result of the vote of
Stockholders was as follows:
Number of Shares
----------------
For 16,938,895
Against 9,200
Abstain 1,575
Broker Non-Vote 0
3. Ratification and approval of the selection of KPMG Peat Marwick LLP as
independent auditors to audit the Company's books and accounts for the fiscal
year ending December 31, 1997. The result of the vote of Stockholders was as
follows:
Number of Shares
----------------
For 16,947,855
Against 720
Abstain 1,095
Broker Non-Vote 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit Number Description Of Exhibit
-------------- ----------------------
Exhibit 4(a) Revolving Line of Credit Agreement dated May 21,
1997 by and between Bacou USA, Inc. and Citizens
Bank of Rhode Island.
Exhibit 4(b) Revolving Line of Credit Agreement dated May 21,
1997 by and between Uvex Safety, Inc. and Citizens
Bank of Rhode Island.
Exhibit 4(c) First Amendment to Revolving Line of Credit
Agreement by and between Bacou USA, Inc. and
Citizens Bank of Rhode Island.
Exhibit 4(d) First Amendment to Revolving Line of Credit
Agreement by and between Uvex Safety, Inc. and
Citizens Bank of Rhode Island.
Exhibit 11 Statement Re: Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
(b) The registrant filed two reports on Form 8-K during the quarterly
period ended June 30, 1997. The first report, dated April 14, 1997,
was filed for the purpose of disclosing the execution of binding
agreements to acquire Comasec and its wholly-owned subsidiary
Survivair. The second report, dated May 30, 1997, was filed for the
purpose of disclosing the closing of the acquisition of Comasec and
its wholly-owned subsidiary Survivair.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 14, 1997
BACOU USA, INC.
(Registrant)
/s/ PHILIP B. BARR, JR. /s/ JEFFREY T. BROWN
------------------------------ ----------------------------
Philip B. Barr, Jr., Jeffrey T. Brown
Executive Vice President and Corporate Controller and
Chief Financial Officer Chief Accounting Officer
15
<PAGE> 1
EXHIBIT 4(a)
REVOLVING LINE OF CREDIT AGREEMENT
This REVOLVING LINE OF CREDIT AGREEMENT (this "Agreement") is made this
21st day of May, 1997 by and between Bacou USA, Inc., a Delaware corporation
("Borrower") and Citizens Bank of Rhode Island, a Rhode Island financial
institution, with its principal office located in the City of Providence, Rhode
Island ("Lender"). Borrower has requested certain loans from Lender and Lender
has agreed to make certain loans to Borrower, upon the terms and conditions set
forth below.
SECTION 1. DEFINITIONS
"Assets" Assets means total assets as computed in accordance with
generally accepted accounting principles, consistently applied and as applied in
connection with and at the time of the preparation of the financial statements
previously furnished to Lender, and as required to be furnished to Lender
pursuant to the terms hereof.
"Board" Board shall have the meaning set forth in Section 3.13
hereof.
"Code" Code shall have the meaning set forth in Section 5.8 hereof.
"Debt" Debt means all items which, in accordance with generally
accepted accounting principles consistently applied, would be included in
determining total liabilities as shown on the liability side of a balance sheet
as of the date Debt is to be determined and, in any event, shall include,
without limitation, any liability, whether or not any such liability shall have
been assumed, (a) on account of deposits, advances or progress payments under
contract, or any indebtedness or liability evidenced by notes, bonds, debentures
or similar obligations (including, without limitation, any purchase option
obligations, conditional sales or similar title retention agreements) or
indebtedness for borrowed money, (b) secured by any mortgage, pledge, lien or
security interest on or in property owned or acquired, and (c) under a lease
which, in accordance with generally accepted accounting principles consistently
applied, should be capitalized, and guaranties, endorsements (other than for
collection in the ordinary course of business) and other contingent obligations
in respect of the obligations of others.
"ERISA" ERISA shall have the meaning set forth in Section 5.8
hereof.
"Event(s) of Default" Event(s) of Default means those Event(s) of
Default set forth in Section 7.1 hereof.
"Fiscal Loss" Fiscal Loss means, in accordance with generally
accepted accounting principles, any net operating loss (on a consolidated basis)
prior to the payment of interest, dividends and taxes.
"Letters of Credit" Letters of Credit means standby and commercial
letters of credit issued from time to time on account of Borrower under the
Revolving Credit Loans.
<PAGE> 2
"Liabilities" Liabilities means total consolidated liabilities as
computed in accordance with generally accepted accounting principles,
consistently applied and as applied in connection with and at the time of the
preparation of the financial statements previously furnished to Lender and as
required to be furnished to Lender pursuant to the terms hereof, provided that
Liabilities shall include all Debt and other obligations for borrowed money and
deferred purchase price for property or services or any obligation or
indebtedness of others, the payment or collection of which Borrower has
guaranteed or in respect of which Borrower is liable, contingently or otherwise,
and other than Debt of Borrower to any third party, which Debt is subordinated,
in form and substance satisfactory to Lender, to payment of the Revolving Credit
Note and the Revolving Credit Loans.
"Loan Documents" Loan Documents means, collectively, this Agreement,
the Revolving Credit Note, and all other instruments and documents concurrently,
previously or at any time hereafter executed by Borrower in connection with the
Revolving Credit Loans or this Agreement.
"PBGC" PBGC shall have the meaning set forth in Section 5.8 hereof.
"Revolving Credit Commitment" Revolving Credit Commitment means the
obligation of Lender to make Revolving Credit Loans pursuant to Section 2.1
hereof.
"Revolving Credit Limit" Revolving Credit Limit means the sum of
Twenty Eight Million and 00/100ths Dollars ($28,000,000).
"Revolving Credit Loan(s)" Revolving Credit Loan(s) means the
loan(s) made by Lender to Borrower and evidenced by the Revolving Credit Note,
such Revolving Credit Loan(s) to be made pursuant to Section 2 hereof.
"Revolving Credit Note" Revolving Credit Note means that certain
promissory note dated of even date herewith made by Borrower in favor of Lender
in the stated principal amount of Twenty Eight Million and 00/100ths Dollars
($28,000,000), evidencing the Revolving Credit Loans.
"Revolving Credit Termination Date" Revolving Credit Termination
Date means March 31, 1998, unless extended in writing by Lender.
"Tangible Net Worth" Tangible Net Worth means the excess of
aggregate consolidated Assets of Borrower over aggregate consolidated
Liabilities of Borrower, as determined in accordance with generally accepted
accounting principles consistently applied. For purposes of the foregoing
calculations, aggregate consolidated Assets shall not include intangible assets
and deferred charges, including without limitation, goodwill, debt discount,
organizational expenses, trademarks and trade names, patents, deferred product
development costs and similar items.
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<PAGE> 3
SECTION 2. REVOLVING CREDIT LOANS
2.1. Revolving Credit Commitment. Subject to the terms and
conditions of this Agreement, Lender agrees to make Revolving Credit Loans to
Borrower on a revolving basis from time to time from the date hereof to and
including the Revolving Credit Termination Date, in an aggregate principal
amount up to but not exceeding at any one time outstanding the Revolving Credit
Limit. During the aforesaid period, Borrower may use the Revolving Credit
Commitment by borrowing, paying and repaying the Revolving Credit Loans (and by
surrendering Letters of Credit) in whole or in part and by reborrowing (or by
requesting additional Letters of Credit on its account), all in accordance with
the terms and conditions of this Agreement.
2.2. Revolving Credit Note; Mandatory Payments. The Revolving Credit
Loans shall be evidenced by the Revolving Credit Note. The Revolving Credit Note
shall bear interest on the unpaid principal balance and, at Lender's election,
on overdue interest, whether before or after maturity, to the extent permitted
by applicable law, from the date thereof until payment in full thereof, at the
rate set forth in the Revolving Credit Note. Payments on the Revolving Credit
Note shall be made in accordance with the terms thereof. Interest shall be
calculated on the basis of a three hundred sixty (360) day year, but shall
accrue and be payable on the basis of the actual number of days elapsed in each
month.
2.3. Borrowing Procedure. The Revolving Credit Loans shall be made
at such time or times as Borrower shall request. All Revolving Credit Loans
shall be made, processed and documented in accordance with the following terms
and conditions:
(a) Each of the Revolving Credit Loans shall be made on at least one
(1) business day's advance notice in writing or by telephone to Lender
from Walter Stepan or Borrower's Chief Financial Officer, or such
person(s) as either person may from time to time designate in writing to
Lender, specifying the date and amount thereof. Lender shall credit the
amount of such Revolving Credit Loan to the checking account of Borrower
with Lender designated as the operating account of Borrower, provided,
however, that no Event of Default has occurred hereunder, and all
requirements and preconditions imposed by this Agreement have been met.
Advice of borrowings hereunder shall be given to J. Bruce Hallworth, or
such other officer(s) of Lender as Lender may designate from time to time.
(b) Borrower shall give to Lender written confirmation of each
request for a Revolving Credit Loan, and Lender shall give Borrower
written confirmation of the making of each Revolving Credit Loan and such
credit, which confirmation shall constitute conclusive evidence, absent
manifest error, of the making of a Revolving Credit Loan hereunder. In
cases where Borrower does not receive from Lender notice of a debit or
credit to the account, as provided herein, on the advances or repayments,
the amounts owing under the Revolving Credit Note and the applicable
interest rate(s) thereon, shall be the amounts indicated by Lender's
records.
(c) Borrower agrees that Lender shall incur no liability in acting
upon written or telephonic instructions which the recipient of the
instructions believes in good faith to be given by an authorized person,
notwithstanding the fact that such instructions
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<PAGE> 4
might not be confirmed as aforesaid, and Borrower shall be fully liable to
Lender for all advances made by Lender to Borrower hereunder on the basis
of such instructions.
(d) All instructions from Borrower to Lender shall be given by 1:00
p.m. (Providence time) on any banking day in order to be effective that
day. If given after 1:00 p.m. (Providence time), such instructions shall
be effective as of the next banking day or as Borrower and Lender may
mutually agree.
(e) Each request by Borrower for a borrowing hereunder shall
constitute a representation and a warranty by Borrower to Lender that all
of Borrower's representations and warranties set forth in Section 3 below
are true and accurate as of the date of such request.
(f) Each request for the issuance by Lender of Letters of Credit hereunder
shall be accompanied by the name and address of the intended beneficiary thereof
and the completion of the standard application relating thereto. Prior to the
issuance of Letters of Credit hereunder, Borrower shall pay to Lender all of
Lender's Letter of Credit fees and charges and execute Lender's standard Letter
of Credit documents.
2.4. Limitations on Revolving Credit Loans. Notwithstanding anything
contained in this Agreement to the contrary, the aggregate amount of the
Revolving Credit Loans made or outstanding at any time hereunder and under the
Revolving Credit Note shall not exceed the Revolving Credit Limit. In the event
that the aggregate amount of the Revolving Credit Loans outstanding at any time
exceeds the foregoing limit, then Borrower shall immediately pay to Lender an
amount equal to the amount by which such aggregate outstanding Revolving Credit
Loans exceed the applicable limit, so that Borrower shall always be in
compliance with the Revolving Credit Limit. In no case shall the aggregate
principal amount of all outstanding Revolving Credit Loans plus the aggregate
face amount of all issued Letters of Credit exceed at any time the Revolving
Credit Limit.
2.5. Termination of Right to Borrow; Repayment. The part of this
Agreement that relates to periodic borrowings shall terminate on the Revolving
Credit Termination Date, or on any earlier date on or after which an Event of
Default occurs (and in the case of such Event of Default, the entire unpaid
principal balance outstanding as a result of the Revolving Credit Loans,
together with all interest thereon accrued and unpaid and all other charges due
hereunder, shall be paid in full). The unpaid principal balance under the
Revolving Credit Note, and interest accrued and unpaid thereon, if not sooner
paid, shall be due and payable on the Revolving Credit Termination Date.
2.6. Prepayments. Borrower shall have the right, at any time and
from time to time, to pay, without premium or penalty, all or any part of the
indebtedness outstanding under the Revolving Credit Note.
2.7. Purpose of Revolving Credit Loans. The purpose of the Revolving
Credit Commitment and all Revolving Credit Loans is to provide working capital
for Borrower's business operations, to finance acquisitions of other entities
with Lender's consent, to finance capital asset purchases, and to provide
Letters of Credit from time to time.
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<PAGE> 5
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the
Revolving Credit Loans to be governed by the terms hereof, Borrower represents
and warrants to Lender as follows:
3.1. Organization and Qualification. Borrower is a duly organized
corporation validly existing and in good standing under the laws of the States
of Delaware and Rhode Island, and has the power to own its assets and to
transact the business in which it is presently engaged, and has qualified to do
business in each jurisdiction in which the nature of its business and/or the
ownership of its assets requires such qualification.
3.2. Power and Authorization. Borrower has, or at the time of
execution shall have, the power to execute, deliver and perform the Loan
Documents and to borrow hereunder and thereunder, and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions of, and
the execution, delivery and performance of, the Loan Documents. All consents,
licenses, approvals or authorizations of, or registration or declarations with,
any governmental authority, bureau or agency which are required in connection
with the execution, delivery, performance, validity or enforceability of the
Loan Documents have been duly obtained and are in full force and effect.
3.3. No Legal Bar to Revolving Credit Loans. The execution, delivery
and performance of the Loan Documents shall not violate any provision of any
existing law or regulation, any order or decree of any court or governmental
authority, bureau or agency, the certificate of incorporation and by-laws of
Borrower, or any mortgage, indenture, contract or other agreement to which
Borrower is a party or which purports to be binding upon Borrower or upon any of
its properties or assets, and shall not result in the creation or imposition of
any lien, charge or encumbrance on, or security interest in, any of its
properties or assets except in favor of Lender.
3.4. No Material Litigation. Except as set forth on the financial
statements of Borrower referred to in Section 3.8 hereof or disclosed in writing
to Lender, there are no actions, suits or proceedings (whether or not purported
to be on behalf of or against Borrower) pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any of its properties
which, if adversely determined, would have a material adverse effect upon the
financial condition, business or operations of Borrower. Borrower is not in
default with respect to any order of any court, arbitrator or governmental body
nor subject or a party to any order of any court or governmental body arising
out of any action, suit or proceeding under any statute or other law.
3.5. No Default. Borrower is not in default in the payment or
performance of any material contract, material lease of personal property or
real property, agreement or other instrument to which it is a party or by which
any of its assets may be bound, and no Event of Default has occurred and is
continuing thereunder.
3.6. No Pending Insolvency. Any borrowings made by Borrower subject
to this Agreement do not and shall not render Borrower insolvent; Borrower is
not contemplating the filing of a petition under any state or federal bankruptcy
or insolvency laws or a petition for the liquidation of or to appoint a receiver
for all or a major portion of its property, nor does
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<PAGE> 6
Borrower have any knowledge of any person contemplating the filing of any such
petition against Borrower or its assets, including the properties and assets
reflected in the financial statements referred to in Section 3.8 hereof, and
none of the properties and assets owned by Borrower is subject to any mortgage,
security interest, pledge, lien, charge, encumbrance or title retention or other
security agreement or arrangement of any nature whatsoever, except such as are
set forth in the financial statements referred to in Section 3.8 hereof, and
none of the properties and assets owned by Borrower is subject to any mortgage,
security interest, pledge, lien, charge, encumbrance or title retention or other
security agreement or arrangement of any nature whatsoever, except such as are
set forth in the financial statements referred to in Section 3.8 hereof or fully
disclosed in writing to Lender.
3.7. Taxes. Borrower has filed or caused to be filed all tax returns
required to be filed by Borrower, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it, and no tax liens
have been filed which have not been bonded over or otherwise addressed to the
satisfaction of Lender, and no claims are being asserted with respect to any
taxes which are not reflected in the financial statements referred to in Section
3.8 hereof; and Borrower is currently providing adequate reserves for all
current taxes.
3.8. Financial Condition. All financial statements previously
furnished by Borrower to Lender fully and accurately reflect the financial
condition of Borrower as of the dates furnished and have been prepared in
accordance with generally accepted principles of accounting practice,
consistently applied. There has been no material adverse change in the financial
condition of Borrower since the date of such statements, and Borrower has no
knowledge of any material obligation, liability or commitment, direct or
contingent which existed as of the date of said financial statements and which
is not reflected in said financial statements.
3.9. Ownership of Property. Borrower owns or leases all property,
tangible and intangible, necessary to conduct the business in which it is
engaged in the manner in which that business has been conducted.
3.10. Compliance With Laws. Borrower has complied in all material
respects with all laws, regulations and orders applicable to its business,
including those pertaining to labor and minimum wages, zoning, environment,
health and safety, and the present use of all property owned by it does not
violate any such laws, regulations or orders.
3.11. Statements. No statement of fact made by or on behalf of
Borrower in this Agreement or in any certificate or schedule furnished to Lender
pursuant hereto, contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements contained therein or
herein not misleading. There is no fact presently known to Borrower that has not
been disclosed to Lender which materially affects adversely nor, as far as
Borrower can foresee, will materially affect adversely Borrower's property,
business, prospects or condition (financial or otherwise).
3.12. Binding Effect. The Loan Documents and all of the other
instruments and documents executed by Borrower and delivered to Lender pursuant
to this Agreement, constitute the legal, valid and binding obligations of
Borrower and are enforceable in accordance with their respective terms.
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<PAGE> 7
3.13. Regulation U. Borrower owns no "margin stock" as such term is
defined in Regulation U, as amended (12 C.F.R. Part 221), issued by the Board of
Governors of the Federal Reserve System (the "Board"). The proceeds of the
Revolving Credit Loans made pursuant to this Agreement shall be used by Borrower
only for the purposes permitted by Lender as set forth in Section 2.7 hereof.
None of the proceeds of the Revolving Credit Loans will be used, directly or
indirectly, for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry margin stock or for any other purpose
which might constitute any of the Revolving Credit Loans a "purpose credit"
within the meaning of said Regulation U or Regulation X (12 C.F.R. Part 224) of
the Board. Neither Borrower nor any agent acting in its behalf has taken or will
take any action which might cause this Agreement or any of the documents or
instruments delivered pursuant hereto to violate any regulation of the Board or
to violate the Securities Exchange Act of 1934, in effect as of the date hereof.
3.14. Employee Benefit Plans. (a) Except as disclosed to Lender,
none of the employee benefit plans maintained at any time by Borrower or the
trust created thereunder has engaged in a prohibited transaction which could
subject any such employee benefit plan or trust to a material tax or penalty on
prohibited transactions imposed under Code Section 4975 or ERISA.
(b) None of the employee benefit plans of Borrower which are
employee pension benefit plans or the trusts created thereunder has been
terminated; nor has any such employee pension benefit plan incurred any
liability to the Pension Benefit Guaranty Corporation, other than for
required insurance premiums which have been paid when due, or incurred any
accumulated funding deficiency, whether or not waived; nor has there been
any reportable event, or other event or condition, which presents a
material risk of termination of any such employee benefit plan by such
Pension Benefit Guaranty Corporation.
(c) Except for the Titmus bargaining employee pension plan, the
present value of all accrued benefits under the employee benefit plans of
Borrower which are employee pension benefit plans did not, as of the most
recent valuation date, exceeds the then current value of the assets of
such employee pension benefit plans allocable to such accrued benefits.
(d) The consummation of the Revolving Credit Loans from Lender
provided for in this Agreement will not involve any prohibited
transaction.
(e) As used in this Section and in Section 5.8 hereof, the terms
"employee benefit plan", "employee pension benefit plan", "accumulated
funding deficiency", "reportable event", and "accrued benefits" shall have
the respective meanings assigned to them in ERISA, and the term
"prohibited transaction" shall have the meaning assigned to it in Code
Section 4975 and ERISA.
3.15. Investment Company. Borrower is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. Section 80a-1, et seq.). The application of the
proceeds and repayment of the Revolving Credit Note by Borrower, the performance
of the transactions contemplated by this Agreement, shall not violate
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<PAGE> 8
any provision of said Act, or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
3.16. Environmental Compliance. Borrower makes the following
representations and warranties to Lender as to all property owned or controlled
by it (the "Real Estate"):
(a) Neither Borrower nor any operations conducted by Borrower or any
tenant of Borrower on the Real Estate is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including, without
limitation, those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any other
federal, or state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (collectively,
"Environmental Laws"), which violation involves the Real Estate and would
have a material adverse effect on the environment or the business, assets
or financial condition of Borrower.
(b) Borrower has no knowledge of the receipt of any notice from any
third party, including without limitation any federal, state or local
governmental authority, (i) that it has been identified by the United
States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that
any hazardous waste, as defined by 42 U.S.C. Section 9601(5), any
hazardous substances as defined by 42 U.S.C. Section 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) or any
toxic substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws (collectively, "Hazardous
Materials") which it has generated, transported or disposed of have been
found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that Borrower conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Laws; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any
third party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the Release of Hazardous Materials.
(c) No portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Materials except in
accordance with applicable Environmental Laws; and no underground tank or
other underground storage receptacle for Hazardous Materials is located on
any portion of the Real Estate; and (i) in the course of any activities
conducted by Borrower, no Hazardous Materials have been generated or are
being used on the Real Estate except in accordance with applicable
Environmental Laws; (ii) to the best of Borrower's knowledge there has
been no past or present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing or dumping
(a "Release" or "Releases") or threatened Release of Hazardous Materials
on, upon, into or from the Real Estate, which Release would have an
adverse effect on the value of the Real Estate or adjacent properties or
the
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<PAGE> 9
environment; (iii) to the best of Borrower's knowledge, there have been no
Releases on, upon, from or into any real property in the vicinity of the
Real Estate which, through soil or groundwater contamination, which if
come to be located on, would have a material adverse effect on the value
of, the Real Estate; and (iv) any Hazardous Materials that have been
generated on the Real Estate have been transported off-site only by
carriers having an identification number issued by the EPA, treated or
disposed of only by treatment or disposal facilities maintaining valid
permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best of Borrower's
knowledge, operating in compliance with such permits and applicable
Environmental Laws.
(d) No part of the Real Estate is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, by virtue of the transactions set
forth herein and contemplated hereby.
SECTION 4. CONDITIONS OF REVOLVING CREDIT LOANS
The obligation of Lender to make the Revolving Credit Loans hereunder is
subject to the following conditions precedent:
4.1. Authorization. On or prior to the date of the closing of the
Revolving Credit Loans and the execution of the documents evidencing the
Revolving Credit Loans, Borrower shall have furnished to Lender copies of all
corporate documents and proceedings taken by Borrower, certified by Borrower's
secretary authorizing all such borrowings and actions, and the execution,
delivery and performance of the Loan Documents and such other documents as
Lender or its counsel may reasonably request.
4.2. Approval of Counsel. All legal matters incident to the
transactions contemplated by this Agreement shall be satisfactory to Peabody &
Brown, special counsel to Lender.
4.3. Certificate. The representations and warranties contained in
Section 3 hereof shall be true and correct on the date hereof and on each date
on which Borrower requests a Loan hereunder; and no event that constitutes or
which with the mere giving of notice of lapse of time, or both, would constitute
an Event of Default under this Agreement shall have occurred or shall exist on
such date. Upon request of Lender, Borrower shall deliver to Lender, dated as of
each date of the Revolving Credit Loans, certificates of Borrower's secretary,
to the foregoing effect.
4.4. Legal Opinion. On or prior to the date of the closing of the
Revolving Credit Loans and the execution of the documents evidencing the
Revolving Credit Loans, counsel to Borrower shall submit to Lender an opinion
letter in form and substance satisfactory to Lender and to Lender's special
counsel, which opinion letter shall address, without limitation, all matters
customarily addressed in such an opinion.
4.5. Loan Documents. On or prior to the date of the closing of the
Revolving Credit Loans, Borrower shall execute and deliver to Lender the Loan
Documents, and any other instruments or documents related to the foregoing
instruments or this Agreement.
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4.6. Financial Statements. On or prior to the date of the closing of
the Revolving Credit Loans and the execution of the documents evidencing the
Revolving Credit Loans, Lender shall receive copies of the current financial
statements and income tax returns of Borrower.
SECTION 5. AFFIRMATIVE COVENANTS
Until payment in full of the principal and interest of Borrower's
obligations to Lender under the Revolving Credit Note and this Agreement, unless
Lender shall otherwise agree in writing, Borrower hereby covenants and agrees
that Borrower shall perform and fulfill the following covenants:
5.1. Financial Statements, Reports and Contracts. Borrower shall
furnish to Lender the following information at the times set forth below which
shall constitute written notice to Lender for purposes of this Agreement:
(a) On or before ninety (90) days after the close of each of its
fiscal years, audited consolidated financial statements, together with
supporting schedules on a consolidating basis, of Borrower for such fiscal
year, including without limitation balance sheets, related statements of
income, statements of stockholder equity, statements of cash flow, and
similar statements, all with customary supporting data and schedules all
in reasonable detail, in form satisfactory to Lender, prepared in
accordance with generally accepted accounting principles and prior
practice, consistently applied, and audited by an independent certified
public accountant satisfactory to Lender who shall certify to Lender, upon
Lender's request, that no Event of Default has occurred, in particular
with respect to all financial covenants of Borrower (if any) (and such
certificate shall include the calculation of Borrower's compliance with
such financial covenants), prior to or as of the date of such
certification;
(b) On or before forty-five (45) days after the close of each fiscal
quarter of Borrower, copies of all filings on Form 10-Q made by Borrower;
(c) With reasonable promptness, such other information bearing upon
the credit and the status of business and operations of Borrower as Lender
may from time to time reasonably request.
5.2. Payment of Obligations. Borrower shall pay and discharge, when
due, all of its obligations and liabilities (including, without limitation, tax
liabilities) except where the same may be contested in good faith. Borrower
shall maintain appropriate reserves for the accrual of any of the same
determined in accordance with generally accepted accounting principles,
consistently applied, and the applicable requirements of public regulatory
authorities having jurisdiction over Borrower.
5.3. Accounts / Audits. Borrower shall keep proper books of record
and account in which full, true and correct entries in reasonable detail will be
made of all its transactions in accordance with generally accepted accounting
principles, consistently applied, and the requirements of public regulatory
authorities having jurisdiction over Borrower. Borrower shall permit Lender
through Lender's officers, employees and agents, to inspect the places of
business,
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equipment, property and records of Borrower from time to time as
Lender may require, and to audit Borrower's records of account no more than
twice per year, the expense of which audit(s) shall be borne by Borrower and
shall be payable to Lender upon demand. Provided, however, that upon the
occurrence of an Event of Default under the Loan Documents, Lender may cause
such audit to be performed as many times as it deems to be reasonably necessary.
5.4. Maintenance of Properties; Insurance. Borrower shall keep all
of its properties useful and necessary to its business in good repair, working
order and condition, and from time to time make or cause to be made all needful
and proper repairs, renewals, replacements, betterments and improvements
thereto, so that the businesses carried on by Borrower may be properly and
advantageously conducted at all times. Borrower shall maintain insurance with
insurance companies in reasonable amounts, in accordance with sound business
practices, insuring against such risks as are usually insured against in the
same general area and by entities engaged in the same or a similar business,
including, by way of illustration and not of limitation, fire with extended
coverage, public liability, theft, personal property, collision and workers'
compensation insurance.
5.5. Additional Instruments. Borrower shall promptly execute and
deliver or cause to be executed and delivered to Lender from time to time all
such additional and/or supplemental instruments and documents as Lender deems
reasonably necessary or appropriate to evidence the obligations of Borrower.
5.6. Notices. Borrower shall promptly upon discovery of any one or
more of the following events give notice in writing to Lender of (a) the
occurrence of any event which constitutes, or which would constitute with the
mere passage of time or the giving of notice or both, an Event of Default or a
default under any instrument in connection herewith, (b) any dispute which may
exist between Borrower and any governmental agency or body which could affect
normal business operations of Borrower, (c) any changes in the financial
condition of Borrower which may or will result in a material adverse change in
the financial condition of Borrower, and (d) all litigation and proceedings
against Borrower in which the amount involved is One Hundred Thousand and
00/100ths Dollars ($100,000.00) or more and is not fully covered by insurance.
5.7. Conduct of Business and Maintenance of Existence. Borrower
shall do all things necessary to preserve, renew and keep in full force and
effect its existence as a corporation organized under the laws of the State of
Delaware, and all of its rights, franchises and licenses, and shall comply in
all respects with all applicable laws.
5.8. Employee Benefit Plans. Borrower shall maintain each of its
employee pension benefit plans (if any) that are subject to Title IV of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), in
compliance with all applicable requirements of ERISA and of the Internal Revenue
Code of 1986, as amended (the "Code"), and with all applicable rulings and
regulations issued under the provisions of ERISA and of the Code and, without
limiting the generality of the foregoing, shall satisfy the minimum funding
standard for any such plan (as defined in Section 412(a) of the Code) and shall
not engage in any prohibited transaction with respect to any such plan (as
defined in Section 4975(c) of the Code). Borrower shall promptly furnish to
Lender statements of Borrower setting forth details of any reportable event (as
defined in Section 4043(b) of ERISA) which may have occurred and the action
which Borrower propose to take with respect thereto, together with a copy of
notice of such reportable
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event given to the Pension Benefit Guaranty Corporation ("PBGC"); promptly upon
the filing or making thereof, Borrower shall furnish to Lender a copy of each
annual report with respect to any such plan; and promptly after receipt thereof,
furnish to Lender a copy of any notice Borrower receives from the PBGC or the
Internal Revenue Service with respect to any such plan.
5.9. Labor Laws. Borrower shall materially comply with all labor
laws at any time applicable to it including without limitation all labor laws
and minimum wage laws, and shall make all proper and applicable deductions from
wages required by law and all payments related to such deductions made.
5.10. Subordination of Debt. Borrower shall subordinate to the
Revolving Credit Loans, by subordination instruments satisfactory to Lender in
form and substance, all loans made to Borrower by any officer, director,
shareholder, partner, guarantor or affiliate of Borrower from time to time and
at any time made including all principal and interest accruing thereupon. All
original promissory notes or other instruments evidencing indebtedness of
Borrower to such officer, director, shareholder, partner, affiliate or guarantor
shall be delivered to and held by Lender.
5.11. Primary Accounts. Borrower shall maintain all of its primary
deposit and operating accounts with Lender at all times during the term hereof.
5.12. Compliance with Laws. Borrower shall, at all times, comply
fully with all laws applicable to it and to the Real Estate, including without
limitation the Americans with Disabilities Act, as the same may be modified from
time to time.
5.13. Ratio of Liabilities to Tangible Net Worth. Borrower shall
maintain at all times during the term hereof a ratio of Liabilities to Tangible
Net Worth of not more than 1:00 : 1.00, Borrower's compliance herewith to be
first tested by Lender on December 31, 1997 and to be tested annually
thereafter.
SECTION 6. NEGATIVE COVENANTS
Until payment in full of all of Borrower's obligations to Lender under
this Agreement, the Revolving Credit Note and all other Loan Documents, Borrower
covenants and agrees as follows:
6.1. Limitation on Borrowing. Borrower shall not incur, create,
assume or permit to exist any Debt or liability on account of deposits or
advances or any indebtedness or liability for borrowed money, or any
indebtedness or liability evidenced by any notes, bonds, debentures, or similar
obligations, including leases, except (a) Debt to Lender; (b) Debt existing as
of the date of the closing of the Revolving Credit Loans and approved in writing
by Lender; (c) Debt the terms and conditions of which have been approved in
writing by Lender, and which Debt is subordinated, if required by Lender, to the
prior payment of all amounts due under the Revolving Credit Note and this
Agreement; and (d) trade obligations incurred by Borrower in the ordinary course
of business.
6.2. Limitation on Disposition of Assets. Borrower shall not sell,
lease, enter into a sale/leaseback transaction for, or otherwise dispose of or
transfer all or any material part of its properties or assets, including,
without limitation, its accounts receivable, inventory,
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equipment or interest in real property, to any other person, firm, trust,
corporation or association, or enter into any agreement to any such effect.
6.3. Limitation on Encumbrances. Borrower shall not create, incur,
make, assume, or suffer to exist, after the date hereof, any assignment,
mortgage, pledge, security interest, lien, or other encumbrance of or upon any
of its properties or assets, whether now owned or hereafter acquired, to any
party other than Lender, excepting (a) liens for taxes not delinquent or being
contested in good faith by appropriate proceedings diligently pressed and as to
which there have been set aside on its books adequate reserves; (b) encumbrances
existing as of the date hereof, disclosed in writing to Lender and approved by
Lender in writing; (c) liens imposed by operation of law, such as warehousemen's
or mechanics' liens, incurred by Borrower in good faith and in the ordinary
course of business; and (d) liens securing Debt permitted under Section 6.1
hereof.
6.4. Limitation on Contingent Liabilities. Borrower shall not
directly or indirectly guaranty the payment by any other party whatsoever of any
indebtedness, or in effect guaranty the payment of any indebtedness through an
agreement, contingent or otherwise, except, however, that nothing in this
Section 6.4 shall be construed to prevent Borrower from guaranteeing all
obligations of Uvex Safety, Inc. to Lender under that certain Guaranty of even
date herewith from Borrower to Lender. In addition, Borrower shall not directly
nor indirectly (a) purchase indebtedness, (b) purchase, sell or lease (as lessee
or lessor) property or purchase or sell services primarily for the purpose of
enabling a debtor to make payment of the indebtedness or to assure the owner of
the indebtedness against loss, or (c) make any loan or advance or otherwise
supply funds to, or in any other manner, invest in a debtor. Notwithstanding the
foregoing, Borrower may endorse negotiable instruments for collection in the
ordinary course of business.
6.5. Limitation on Fundamental Changes . Borrower shall not sell,
lease, or otherwise dispose of all or substantially all of its assets to any
other person, firm, corporation or association or enter into any agreement to
any such effect, change its fiscal year, or dissolve or liquidate.
6.6. Limitation on Acceleration of Other Debt and Modification of
Subordinated Debt. Borrower shall not accelerate the maturity of any Debt now or
hereafter outstanding to any other bank, lender, or financial institution, or
repay the same otherwise than in accordance with its terms or regular
amortization. Borrower shall not amend or modify, or consent to the amendment or
modification of, the terms of any Debt which is subordinated to the Revolving
Credit Loans.
6.7. Limitation on Use of Loan Proceeds. Borrower shall not permit
any of the proceeds of the Revolving Credit Loans to be used directly or
indirectly for the benefit of or by its current majority shareholder, Bacou,
S.A., its successors and assigns, except for payments relative to the
acquisition of Survivair, Inc., and payments made in the ordinary course of
business.
6.8 Fiscal Loss. Borrower shall not incur a Fiscal Loss in any
fiscal year of Borrower.
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SECTION 7. DEFAULTS AND REMEDIES
7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder, under the
Revolving Credit Note and under all other Loan Documents (individually called an
"Event of Default", and collectively called "Events of Default"):
(a) Failure of Borrower to pay on the date when due (without any
notice thereof being required) any principal or interest or other charge due
under the Revolving Credit Note or as required by this Agreement or under any
other Debt, liability or obligation of Borrower to Lender, whether now or
hereafter existing or hereafter contracted or assumed, when and as the same
respectively becomes due and payable to Lender, whether at maturity, by
acceleration, or otherwise; or
(b) Any representation or warranty made by Borrower in this
Agreement, the Revolving Credit Note or any other of the Loan Documents, or in
any certificate, financial or other statement furnished at any time under or in
connection with the Revolving Credit Loans, this Agreement or with any other
Debt of Borrower to Lender, whether now or hereafter existing or hereafter
contracted or assumed, proves to be untrue or misleading when made or as of the
date hereof in any material respect; or
(c) Failure of Borrower to observe or perform, which failure
continues uncured for twenty (20) days after written notice of such failure is
given by Lender to Borrower (such notice to be given in accordance with Section
8.10 hereof) any term, covenant or agreement (excepting failure to pay, which
shall be governed by Section 7.1(a) hereof) contained in the Revolving Credit
Note, this Agreement, any other of the Loan Documents, or any other instrument
evidencing, securing or relating to any Debt, liability or obligation of
Borrower to Lender whether now or hereafter existing or hereinafter contracted
or assumed; or
(d) Failure of Borrower to pay or perform, on the date when due, any
material obligation of Borrower (including, without limitation, any material
obligation to parties other than Lender) affecting any security (now or
hereafter existing) for the Revolving Credit Note, regardless of how such
obligation is evidenced; or
(e) Filing by Borrower of a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization, arrangement,
readjustment of its debts or for any other relief under the United States
Bankruptcy Code, as amended, or under any other insolvency act or law, state or
federal, now or hereafter existing, or any action by Borrower indicating its
consent to, approval of, or acquiescence in, any such petition or proceeding;
the application by Borrower for, or the appointment by consent or acquiescence
of, a receiver or trustee for it or for all or a substantial part of its
property; the making by Borrower of an assignment for the benefit of creditors;
the inability of Borrower to pay its debts as and when they become due or the
admission by Borrower in writing of such inability; Borrower dissolved or
terminates its existence; any levy is made upon the property or assets of
Borrower which are collateral for the Revolving Credit Loans; or
(f) Filing of an involuntary petition against Borrower in bankruptcy
or seeking reorganization, arrangement, readjustment of its debts or for any
other relief under the United States Bankruptcy Code, as amended, or under any
other insolvency act or law, state or federal,
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<PAGE> 15
now or hereafter existing; or the involuntary appointment of a receiver or
trustee for Borrower, or for all or a substantial part of its property; or the
involuntary dissolution or liquidation of Borrower; or the seizure of or
issuance of a warrant of attachment, execution or similar process against any
part of the property or assets of Borrower; and the continuance of any of such
events for sixty (60) days undismissed, unbonded or undischarged; or
(g) Borrower is permanently enjoined, restrained or in any manner
prevented by court order from conducting all or any material part of its
business affairs; or
(h) Merger or consolidation with another corporation by Borrower
where Borrower is not the surviving entity; or
(i) Dissolution, termination of existence, business failure or
cessation of business operations of Borrower; or
(j) Lender reasonably concludes that an event has occurred or a
condition exists which does not constitute an Event of Default under any of the
foregoing provisions but does constitute a material threat to the security of
Lender for the Revolving Credit Loans, and such event or condition continues
uncured for twenty (20) days after written notice thereof is given by Lender to
Borrower.
7.2. Remedies of Lender Upon Default. Upon and after the occurrence
of any Event of Default, then and in any such event, at the option of Lender,
Lender may declare all amounts owing in respect to the Revolving Credit Note,
and this Agreement and all unpaid installments thereof and interest thereon and
all other liabilities, obligations, and Debt of Borrower to Lender then
existing, at once due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived. In such event, all
property, credits, claims and balances of whatever nature of Borrower at any
time in the possession or control of or owing to Lender or its agents
(remittances and property to be deemed in possession of Lender as soon as put in
transit to it) including, without limitation, any balances on deposit in any
account of Borrower with Lender may at any time be set off or otherwise applied
by Lender to the payment of all amounts owing in respect of the Revolving Credit
Note, this Agreement and all other Loan Documents, and any other liabilities,
obligations, and Debt of Borrower, or any part thereof, whether or not due, in
such order as Lender shall determine. Lender may apply any proceeds of any
security in such order as it shall determine, and after all Debt, liabilities
and obligations now or hereafter of Borrower to Lender have been paid in full,
Lender shall account for any security then remaining or any surplus.
7.3. Cross Default. An Event of Default hereunder shall constitute a
default and an Event of Default under the Revolving Credit Note, under each of
the other Loan Documents, and all other obligations, now or hereafter existing,
howsoever evidenced, of Borrower to Lender. An Event of Default hereunder shall
also constitute an Event of Default under that certain Revolving Credit
Agreement between Lender and Uvex Safety, Inc. dated of even date herewith.
7.4. No Release of Borrower. Borrower expressly agrees that no
renewal or extension granted, whether by acceptance of interest in advance or
otherwise, nor any indulgence shown to, nor any release of, nor any dealings
between Lender and any person now or hereafter interested in this Agreement, the
Revolving Credit Note, shall discharge, extend, or in any way
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<PAGE> 16
affect the obligations of Borrower as principal debtor under this Agreement and
the Revolving Credit Note.
SECTION 8. MISCELLANEOUS
8.1. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of Lender, any right, power or privilege
hereunder or under the Revolving Credit Note, or the other Loan Documents, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Every maker,
endorser and guarantor of the Revolving Credit Note and this Agreement waives
presentment, demand, notice and protest and all defenses based on the giving of
time and other indulgence, substitution, exchange or release of collateral or
release of any person primarily or secondarily liable thereunder. The rights and
remedies herein, in the Revolving Credit Note, and in the Loan Documents are
cumulative and not exclusive of any rights or remedies provided by law.
8.2. Payment of Expenses and Taxes. Borrower agrees to pay, or
reimburse Lender, for actual out-of-pocket expenses, including reasonable
counsel fees, incurred by Lender in connection with the development,
preparation, execution, administration, collection or enforcement of or the
preservation of any rights under any of the Loan Documents and the Revolving
Credit Loans. Borrower agrees to pay, and to save Lender harmless from, any and
all liabilities with respect to, or resulting from any delay in paying taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of the Revolving Credit Note and any of the other Loan
Documents or any modification thereof, or any waiver or consent under or in
respect of any thereof. The agreements of Borrower under this Section shall be
deemed to be and this Agreement shall be construed as if such agreements were
representations and warranties under Section 3 hereof. The obligations of
Borrower under this Section shall survive the payment of any amounts due in
respect of the Revolving Credit Note, and this Agreement, and the termination of
this Agreement.
8.3. Intention Not to Violate Usury Laws. Notwithstanding anything
in the Revolving Credit Note, this Agreement, or any other of the Loan Documents
or other instrument to the contrary, Borrower shall not be required to pay
interest on the indebtedness evidenced by the Revolving Credit Note in excess of
the maximum interest permissible under applicable law. If under any
circumstances whatsoever the holder of the Revolving Credit Note should receive
as interest under the Revolving Credit Note an amount which would exceed the
maximum permissible interest under applicable law, such excess amount shall be
applied to reduce the principal balance of the indebtedness evidenced by the
Revolving Credit Note and not to payment of interest.
8.4. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Borrower and Lender and their respective successors
and assigns, as the case may be, except that Borrower may not transfer or assign
any of its rights hereunder without the prior written consent of Lender. All
references to Lender herein, in the Revolving Credit Note or in any instrument
delivered to Lender in connection herewith or therewith shall be deemed to apply
to any holder for the time being of the Revolving Credit Note.
8.5. Assignment by Lender. Lender may, from time to time, without
notice to Borrower, sell, assign, transfer or otherwise dispose of all or any
part of the Revolving Credit
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<PAGE> 17
Loans. In such event, each and every immediate and successive purchaser,
assignee, transferee or holder of all or any part of the Revolving Credit Loans
shall have the right to enforce this Agreement, by legal action or otherwise,
for its own benefit as fully as if such purchaser, assignee, transferee or
holder were herein by name specifically given such right. Lender shall have an
unimpaired right to enforce this Agreement for its benefit with respect to that
portion of the Revolving Credit Loans as Lender has not sold, assigned,
transferred or otherwise disposed of.
8.6. Day of Payment. Whenever any payment to be made hereunder or
under the Revolving Credit Note shall become due and payable on a day which is
not a business day, such payment may be made on the next succeeding business day
and, in the case of any payment of principal, such extension shall in such case
be included in computing interest on such payment.
8.7. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles, consistently applied. Where any accounting determination or
calculation is required to be made under this Agreement, such determination or
calculation (unless otherwise provided) shall be made in accordance with
generally accepted accounting principles, consistently applied, except that if
because of a change in generally accepted accounting principles, Borrower would
have to alter a previously utilized accounting method or policy in order to
remain in compliance with generally accepted accounting principles, such
determination or calculation shall continue to be made in accordance with
Borrower's previous accounting methods or policy.
8.8. Stamp or Other Tax. Should any stamp or excise tax become
payable in respect of this Agreement, or the Revolving Credit Note, or any
modification hereof or thereof, Borrower shall pay the same (including interest
and penalties, if any) and shall hold Lender harmless with respect thereto.
8.9. Construction and Merger. This Agreement merges all of the
understandings of the parties hereto and the Revolving Credit Note, this
Agreement, and the rights and obligations of the parties hereunder and
thereunder, unless expressly stated to the contrary in a particular Loan
Document, shall be governed by, and construed and interpreted in accordance with
the laws of the State of Rhode Island without resort to its conflict of laws
rules. The paragraph headings used herein are solely for reference and shall not
be used in the interpretation or the construction hereof. Wherever possible,
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law; should any portion of this Agreement
be declared invalid for any reason in any jurisdiction, such declaration shall
have no effect upon the remaining portions of this Agreement; furthermore, the
entirety of this Agreement shall continue in full force and effect in other
jurisdictions and said remaining portions of this Agreement shall continue in
full force and effect in the subject jurisdiction as if this Agreement had been
executed with the invalid portions thereof deleted.
8.10. Notices. Except as otherwise specified herein or by notice,
all notices and communications provided for herein shall be in writing and shall
be deemed effective when deposited in the United States mail, sent by certified
mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to Borrower, to: Bacou USA, Inc.
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<PAGE> 18
10 Thurber Boulevard
Smithfield, RI 02917
Attn: Mr. Walter Stepan
President and CEO
with a copy to: Susan A. Keller, Esq.
Edwards & Angell
2700 Hospital Trust Tower
Providence, RI 02903
(b) If to Lender, to: Citizens Bank of Rhode Island
One Citizens Plaza
Providence, RI 02903
Attn: J. Bruce Hallworth
Senior Vice President
with a copy to:
Suzanne Worrell Gemma, Esq.
Peabody & Brown
One Citizens Plaza, Suite 700
Providence, RI 02903
Any party may change its address by not less than three (3) days' advance notice
thereof given as aforesaid.
8.11. WAIVER OF JURY TRIAL; SERVICE OF PROCESS. IN THE EVENT THAT
LENDER BRINGS ANY ACTION OR PROCEEDING IN CONNECTION HEREWITH IN ANY COURT OF
RECORD OF RHODE ISLAND OR THE UNITED STATES IN RHODE ISLAND, BORROWER HEREBY
IRREVOCABLY CONSENTS TO AND CONFERS PERSONAL JURISDICTION OF SUCH COURT OVER
BORROWER BY SUCH COURT. IN ANY SUCH ACTION OR PROCEEDING, BORROWER HEREBY WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT
SERVICE THEREOF MAY BE MADE UPON BORROWER BY MAILING A COPY OF SUCH SUMMONS,
COMPLAINT OR OTHER PROCESS BY CERTIFIED MAIL TO BORROWER AT ITS ADDRESS
DESIGNATED IN SECTION 8.10 HEREOF. BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION HEREWITH,
OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF,
OR ANY OTHER CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN BORROWER AND LENDER.
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<PAGE> 19
IN WITNESS WHEREOF, the parties have by their duly authorized
representatives executed this Agreement as of the day and year first above
written.
BACOU USA, INC.
/s/ Philip B. Barr By: /s/ Walter Stepan
- --------------------------- ----------------------------------
Witness Walter Stepan, President and
Chief Executive Officer
CITIZENS BANK OF RHODE ISLAND
/s/ Christine M. Rowe By: /s/ J. Bruce Hallworth
- --------------------------- ----------------------------------
Witness J. Bruce Hallworth
Senior Vice President
<PAGE> 1
EXHIBIT 4(b)
REVOLVING LINE OF CREDIT AGREEMENT
This REVOLVING LINE OF CREDIT AGREEMENT (this "Agreement") is made this
21st day of May, 1997 by and between Uvex Safety, Inc., a Rhode Island
corporation ("Borrower") and Citizens Bank of Rhode Island, a Rhode Island
financial institution, with its principal office located in the City of
Providence, Rhode Island ("Lender"). Borrower has requested certain loans from
Lender and Lender has agreed to make certain loans to Borrower, upon the terms
and conditions set forth below.
SECTION 1. DEFINITIONS
"Assets" Assets means total assets as computed in accordance with
generally accepted accounting principles, consistently applied and as applied in
connection with and at the time of the preparation of the financial statements
previously furnished to Lender, and as required to be furnished to Lender
pursuant to the terms hereof.
"Board" Board shall have the meaning set forth in Section 3.13
hereof.
"Code" Code shall have the meaning set forth in Section 5.8 hereof.
"Debt" Debt means all items which, in accordance with generally
accepted accounting principles consistently applied, would be included in
determining total liabilities as shown on the liability side of a balance sheet
as of the date Debt is to be determined and, in any event, shall include,
without limitation, any liability, whether or not any such liability shall have
been assumed, (a) on account of deposits, advances or progress payments under
contract, or any indebtedness or liability evidenced by notes, bonds, debentures
or similar obligations (including, without limitation, any purchase option
obligations, conditional sales or similar title retention agreements) or
indebtedness for borrowed money, (b) secured by any mortgage, pledge, lien or
security interest on or in property owned or acquired, and (c) under a lease
which, in accordance with generally accepted accounting principles consistently
applied, should be capitalized, and guaranties, endorsements (other than for
collection in the ordinary course of business) and other contingent obligations
in respect of the obligations of others.
"ERISA" ERISA shall have the meaning set forth in Section 5.8
hereof.
"Event(s) of Default" Event(s) of Default means those Event(s) of
Default set forth in Section 7.1 hereof.
"Fiscal Loss" Fiscal Loss means, in accordance with generally
accepted accounting principles, any net operating loss (on a consolidated basis)
prior to the payment of interest, dividends and taxes.
"Guarantor" Guarantor means Bacou USA, Inc., a Delaware corporation.
"Guaranty" Guaranty means that certain guaranty of even date
herewith given by the Guarantor to Lender and more particularly described in
Section 2.8 hereof.
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"Letters of Credit" Letters of Credit means standby and commercial
letters of credit issued from time to time on account of Borrower under the
Revolving Credit Loans.
"Liabilities" Liabilities means total consolidated liabilities as
computed in accordance with generally accepted accounting principles,
consistently applied and as applied in connection with and at the time of the
preparation of the financial statements previously furnished to Lender and as
required to be furnished to Lender pursuant to the terms hereof, provided that
Liabilities shall include all Debt and other obligations for borrowed money and
deferred purchase price for property or services or any obligation or
indebtedness of others, the payment or collection of which Borrower has
guaranteed or in respect of which Borrower is liable, contingently or otherwise,
and other than Debt of Borrower to any third party, which Debt is subordinated,
in form and substance satisfactory to Lender, to payment of the Revolving Credit
Note and the Revolving Credit Loans.
"Loan Documents" Loan Documents means, collectively, this Agreement,
the Revolving Credit Note, the Guaranty, and all other instruments and documents
concurrently, previously or at any time hereafter executed by Borrower in
connection with the Revolving Credit Loans or this Agreement.
"PBGC" PBGC shall have the meaning set forth in Section 5.8 hereof.
"Revolving Credit Commitment" Revolving Credit Commitment means the
obligation of Lender to make Revolving Credit Loans pursuant to Section 2.1
hereof.
"Revolving Credit Limit" Revolving Credit Limit means the sum of
Three Million ($3,000,000).
"Revolving Credit Loan(s)" Revolving Credit Loan(s) means the
loan(s) made by Lender to Borrower and evidenced by the Revolving Credit Note,
such Revolving Credit Loan(s) to be made pursuant to Section 2 hereof.
"Revolving Credit Note" Revolving Credit Note means that certain
promissory note dated of even date herewith made by Borrower in favor of Lender
in the stated principal amount of Three Million Dollars ($3,000,000), evidencing
the Revolving Credit Loans.
"Revolving Credit Termination Date" Revolving Credit Termination
Date means March 31, 1998, unless extended in writing by Lender.
"Tangible Net Worth" Tangible Net Worth means the excess of
aggregate consolidated Assets of Borrower over aggregate consolidated
Liabilities of Borrower, as determined in accordance with generally accepted
accounting principles consistently applied. For purposes of the foregoing
calculations, aggregate consolidated Assets shall not include intangible assets
and deferred charges, including, without limitation, goodwill, debt discount,
organizational expenses, trademarks and trade names, patents, deferred product
development costs and similar items.
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SECTION 2. REVOLVING CREDIT LOANS
2.1. Revolving Credit Commitment. Subject to the terms and
conditions of this Agreement, Lender agrees to make Revolving Credit Loans to
Borrower on a revolving basis from time to time from the date hereof to and
including the Revolving Credit Termination Date, in an aggregate principal
amount up to but not exceeding at any one time outstanding the Revolving Credit
Limit. During the aforesaid period, Borrower may use the Revolving Credit
Commitment by borrowing, paying and repaying the Revolving Credit Loans (and by
surrendering Letters of Credit) in whole or in part and by reborrowing (or by
requesting additional Letters of Credit on its account), all in accordance with
the terms and conditions of this Agreement.
2.2. Revolving Credit Note; Mandatory Payments. The Revolving Credit
Loans shall be evidenced by the Revolving Credit Note. The Revolving Credit Note
shall bear interest on the unpaid principal balance and, at Lender's election,
on overdue interest, whether before or after maturity, to the extent permitted
by applicable law, from the date thereof until payment in full thereof, at the
rate set forth in the Revolving Credit Note. Payments on the Revolving Credit
Note shall be made in accordance with the terms thereof. Interest shall be
calculated on the basis of a three hundred sixty (360) day year, but shall
accrue and be payable on the basis of the actual number of days elapsed in each
month.
2.3. Borrowing Procedure. The Revolving Credit Loans shall be made
at such time or times as Borrower shall request. All Revolving Credit Loans
shall be made, processed and documented in accordance with the following terms
and conditions:
(a) Each of the Revolving Credit Loans shall be made on at least one
(1) business day's advance notice in writing or by telephone to Lender
from Walter Stepan, or such person(s) as he may from time to time
designate in writing to Lender, specifying the date and amount thereof.
Lender shall credit the amount of such Revolving Credit Loan to the
checking account of Borrower with Lender designated as the operating
account of Borrower, provided, however, that no Event of Default has
occurred hereunder, and all requirements and preconditions imposed by this
Agreement have been met. Advice of borrowings hereunder shall be given to
J. Bruce Hallworth, or such other officer(s) of Lender as Lender may
designate from time to time.
(b) Borrower shall give to Lender written confirmation of each
request for a Revolving Credit Loan, and Lender shall give Borrower
written confirmation of the making of each Revolving Credit Loan and such
credit, which confirmation shall constitute conclusive evidence, absent
manifest error, of the making of a Revolving Credit Loan hereunder. In
cases where Borrower does not receive from Lender notice of a debit or
credit to the account, as provided herein, on the advances or repayments,
the amounts owing under the Revolving Credit Note and the applicable
interest rate(s) thereon, shall be the amounts indicated by Lender's
records.
(c) Borrower agrees that Lender shall incur no liability in acting
upon written or telephonic instructions which the recipient of the
instructions believes in good faith to be given by an authorized person,
notwithstanding the fact that such instructions might not be confirmed as
aforesaid, and Borrower shall be fully liable to Lender for all advances
made by Lender to Borrower hereunder on the basis of such instructions.
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(d) All instructions from Borrower to Lender shall be given by 1:00
p.m. (Providence time) on any banking day in order to be effective that
day. If given after 1:00 p.m. (Providence time), such instructions shall
be effective as of the next banking day or as Borrower and Lender may
mutually agree.
(e) Each request by Borrower for a borrowing hereunder shall
constitute a representation and a warranty by Borrower to Lender that all
of Borrower's representations and warranties set forth in Section 3 below
are true and accurate as of the date of such request.
(f) Each request for the issuance by Lender of Letters of Credit
hereunder shall be accompanied by the name and address of the intended
beneficiary thereof and the completion of the standard application relating
thereto. Prior to the issuance of Letters of Credit hereunder, Borrower shall
pay to Lender all of Lender's Letter of Credit fees and charges and execute
Lender's standard Letter of Credit documents.
2.4. Limitations on Revolving Credit Loans. Notwithstanding anything
contained in this Agreement to the contrary, the aggregate amount of the
Revolving Credit Loans made or outstanding at any time hereunder and under the
Revolving Credit Note shall not exceed the Revolving Credit Limit. In the event
that the aggregate amount of the Revolving Credit Loans outstanding at any time
exceeds the foregoing limit, then Borrower shall immediately pay to Lender an
amount equal to the amount by which such aggregate outstanding Revolving Credit
Loans exceed the applicable limit, so that Borrower shall always be in
compliance with the Revolving Credit Limit. In no case shall the aggregate
principal amount of all outstanding Revolving Credit Loans plus the aggregate
face amount of all issued Letters of Credit exceed at any time the Revolving
Credit Limit.
2.5. Termination of Right to Borrow; Repayment. The part of this
Agreement that relates to periodic borrowings shall terminate on the Revolving
Credit Termination Date, or on any earlier date on or after which an Event of
Default occurs (and in the case of such Event of Default, the entire unpaid
principal balance outstanding as a result of the Revolving Credit Loans,
together with all interest thereon accrued and unpaid and all other charges due
hereunder, shall be paid in full). The unpaid principal balance under the
Revolving Credit Note, and interest accrued and unpaid thereon, if not sooner
paid, shall be due and payable on the Revolving Credit Termination Date.
2.6. Prepayments. Borrower shall have the right, at any time and
from time to time, to pay, without premium or penalty, all or any part of the
indebtedness outstanding under the Revolving Credit Note.
2.7. Purpose of Revolving Credit Loans. The purpose of the Revolving
Credit Commitment and all Revolving Credit Loans is to provide working capital
for Borrower's business operations, to finance the acquisition of other entities
with Lender's consent, to finance capital asset purchases, to purchase foreign
exchange, and to provide Letters of Credit from time to time.
2.8. Guaranty. In consideration of the Loan made by Lender to
Borrower, Borrower agrees to cause Guarantor to execute and deliver to Lender a
guaranty guarantying
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Borrower's obligations of payment and performance under the Revolving Credit
Loans, the Revolving Credit Note, and this Agreement, as more particularly
described in the Guaranty, which Guaranty shall be security for all obligations
of Borrower to Lender now or hereafter existing, and the provisions of which are
hereby incorporated herein by reference, having the same force and effect as if
set forth herein.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to
make the Revolving Credit Loans to be governed by the terms hereof, Borrower
represents and warrants to Lender as follows:
3.1. Organization and Qualification. Borrower is a duly organized
corporation validly existing and in good standing under the laws of the State of
Rhode Island, and has the power to own its assets and to transact the business
in which it is presently engaged, and has qualified to do business in each
jurisdiction in which the nature of its business and/or the ownership of its
assets requires such qualification.
3.2. Power and Authorization. Borrower has, or at the time of
execution shall have, the power to execute, deliver and perform the Loan
Documents and to borrow hereunder and thereunder, and has taken all necessary
corporate action to authorize the borrowings on the terms and conditions of, and
the execution, delivery and performance of, the Loan Documents. All consents,
licenses, approvals or authorizations of, or registration or declarations with,
any governmental authority, bureau or agency which are required in connection
with the execution, delivery, performance, validity or enforceability of the
Loan Documents have been duly obtained and are in full force and effect.
3.3. No Legal Bar to Revolving Credit Loans. The execution, delivery
and performance of the Loan Documents shall not violate any provision of any
existing law or regulation, any order or decree of any court or governmental
authority, bureau or agency, the articles of incorporation and by-laws of
Borrower, or any mortgage, indenture, contract or other agreement to which
Borrower is a party or which purports to be binding upon Borrower or upon any of
its properties or assets, and shall not result in the creation or imposition of
any lien, charge or encumbrance on, or security interest in, any of its
properties or assets except in favor of Lender.
3.4. No Material Litigation. Except as set forth on the financial
statements of Borrower referred to in Section 3.8 hereof or disclosed in writing
to Lender, there are no actions, suits or proceedings (whether or not purported
to be on behalf of or against Borrower) pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any of its properties
which, if adversely determined, would have a material adverse effect upon the
financial condition, business or operations of Borrower. Borrower is not in
default with respect to any order of any court, arbitrator or governmental body
nor subject or a party to any order of any court or governmental body arising
out of any action, suit or proceeding under any statute or other law.
3.5. No Default. Borrower is not in material default in the payment
or performance of any material contract, lease of personal property or real
property, agreement or
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other instrument to which it is a party or by which any of its assets may be
bound, and no Event of Default has occurred and is continuing thereunder.
3.6. No Pending Insolvency. Any borrowings made by Borrower subject
to this Agreement do not and shall not render Borrower insolvent; Borrower is
not contemplating the filing of a petition under any state or federal bankruptcy
or insolvency laws or a petition for the liquidation of or to appoint a receiver
for all or a major portion of its property, nor does Borrower have any knowledge
of any person contemplating the filing of any such petition against Borrower or
its assets, including the properties and assets reflected in the financial
statements referred to in Section 3.8 hereof, and none of the properties and
assets owned by Borrower is subject to any mortgage, security interest, pledge,
lien, charge, encumbrance or title retention or other security agreement or
arrangement of any nature whatsoever, except such as are set forth in the
financial statements referred to in Section 3.8 hereof, and none of the
properties and assets owned by Borrower is subject to any mortgage, security
interest, pledge, lien, charge, encumbrance or title retention or other security
agreement or arrangement of any nature whatsoever, except such as are set forth
in the financial statements referred to in Section 3.8 hereof or fully disclosed
in writing to Lender.
3.7. Taxes. Borrower has filed or caused to be filed all tax returns
required to be filed by Borrower, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it, and no tax liens
have been filed which have not been bonded over or otherwise addressed to the
satisfaction of Lender, and no claims are being asserted with respect to any
taxes which are not reflected in the financial statements referred to in Section
3.8 hereof; and Borrower is currently providing adequate reserves for all
current taxes.
3.8. Financial Condition. All financial statements previously
furnished by Borrower to Lender fully and accurately reflect the financial
condition of Borrower as of the dates furnished and have been prepared in
accordance with generally accepted principles of accounting practice,
consistently applied. There has been no material adverse change in the financial
condition of Borrower since the date of such statements, and Borrower has no
knowledge of any material obligation, liability or commitment, direct or
contingent which existed as of the date of said financial statements and which
is not reflected in said financial statements.
3.9. Ownership of Property. Borrower owns or leases all property,
tangible and intangible, necessary to conduct the business in which it is
engaged in the manner in which that business has been conducted.
3.10. Compliance With Laws. Borrower has complied in all material
respects with all laws, regulations and orders applicable to its business,
including those pertaining to labor and minimum wages, zoning, environment,
health and safety, and the present use of all property owned by it does not
violate any such laws, regulations or orders.
3.11. Statements. No statement of fact made by or on behalf of
Borrower in this Agreement or in any certificate or schedule furnished to Lender
pursuant hereto, contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements contained therein or
herein not misleading. There is no fact presently known to Borrower that has not
been disclosed to Lender which materially affects adversely nor, as far as
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Borrower can foresee, will materially affect adversely Borrower's property,
business, prospects or condition (financial or otherwise).
3.12. Binding Effect. The Loan Documents and all of the other
instruments and documents executed by Borrower and delivered to Lender pursuant
to this Agreement, constitute the legal, valid and binding obligations of
Borrower and are enforceable in accordance with their respective terms.
3.13. Regulation U. Borrower owns no "margin stock" as such term is
defined in Regulation U, as amended (12 C.F.R. Part 221), issued by the Board of
Governors of the Federal Reserve System (the "Board"). The proceeds of the
Revolving Credit Loans made pursuant to this Agreement shall be used by Borrower
only for the purposes permitted by Lender as set forth in Section 2.7 hereof.
None of the proceeds of the Revolving Credit Loans will be used, directly or
indirectly, for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry margin stock or for any other purpose
which might constitute any of the Revolving Credit Loans a "purpose credit"
within the meaning of said Regulation U or Regulation X (12 C.F.R. Part 224) of
the Board. Neither Borrower nor any agent acting in its behalf has taken or will
take any action which might cause this Agreement or any of the documents or
instruments delivered pursuant hereto to violate any regulation of the Board or
to violate the Securities Exchange Act of 1934, in effect as of the date hereof.
3.14. Employee Benefit Plans. (a) Except as disclosed to Lender,
none of the employee benefit plans maintained at any time by Borrower or the
trust created thereunder has engaged in a prohibited or allegedly prohibited
transaction which could subject any such employee benefit plan or trust to a
material tax or penalty on prohibited transactions imposed under Code Section
4975 or ERISA.
(b) None of the employee benefit plans of Borrower which are
employee pension benefit plans or the trusts created thereunder has been
terminated; nor has any such employee pension benefit plan incurred any
liability to the Pension Benefit Guaranty Corporation established pursuant
to ERISA, other than for required insurance premiums which have been paid
when due, or incurred any accumulated funding deficiency, whether or not
waived; nor has there been any reportable event, or other event or
condition, which presents a material risk of termination of any such
employee benefit plan by such Pension Benefit Guaranty Corporation.
(c) Except for the Titmus Optical, Inc. bargaining employee pension
plan, the present value of all accrued benefits under the employee benefit
plans of Borrower which are employee pension benefit plans did not, as of
the most recent valuation date, exceeds the then current value of the
assets of such employee pension benefit plans allocable to such accrued
benefits.
(d) The consummation of the Revolving Credit Loans from Lender
provided for in this Agreement will not involve any prohibited
transaction.
(e) As used in this Section and in Section 5.8 hereof, the terms
"employee benefit plan", "employee pension benefit plan", "accumulated
funding deficiency", "reportable event", and "accrued benefits" shall have
the respective meanings assigned to
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them in ERISA, and the term "prohibited transaction" shall have the
meaning assigned to it in Code Section 4975 and ERISA.
3.15. Investment Company. Borrower is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. Section 80a-1, et seq.). The application of the
proceeds and repayment of the Revolving Credit Note by Borrower, the performance
of the transactions contemplated by this Agreement shall not violate any
provision of said Act, or any rule, regulation or order issued by the Securities
and Exchange Commission thereunder.
3.16. Environmental Compliance. Borrower makes the following
representations and warranties to Lender as to all property owned or controlled
by it (the "Real Estate"):
(a) Neither Borrower nor any operations conducted by Borrower or any
tenant of Borrower on the Real Estate is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including, without
limitation, those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any other
federal, or state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (collectively,
"Environmental Laws"), which violation involves the Real Estate and would
have a material adverse effect on the environment or the business, assets
or financial condition of Borrower.
(b) Borrower has no knowledge of the receipt of any notice from any
third party, including without limitation any federal, state or local
governmental authority, (i) that it has been identified by the United
States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that
any hazardous waste, as defined by 42 U.S.C. Section 9601(5), any
hazardous substances as defined by 42 U.S.C. Section 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) or any
toxic substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws (collectively, "Hazardous
Materials") which it has generated, transported or disposed of have been
found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that Borrower conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Laws; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any
third party's incurrence of costs, expenses, losses or damages of any kind
whatsoever in connection with the Release of Hazardous Materials.
(c) No portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Materials except in
accordance with applicable Environmental Laws; and no underground tank or
other underground storage receptacle
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for Hazardous Materials is located on any portion of the Real Estate; and
(i) in the course of any activities conducted by Borrower, no Hazardous
Materials have been generated or are being used on the Real Estate except
in accordance with applicable Environmental Laws; (ii) to the best of
Borrower's knowledge there has been no past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping (a "Release" or "Releases") or
threatened Release of Hazardous Materials on, upon, into or from the Real
Estate, which Release would have an adverse effect on the value of the
Real Estate or adjacent properties or the environment; (iii) to the best
of Borrower's knowledge, there have been no Releases on, upon, from or
into any real property in the vicinity of the Real Estate which, through
soil or groundwater contamination, which if come to be located on, would
have a material adverse effect on the value of, the Real Estate; and (iv)
any Hazardous Materials that have been generated on the Real Estate have
been transported off-site only by carriers having an identification number
issued by the EPA, treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities have been and are,
to the best of Borrower's knowledge, operating in compliance with such
permits and applicable Environmental Laws.
(d) No part of the Real Estate is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, by virtue of the transactions set
forth herein and contemplated hereby.
SECTION 4. CONDITIONS OF REVOLVING CREDIT LOANS
The obligation of Lender to make the Revolving Credit Loans hereunder is
subject to the following conditions precedent:
4.1. Authorization. On or prior to the date of the closing of the
Revolving Credit Loans and the execution of the documents evidencing the
Revolving Credit Loans, Borrower shall have furnished to Lender copies of all
corporate documents and proceedings taken by Borrower, certified by Borrower's
secretary authorizing all such borrowings and actions, and the execution,
delivery and performance of the Loan Documents and such other documents as
Lender or its counsel may reasonably request.
4.2. Approval of Counsel. All legal matters incident to the
transactions contemplated by this Agreement shall be satisfactory to Peabody &
Brown, special counsel to Lender.
4.3. Certificate. The representations and warranties contained in
Section 3 hereof shall be true and correct on the date hereof and on each date
on which Borrower requests a Loan hereunder; and no event that constitutes or
which with the mere giving of notice of lapse of time, or both, would constitute
an Event of Default under this Agreement shall have occurred or shall exist on
such date. Upon request of Lender, Borrower shall deliver to Lender, dated as of
each date of the Revolving Credit Loans, certificates of Borrower's secretary,
to the foregoing effect.
4.4. Legal Opinion. On or prior to the date of the closing of the
Revolving Credit Loans and the execution of the documents evidencing the
Revolving Credit Loans,
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counsel to Borrower and Guarantor shall submit to Lender an opinion letter in
form and substance satisfactory to Lender and to Lender's special counsel, which
opinion letter shall address, without limitation, all matters customarily
addressed in such an opinion.
4.5. Loan Documents. On or prior to the date of the closing of the
Revolving Credit Loans, Borrower and Guarantor shall execute and deliver to
Lender the Loan Documents, and any other instruments or documents related to the
foregoing instruments or this Agreement.
4.6. Financial Statements. On or prior to the date of the closing of
the Revolving Credit Loans and the execution of the documents evidencing the
Revolving Credit Loans, Lender shall receive copies of the current financial
statements and income tax returns of Borrower and Guarantor.
SECTION 5. AFFIRMATIVE COVENANTS
Until payment in full of the principal and interest of Borrower's
obligations to Lender under the Revolving Credit Note and this Agreement, unless
Lender shall otherwise agree in writing, Borrower hereby covenants and agrees
that Borrower shall perform and fulfill the following covenants:
5.1. Financial Statements, Reports and Contracts. Borrower shall
furnish to Lender the following information at the times set forth below which
shall constitute written notice to Lender for purposes of this Agreement:
(a) On or before ninety (90) days after the close of each of its
fiscal years, audited financial statements of Guarantor for such fiscal
year, together with supporting schedules of Borrower, including, without
limitation balance sheets, related statements of income, statements of
stockholder equity, statements of cash flow, and similar statements, all
with customary supporting data and schedules all in reasonable detail, in
form satisfactory to Lender, prepared in accordance with generally
accepted accounting principles and prior practice, consistently applied,
and audited by an independent certified public accountant satisfactory to
Lender who shall certify to Lender, upon Lender's request, that no Event
of Default has occurred, in particular with respect to all financial
covenants of Borrower (if any) (and such certificate shall include the
calculation of Borrower's compliance with such financial covenants), prior
to or as of the date of such certification;
(b) On or before forty-five (45) days after the close of each fiscal
quarter of Borrower, copies of all filings on Form 10-Q made by Guarantor;
(c) With reasonable promptness, such other information bearing upon
the credit and the status of business and operations of Borrower as Lender
may from time to time reasonably request.
5.2. Payment of Obligations. Borrower shall pay and discharge, when
due, all of its obligations and liabilities (including, without limitation, tax
liabilities) except where the same may be contested in good faith. Borrower
shall maintain appropriate reserves for the accrual of any of the same
determined in accordance with generally accepted accounting
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principles, consistently applied, and the applicable requirements of public
regulatory authorities having jurisdiction over Borrower.
5.3. Accounts / Audits. Borrower shall keep proper books of record
and account in which full, true and correct entries in reasonable detail will be
made of all its transactions in accordance with generally accepted accounting
principles, consistently applied, and the requirements of public regulatory
authorities having jurisdiction over Borrower. Borrower shall permit Lender
through Lender's officers, employees and agents, to inspect the places of
business, equipment, property and records of Borrower from time to time as
Lender may require, and to audit Borrower's records of account no more than
twice per year, the expense of which audit(s) shall be borne by Borrower and
shall be payable to Lender upon demand. Provided, however, that upon the
occurrence of an Event of Default under the Loan Documents, Lender may cause
such audits to be performed as many times as it deems reasonably necessary.
5.4. Maintenance of Properties; Insurance. Borrower shall keep all
of its properties useful and necessary to its business in good repair, working
order and condition, and from time to time make or cause to be made all needful
and proper repairs, renewals, replacements, betterments and improvements
thereto, so that the businesses carried on by Borrower may be properly and
advantageously conducted at all times. Borrower shall maintain insurance with
insurance companies in reasonable amounts, in accordance with sound business
practices, insuring against such risks as are usually insured against in the
same general area and by entities engaged in the same or a similar business,
including, by way of illustration and not of limitation, fire with extended
coverage, public liability, theft, personal property, collision and workers'
compensation insurance.
5.5. Additional Instruments. Borrower shall promptly execute and
deliver or cause to be executed and delivered to Lender from time to time all
such additional and/or supplemental instruments and documents as Lender deems
reasonably necessary or appropriate to evidence the obligations of Borrower.
5.6. Notices. Borrower shall promptly upon discovery of any one or
more of the following events give notice in writing to Lender of (a) the
occurrence of any event which constitutes, or which would constitute with the
mere passage of time or the giving of notice or both, an Event of Default or a
default under any instrument in connection herewith, (b) any dispute which may
exist between Borrower and any governmental agency or body which could affect
normal business operations of Borrower, (c) any changes in the financial
condition of Borrower which may or will result in a material adverse change in
the financial condition of Borrower, and (d) all litigation and proceedings
against Borrower in which the amount involved is One Hundred Thousand and
00/100ths Dollars ($100,000.00) or more and is not fully covered by insurance.
5.7. Conduct of Business and Maintenance of Existence. Borrower
shall do all things necessary to preserve, renew and keep in full force and
effect its existence as a corporation organized under the laws of the State of
Rhode Island, and all of its rights, franchises and licenses, and shall comply
in all respects with all applicable laws.
5.8. Employee Benefit Plans. Borrower shall maintain each of its
employee pension benefit plans (if any) that are subject to Title IV of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), in
compliance with all applicable requirements of
-11-
<PAGE> 12
ERISA and of the Internal Revenue Code of 1986, as amended (the "Code"), and
with all applicable rulings and regulations issued under the provisions of ERISA
and of the Code and, without limiting the generality of the foregoing, shall
satisfy the minimum funding standard for any such plan (as defined in Section
412(a) of the Code) and shall not engage in any prohibited transaction with
respect to any such plan (as defined in Section 4975(c) of the Code). Borrower
shall promptly furnish to Lender statements of Borrower setting forth details of
any reportable event (as defined in Section 4043(b) of ERISA) which may have
occurred and the action which Borrower proposes to take with respect thereto,
together with a copy of notice of such reportable event given to the Pension
Benefit Guaranty Corporation ("PBGC"); promptly upon the filing or making
thereof, Borrower shall furnish to Lender a copy of each annual report with
respect to any such plan; and promptly after receipt thereof, furnish to Lender
a copy of any notice Borrower receives from the PBGC or the Internal Revenue
Service with respect to any such plan.
5.9. Labor Laws. Borrower shall materially comply with all labor
laws at any time applicable to it including without limitation all labor laws
and minimum wage laws, and shall make all proper and applicable deductions from
wages required by law and all payments related to such deductions made.
5.10. Subordination of Debt. Borrower shall subordinate to the
Revolving Credit Loans, by subordination instruments satisfactory to Lender in
form and substance, all loans made to Borrower by any officer, director,
shareholder, partner, guarantor or affiliate of Borrower from time to time and
at any time made including all principal and interest accruing thereupon. All
original promissory notes or other instruments evidencing indebtedness of
Borrower to such officer, director, shareholder, partner, affiliate or guarantor
shall be delivered to and held by Lender.
5.11. Primary Accounts. Borrower shall maintain all of its primary
deposit and operating accounts with Lender at all times during the term hereof.
5.12. Compliance with Laws. Borrower shall, at all times, comply
fully with all laws applicable to it and to the Real Estate, including without
limitation the Americans with Disabilities Act, as the same may be modified from
time to time.
5.13. Ratio of Liabilities to Tangible Net Worth. Borrower shall
maintain at all times during the term hereof a ratio of Liabilities to Tangible
Net Worth of not more than 1:00 : 1.00, Borrower's compliance herewith to be
first tested by Lender on December 31, 1997 and to be tested annually
thereafter.
SECTION 6. NEGATIVE COVENANTS
Until payment in full of all of Borrower's obligations to Lender under
this Agreement, the Revolving Credit Note and all other Loan Documents, Borrower
covenants and agrees as follows:
6.1. Limitation on Borrowing. Borrower shall not incur, create,
assume or permit to exist any Debt or liability on account of deposits or
advances or any indebtedness or liability for borrowed money, or any
indebtedness or liability evidenced by any notes, bonds, debentures, or similar
obligations, including leases, except (a) Debt to Lender; (b) Debt existing as
of the date of the closing of the Revolving Credit Loans and approved in writing
by Lender;
-12-
<PAGE> 13
(c) Debt pertaining to any capitalized lease obligation; provided
such Debt when combined with all other capitalized lease obligations does not
exceed in the aggregate One Million Dollars ($1,000,000) per annum; (d) Debt the
terms and conditions of which have been approved in writing by Lender, and which
Debt is subordinated, if required by Lender, to the prior payment of all amounts
due under the Revolving Credit Note and this Agreement; and (e) trade
obligations incurred by Borrower in the ordinary course of business.
6.2. Limitation on Disposition of Assets. Borrower shall not sell,
lease, enter into a sale/leaseback transaction for, or otherwise dispose of or
transfer all or any material part of its properties or assets, including,
without limitation, its accounts receivable, inventory, equipment or interest in
real property, to any other person, firm, trust, corporation or association, or
enter into any agreement to any such effect.
6.3. Limitation on Encumbrances. Borrower shall not create, incur,
make, assume, or suffer to exist, after the date hereof, any assignment,
mortgage, pledge, security interest, lien, or other encumbrance of or upon any
of its properties or assets, whether now owned or hereafter acquired, to any
party other than Lender, excepting (a) liens for taxes not delinquent or being
contested in good faith by appropriate proceedings diligently pressed and as to
which there have been set aside on its books adequate reserves; (b) encumbrances
existing as of the date hereof, disclosed in writing to Lender and approved by
Lender in writing; (c) liens imposed by operation of law, such as warehousemen's
or mechanics' liens, incurred by Borrower in good faith and in the ordinary
course of business; and (d) liens securing Debt permitted under Section 6.1
hereof.
6.4. Limitation on Contingent Liabilities. Borrower shall not
directly or indirectly guaranty the payment by any other party whatsoever of any
indebtedness, or in effect guaranty the payment of any indebtedness through an
agreement, contingent or otherwise. In addition, Borrower shall not directly nor
indirectly (a) purchase indebtedness, (b) purchase, sell or lease (as lessee or
lessor) property or purchase or sell services primarily for the purpose of
enabling a debtor to make payment of the indebtedness or to assure the owner of
the indebtedness against loss, or (c) make any loan or advance or otherwise
supply funds to, or in any other manner, invest in a debtor. Notwithstanding the
foregoing, Borrower may endorse negotiable instruments for collection in the
ordinary course of business.
6.5. Limitation on Fundamental Changes and Dividends. Borrower shall
not sell, lease, or otherwise dispose of all or substantially all of its assets
to any other person, firm, corporation or association or enter into any
agreement to any such effect, change its fiscal year, or dissolve or liquidate.
6.6. Limitation on Acceleration of Other Debt and Modification of
Subordinated Debt. Borrower shall not accelerate the maturity of any Debt now or
hereafter outstanding to any other bank, lender, or financial institution, or
repay the same otherwise than in accordance with its terms or regular
amortization. Borrower shall not amend or modify, or consent to the amendment or
modification of, the terms of any Debt which is subordinated to the Revolving
Credit Loans.
6.7. Limitation on Use of Loan Proceeds. Borrower shall not permit
any of the proceeds of the Revolving Credit Loans to be used directly or
indirectly for the benefit of or by any affiliated entity of the Borrower
without the written consent of Lender.
-13-
<PAGE> 14
6.8 Fiscal Loss. Borrower shall not incur a fiscal loss in any
fiscal year of Borrower.
SECTION 7. DEFAULTS AND REMEDIES
7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder, under the
Revolving Credit Note and under all other Loan Documents (individually called an
"Event of Default", and collectively called "Events of Default"):
(a) Failure of Borrower to pay on the date when due (without any
notice thereof being required) any principal or interest or other charge due
under the Revolving Credit Note or as required by this Agreement or under any
other Debt, liability or obligation of Borrower to Lender, whether now or
hereafter existing or hereafter contracted or assumed, when and as the same
respectively becomes due and payable to Lender, whether at maturity, by
acceleration, or otherwise; or
(b) Any representation or warranty made by Borrower in this
Agreement, the Revolving Credit Note or any other of the Loan Documents, or in
any certificate, financial or other statement furnished at any time under or in
connection with the Revolving Credit Loans, this Agreement or with any other
Debt of Borrower to Lender, whether now or hereafter existing or hereafter
contracted or assumed, proves to be untrue or misleading when made or as of the
date hereof in any material respect; or
(c) Failure of Borrower to observe or perform, which failure
continues uncured for twenty (20) days after written notice of such failure is
given by Lender to Borrower (such notice to be given in accordance with Section
8.10 hereof) any term, covenant or agreement (excepting failure to pay, which
shall be governed by Section 7.1(a) hereof) contained in the Revolving Credit
Note, this Agreement, any other of the Loan Documents, or any other instrument
evidencing, securing or relating to any Debt, liability or obligation of
Borrower to Lender whether now or hereafter existing or hereinafter contracted
or assumed; or
(d) Failure of Borrower to pay or perform, on the date when due, any
material obligation of Borrower (including, without limitation, any material
obligation to parties other than Lender) affecting any security (now or
hereafter existing) for the Revolving Credit Note, regardless of how such
obligation is evidenced; or
(e) Filing by Borrower or Guarantor of a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization,
arrangement, readjustment of its debts or for any other relief under the United
States Bankruptcy Code, as amended, or under any other insolvency act or law,
state or federal, now or hereafter existing, or any action by Borrower or
Guarantor indicating its consent to, approval of, or acquiescence in, any such
petition or proceeding; the application by Borrower or Guarantor for, or the
appointment by consent or acquiescence of, a receiver or trustee for it or for
all or a substantial part of its property; the making by Borrower or Guarantor
of an assignment for the benefit of creditors; the inability of Borrower or
Guarantor to pay its debts as and when they become due or the admission by
Borrower or Guarantor in writing of such inability; Borrower or Guarantor
dissolved or
-14-
<PAGE> 15
terminates its existence; any levy is made upon the property or assets of
Borrower or Guarantor which are collateral for the Revolving Credit Loans; or
(f) Filing of an involuntary petition against Borrower or Guarantor
in bankruptcy or seeking reorganization, arrangement, readjustment of its debts
or for any other relief under the United States Bankruptcy Code, as amended, or
under any other insolvency act or law, state or federal, now or hereafter
existing; or the involuntary appointment of a receiver or trustee for Borrower
or Guarantor, or for all or a substantial part of its property; or the
involuntary dissolution or liquidation of Borrower or Guarantor; or the seizure
of or issuance of a warrant of attachment, execution or similar process against
any part of the property or assets of Borrower or Guarantor; and the continuance
of any of such events for sixty (60) days undismissed, unbonded or undischarged;
or
(g) Borrower is permanently enjoined, restrained or in any manner
prevented by court order from conducting all or any material part of its
business affairs; or
(h) Merger or consolidation with another corporation by Borrower
where Borrower is not the surviving entity; or
(i) Dissolution, termination of existence, business failure or
cessation of business operations of Borrower; or
(j) The occurrence of an Event of Default under the Guaranty or any
other guaranty of the Revolving Credit Loans, now or hereafter existing, or the
Guarantor gives notice to Lender of its revocation or termination of the
Guaranty.
(k) Lender reasonably concludes that an event has occurred or a
condition exists which does not constitute an Event of Default under any of the
foregoing provisions but does constitute a material threat to the security of
Lender for the Revolving Credit Loans, and such event or condition continues
uncured for twenty (20) days after written notice thereof is given by Lender to
Borrower.
7.2. Remedies of Lender Upon Default. Upon and after the occurrence
of any Event of Default, then and in any such event, at the option of Lender,
Lender may declare all amounts owing in respect to the Revolving Credit Note,
and this Agreement and all unpaid installments thereof and interest thereon and
all other liabilities, obligations, and Debt of Borrower to Lender then
existing, at once due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived. In such event, all
property, credits, claims and balances of whatever nature of Borrower at any
time in the possession or control of or owing to Lender or its agents
(remittances and property to be deemed in possession of Lender as soon as put in
transit to it) including, without limitation, any balances on deposit in any
account of Borrower with Lender may at any time be set off or otherwise applied
by Lender to the payment of all amounts owing in respect of the Revolving Credit
Note, this Agreement and all other Loan Documents, and any other liabilities,
obligations, and Debt of Borrower, or any part thereof, whether or not due, in
such order as Lender shall determine. Lender may apply any proceeds of any
security in such order as it shall determine, and after all Debt, liabilities
and obligations now or hereafter of Borrower to Lender have been paid in full,
Lender shall account for any security then remaining or any surplus.
-15-
<PAGE> 16
7.3. Cross Default. An Event of Default hereunder shall constitute a
default and an Event of Default under the Revolving Credit Note, under each of
the other Loan Documents, and all other obligations, now or hereafter existing,
howsoever evidenced, of Borrower to Lender. An Event of Default hereunder shall
also constitute an Event of Default under that certain Revolving Credit
Agreement between Lender and Bacou USA, Inc. dated of even date herewith.
7.4. No Release of Borrower. Borrower expressly agrees that no
renewal or extension granted, whether by acceptance of interest in advance or
otherwise, nor any indulgence shown to, nor any release of, nor any dealings
between Lender and any person now or hereafter interested in this Agreement, the
Revolving Credit Note, shall discharge, extend, or in any way affect the
obligations of Borrower as principal debtor under this Agreement and the
Revolving Credit Note.
SECTION 8. MISCELLANEOUS
8.1. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of Lender, any right, power or privilege
hereunder or under the Revolving Credit Note, or the other Loan Documents, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Every maker,
endorser and guarantor of the Revolving Credit Note and this Agreement waives
presentment, demand, notice and protest and all defenses based on the giving of
time and other indulgence, substitution, exchange or release of collateral or
release of any person primarily or secondarily liable thereunder. The rights and
remedies herein, in the Revolving Credit Note, and in the Loan Documents are
cumulative and not exclusive of any rights or remedies provided by law.
8.2. Payment of Expenses and Taxes. Borrower agrees to pay, or
reimburse Lender, for actual out-of-pocket expenses, including reasonable
counsel fees, incurred by Lender in connection with the development,
preparation, execution, administration, collection or enforcement of or the
preservation of any rights under any of the Loan Documents and the Revolving
Credit Loans. Borrower agrees to pay, and to save Lender harmless from, any and
all liabilities with respect to, or resulting from any delay in paying taxes, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of the Revolving Credit Note and any of the other Loan
Documents or any modification thereof, or any waiver or consent under or in
respect of any thereof. The agreements of Borrower under this Section shall be
deemed to be and this Agreement shall be construed as if such agreements were
representations and warranties under Section 3 hereof. The obligations of
Borrower under this Section shall survive the payment of any amounts due in
respect of the Revolving Credit Note, and this Agreement, and the termination of
this Agreement.
8.3. Intention Not to Violate Usury Laws. Notwithstanding anything
in the Revolving Credit Note, this Agreement, or any other of the Loan Documents
or other instrument to the contrary, Borrower shall not be required to pay
interest on the indebtedness evidenced by the Revolving Credit Note in excess of
the maximum interest permissible under applicable law. If under any
circumstances whatsoever the holder of the Revolving Credit Note should receive
as interest under the Revolving Credit Note an amount which would exceed the
maximum permissible interest under applicable law, such excess amount shall be
applied to reduce the
-16-
<PAGE> 17
principal balance of the indebtedness evidenced by the Revolving Credit Note and
not to payment of interest.
8.4. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Borrower and Lender and their respective successors
and assigns, as the case may be, except that Borrower may not transfer or assign
any of its rights hereunder without the prior written consent of Lender. All
references to Lender herein, in the Revolving Credit Note or in any instrument
delivered to Lender in connection herewith or therewith shall be deemed to apply
to any holder for the time being of the Revolving Credit Note.
8.5. Assignment by Lender. Lender may, from time to time, without
notice to Borrower, sell, assign, transfer or otherwise dispose of all or any
part of the Revolving Credit Loans. In such event, each and every immediate and
successive purchaser, assignee, transferee or holder of all or any part of the
Revolving Credit Loans shall have the right to enforce this Agreement, by legal
action or otherwise, for its own benefit as fully as if such purchaser,
assignee, transferee or holder were herein by name specifically given such
right. Lender shall have an unimpaired right to enforce this Agreement for its
benefit with respect to that portion of the Revolving Credit Loans as Lender has
not sold, assigned, transferred or otherwise disposed of.
8.6. Day of Payment. Whenever any payment to be made hereunder or
under the Revolving Credit Note shall become due and payable on a day which is
not a business day, such payment may be made on the next succeeding business day
and, in the case of any payment of principal, such extension shall in such case
be included in computing interest on such payment.
8.7. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles, consistently applied. Where any accounting determination or
calculation is required to be made under this Agreement, such determination or
calculation (unless otherwise provided) shall be made in accordance with
generally accepted accounting principles, consistently applied, except that if
because of a change in generally accepted accounting principles, Borrower would
have to alter a previously utilized accounting method or policy in order to
remain in compliance with generally accepted accounting principles, such
determination or calculation shall continue to be made in accordance with
Borrower's previous accounting methods or policy.
8.8. Stamp or Other Tax. Should any stamp or excise tax become
payable in respect of this Agreement, or the Revolving Credit Note, or any
modification hereof or thereof, Borrower shall pay the same (including interest
and penalties, if any) and shall hold Lender harmless with respect thereto.
8.9. Construction and Merger. This Agreement merges all of the
understandings of the parties hereto and the Revolving Credit Note, this
Agreement, and the rights and obligations of the parties hereunder and
thereunder, unless expressly stated to the contrary in a particular Loan
Document, shall be governed by, and construed and interpreted in accordance with
the laws of the State of Rhode Island without resort to its conflict of laws
rules. The paragraph headings used herein are solely for reference and shall not
be used in the interpretation or the construction hereof. Wherever possible,
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law; should any
-17-
<PAGE> 18
portion of this Agreement be declared invalid for any reason in any
jurisdiction, such declaration shall have no effect upon the remaining portions
of this Agreement; furthermore, the entirety of this Agreement shall continue in
full force and effect in other jurisdictions and said remaining portions of this
Agreement shall continue in full force and effect in the subject jurisdiction as
if this Agreement had been executed with the invalid portions thereof deleted.
8.10. Notices. Except as otherwise specified herein or by notice,
all notices and communications provided for herein shall be in writing and shall
be deemed effective when deposited in the United States mail, sent by certified
mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to Borrower, to: Uvex Safety, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Attn: Mr. Walter Stepan,
President and CEO
with a copy to: Susan A. Keller, Esq.
Edwards & Angell
2700 Hospital Trust Tower
Providence, RI 02903
(b) If to Lender, to: Citizens Bank of Rhode Island
One Citizens Plaza
Providence, RI 02903
Attn: J. Bruce Hallworth,
Senior Vice President
with a copy to:
Suzanne Worrell Gemma, Esq.
Peabody & Brown
One Citizens Plaza, Suite 700
Providence, RI 02903
Any party may change its address by not less than three (3) days' advance notice
thereof given as aforesaid.
8.11. WAIVER OF JURY TRIAL; SERVICE OF PROCESS. IN THE EVENT THAT
LENDER BRINGS ANY ACTION OR PROCEEDING IN CONNECTION HEREWITH IN ANY COURT OF
RECORD OF RHODE ISLAND OR THE UNITED STATES IN RHODE ISLAND, BORROWER HEREBY
IRREVOCABLY CONSENTS TO AND CONFERS PERSONAL JURISDICTION OF SUCH COURT OVER
BORROWER BY SUCH COURT. IN ANY SUCH ACTION OR PROCEEDING, BORROWER HEREBY WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT
SERVICE THEREOF MAY BE MADE UPON BORROWER BY MAILING A COPY OF SUCH SUMMONS,
COMPLAINT OR OTHER PROCESS BY CERTIFIED MAIL TO BORROWER AT ITS ADDRESS
DESIGNATED IN SECTION 8.10 HEREOF. BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT OR
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<PAGE> 19
ANY INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION HEREWITH, OR THE VALIDITY,
PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER
CLAIM OR DISPUTE HOWSOEVER ARISING BETWEEN BORROWER AND LENDER.
IN WITNESS WHEREOF, the parties have by their duly authorized
representatives executed this Agreement as of the day and year first above
written.
UVEX SAFETY, INC.
/s/ Philip B. Barr By: /s/ Walter Stepan
- --------------------------- ----------------------------------
Witness Walter Stepan, President and
Chief Executive Officer
CITIZENS BANK OF RHODE ISLAND
/s/ Christine M. Rowe By: /s/ J. Bruce Hallworth
- --------------------------- ----------------------------------
Witness J. Bruce Hallworth
Senior Vice President
-19-
<PAGE> 1
Exhibit 4(c)
July 21, 1997
Walter Stepan
President and CEO
Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Re: Citizens Bank of Rhode Island's Revolving Line of Credit Agreement
dated May 21, 1997
Dear Mr. Stepan:
I am writing to set forth our agreement with respect to a certain
Revolving Line of Credit Agreement by and between Bacou USA, Inc. ("Bacou") and
Citizens Bank of Rhode Island (the "Bank") dated May 21, 1997 (the "Agreement").
In specific, I am writing to set forth our agreement with respect to amending
the definition of "Revolving Credit Termination Date", which definition appears
on Page 2 of the Agreement. As we have agreed, that definition is hereby amended
to read as follows:
"Revolving Credit Termination Date." Revolving Credit Termination Date
means April 30, 1998, unless extended in writing by Lender."
Except as modified and amended hereby, the Agreement shall remain in full
force and effect and is in all other respects ratified and confirmed. Please
indicate your acceptance of this modification to the Agreement by signing where
indicated below.
Sincerely,
CITIZENS BANK OF RHODE ISLAND
By: /s/J. Bruce Hallworth
------------------------
J. Bruce Hallworth
Senior Vice President
<PAGE> 2
AGREED AND ACCEPTED BY:
BACOU USA, INC.
By: /s/ Walter Stepan
-------------------------------------
Walter Stepan
President & Chief Executive Officer
Dated: 8/4/97
By: /s/ Philip B. Barr
-------------------------------------
Philip B. Barr
Executive Vice President
and Chief Financial Officer
Dated: 8/4/97
-2-
<PAGE> 1
Exhibit 4(d)
July 21, 1997
Walter Stepan
President and CEO
Bacou USA, Inc.
10 Thurber Boulevard
Smithfield, RI 02917
Re: Citizens Bank of Rhode Island's Revolving Line of Credit Agreement
dated May 21, 1997
Dear Mr. Stepan:
I am writing to set forth our agreement with respect to a certain
Revolving Line of Credit Agreement by and between Uvex Safety, Inc. ("Uvex") and
Citizens Bank of Rhode Island (the "Bank") dated May 21, 1997 (the "Agreement").
In specific, I am writing to set forth our agreement with respect to amending
the definition of "Revolving Credit Termination Date", which definition appears
on Page 3 of the Agreement. As we have agreed, that definition is hereby amended
to read as follows:
"Revolving Credit Termination Date." Revolving Credit Termination Date
means April 30, 1998, unless extended in writing by Lender."
Except as modified and amended hereby, the Agreement shall remain in full
force and effect and is in all other respects ratified and confirmed. Please
indicate your acceptance of this modification to the Agreement by signing where
indicated below.
Sincerely,
CITIZENS BANK OF RHODE ISLAND
By: /s/ J. Bruce Hallworth
----------------------
J. Bruce Hallworth
Senior Vice President
<PAGE> 2
AGREED AND ACCEPTED BY:
UVEX SAFETY, INC.
By: /s/ Walter Stepan
-----------------------------------
Walter Stepan
President & Chief Executive Officer
Dated: 8/4/97
AGREED AND CONSENTED TO BY:
BACOU USA, INC., Guarantor
By: /s/ Walter Stepan
-----------------------------------
Walter Stepan
President & Chief Executive Officer
Dated: 8/4/97
By: /s/ Philip B. Barr
-----------------------------------
Philip B. Barr
Executive Vice President
and Chief Financial Officer
Dated: 8/4/97
-2-
<PAGE> 1
EXHIBIT 11
----------
Bacou USA, Inc.
Statement Re: Computation of Per Share Earnings
-----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
--------------------------- ---------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Primary:
Weighted average shares outstanding 17,312,200 17,141,000 17,312,200 15,500,500
Net effect of dilutive stock options
based on the treasury stock method
using the average market price 1,550 48,363 6,156 24,297
----------- ----------- ----------- -----------
Total 17,313,750 17,189,363 17,318,356 15,524,797
----------- ----------- ----------- -----------
Net income $ 4,245,062 $ 5,648,582 $ 8,377,015 $ 9,754,809
----------- ----------- ----------- -----------
Per share amount $ 0.24 $ 0.33 $ 0.48 $ 0.63
----------- ----------- ----------- -----------
Fully diluted:
Weighted average shares outstanding 17,312,200 17,141,000 17,312,200 15,500,500
Net effect of dilutive stock options
based on the treasury stock method
using the greater of average or period
end market price 32,260 58,361 30,018 30,027
----------- ----------- ----------- -----------
Total 17,344,460 17,199,361 17,342,218 15,530,527
----------- ----------- ----------- -----------
Net income $ 4,245,062 $ 5,648,582 $ 8,377,015 $ 9,754,809
----------- ----------- ----------- -----------
Per share amount $ 0.24 $ 0.33 $ 0.48 $ 0.63
----------- ----------- ----------- -----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 2,517,809
<SECURITIES> 0
<RECEIVABLES> 17,746,038
<ALLOWANCES> 0
<INVENTORY> 23,086,400
<CURRENT-ASSETS> 47,728,714
<PP&E> 33,365,773
<DEPRECIATION> 0
<TOTAL-ASSETS> 143,803,737
<CURRENT-LIABILITIES> 17,887,470
<BONDS> 0
0
0
<COMMON> 17,312
<OTHER-SE> 120,766,955
<TOTAL-LIABILITY-AND-EQUITY> 143,803,737
<SALES> 58,710,887
<TOTAL-REVENUES> 58,710,887
<CGS> 27,243,404
<TOTAL-COSTS> 27,243,404
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 103,861
<INCOME-PRETAX> 14,256,212
<INCOME-TAX> 5,879,197
<INCOME-CONTINUING> 8,377,015
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,377,015
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
</TABLE>
