================================================================================
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 28, 1997
Commission File No. 1-8045
________________________
GenRad, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-1360950
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7 Technology Park Drive, Westford, Massachusetts 01886-0033
- ------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 589-7000
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
26,914,018 shares of the Common Stock, $1 par value, were outstanding on August
5, 1997.
<PAGE>
GENRAD, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Part I. Financial Information:
Consolidated Statement of Operation ............................. 1
Consolidated Balance Sheet ...................................... 2 - 3
Consolidated Statement of Cash Flows ............................ 4
Notes to Consolidated Financial Statements ...................... 5 - 6
Management's Discussion and Analysis of
Financial Condition and Results of Operation .................. 7 - 10
Part II. Other Information:
Item 4. Submissions of Matters to a Vote of Security Holders .... 11
Item 6. Exhibits and Reports on Form 8-K ........................ 11
Signatures ...................................................... 12
<PAGE>
PART I. FINANCIAL INFORMATION
GENRAD, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
(In thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- -----------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
-------- ------- -------- ---------
<S> <C> <C> <C> <C>
Sales:
Sales of products $50,213 $35,959 $91,535 $70,893
Sales of services 10,837 9,209 22,015 17,829
---------- ----------- --------- ----------
Total sales 61,050 45,168 113,550 88,722
---------- ----------- --------- ----------
Cost of sales:
Cost of products sold 24,920 16,024 42,417 32,673
Cost of services sold 6,593 4,922 12,581 8,992
---------- ----------- --------- ----------
31,513 20,946 54,998 41,665
---------- ----------- --------- ----------
Gross profit 29,537 24,222 58,552 47,057
Selling, general and administrative 16,037 12,943 33,514 25,438
Research and development 4,565 4,088 9,245 8,469
---------- ----------- --------- ----------
Total operating expenses 20,602 17,031 42,759 33,907
---------- ----------- --------- ----------
Operating income 8,935 7,191 15,793 13,150
Other (expense) income:
Interest, net (134) (984) (8) (2,039)
Other, net (74) (19) (56) 48
---------- ----------- --------- ----------
Total other expense (208) (1,003) (64) (1,991)
---------- ----------- --------- ----------
Income before income taxes 8,727 6,188 15,729 11,159
---------- ----------- --------- ----------
Income tax provision (benefit):
Income tax provision 806 477 1,479 979
Income tax benefit for reversal of deferred
Tax asset valuation allowance - - (5,388) (2,480)
---------- ----------- --------- ----------
Income tax provision (benefit) 806 477 (3,909) (1,501)
---------- ----------- --------- ----------
Net Income $ 7,921 $ 5,711 $19,638 $12,660
========== =========== ========= ==========
Net income per common and common
equivalent shares:
Primary $ 0.28 $ 0.24 $ 0.70 $ 0.54
========== =========== ========= ==========
Fully diluted $ 0.28 $ 0.24 $ 0.69 $ 0.53
========== =========== ========= ==========
Weighted average common and common
equivalent shares used in computing per
share amounts:
Primary 28,177,000 23,981,000 28,097,000 23,570,000
========== =========== ========== ===========
Fully diluted 28,741,000 24,160,000 28,404,000 23,940,000
========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these Consolidated
Financial Statements.
1
<PAGE>
GENRAD, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
June 28, December 28,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and equivalents $ 14,540 $ 10,557
Accounts receivable, net 61,556 49,142
Inventories:
Raw materials 12,385 10,632
Work in process 4,097 4,075
Finished goods 4,126 5,543
--------- ---------
Total inventories 20,608 20,250
Other current assets 5,068 4,501
--------- ---------
Total current assets 101,772 84,450
--------- ---------
Property, plant and equipment:
Buildings and leasehold improvements 2,773 2,908
Machinery and equipment 75,514 64,058
Service parts 11,314 13,189
--------- ---------
89,601 80,155
Accumulated depreciation (60,445) (60,987)
--------- ---------
Property, plant and equipment, net 29,156 19,168
--------- ---------
Deferred tax asset 7,874 2,480
Intangible assets 7,723 8,486
Other assets 1,868 1,181
--------- ---------
$ 148,393 $ 115,765
========= =========
</TABLE>
The accompanying notes are an integral part of these Consolidated
Financial Statements.
2
<PAGE>
GENRAD, INC. AND SUBSIDIARIES
Consolidated Balance Sheet (continued)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
June 28, December 28,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Trade accounts payable $ 10,051 $ 7,171
Accrued liabilities 11,875 15,007
Accrued compensation and employee benefits 3,532 7,096
Income taxes payable 2,486 1,537
Current portion of long-term debt 2,903 --
--------- ---------
Total current liabilities 30,847 30,811
--------- ---------
Long-term Liabilities:
Long-term debt 9,607 146
Accrued pensions and benefits 12,583 12,177
Future lease costs of unused facilities 4,700 4,949
Other long-term liabilities 3,804 4,002
--------- ---------
Total long-term liabilities 30,694 21,274
--------- ---------
Stockholders' Equity:
Common stock, $1 par value, 60,000,000 shares
authorized; 26,814,000 and 26,048,000 issued and
outstanding in 1997 and 1996, respectively 26,814 26,048
Additional paid-in capital 166,248 163,099
Accumulated deficit (104,149) (123,787)
Cumulative translation adjustment (2,061) (1,680)
--------- ---------
Total stockholders' equity 86,852 63,680
--------- ---------
$ 148,393 $ 115,765
========= =========
</TABLE>
The accompanying notes are an integral part of these Consolidated
Financial Statements.
3
<PAGE>
GENRAD, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------
June 28, June 29,
1997 1996
--------- ---------
<S> <C> <C>
Operating activities:
Net income $ 19,638 $ 12,660
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,877 3,160
Gain on disposition of property, plant and equipment (66) --
Reserve for future lease costs of unused facilities (249) (992)
(Decrease) increase resulting from changes in
operating assets and liabilities:
Accounts receivable (13,539) (7,262)
Inventories (959) (4,551)
Other current assets (687) (1,560)
Deferred tax asset (5,394) (2,480)
Trade accounts payable 3,003 (1,624)
Accrued liabilities (2,354) 455
Accrued compensation and employee benefits (2,718) (3,333)
Accrued income taxes 972 867
Other, net (826) (157)
--------- ---------
Net cash provided by (used in) operating activities 698 (4,817)
--------- ---------
Investing activities:
Purchases of property, plant and equipment (13,269) (4,214)
Purchase of subsidiary -- (3,745)
Proceeds from sale of property, plant and equipment 133 583
--------- ---------
Net cash used in investing activities (13,136) (7,376)
--------- ---------
Financing activities:
Net change in long-term debt 11,864 14
Net change in revolving line of credit -- 3,283
Proceeds from employee stock option exercises 3,915 3,908
--------- ---------
Net cash provided by financing activities 15,779 7,205
--------- ---------
Effects of exchange rates on cash 642 245
--------- ---------
Increase (decrease) in cash equivalents 3,983 (4,743)
Cash and equivalents at beginning of period 10,557 9,064
--------- ---------
Cash and equivalents at end of period $ 14,540 $ 4,321
========= =========
</TABLE>
Supplemental disclosure of non-cash financing activity:
In conjunction with the purchase of Test Technology Associates, Inc. in the
first quarter of 1996, the Company had a minimum future obligation of $2.0
million which was classified as accrued liabilities and other long-term
liabilities.
The accompanying notes are an integral part of these Consolidated
Financial Statements.
4
<PAGE>
GENRAD, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1: Accounting Comments
Reference is made to the Company's 1996 Annual Report and Form 10-K which
contains, at pages 27 through 39, financial statements and the notes thereto,
including a summary of significant accounting policies.
With respect to the financial information for the interim periods included in
this report, which is unaudited, the management of the Company believes that all
adjustments necessary for a fair presentation of the results for such interim
periods have been included. All adjustments are of a normal and recurring
nature.
The results of any interim period are not necessarily indicative of the results
for the entire year.
Note 2: Earnings per share
The Company computes net income per common and common equivalent shares using
the method prescribed in Accounting Principles Board Opinion No. 15, "Earnings
per Share". The Company will adopt SFAS No. 128, "Earnings per Share" in the
fourth quarter of 1997. Had the earnings per share calculation been applied on a
basis consistent with the provisions of SFAS No. 128, the Company's earnings per
share would have been reported as the pro forma amounts indicated below (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- --------------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic earnings per share:
Income available to common stockholders $ 7,921 $ 5,711 $19,638 $12,660
======= ======= ======= =======
Weighted average number of common shares outstanding 26,697 21,901 26,414 21,681
======= ======= ======= =======
Basic earnings per share $0.30 $0.26 $0.74 $0.58
======= ======= ======= =======
Diluted earnings per share:
Income available to common stockholders $ 7,921 $ 5,711 $19,638 $12,660
======= ======= ======= =======
Weighted-average number of common shares outstanding 26,697 21,901 26,414 21,681
Weighted-average incremental shares from assumed
conversions of stock options 1,480 2,080 1,682 1,817
------- ------- ------- -------
28,177 23,981 28,096 23,498
======= ======= ======= =======
Diluted earnings per share $0.28 $0.24 $0.70 $0.54
======= ======= ======= =======
</TABLE>
5
<PAGE>
GenRad, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
Note 3: Borrowings:
Line of Credit (revolving credit agreement): On May 6, 1997 the Company modified
its $25 million credit facility. Borrowings under the credit facility will
expire on December 31, 1998 and are subject to compliance with specified
financial and operating covenants. Interest will be payable at the lesser of (i)
the prime interest rate, or (ii) under a LIBOR option, with borrowing spreads of
LIBOR plus 1.25% to LIBOR plus 1.75%. The unused commitment fee ranges from
0.250% to 0.625%, based upon the Company's financial performance. There were no
borrowings outstanding on the line of credit at June 28, 1997.
Long-term debt (facility agreement): On June 26, 1997, the Company entered into
a term loan which provided approximately $12 million for the purchase of
furniture and fixtures for the Company's new corporate headquarters and
manufacturing facility in Westford, Massachusetts. The term of the loan is five
years and expires June 26, 2002. Twenty equal quarterly principal payments of
$0.6 million are due commencing in September 1997. Interest is payable quarterly
in arrears at LIBOR plus 1.25%.
6
<PAGE>
GENRAD, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Operating Results
- -----------------
Orders for the Company's products and services increased to $56.9 million and
$118.2 million for the three months and six months ended June 28, 1997,
respectively, from $43.2 million and $91.4 million for the comparable periods in
1996. Orders increased in North America and Europe in the 1997 second quarter
from the comparable period in 1996, with a minimal decrease in Asian orders. For
the six months ended June 28, 1997, orders increased across all geographies and
most product lines with the most significant order contributors coming from
contract manufacturing, transportation and telecommunication industries.
Backlog at the end of the 1997 second quarter was $29.3 million compared to
$24.7 million at year-end 1996 and $30.0 million at the end of the 1996 second
quarter. Backlog at June 28, 1997 increased from year-end 1996 due to the
Company's continued growth in orders. Backlog at the end of the second quarter
of 1997 decreased from the comparable period in 1996 due to the Company's
ability to more quickly deliver orders to customers as a result of improvements
in its manufacturing processes. The Company believes that a substantial portion
of the 1997 second quarter backlog will be shipped prior to the end of 1997.
Net product and service sales were $61.1 million and $113.6 million for the
three months and six months ended June 28, 1997, respectively, as compared to
$45.2 million and $88.7 million for the comparable periods in 1996. Sales
increased primarily as a result of increased sales across all product lines with
the largest contributions coming from Electronic Manufacturing Systems (EMS) and
Advanced Diagnostic Solutions (ADS).
Sales from international markets were 56.9% and 56.1% for the three months and
six months ended June 28, 1997, respectively, as compared to 54.6% and 58.3% for
the similar periods in 1996. International sales increased for the three months
ended June 28, 1997 from the comparable period in 1996, primarily as a result of
sales by ADS to BMW AG Motorcycles Division and Saab Automobiles AB.
International sales decreased for the six months ended June 28, 1997 from the
comparable period in 1996, primarily as a result of strong sales in North
America of EMS products in the first six months of 1997.
Product margins were 50.4% and 53.7% for the three months and six months ended
June 28, 1997, respectively, as compared to 55.4% and 53.9% for the comparable
periods in 1996. Product margins decreased as a result of a change in the
Company's product mix. GENEVA and ADS, having slightly lower than average
margins as compared to EMS, have continued to grow and represented a higher
proportion of sales than in earlier periods.
Service margins were 39.2% and 42.9% for the three months and six months ended
June 28, 1997, respectively, as compared to 46.6% and 49.6% for the comparable
period in 1996. Service margins decreased as a result of continuing competitive
pricing pressures in the maintenance business and an increase in infrastructure
costs to support the Company's growing programming service business.
Selling, general and administrative expenses increased in the three and six
month periods ended June 28, 1997 to $16.0 million and $33.5 million,
respectively, from $12.9 million and $25.4 million in the comparable periods in
1996. The increase in these expenses is due primarily to additional selling
expenses resulting from an increase in the Company's sales force which has
contributed to the growth in orders. The acquisition of several subsidiaries in
1996 also contributed to the increase in these expenses.
7
<PAGE>
Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Operating Results (continued)
- -----------------------------
Research and development expenses increased for the three and six month periods
ended June 28, 1997 to $4.6 million and $9.2 million, respectively, from $4.1
million and $8.5 million in the comparable periods in 1996. As a percentage of
product and service sales, research and development expenses decreased to 7.5%
and 8.1% for the three and six month periods ended June 28, 1997, respectively,
as compared to 9.1% and 9.5% in the comparable periods of 1996, which was
primarily the result of the overall increase in sales in 1997 as compared to
1996. The Company continues to invest in new product development and
enhancements to existing products.
Net interest expense decreased in the three and six month periods ended June 28,
1997 to $0.1 million and $0, respectively, from $1.0 million and $2.0 million in
the comparable period in 1996. In the fourth quarter of 1996, the Company
announced its redemption of all $50 million of its 7 1/4% convertible
subordinated debentures. On the November 6, 1996 redemption date, the holders of
the debentures converted $49.6 million of principal into common stock at a price
of $14.375 per share and the remaining principal was redeemed in cash totaling
$0.4 million, including accrued interest and bond redemption costs. As a result,
a significant amount of the Company's interest expense was eliminated in the
1997 periods as compared to 1996.
A net income tax benefit of $5.4 million was recorded in the first quarter of
1997 as compared to $2.5 million in the comparable period in 1996. The tax
benefit represents a reduction in the Company's valuation allowance for deferred
taxes and was recorded due to management's expectations of future income and
expected utilization of the Company's domestic net operating loss carryforwards.
Income tax expense increased for the three months ended June 28, 1997 to $0.8
million from $0.5 million in the comparable period in 1996. Excluding the
deferred tax benefits, the income tax provision was $1.5 million for the six
months ended June 28, 1997 as compared to $1.0 million for the comparable period
in 1996. Income taxes increased in 1997 as compared to 1996 due to an increased
level of estimated foreign taxable income.
As a result of the above, the Company reported net income of $7.9 million for
three months and $19.6 million for the six months ended June 28, 1997, as
compared to net income of $5.7 million and $12.7 million, respectively, for the
comparable periods in 1996.
8
<PAGE>
Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Liquidity and Sources of Capital
- --------------------------------
Cash provided by operating activities was $0.7 million for the six months ended
June 28, 1997 as compared to $4.8 million of cash used in operating activities
for the comparable period in 1996. The improved cash flow is primarily
attributable to an overall increase in net income.
During the six months ended June 28, 1997, cash used from investing activities
was $13.1 million as compared to $7.4 million for the comparable period in 1996.
The 1997 capital expenditures of $13.1 million were primarily for the purchase
of leasehold improvements, equipment and furniture for the new corporate
headquarters and manufacturing facility in Westford, Massachusetts.
Cash provided by financing activities was $15.8 million as compared to $7.2
million for the six months ended June 28, 1997 and June 29, 1996, respectively.
The Company entered into a five year term loan to finance the capital
expenditures, noted in the previous paragraph, which accounted for the net
increase in long-term debt of $11.9 million for the six months ended June 28,
1997. Proceeds from employee stock option exercises provided cash of $3.9
million for the six months ended June 28, 1997.
The Company's primary source of liquidity is internally generated funds. The
Company also has an existing unsecured line of credit up to $25 million, against
which there were no borrowings outstanding on June 28, 1997. Borrowings under
the credit facility are subject to compliance with specified financial and
operating covenants. The credit facility expires on December 31, 1998. The
Company anticipates that in fiscal 1997 it will fund its working capital and
capital expenditure requirements, make interest payments on its borrowings and
meet its cash obligations from internally generated funds, and from the
available credit facility.
The Company buys and sells foreign currencies using forward contracts intended
to hedge payables and receivables denominated in foreign currencies. The Company
primarily operates in U.S. dollars and European currencies. At June 28, 1997,
the Company had forward exchange contracts to sell approximately $19.2 million
of foreign currencies.
Inflation during the periods presented did not have a significant effect on the
operations of the Company. The Company attempts to mitigate inflationary cost
increases by continuously improving manufacturing methods and technologies.
Factors That May Affect Future Results
- --------------------------------------
This Quarterly Report contains certain forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to those discussed below.
The Company's future operating results are dependent upon the Company's ability
to develop, manufacture and market technologically innovative products that meet
customers' needs, fund its working capital, capital and financing requirements
and meet its cash obligations, including those arising from past restructurings.
9
<PAGE>
Management's Discussion and Analysis of
----------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Factors That May Affect Future Results (continued)
- --------------------------------------------------
The market for the Company's products is characterized by rapid technological
change, evolving industry standards, changes in customers' needs, and frequent
new product introductions and is therefore highly dependent on timely product
innovation. Competition in the markets in which the Company operates is intense.
The introduction by the Company or its competitors of products embodying new
technology or the emergence of new industry standards or practices could render
the Company's existing products obsolete or otherwise unmarketable. The
Company's ability to develop and market products and services that successfully
meet changing market needs will impact future results. A portion of future
revenues will come from new products and services. The Company cannot determine
the ultimate effect that new products and services will have on revenues,
earnings and stock price.
The Company is dependent upon a number of suppliers for several key components
of its products. The loss of certain of the Company's suppliers or substantial
price increases imposed by suppliers could have a material adverse effect on the
Company.
Although margins continue to be impacted by competitive pricing pressures, the
Company's manufacturing costs have decreased due to engineered cost reductions
and manufacturing efficiencies.
The Company is exposed to risks inherent in international trade and operations
as a result of its international sales and the operation of its manufacturing
facility in Manchester, England. Such trade and operations expose the Company to
continuing risks such as unpredictable and potentially inconsistent regulatory
requirements, political and economic changes, tariffs or other trade
restrictions, transportation delays, foreign currency fluctuations and labor
disruptions.
The Company may be subject to patent or product liability claims in the future.
A successful claim brought against the Company in excess of available insurance
coverage or any claim that results in significant adverse publicity may have a
material adverse effect on the Company's competitive position, financial
condition, results of operations or liquidity.
10
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submissions of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders of GenRad, Inc. was held on May 8,
1997 (the "Annual Meeting").
(b) Not required pursuant to instructions No. 3.
(c) Votes were cast or withheld in connection with the election of directors
at the Annual Meeting as follows:
Name of Director For Withheld
------------------- ---------- --------
James F. Lyons 20,007,843 466,309
Adriana Stadecker 20,019,799 454,353
Lowell B. Hawkinson 20,025,634 448,518
Votes were cast or withheld in connection with the following proposals,
more fully described in the Company's Proxy Statement dated April 7,
1997 at the Annual Meeting.
<TABLE>
<CAPTION>
Affirmative Negative Not
Votes Votes Abstained Voted
----------- -------- --------- -----
<S> <C> <C> <C> <C>
1) To amend the Company's 1991 Equity
Incentive Plan by increasing by
2,000,000 the shares of Common Stock
available for issuance thereunder, which
shares had been granted under options to
officers of the Company. 9,027,891 4,730,303 179,234 6,536,724
2) To amend the Company's 1991 Equity
Incentive Plan by limiting the number of
shares of Company Stock available to any
participant in any one year to 500,000 19,985,597 298,392 190,163 --
shares.
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) 10. Lease agreement dated July 26, 1996 between GenRad, Inc. and
Michelson Farm - Westford Technology Park Trust, incorporated by
reference to Exhibit 10 to the Company's report on Form 10-Q for
the quarter ended June 29, 1996.
10.1 Facility agreement dated June 26, 1997 between GenRad Limited and
BankBoston, N.A. London Branch.
10.2 Amended and restated revolving credit agreement dated May 6, 1997
between GenRad, Inc. and BankBoston, N.A.
11. Statement re: Computation of Earnings Per Share.
27. Financial Data Schedule.
(b) There were no reports on Form 8-K filed during the quarter ended June
28, 1997.
11
<PAGE>
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.
GenRad, Inc.
By: /S/ Paul Pronsky, Jr.
------------------------------------------
Paul Pronsky, Jr.
Vice President and
Chief Financial Officer and Secretary
Date: August 11, 1997
12
Ex 10.1
FACILITY AGREEMENT
Dated June 26, 1997
Between
GenRad Limited
and
BankBoston, N.A. London Branch
<PAGE>
TABLE OF CONTENTS
- -----------------
<TABLE>
<CAPTION>
Clause Page
- ------ ----
<S> <C> <C>
1. INTERPRETATION
1.1 Terms Defined 1
1.2 Rules of Interpretation 5
1.3 Purposes 6
2. THE FACILITY 6
3. INTEREST PAYABLE ON THE ADVANCES
3.1 Determination of Interest Periods6
3.2 Rate of Interest 6
3.3 Time for Payment 6
3.4 Default Interest 6
4. CERTAIN LENDING PROVISION
4.1 Determination of Interest Rate 7
4.2 Alternative Interest Rate 7
4.3 Repayments and Prepayments of 7
the Advances, etc.
4.4 Closing Fee 8
4.5 Payments and Computations 8
4.6 Payments to be Free of 9
Deductions
4.7 Additional Costs, Changes in 10
Circumstances, etc.
4.8 Illegality 11
4.9 Indemnification 11
5. CONDITIONS PRECEDENT; SECURITY
5.1 Documentary Conditions Precedent 12
5.2 Further Conditions Precedent 12
5.3 Security; Guarantee 12
6. REPRESENTATIONS AND WARRANTIES
6.1 Due Incorporation 12
6.2 Capacity 13
6.3 Authority and Enforceability 13
6.4 Compliance with Other Instruments 13
6.5 Financial Statements; Solvency 13
6.6 Material Adverse Events 14
6.7 Litigation, etc. 14
6.8 Title 14
6.9 Franchises, Patents, Copyrights, etc. 14
<PAGE>
ii
6.10 Indebtedness 14
6.11 Absence of Undisclosed Liabilities 14
6.12 Taxes 15
6.13 Insurance 15
6.14 Activities in Compliance with Other 15
Instruments and Laws
6.15 Subsidiaries 15
6.16 No Unmatured Events of Default 16
or Events of Default
6.17 Collateral 16
6.18 Governmental Approvals 16
6.19 Disclosure 16
7. CERTAIN AFFIRMATIVE COVENANTS
7.1 Financial Statements, Reports 16
and Inspection
7.2 Insurance 17
7.3 Inspection of Properties and Books 17
7.4 Compliance with Laws, Contracts, 17
Licenses, and Permits
7.5 Notice of Default, etc. 17
7.6 Maintenance of Existence, Licenses 18
and Properties
7.7 Expenses 18
7.8 Financial Records 18
7.9 Taxes 18
7.10 Conduct of Business 19
7.11 Use of Proceeds 19
7.12 Delivery of Landlord's Lien Waiver 19
7.13 Further Assurances 19
8. CERTAIN NEGATIVE COVENANTS
8.1 Encumbrances 19
8.2 Distributions 20
8.3 Transactions with Affiliates 20
8.4 Sale of Assets 20
8.5 Acquisition or Merger 20
8.6 Indebtedness 20
8.7 Subsidiaries; Limitation on Issuance 21
of Share Capital
8.8 Change in Terms and Payment 21
of Indebtedness
8.9 Investments 21
9. EVENTS OF DEFAULT; ACCELERATION
9.1 Events of Default 22
9.2 Remedies Not Exclusive 24
<PAGE>
iii
10. SETOFF 24
11. MISCELLANEOUS
11.1 Consents, Amendments, Waivers, etc. 24
11.2 Assignment and Novation 25
11.3 Notices 25
11.4 Governing Law; Place of Jurisdiction 26
11.5 Severability 26
11.6 Counterparts 26
11.7 Entire Agreement 26
</TABLE>
<PAGE>
iv
LIST OF SCHEDULES
- -----------------
The First Schedule Calculation of Additional Cost
The Second Schedule Documentary Conditions Precedent
To The Advance
The Third Schedule Subsidiaries
The Fourth Schedule Presently Existing Encumbrances
The Fifth Schedule Presently Existing Indebtedness
The Sixth Schedule Disclosure Letter
<PAGE>
THIS FACILITY AGREEMENT is made the 26th day of June, 1997.
BY AND AMONG
(1) GENRAD LIMITED, a limited liability company incorporated in England and
Wales (registered number 790061 whose registered office is at Orion
Business Park, Bird Hall Lane, Stockport, Cheshire SK3 0XG (the
"Borrower"); and
(2) BANKBOSTON, N.A., LONDON BRANCH, a national banking association
organized under the laws of the United States of America acting through
its London Branch at 39 Victoria Street, London SW1H OED (the "Bank");
NOW IT IS HEREBY AGREED:
Clause 1. INTERPRETATION.
---------------
1.1 Terms Defined. In this Agreement, the following terms shall have
the respective meanings set forth below:
"Additional Cost" shall mean in relation to any period, a percentage
calculated for such period at an annual rate determined by the application of
the formula set out in The First Schedule hereto.
"Advance" shall mean the advance under the Facility made or to be made
to the Borrower pursuant to Clause 2 hereof.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with any member of the
Affiliate Group (or other specified Person).
"Affiliate Group" shall mean, collectively, the Borrower, Holdings, the
Parent, and each of their respective Subsidiaries.
"Applicable Margin" shall mean, in relation to interest payable on the
Advance, 1.25% per annum.
"Audited Financials" shall have the meaning assigned to such term in
Clause 6.5.
"Bank" shall have the meaning assigned to such term in the recitals
hereto.
"Borrowing Date" shall mean in relation to the Advance, the day on
which the Advance is made to the Borrower.
<PAGE>
-2-
"Business Day" shall mean a day (other than a Saturday or a Sunday) on
which banks are open for business in London, England.
"Disclosure Letter" shall mean the disclosure letter to be submitted by
the Borrower to the Bank on the date hereof in the form set out in The Sixth
Schedule to this Agreement.
"Distribution" shall mean (a) the declaration or payment of any
dividend on or in respect of any Shares of any class of any Person, other than
dividends payable solely in Shares of such Person, or (b) the purchase,
redemption or other retirement of any Shares of any class of any Person,
directly or indirectly through a Subsidiary or otherwise, or (c) the return of
capital by any Person to its shareholders as such, or (d) any other distribution
on or in respect of any Shares of any class of any Person.
"Encumbrances" shall mean any mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, security interest, title
retention or other encumbrance of any kind securing or any right conferring a
priority of payment in respect of any obligation of any person.
"Event of Default" shall mean any of the events described in Clauses
9.1(a) through (m) (inclusive) hereof.
"Facility" shall mean the Sterling term loan facility of up to
(pound)7,250,000 referred to in Clause 2.
"GAAP" shall mean generally accepted accounting principles in the
United Kingdom, applied on a consistent basis.
"Hazardous Substances" shall mean that term as defined in Clause 6.14
hereof.
"Holdings" shall mean GenRad Holdings Limited (Registered No. 1761564),
a limited liability company incorporated in England and Wales and the legal and
beneficial owner of all of the issued share capital of the Borrower.
"Indebtedness" shall mean, as to any Person, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, (d) all obligations of such Person for reimbursement (whether
contingent or liquidated) of amounts drawn under letters of credit, performance
bonds or guarantees issued for the account of such Person, (e) all obligations
of such Person as lessee under equipment finance leases, (f) all obligations
secured by any mortgage, charge, lien, security interest or other encumbrance,
to which any property or asset owned or held by such Person is subject, whether
or not the obligation secured thereby shall have been assumed, and (g) all
Indebtedness of others guaranteed by such Person.
<PAGE>
-3-
"Interest Payment Date" shall mean any date on which a payment of
interest is due on the Advance pursuant to the terms hereof.
"Interest Period" shall mean with respect to the Advance (i) initially,
as specified by the Borrower in writing, the period commencing on the Borrowing
Date of the Advance and expiring 1, 3 or 6 months thereafter (or as may be
otherwise agreed by the Bank), and (ii) thereafter as specified by the Borrower
in a written notice furnished to the Bank no later than 11:00 a.m. (London time)
one (1) Business Day prior to the Rate-fixing Day with respect to the Advance,
any successive periods of 1, 3 or 6 months (or as may be otherwise agreed by the
Bank), commencing on the same day on which the immediately preceding Interest
Period with respect to the Advance shall have expired. If the Borrower does not
elect otherwise, each Interest Period with respect to an Advance shall be three
(3) months (or such shorter period as will result in the Interest Period not
extending beyond the Termination Date). The number of days in each Interest
Period and the particular day on which each Interest Period ends and the next
begins shall be fixed by the Bank in accordance with generally accepted practice
and notified to the Borrower on the Rate-fixing Day therefor. If any Interest
Period would otherwise end on a day which is not a Business Day, such Interest
Period shall end and the next Interest Period shall commence on the next
succeeding day which is a Business Day. Any Interest Period which begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Interim Financials" shall have the meaning assigned to such term in
Clause 6.5.
"LIBOR" shall mean, at the time any determination thereof is to be made
for any Interest Period, the rate at which the Bank, in accordance with its
normal practice, is able to obtain like deposits in Sterling in the London
interbank offered market for a period comparable in length to such Interest
Period.
"Loan Documents" shall mean, collectively, this Agreement, the Security
Documents, the Parent Loan Agreement and any other documents or instruments
delivered or to be delivered by any member of the Affiliate Group pursuant
hereto or thereto.
"Material Adverse Change" shall have the meaning assigned to such term
in Clause 6.6.
"Obligations" shall mean all Indebtedness, obligations and liabilities
to the Bank existing on the date of this Agreement or arising thereafter, direct
or indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise of the Borrower and its Subsidiaries arising or incurred
under this Agreement or the other Loan Documents or in respect of the Advance
hereunder or pursuant to any instruments at any time evidencing any of the
foregoing.
"Outstanding Amount" shall mean in relation to the Advance at any time,
the principal amount of the Advance outstanding at that time.
<PAGE>
-4-
"Parent" shall mean GenRad, Inc., a Massachusetts, U.S.A. corporation,
and the legal and beneficial owner of all of the issued share capital of
Holdings.
"Parent Guarantee" shall mean that term as defined in Clause 5.3
hereof.
"Parent Loan Agreement" shall mean the Amended and Restated Revolving
Credit Agreement, dated as of 6 May, 1997 by and among the Parent, the Borrower,
GenRad Europe Limited, a limited liability company incorporated in England and
Wales, the financial institutions party thereto from time to time and
BankBoston, N.A. as agent for such financial institutions, as the same may be
amended, modified, supplemented or restated and in effect from time to time.
"Person" shall mean any natural person, corporation, limited liability
company, partnership, limited liability partnership, firm, association,
government, governmental agency or any other juridical entity, whether acting in
an individual, fiduciary or other capacity.
"Qualifying Bank" shall mean a bank for the purposes of section 349 of
the Income and Corporations Taxes Act 1988 (or any statutory amendment,
modification or re-enactment thereof), which is within the charge to the United
Kingdom corporation tax as respects any interest payable or paid to it under
this Agreement.
"Rate-fixing Day" shall mean in relation to the Advance, the Business
Day on which any Interest Period relating to the Advance begins.
"Restricted Payment" shall mean any payment to any Affiliate of the
Borrower or any of its Subsidiaries in respect of any indebtedness or other
obligation of the Borrower or any of its Subsidiaries to such Person.
"Security Documents" shall mean all documents executed or to be
executed for the purpose of giving to the Bank security or any other form of
support in connection with any of the Obligations, including, without
limitation, the Parent Guarantee, and those security documents listed in The
Second Schedule hereto.
"Shares" shall mean any type of shares or other units of equity capital
of any kind, whether or not such units are certificated.
"Sterling" and "(pound)" shall mean the lawful currency for the time
being of the United Kingdom.
"Sterling Equivalent" shall mean, on any particular date, with respect
to any amount denominated in Sterling, such amount of Sterling, and with respect
to any amount denominated in a currency other than Sterling (the "Second
Currency"), the amount of Sterling which could be purchased by the Bank (in
accordance with its usual practice) with that amount of the Second Currency at
the spot rate of exchange in the London Foreign Exchange Market at or about
11:00 a.m. (London time) on such date for the purchase of Sterling with the
Second Currency.
<PAGE>
-5-
"Subsidiary" shall mean (a) when used to determine the relationship of
one Person which is a company incorporated in England to another Person, that
term as defined by Clause 736 of the Companies Act 1985 (as amended by Clause
144 of the Companies Act 1989), and (b) when used to determine the relationship
of one Person which is not a company incorporated in England to another Person,
that other Person of which the first Person shall own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes) of
the Shares or similar interests, of any class or classes (however designated),
the holders of which are entitled, as such holders, to vote for the election of
a majority of the directors (or persons performing similar functions) of such
other Person, whether or not the right so to vote exists by reason of the
happening of a contingency.
"Taxes" or "Tax" shall mean taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any political
subdivision or taxing authority thereof on the Bank, as the case may be, other
than any such charges or tax on or measured by the overall net income, net worth
or shareholders' capital of such Person.
"Termination Date" shall mean 26 June 2002.
"Unmatured Event of Default" shall mean an event, act or occurrence
which with the giving of notice or the lapse of time, or with both thereof,
would become an Event of Default.
1.2 Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP applied on a consistent basis by the accounting entity
to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) Reference to "this Agreement" and the "Agreement" refers to this
Facility Agreement and reference to a particular Clause or subclause refers to
that clause or subclause of this Agreement unless otherwise indicated.
(h) The words "herein", "hereof', "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
<PAGE>
-6-
(i) Clause headings are inserted for convenience only and have no legal
effect.
(j) References to clauses, schedules and exhibits are to be construed
as references to the clauses of, schedules to and exhibits to this Agreement,
and references to this Agreement include its schedules and exhibits.
1.3 Purposes. This Agreement sets out the terms and conditions upon and
subject to which the Bank will make available to the Borrower a loan of up to
(pound)7,250,000 to be used for the purpose of repaying Indebtedness owed to the
Parent and other members of the Affiliate Group, the entire proceeds of which
repayment (without deduction) will be used to purchase furniture and fixtures
for the Parent's leased office space in Westford, Massachusetts.
Clause 2. THE FACILITY.
-------------
The Bank, relying upon each of the representations and warranties in
Clause 6, and subject to the terms and conditions set forth in this Agreement,
agrees to lend the Borrower on the Borrowing Date, in one Advance, the Facility
in the principal sum of (pound)7,250,000.
Clause 3. INTEREST PAYABLE ON THE ADVANCE.
--------------------------------
3.1 Determination of Interest Periods. The Borrower shall furnish to
the Bank not later than 11:00 a.m. (London time) one (1) Business Day prior to
the Borrowing Date a written notice specifying the initial Interest Period with
respect to the Advance. No later than 11:00 a.m. (London time) one (1) Business
Day prior to the Rate-fixing Day for any succeeding Interest Period with respect
to the Advance the Borrower shall notify the Bank in writing of the Borrower's
determination of the duration of such succeeding Interest Period.
3.2 Rate of Interest. The rate of interest which shall be payable by
the Borrower on the unpaid principal amount of the Advance outstanding and not
yet overdue shall be the annual percentage rate of interest determined by the
Bank to be the sum of (i) the LIBOR applicable to the Advance, plus (ii) the
Applicable Margin, plus (iii) the Additional Cost.
3.3 Time for Payment. The Borrower hereby absolutely and
unconditionally promises to pay interest on the unpaid principal amount of the
Advance to the Bank in arrears on (i) the last day of each Interest Period,
provided that if the duration of any such Interest Period is longer than three
(3) months the Borrower shall pay the accrued interest on the last Business Day
of each successive three (3) month period within such Interest Period and on the
last day of the Interest Period relating thereto, and (ii) the date the Advance
is repaid in full.
3.4 Default Interest.
(a) If the Borrower fails to pay any amount payable by it
under this Agreement when due it shall, upon demand by the Bank from
time to time, pay interest on the overdue amount from the due date up
to the date of
<PAGE>
-7-
actual payment, both before and after judgment, at a rate (the "default
rate") determined by the Bank to be three percent (3.00%) per annum
above the interest rate payable on the overdue amount under Clause 3.2
immediately prior to the due date therefore.
(b) The default rate shall be determined on each Business
Day.
(c) Default interest shall be compounded at the end of each
calendar month.
Clause 4. CERTAIN LENDING PROVISIONS.
---------------------------
4.1 Determination of Interest Rate. Each determination of any interest
rate by the Bank pursuant to the terms hereof with respect to the Advance shall
be conclusive in the absence of manifest error.
4.2 Alternative Interest Rate. Except as otherwise provided in this
Agreement, if the Bank shall reasonably determine that adequate and reasonable
methods do not exist for ascertaining LIBOR on any Rate-fixing Day, the Bank
will so notify the Borrower as soon as practicable on such day, which notice
shall be conclusive and binding, and then (a) the Interest Period for the
Advance shall be three (3) months (the "Alternative Interest Period") and (b)
the Bank shall calculate interest on the principal amount of the Advance by
substituting for LIBOR the rate per annum determined by the Bank to be that
which fairly expresses as a percentage per annum the cost to the Bank of funding
such principal amount, from whatever source the bank may select in good faith,
during such Alternative Interest Period, as certified by the Bank to the
Borrower.
4.3 Repayments and Prepayments of the Advances, etc.
(a) The Borrower absolutely and unconditionally promises to
(i) repay the principal sum of the Advance in twenty (20) equal
quarterly instalments of (pound)362,500 each, with each such instalment
to be paid on the last Business Day of each successive three (3) month
period during the term of this Agreement commencing with the first such
payment on 26 September 1997 and ending with the last such payment on
the Termination Date and (ii) pay to the Bank on the Termination Date
the entire unpaid amount of all other Obligations, if any, then
outstanding.
(b) The Borrower may, pursuant to this subclause (b), by
providing three (3) Business Days' prior written notice to the Bank,
elect to prepay the principal of the Advance outstanding at any time in
full or in part without premium or penalty, except as provided in
Clause 4.9 hereof, provided that the amount of any partial prepayment
of the unpaid principal of the Advance pursuant to this subclause (b)
shall be in an integral multiple of (pound)30,000.
(c) Every notice of prepayment shall be effective only on
actual receipt by the Bank, shall be irrevocable and shall oblige the
Borrower to make such prepayment on the date specified. No amount
prepaid may be reborrowed and any amount prepaid pursuant to subclause
(b) shall be applied in
<PAGE>
-8-
reducing the repayment instalments in subclause (a) in inverse order of
their due dates for payment. The Borrower may not prepay the Advance or
any part thereof save as expressly provided in this Agreement.
(d) The obligation of the Borrower to repay all amounts
borrowed by it hereunder, all interest thereon and all other amounts
payable by it in respect thereof shall be evidenced by this Agreement,
it being the intention of the parties hereto that the Borrower's
obligation with respect to any amounts owed by the Borrower hereunder
is evidenced only as stated herein and in the other Loan Documents and
not by separate promissory notes or other instruments.
4.4 Closing Fee.
On the date hereof the Borrower shall pay to the Bank a fee in the sum
of (pound)27,187.50.
4.5 Payments and Computations.
(a) Sterling is the currency of account and payment for each
and every sum at any time due from the Borrower hereunder; provided
that:
(i) each payment in respect of costs and expenses
shall be made in the currency in which the same were incurred;
and
(ii) any amount expressed to be payable in a currency
other than Sterling shall be paid in that other currency.
(b) If any sum due from the Borrower under this Agreement or
any order or judgment given or made in relation hereto has to be
converted from the currency (the "first currency") in which the same is
payable hereunder or under such order or judgment into another currency
(the "second currency") for the purpose of (i) making or filing a claim
or proof against the Borrower, (ii) obtaining an order or judgment in
any court or other tribunal or (iii) enforcing any order or judgment
given or made in relation hereto, the Borrower shall indemnify and hold
harmless each of the Persons to whom such sum is due from and against
any loss suffered as a result of any discrepancy between (A) the rate
of exchange used for such purpose to convert the sum in question from
the first currency into the second currency and (B) the rate or rates
of exchange at which such Person may in the ordinary course of business
purchase the first currency with the second currency upon receipt of a
sum paid to it in satisfaction, in whole or in part, of any such order,
judgment, claim or proof.
(c) On each date on which this Agreement requires an amount to
be paid by the Borrower hereunder, the Borrower shall make the same
available to the Bank to such account of the Bank as the Bank shall
have notified the Borrower in writing.
(d) Save as provided in the definition of Interest Period, if
any sum would, but for the provisions of this subclause (d), become due
and payable
<PAGE>
-9-
hereunder on a day which is not a Business Day, then such sum shall
become due and payable on the Business Day next succeeding the day on
which such sum would otherwise have become due and payable hereunder.
(e) All computations of interest payable hereunder shall be
made by the Bank on the basis of the actual number of days elapsed and
on a 365-day year.
4.6 Payments to be Free of Deductions.
(a) All payments by the Borrower under this Agreement shall be
made without set-off or counterclaim and free and clear of and without
deduction for any Taxes, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any country or any political subdivision
thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrower with respect to any amount
payable by it hereunder, the Borrower will pay to the Bank, on the date
on which the said amount becomes due and payable hereunder, such
additional amount as shall be necessary to enable the Bank to receive
the same net amount which it would have received on such due date had
no such obligation been imposed upon the Borrower.
(b) In the event that the Bank actually receives from any such
taxing or other authority any credit, repayment, relief or rebate in
respect of any such deduction or withholding for which the Borrower has
paid it an additional amount pursuant to Clause 4.6(a) above, the Bank
will promptly after the date of such credit, repayment, relief or
rebate pay to the Borrower the amount of such credit, repayment, relief
or rebate, less the aggregate amount of any costs or expenses which the
Bank shall have sustained or incurred in connection with or as a result
of the obtaining of such credit, repayment, relief or rebate, but not
including the normal expenses incurred by the Bank in filing those tax
forms it would otherwise have been required to file without regard to
such credit, repayment, relief or rebate and provided that if the Bank
has made a payment to the Borrower pursuant to this Clause 4.6 (b) on
the basis of any credit, repayment, relief or rebate which is
subsequently disallowed, then the Borrower shall repay, immediately
upon demand, the amount of such payment. Nothing herein contained shall
interfere with the right of the Bank to arrange its tax affairs in
whatever manner it thinks fit and, in particular, it shall not be under
any obligation to claim relief from tax on its corporate profits or
from any similar tax liability, or to claim such relief in priority to
any other claims of relief, credits or deductions available to it or to
disclose details of its tax affairs.
(c) The Bank hereby represents to the Borrower that it is on
the date hereof a Qualifying Bank and agrees to advise the Borrower
promptly if at any time it ceases to be a Qualifying Bank.
(d) If the Bank is not or ceases to be a Qualifying Bank then
(save in circumstances where the Bank has ceased to be a Qualifying
Bank by reason of any change in law, regulation or double taxation
treaty or its application
<PAGE>
-10-
or interpretation, in each case taking effect after the date of this
Agreement), the Borrower shall not be liable to pay to the Bank under
this Clause 4.6 any amount in respect of taxes levied or imposed by any
taxing authority of or in the United Kingdom in excess of the amount
the Borrower would have been obliged to pay if the Bank had been, or
had not ceased to be, a Qualifying Bank.
4.7 Additional Costs, Changes in Circumstances, etc.
(a) Anything herein to the contrary notwithstanding, if any
law which becomes effective or is implemented on or after the date
hereof (which expression, as used in this Agreement, includes statutes
and rules and regulations thereunder and interpretations thereof by any
competent court or by any governmental or other regulatory body or
official charged with the administration or the interpretation thereof
and requests, directives, instructions and notices at any time or from
time to time heretofore or hereafter made upon or otherwise issued to
the Bank by any central bank or other fiscal, monetary or other
authority, whether or not having the force of law) shall (i) subject
the Bank to any Tax, charge, fee, deduction or withholding of any
nature with respect to this Agreement, the amount of the Advance, or
the payment to such Bank of any amounts due to it hereunder, or (ii)
materially change the basis of taxation of payments to the Bank (as
reasonably determined by the Bank) of principal or interest or any
other amount payable to the Bank hereunder, or (iii) impose or increase
or render applicable any special or supplemental deposit or reserve or
similar requirements or assessment against assets held by, or deposits
in or for the account of, or any eligible liabilities of, or advances
by the Bank in respect of the transaction or transactions contemplated
herein, or (iv) impose on the Bank any other condition or requirement
with respect to this Agreement or the Commitment, and the result of any
of the foregoing is (A) to increase the cost to the Bank of making,
funding or maintaining all or any part of the Advance, or (B) to reduce
the amount of principal, interest or other amount payable to the Bank
hereunder, or (C) to require the Bank to make any payment or to forego
any interest or other sum payable hereunder, the amount of which
payment or foregone interest or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by the Bank
from the Borrower hereunder, then, and in each such case not otherwise
provided for in Clause 4.6 or any other Clause hereunder, the Bank will
use all reasonable efforts to avoid such circumstances and if those
efforts fail the Borrower will pay to the Bank, within thirty (30) days
of the date of an invoice (accompanied by calculations of such
additional amounts in reasonable detail) issued by the Bank to the
Borrower with respect thereto, such additional amounts as will be
sufficient to compensate the Bank for such additional cost, reduction,
payment or foregone interest or other sum. Such calculations as to
amounts owed by the Borrower referred to in the preceding sentence
shall be conclusive and binding upon the Borrower, absent manifest
error.
(b) If any law which becomes effective or is implemented on or
after the date hereof or any governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) or the
interpretation
<PAGE>
-11-
thereof by a court or governmental authority with appropriate
jurisdiction imposes or increases the amount of capital required or
expected to be maintained by the Bank, or any corporation controlling
the Bank, and the Bank determines that the amount of capital required
is increased by or based upon the existence of the credit facilities
established hereunder or any Advance made pursuant hereto then the Bank
shall notify the Borrower of such fact showing the calculation thereof
in reasonable detail. To the extent that the costs of such increased
capital requirements are not reflected in the calculation of LIBOR or
in commissions or fees payable by the Borrower hereunder (and are not
otherwise adjusted by the provisions of Clause 4.6 or any other Clause
hereof), the Borrower and the Bank shall thereafter attempt to
negotiate in good faith an adjustment within thirty (30) days of the
day on which the Borrower receives such notice. If no such adjustment
is agreed pursuant thereto within such time, then commencing on the
date of such notice (but not earlier than the effective date of any
such change), the amounts payable by the Borrower hereunder shall
increase by an amount which will, in the reasonable determination of
the Bank, provide adequate compensation. The Bank shall allocate such
cost increases among its customers in good faith and on an equitable
basis.
4.8 Illegality. If, at any time, it is or becomes unlawful for the Bank
to maintain hereunder or to make or perform any other obligation hereunder in
relation to the Advance made, then the Bank will use all reasonable efforts to
avoid such illegality (including a change in the applicable lending office) and
if those efforts fail deliver the Bank shall deliver to the Borrower a
certificate to that effect and:
(a) the Bank shall not thereafter be obliged to maintain the
Facility hereunder; and
(b) if the Bank so requires, the Borrower shall within thirty
(30) days of demand by the Bank (or such earlier date as may be
required by applicable law affecting the Bank) repay to the Bank
without premium or penalty (save as provided in Clause 4.9) an amount
equal to the outstanding principal sum of the Advance together with
accrued interest thereon and all other amounts owing to the Bank
hereunder, whereupon the Facility shall be reduced to zero.
4.9 Indemnification. In the event that the Borrower shall at any time
repay or prepay any principal of the Advance on a date other than the last day
of the Interest Period with respect thereto, whether such repayment or
prepayment is pursuant to Clause 4 hereof, as a result of acceleration or
otherwise the Borrower shall, within five (5) days of demand by the Bank
accompanied by calculations in reasonable detail pay to the Bank any amounts
required to compensate the Bank for any and all losses, costs and expenses of
the Bank in respect of the Borrower's payment or prepayment on the date of such
payment, including, but not limited to, compensation relating to liquidation or
re-employment of deposits or other funds acquired by the Bank to maintain the
Advance. Such compensation may include, without limitation, an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so paid or prepaid for the period from the date of such payment or
prepayment to the last day of the then current
<PAGE>
-12-
Interest Period for the Advance at the applicable rate of interest for the
Advance provided for herein, over (ii) the amount of interest (as reasonably
determined by the Bank) which would have been paid on deposits of comparable
amounts having terms comparable to such period placed with it by leading banks
in the relevant market. Any calculations made by the Bank pursuant to the terms
of this Clause 4.9 regarding amounts owed by the Borrower shall be conclusive
and binding on the Borrower and the Bank absent manifest error.
Clause 5. CONDITIONS PRECEDENT; SECURITY.
-------------------------------
5.1 Documentary Conditions Precedent. The obligations of the Bank to
make the Advance to the Borrower under this Agreement are subject to the
condition precedent that the Bank has notified the Borrower that it has received
all of the documents set out in The Second Schedule hereto in form and substance
satisfactory to it.
5.2 Further Conditions Precedent. The obligations of the Bank in
respect of the making of the Advance and the commencement of each succeeding
Interest Period with respect to the outstanding Advance are subject to the
further conditions precedent that:
(a) the representations and warranties in Clause 6 hereof and
all other representations in writing made by or on behalf of the
Borrower or any of its Subsidiaries to the Bank in connection with this
Agreement or any of the Loan Documents shall be true as of the date on
which they were made and shall also be true at any time during the life
of the Facility with the same effect as if made at and as of such time;
and
(b) no event shall have occurred and be continuing, and no
condition shall exist, which constitutes an Event of Default or an
Unmatured Event of Default, or which following the making of the
Advance, would constitute an Event of Default or an Unmatured Event of
Default.
5.3 Security; Guarantee. The Obligations shall be secured by the
Security Documents, and shall be unconditionally and irrevocably guaranteed in
full by the Parent pursuant to a guarantee in form and substance satisfactory to
the Bank (the "Parent Guarantee").
Clause 6. REPRESENTATIONS AND WARRANTIES.
-------------------------------
The Borrower represents and warrants to the Bank (each such
representation and warranty being deemed repeated upon the commencement of each
succeeding Interest Period with respect to the Advance) that, except as set
forth in the Disclosure Letter:
6.1 Due Incorporation. Each of the Borrower and its Subsidiaries is a
corporation duly organised, validly existing and in good standing under the laws
of its jurisdiction of incorporation.
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6.2 Capacity. Each of the Borrower and its Subsidiaries has full power
and authority to execute and deliver and to perform and observe the provisions
of each of the Loan Documents to which it is a party and to carry out the
transactions contemplated thereby.
6.3 Authority and Enforceability. The execution, delivery and
performance by each of the Borrower and its Subsidiaries of each of the Loan
Documents to which it is a party have been duly authorised by all necessary
corporate action, and do not and will not require any registration with, consent
or approval of, notice to, or any action by, any Person. Each of the Loan
Documents to which the Borrower or any of its Subsidiaries is a party
constitutes the legal, valid and binding obligations of the Borrower or such
Subsidiary, as the case may be, enforceable against it in accordance with its
terms.
6.4 Compliance with Other Instruments. The execution and delivery of
each of the Loan Documents to which the Borrower or any of its Subsidiaries is a
party and compliance with the terms of such Loan Documents will not (a) result
in a breach of (i) any of the terms or conditions of, or result in the
imposition of any lien, charge or encumbrance upon any properties of the
Borrower or any of its Subsidiaries pursuant to, or constitute a default (with
due notice or lapse of time or both) or result in an occurrence of an event for
which any holder or holders of Indebtedness may declare the same due and payable
under, any indenture, agreement, order, judgment or instrument under which the
Borrower or any of its Subsidiaries is a party or by which the Borrower or any
of its Subsidiaries or its or their property may be bound or affected, or (ii)
the Memorandum and Articles of Association or other constitutive documents of
the Borrower or any of its Subsidiaries or any shareholders resolution of the
Borrower or any of its Subsidiaries, or (b) violate any existing provision of
law applicable to the Borrower or any of its Subsidiaries.
6.5 Financial Statements; Solvency.
(a) The audited financial statements (including the profit and
loss account and balance sheet) of the Borrower for the financial year
ended 30 December 1995 (the "Audited Financials") and the
management-prepared financial statements (including the profit and loss
account and balance sheet) of the Borrower for the period ending 29
March 1997 (the "Interim Financials") have been provided to the Bank,
have been prepared in accordance with GAAP (save, in the case of the
Interim Financials, for year-end adjustments) and are complete and
correct and give a true and fair view of the results of operations of
the Borrower for the applicable period and the state of its affairs as
at the applicable date and in particular accurately disclose all
liabilities (actual or contingent) of the Borrower.
(b) Each of the Borrower and its Subsidiaries is solvent, has
assets having a fair market value in excess of the amount required to
pay its probable liabilities on its existing debts as they become due,
and has and will have access to adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as they become due.
<PAGE>
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6.6 Material Adverse Change. Since the date of the Audited Financials
there has been no Material Adverse Change in the assets, business, financial
position or results of operations of the Borrower. A "Material Adverse Change"
with respect to a Person means a change that might result in a substantial
reduction in the solvency of such Person or that might result in such Person
being unable to perform its obligations under this Agreement or the other Loan
Documents to which it is a party.
6.7 Litigation, etc. There are no actions, suits, arbitrations or
proceedings pending, or to the best knowledge of the Borrower threatened,
against or affecting the Borrower or any of its Subsidiaries which, if adversely
determined, could have a material adverse effect on the business, properties or
financial condition of the Borrower or any of its Subsidiaries, save as
disclosed in the Disclosure Letter. Neither the Borrower nor any of its
Subsidiaries is in violation of any applicable laws and/or regulations which
could materially affect the business, properties or financial condition of the
Borrower or any of its Subsidiaries nor are they, or any of them, in violation
or default with respect to any order, writ, injunction, demand or decree of any
court or any governmental agency or in violation or default under any indenture,
agreement or other instrument under which the Borrower or any of its
Subsidiaries is a party or may be bound.
6.8 Title. Each of the Borrower and its Subsidiaries has good and
marketable title to the properties and assets which it owns or leases and which
are necessary to carry on the business of the Borrower and its Subsidiaries as
conducted and as presently anticipated to be conducted, and none of such
properties and assets is subject to any Encumbrance, except as permitted
pursuant to Clause 8.1 hereof. All such properties and assets are in good
condition and repair, normal wear and tear excepted, and are adequate and
sufficient to carry on the business of the Borrower and its Subsidiaries as
conducted and as presently anticipated to be conducted. Each lease which is
material to the conduct of the business of the Borrower or any of its
Subsidiaries is valid and subsisting and no event or condition exists which
constitutes, or after notice or lapse of time or both would constitute, a
default thereunder. Such leasehold interests are subject to no Encumbrance, and
in each case quiet possession of the properties covered by such leases has been
maintained.
6.9 Franchises, Patents, Copyrights, etc. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, titles, licenses, trademarks,
trade names, service marks, copyrights and all rights with respect thereto, free
from restrictions, that are necessary for the ownership, maintenance and
operation of their respective businesses, substantially as now conducted and as
presently anticipated to be conducted, without known conflict with any rights of
others.
6.10 Indebtedness. Neither the Borrower nor any of its Subsidiaries has
any Indebtedness other than Indebtedness expressly permitted by the provisions
contained in Clause 8.6 hereof.
6.11 Absence of Undisclosed Liabilities. Except to the extent reflected
or reserved against in the Audited Financials or in the notes thereto, neither
the Borrower nor any of its Subsidiaries has any material liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise
(including, without
<PAGE>
-15-
limitation, liabilities as guarantor or otherwise with respect to obligations of
others) and whether due or to become due, including, without limitation, any
liabilities for taxes due or to become due.
6.12 Taxes. Each of the Borrower and its Subsidiaries has filed or
caused to be filed all tax returns which are required to be filed by it pursuant
to the laws, regulations or orders of each Person with taxing power over it or
its assets. Each of the Borrower and its Subsidiaries has paid, or made
provision for the payment of, all taxes, assessments, fees and other
governmental charges which have or may have become due pursuant to said returns,
or otherwise, or pursuant to any assessment received except such taxes, if any,
as are being contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided. The charges, accruals
and reserves in respect of taxes on the books of the Borrower and its
Subsidiaries are sufficient to comply with GAAP. The Borrower knows of no
proposed tax assessment against the Borrower or any of its Subsidiaries.
6.13 Insurance. The Borrower has provided to the Bank a complete and
correct list of all policies of theft, fire, liability, life, property and
casualty and other insurance owned or held by the Borrower and each of its
Subsidiaries, all of which are in effect. Such policies of insurance are
maintained with internationally reputable insurance companies, funds or
underwriters, are of the kinds and cover such risks and are in such amounts and
with such deductibles and exclusions as are consistent with prudent business
practice.
6.14 Activities in Compliance with Other Instruments and Laws.
(a) Neither the Borrower nor any of its Subsidiaries is in
violation of, and the activities of each of the Borrower and its
Subsidiaries as currently conducted and as currently contemplated to be
conducted do not and will not violate any provision of, its Memorandum
and Articles of Association or other constitutive documents, or any
resolution of its shareholders, or any agreement or instrument to which
it may be subject or by which any of them or any of its or their
properties may be bound or any law, decree, order, judgment, statute,
license, rule or regulation.
(b) Neither the Borrower nor any of its Subsidiaries is in
violation of, and the activities of the Borrower and its Subsidiaries
as currently conducted do not violate, any applicable environmental,
zoning, land use, or health and safety law, regulation or ordinance.
None of the leasehold or freehold properties of the Borrower and its
Subsidiaries is being, or to the best of the knowledge (after
reasonable inquiry) of the Borrower and its Subsidiaries, has been,
used for the handling, processing, storage or disposal of hazardous
waste or substances, pollutants, contaminants, toxic substances, oil or
other chemicals controlled or regulated by applicable environmental law
or regulations ("Hazardous Substances"). There have been no releases or
threatened releases of Hazardous Substances on, into, or from the
freehold or leasehold properties of the Borrower and its Subsidiaries.
6.15 Subsidiaries. Attached hereto as The Third Schedule is a complete
and correct list of all present Subsidiaries of the Borrower, which list shows
for each
<PAGE>
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Subsidiary, its jurisdiction of incorporation, its principal business, and the
number and percentage of its outstanding Shares owned of record and/or
beneficially by the Borrower or one of the Subsidiaries.
6.16 No Unmatured Events of Default or Events of Default. No Unmatured
Event of Default or Event of Default has occurred and is continuing.
6.17 Collateral. All of the Obligations will at all times from and
after the execution and delivery of each of the Security Documents be entitled
to all of the benefits of and be secured by each of such Security Documents in
accordance with the terms thereof.
6.18 Governmental Approvals. Neither the execution, delivery and
performance by the Borrower and its Subsidiaries of this Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is or is to
become a party, nor the conduct by the Borrower and its Subsidiaries of their
respective activities as currently conducted and as currently contemplated to be
conducted, requires the approval or consent of, or filing with, any governmental
agency or authority other than those already obtained.
6.19 Disclosure. None of the representations or warranties made by the
Borrower or any of its Subsidiaries in any of the Loan Documents as of the date
of such representations and warranties, and none of the statements contained in
each exhibit or report furnished by or on behalf of the Borrower or any of its
Subsidiaries to the Bank in connection with any of the Loan Documents, contains
any untrue statement of a material fact or omits any material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they are made, not misleading. There is no fact
known to the Borrower which materially adversely affects, or which could in the
future materially adversely affect, the financial position, business,
operations, or affairs of the Borrower and its Subsidiaries taken as a whole.
Clause 7. CERTAIN AFFIRMATIVE COVENANTS.
------------------------------
The Borrower covenants and agrees that, until the later of (a) the
Termination Date, or (b) the date upon which all of the Obligations shall have
been paid in full, the Borrower will (and to the extent applicable to any
Subsidiary, will ensure like compliance by each such Subsidiary):
7.1 Financial Statements, Reports and Inspection.
(a) Furnish to the Bank:
(i) as soon as practicable and in any event within
forty-five (45) days after the end of each quarter of the
Borrower's financial year beginning with the first such
quarter ending immediately after the date hereof, management
accounts of the Borrower in respect of such quarter
(comprising its balance sheet and profit and loss account)
showing the results of the operations of the Borrower during
such quarter and during the period from the commencement of
the then current financial year to the end of such quarter;
<PAGE>
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(ii) as soon as they become available and in any event
within ninety (90) days after the close of each of the
Borrower's financial years, audited balance sheets of the
Borrower as at the end of such financial year and the audited
profit and loss account of the Borrower for the period then
ended, which shall (A) accurately disclose all of the
Borrower's liabilities (actual or contingent), (B) be prepared
in accordance with GAAP and be certified without qualification
by a firm of independent chartered accountants of recognised
international standing and (C) give a true and fair view of
the results of operations and the state of affairs of the
Borrower; and
(iii) promptly after the sending or filing thereof,
copies the statutory accounts of the Borrower as and when
filed with Companies House; and
(b) Furnish, promptly upon the request of the Bank, such other
information with respect to the business, affairs or condition
(financial or otherwise) of the Borrower as the Bank may reasonably
request.
7.2 Insurance. Maintain, and cause each of its Subsidiaries to
maintain, insurance with financially sound and reputable insurers with respect
to its properties and business against such casualties and contingencies as
shall be in accordance with the general practices of businesses engaged in
similar activities in similar geographic areas and in amounts, containing such
terms, in such forms and for such periods as may be reasonable and prudent.
7.3 Inspection of Properties and Books. Permit and cause the
Subsidiaries to permit the Bank, or any of its designated representatives, on
reasonable prior written notice, to visit and inspect any of the properties of
the Borrower or any of its Subsidiaries, to examine the books of account of the
Borrower and its Subsidiaries (and to make copies thereof and take extracts
therefrom), to discuss the affairs, finances and accounts of the Borrower and
its Subsidiaries with, and to be advised as to the same by, its and their
officers.
7.4 Compliance with Laws, Contracts, Licenses, and Permits. Comply and
cause each of its Subsidiaries to comply with (a) the applicable laws and
regulations wherever its business is conducted, (b) the provisions of its
Memorandum and Articles of Association or other constitutive documents, as the
case may be, (c) all agreements and instruments by which it or any of its
properties may be bound and (d) all applicable laws, decrees, orders and
judgments. If at any time while the Advance is outstanding any authorisation,
consent, approval, permit or license from any officer, agency or instrumentality
of any government shall become necessary or be required in order that the
Borrower or any of its Subsidiaries may fulfil any of their respective
obligations hereunder and under the Loan Documents, the Borrower will
immediately take or cause to be taken all reasonable steps within the power of
the Borrower and its Subsidiaries to obtain such authorisation, consent,
approval, permit or license and furnish the Bank with evidence thereof.
7.5 Notice of Default, etc. Promptly give notice in writing to the Bank,
in each case upon the Borrower's becoming aware of the same, of (a) the
occurrence of
<PAGE>
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any Event of Default or any continuing Unmatured Event of Default under this
Agreement, (b) any technical, legal or administrative event (including without
limitation, actual or threatened litigation) which has occurred or is likely to
occur and which may materially prejudice the financial or economic situation of
the Borrower or any of its Subsidiaries, (c) the occurrence of any event which
could materially adversely affect the rights of the Bank under, or the ability
of the Borrower or any of its Subsidiaries to perform its respective obligations
under, the Loan Documents, (d) any set off, withholding or other claim or
dispute affecting any of the collateral in any material respect, (e) any
litigation or proceedings threatened in writing or any pending litigation or
proceedings affecting, or involving as a party or potential party thereto, the
Borrower or any of its Subsidiaries and that could reasonably be expected to
have a materially adverse effect on the Borrower or any of its Subsidiaries and
(f) any judgement, final or otherwise, against the Borrower or any of its
Subsidiaries in an amount in excess of (pound)150,000.
7.6 Maintenance of Existence, Licenses and Properties. Preserve and
maintain, and cause each Subsidiary to preserve and maintain, its corporate
existence, and all of its properties, assets, rights, licenses, consents,
privileges and franchises necessary or desirable in the normal conduct of its
business.
7.7 Expenses. Promptly pay:
(a) all reasonable out-of-pocket expenses of the Bank
(including, but not limited to, reasonable fees and disbursements of
the Bank's counsel as well as those fees and disbursements arising in
connection with appraisals and environmental site assessments) together
with any applicable VAT, incident to the preparation, execution and
delivery of the Loan Documents (other than the Parent Loan Agreement),
any amendments or waivers to any of the Loan Documents (other than the
Parent Loan Agreement), the protection of the rights of the Bank under
the Loan Documents and the enforcement of the Obligations, whether by
judicial proceedings or otherwise; and
(b) all stamp, registration and other taxes and fees
(including VAT) to which this Agreement and/or any other Loan Document
(other than the Parent Loan Agreement) or any judgment given in
connection herewith or therewith is or at any time may be subject and
shall, from time to time on demand of the Bank, indemnify the Bank,
against any liabilities, costs, claims and expenses resulting from any
failure to pay or any delay in paying any such tax.
The obligations of the Borrower under this Clause 7.7 shall survive the
repayment of the Advance.
7.8 Financial Records. Keep, and cause each of the Subsidiaries at all
times to keep, books of record and accounts in which proper entries will be made
of its financial transactions in accordance with GAAP.
7.9 Taxes. Pay and cause each of the Subsidiaries to pay, all taxes or
other assessments or governmental charges or levies imposed upon it or upon its
income or profits or upon property belonging to it prior to the time when any
penalties or
<PAGE>
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interest accrue with respect thereto, unless, in any such case, the
same is being contested in good faith by appropriate proceedings and an adequate
reserve therefor has been established and is maintained in accordance with GAAP.
7.10 Conduct of Business. Continue and cause each of the Subsidiaries to
continue to engage primarily in its business as presently conducted and as
presently anticipated to be conducted as of the date hereof and to carry on its
business in an efficient manner.
7.11 Use of Proceeds. Use the Advance made available hereunder solely
for the purposes set forth in Clause 1.3. No portion of the Advance shall be
used in any way which infringes Section 151 of the Companies Act 1985 or any law
of any other relevant jurisdiction which restricts the incurring of indebtedness
and/or the creation of security by the Borrower or its Subsidiaries in
connection with the acquisition, directly or indirectly, of ownership or control
of the Borrower or its Subsidiaries. Without affecting the obligations of the
Borrower in any way, the Bank shall not be bound to monitor or verify the
application of any portion of the Advance.
7.12 Delivery of Landlord's Lien Waiver. Cause the Parent to deliver to
the Bank no later than ten (10) Business Days after the date of this Agreement a
lien waiver letter executed by the lessor of the Parent's leased premises in
Westford, Massachusetts in form and substance satisfactory to the Bank.
7.13 Further Assurances. At any time or from time to time execute and
deliver and cause each of the Subsidiaries to execute and deliver such further
instruments and take such further action as may reasonably be requested by the
Bank, further and more perfectly to effect the purposes of the Loan Documents,
including without limitation, such further Security Documents and documents
evidencing good and marketable title with respect to the properties and assets
of the Borrower and its Subsidiaries now owned or acquired after the date
hereof.
Clause 8. CERTAIN NEGATIVE COVENANTS.
---------------------------
The Borrower covenants and agrees that, until the later of (a) the
Termination Date, or (b) the date upon which all of the Obligations shall have
been paid in full, the Borrower will not (and to the extent applicable to any
Subsidiary, will ensure that each such Subsidiary will not):
8.1 Encumbrances. Create, incur, assume or suffer to exist, or permit
any of the Subsidiaries to create, incur, assume or suffer to exist, any
Encumbrance of any kind upon any of its property, assets or revenues, whether
now owned or hereafter acquired, except:
(a) easements, rights of way, restrictions and similar
encumbrances incurred in the ordinary course of business and not
interfering with the ordinary conduct of business of the Borrower or
any of its Subsidiaries, nor materially and adversely affecting the
value of the properties so encumbered;
(b) Encumbrances in favour of the Bank under the Loan
Documents;
<PAGE>
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(c) Encumbrances arising by operation of law in the ordinary
course of trading over property other than land and securing amounts
not more than 60 days overdue;
(d) presently existing Encumbrances described in The Fourth
Schedule hereto;
(e) Encumbrances the creation of which the Bank has given its
prior written consent;
(f) Encumbrances securing Indebtedness permitted by clause 8.6
hereof the aggregate principal amount of which does not exceed the
Sterling Equivalent of US $100,000; and
(g) Encumbrances consisting of equipment finance leases and
hire purchase arrangements permitted by clause 8.6(e).
8.2 Distributions. Make, or permit any of the Subsidiaries to make,
without the approval of the Bank, any Distribution, except (i) Distributions by
any Subsidiary to the Borrower, and (ii) Distributions by the Borrower to the
Parent or Holdings.
8.3 Transactions with Affiliates. Engage, or permit any of the
Subsidiaries to engage, in any transaction with any Affiliate on terms more
favourable to the Affiliate than would have been obtainable on an arms length
basis in the ordinary course of business, or make, or permit any of its
Subsidiaries to make, any Restricted Payment other than Restricted Payments
which constitute reasonable compensation for services actually rendered.
8.4 Sale of Assets. Sell, or permit any of the Subsidiaries to sell,
lease, abandon or otherwise dispose of, directly or indirectly, all or any of
its assets, except in the ordinary course of business at fair value or in
respect of obsolete assets, provided that the value of such obsolete assets does
not in the aggregate exceed (pound)250,000 in any financial year of the
Borrower.
8.5 Acquisition or Merger. Acquire the business of any Person, or
permit any of the Subsidiaries to acquire the business of any Person, or
consolidate or merge, or permit any of the Subsidiaries to consolidate or merge,
its business with or into any Person; provided, however, that the Borrower, or
any Subsidiary of the Borrower may consolidate or merge its business into the
Parent.
8.6 Indebtedness. Incur or permit to exist or remain outstanding, or
permit any of the Subsidiaries to incur or permit to exist or remain
outstanding, any Indebtedness, other than:
(a) Indebtedness of the Borrower to the Bank pursuant to the
Loan Documents;
(b) Indebtedness in respect of taxes, assessments,
governmental charges and liabilities under statutory severance
indemnities, to the extent that payment thereof is not yet due or to
the extent that the same is being
<PAGE>
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contested in good faith by appropriate proceedings and an adequate
reserve therefor has been established and is maintained in accordance
with GAAP;
(c) Indebtedness in respect of outstanding obligations as
described on The Fifth Schedule hereto;
(d) Indebtedness of any member of the Affiliate Group to the
Borrower or of the Borrower to any member of the Affiliate Group in
respect of intercompany loans;
(e) Indebtedness of any of the Borrower or its Subsidiaries
under equipment finance leases and hire purchase arrangements, provided
that the aggregate amount of such Indebtedness under this Clause 8.6(e)
shall not exceed at any time (pound)500,000;
(f) Indebtedness incurred in the ordinary course of business
and not incurred through the borrowing of money or obtaining of credit
except credit on an open account customarily extended;
(g) Indebtedness of the Borrower or any Subsidiary of the
Borrower, to the Parent; and
(h) Indebtedness not otherwise permitted by this Clause 8.6 in
an aggregate principal amount not to exceed at any time the Sterling
Equivalent of US $100,000.
8.7 Subsidiaries; Limitation on Issuance of Share Capital. Create,
directly or indirectly, or permit the Subsidiaries to create, directly or
indirectly, any additional Subsidiaries, or issue, sell, transfer or otherwise
dispose of or permit any of its Subsidiaries to issue, sell, transfer or
otherwise dispose of, any of its share capital (or any option or right to
acquire its share capital).
8.8 Change in Terms and Payment of Indebtedness. Effect or permit, or
permit any of the Subsidiaries to effect or permit, any material change in or
material amendment to the terms of any Indebtedness, or make, directly or
indirectly, any payment of principal or interest or other amount attributable to
any Indebtedness, except as permitted by the terms of the Loan Documents and as
specifically permitted herein, and except for changes in the ordinary course of
trading in the terms of Indebtedness permitted under Clause 8.6(f) so long as
such changes shall not contravene, or cause any of the Borrower and the
Subsidiaries to contravene, the other terms of this Agreement.
8.9 Investments. Make, or permit any of the Subsidiaries to make, any
investments, except investments consisting of (a) certificates of deposit,
bankers' acceptances, and time and demand deposits of any bank having capital
and unimpaired surplus the Sterling Equivalent of which is in excess of
(pound)250,000,000; (b) marketable direct obligations issued by the United
Kingdom or the United States of America that mature within twelve (12) months
from the date of purchase thereof; or (c) any investment product offered by the
Bank.
<PAGE>
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Clause 9. EVENTS OF DEFAULT; ACCELERATION.
--------------------------------
9.1 Events of Default. If any of the following events shall occur:
(a) the Borrower shall fail to pay when due (i) any amount of
principal of, or interest on, the Advance, or (ii) any other amount
payable hereunder when the same becomes due; provided that the
accidental failure to pay interest or principal on the date due for
payment shall not be an Event of Default so long as the amount due is
paid on the next succeeding Business Day; or
(b) the Borrower or any of its Subsidiaries shall fail to
comply with any of its covenants contained in Clauses 7 and 8; or
(c) the Borrower or any of its Subsidiaries shall fail to
comply with any term, covenant or agreement contained in this Agreement
(other than those specified in (a) or (b) above) or any member of the
Affiliate Group fails to comply with any term, covenant or agreement
contained in any of the other Loan Documents and such failure continues
for fifteen (15) days after written notice of such failure has been
given to such Person by the Bank; or
(d) any representation or warranty made by any member of the
Affiliated Group herein, in any of the Loan Documents, or in any
writing delivered or furnished pursuant to this Agreement, or otherwise
in connection with the transactions contemplated hereby or any report,
certificate, or financial statement furnished in connection with this
Agreement, shall prove to have been false or incorrect in any material
respect when made, repeated, or deemed made; or
(e) the Borrower or any of its Subsidiaries shall fail (i) to
pay any Indebtedness of the Borrower or such Subsidiary, as the case
may be, other than Indebtedness not exceeding (pound)500,000 or the
Sterling Equivalent thereof in the aggregate at any time, or any
interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness,
or (ii) to perform or observe any term, covenant or condition on its
part to be performed or observed under any agreement or instrument
relating to any such Indebtedness, when required to be performed or
observed, and such failure shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the
effect of such failure to perform or observe is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness; or
(f) any Event of Default under and as defined in the Parent
Loan Agreement or any of the Loan Documents (as defined in the Parent
Loan Agreement) shall have occurred and be continuing;
(g) any member of the Affiliate Group is unable to pay its
debts as they fall due within the meaning of Section 123 of the
Borrowing Act 1986 (as that section may be amended by order of Section
416 of the Insolvency Act
<PAGE>
-23-
1986) or admits its inability to pay its debts as they fall due, or
suspends making payments on all or any class of its debts or announces
an intention to do so, or a moratorium is declared in respect of any of
its indebtedness, or it begins negotiations with one or more of its
creditors with a view to avoiding, or in the expectation of,
insolvency; or
(h) any petition is presented or meeting is convened with a
view to a general composition, assignment or arrangement with all or
any class of creditors of any member of the Affiliate Group, or any
similar or analogous proceedings in any other country with respect to
any member of the Affiliate Group, or a meeting of any member of the
Affiliate Group is convened for the purpose of considering any
resolution for its winding-up or for its administration or any such
resolution is passed, or any Person presents a petition for the
winding-up or for the administration of any member of the Affiliate
Group, or an order for the winding-up or administration of any member
of the Affiliate Group is made, or any other legal process is commenced
with a view to the rehabilitation, administration, liquidation,
bankruptcy, winding-up or dissolution of any member of the Affiliate
Group or to any other insolvency proceedings involving any member of
the Affiliate Group and, in the case of a petition or legal process
(other than a petition for the administration of a member of the
Affiliate Group) instituted by a Person who is not a member of the
Affiliate Group, such petition or legal process has not been dismissed
within ten (10) days (other than while the relevant member of the
Affiliate Group is solvent and the petition is for the purposes of a
reconstruction on terms previously approved in writing by the Bank); or
(i) any liquidator, receiver, administrative receiver,
administrator, trustee or the like is appointed in respect of any
member of the Affiliate Group or of the whole or a substantial part of
its assets, or one or more directors of any member of the Affiliate
Group requests the appointment of any such Persons, or any attachment,
sequestration, distress or execution affects all or substantially all
of the assets of a member of Affiliate Group and is not discharged or
stayed within ten (10) days; or
(j) any final judgment, any security measures granted or any
execution actions (attachments) initiated against any member of the
Affiliate Group remains unsatisfied for more than ten (10) days after
the Borrower or any member of the Affiliate Group shall have received
notice thereof; or
(k) a Material Adverse Change in the business or financial
condition of any member of the Affiliate Group shall have occurred at
any time after the date hereof; or
(l) the Parent shall at any time beneficially own less than
one hundred percent (100%) of the issued share capital of Holdings, or
Holdings shall at any time beneficially own less than one hundred
percent (100%) of the issued share capital of the Borrower; or
(m) this Agreement or any other Loan Document shall be
cancelled, terminated, revoked or rescinded by the Borrower or the
Parent party thereto
<PAGE>
-24-
(otherwise than in accordance with the terms thereof) for any reason
whatsoever;
THEN, or at any time thereafter while such event shall be continuing:
(1) where the Borrower or any of its Subsidiaries is in default under
the provisions of Clauses 9.1(g), (h) or (i), the entire unpaid principal amount
of the Advance, all interest accrued and unpaid thereon, and all fees and other
amounts payable hereunder shall automatically become and be forthwith due and
payable, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrower; and
(2) in any case referred to in this Clause 9.1 other than in Clauses
9.1(g), (h) or (i), the Bank may, by written notice to the Borrower, declare all
or part of the unpaid principal amount of the Advance, all interest accrued and
unpaid thereon, and all fees and other Obligations to be forthwith due and
payable, whereupon the same shall become immediately due and payable, or the
Bank may by written notice to the Borrower declare the same to be due and
payable upon demand, whereupon the same shall become due and payable forthwith
on demand.
9.2 Remedies Not Exclusive. No remedy herein conferred upon the Bank is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or any other provision
of law.
Clause 10. SETOFF.
-------
Regardless of the adequacy of any collateral for the Obligations,
during the continuance of any Event of Default, any deposits or other sums
credited by or due from the Bank to the Borrower or any of its Subsidiaries and
any securities or other property of the Borrower or any of its Subsidiaries in
the possession of the Bank may be applied to or set off against the payment of
the Obligations and any and all other liabilities, direct, or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising, of the
Borrower or such Subsidiary, as the case may be, to the Bank.
Clause 11. MISCELLANEOUS.
--------------
11.1 Consents, Amendments, Waivers, etc. Any consent or approval
required or permitted by this Agreement to be given by the Bank may be given,
and any term of this Agreement, the other Loan Documents or any other instrument
related hereto or mentioned herein may be amended, and the performance or
observance by the Borrower or any of its Subsidiaries of any terms of this
Agreement, the other Loan Documents or such other instrument or the continuance
of any Unmatured Event of Default or Event of Default may be waived (either
generally or in a particular instance, either retroactively or prospectively and
either with or without condition) with, but only with, the written consent of
the Bank. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Bank in exercising any right shall operate as a
waiver thereof or otherwise be
<PAGE>
-25-
prejudicial thereto. No notice to or demand upon the Borrower shall entitle the
Borrower to other or further notice or demand in similar or other circumstances.
11.2 Assignment and Novation.
(a) This Agreement shall be binding upon and enure to the
benefit of each party hereto and its successors and permitted assigns.
(b) The Borrower shall not be entitled to assign or transfer
all or any of its rights, benefits and obligations hereunder.
(c) The Bank may at any time with the prior written consent of
the Borrower sell, assign, grant participations in or transfer all or
part of its rights and benefits hereunder to any other person which is
a Qualifying Bank; provided, that each assignment shall be in an amount
that is a whole multiple of (pound)1,000,000. The Bank may disclose on
a confidential basis to any actual or potential transferee or to any
Person approved by the Borrower who may otherwise enter into
contractual relations with the Bank in relation to this Agreement such
information about the Borrower as the Bank shall reasonably consider
appropriate in connection therewith.
11.3 Notices.
(a) Any notice, demand or communication made or given
hereunder by one Person to another pursuant to this Agreement shall be
in writing and shall be made or delivered to that other Person at the
address listed in subclause (b) below and shall be deemed to have been
made or delivered when despatched and the appropriate answerback
received (in the case of any communication made by facsimile
transmission), when left at that address (in the case of any letter
sent by hand or courier service), or two Business Days after being
deposited in the post, first class postage prepaid, in an envelope
addressed to it at that address (in the case of any letter sent by
post).
(b) Notices to any party shall be sent to it at the following
addresses, or any other address of which all the other parties are
notified in writing.
If to the Borrower at: GenRad Limited
Orion Business Park
Bird Hall Lane
Cheadle Heath
Stockport SK3 0XG
Attention: Lisa Hooley
Telephone no.: 0161 491 9191
Telecopy no.: 0161 492 9292
<PAGE>
-26-
If to the Bank at: BankBoston, N.A., London Branch
39 Victoria Street
London SW1H OED
Attention: Veronica Houghton
Telephone no.: 0171 932 9250
Telecopy no. 0171 932 9364
11.4 Governing Law; Place of Jurisdiction.
(a) This Agreement shall be governed by, and shall be
construed in accordance with, the laws of England.
(b) For the benefit of the Bank, the Borrower irrevocably
agrees that:
(i) the courts of England are to have jurisdiction to
settle any disputes which may arise in connection with the
legal relationships established by this Agreement or otherwise
arising in connection with this Agreement, and the Borrower
irrevocably submits to the jurisdiction of such courts; and
(ii) this provision shall not limit the rights of the
Bank to take proceedings in any other court of competent
jurisdiction.
11.5 Severability. The provisions of this Agreement are severable and if
any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
11.6 Counterparts. This Agreement and any amendment hereof may be
executed in several counterparts and by each party on a separate counterpart,
each of which when executed and delivered shall be an original, and all of which
together shall constitute one Agreement.
11.7 Entire Agreement. This Agreement together with all Amendments,
Exhibits and Schedules hereto, expresses the entire understanding of the
parties, with respect to the transactions contemplated hereby. Neither this
Agreement nor any term hereof may be changed, waived, discharged, or terminated,
orally or in writing, except as provided in Clause 11.1 hereof.
<PAGE>
-27-
The First Schedule
------------------
Calculation of Additional Cost
------------------------------
The formula referred to in the definition of Additional Cost is the following:
R = AB + C (B - E) + D (B - F) % per annum
100 - (A + D)
Where:
R is the rate per annum being calculated;
A is the cash ratio level which the relevant Bank is required to maintain
with the Bank of England, expressed as a percentage of eligible
liabilities;
B is the average (rounded upward to the nearest whole multiple of
one-sixteenth of one per cent (1/16%) if such average is not already
such a multiple) of the rates per annum at which Sterling deposits in
an amount corresponding to the Advance (or relevant portion thereof)
are offered by prime banks in the London Interbank Sterling Market to
the relevant Bank at or about 11.00 a.m., London time, on the first day
of the Relevant Period (as defined below) for a period equal to the
Relevant Period;
C is the level of eligible liabilities which (as a result of the
requirements the Bank of England) the Bank maintains as secured money
with members of the London Discount Market Association ("LDMA") or in
certain marketable or callable securities approved by the Bank of
England, which percentage shall (in the absence; of evidence that any
other figure is appropriate) be conclusively presumed to be five
percent (5%);
D is the level of special deposits which the relevant Bank is for the
time being required to maintain with the Bank of England, expressed as
a percentage of eligible liabilities;
E is the lower of B and the rate per annum at which members of the LDMA
bid for Sterling deposits from the relevant Bank for the Relevant
Period at or about 11.00 a.m. on the first day of the Relevant Period;
and
F is the lower of B and the rate per annum currently payable by the Bank
of England to the relevant Bank on any special deposits.
Provided that if the relevant Bank is not being offered Sterling deposits as
aforesaid, the rate for the purpose of calculating the Additional Cost for that
Relevant Period shall be determined by reference to the cost to the relevant
Bank of obtaining Sterling deposits in an amount corresponding to such Bank's
portion
<PAGE>
-28-
of the Advance from such sources as it may reasonably select for such Relevant
Period.
For the purpose of this Schedule, "Relevant Period" means, during any period for
which an interest rate is to be calculated, such period. "Eligible Liabilities"
and "Special Deposits" shall have the meaning given to these terms from time to
time by the Bank of England.
In the event of any change in circumstances (including the imposition of
alternative or additional official requirement, whether or not having the force
of law) which, in the reasonable opinion of the relevant Bank renders the above
formula inapplicable, the relevant Bank (after consultation, if practicable,
with the Borrower) shall notify the Borrower of the manner in which the
Additional Cost shall be determined thereafter and, if appropriate, substitute a
new formula for that set out above.
In application of the above formula, A, B, C, D, E and F will be included in the
formula as figures and not as percentages, e.g. if A is 0.5 percent and B is 12
percent, AB will be calculated as 0.5 x 12 and not as 0.5 percent x 12 percent.
<PAGE>
-29-
The Second Schedule
-------------------
Documentary Conditions Precedent To The Advance
-----------------------------------------------
Conditions Precedent to First Advance. The obligations of the Bank to make the
Advance to the Borrower are subject to the satisfaction of the following
conditions:
1. Delivery of Corporate Documents and Certificates
(a) A duly certified copy of the Memorandum and Articles of
Association and the Certificate of Incorporation and any
Certificate of Incorporation on Change of Name of the
Borrower.
(b) A duly certified copy of the Certificate of Incorporation (or
other charter documents) and bylaws of the Parent.
(c) Resolutions of the board of directors of the Borrower and the
Parent (i) approving the terms of, and the transactions
contemplated by, this Agreement and the other Loan Documents
to which any of them is or is to become a party, and (ii)
authorising a specified person or persons to:
(A) execute this Agreement and the Loan Documents to be
executed by any of them; and
(B) give all notices, requests, instructions,
certificates and other documents to the Bank under
the Loan Documents to be executed by any of them.
(d) A specimen of the signature of each person, authorised by the
resolution or extract referred to in paragraphs 1(c)(A) and
1(c)(B) above, on which the Bank is entitled to rely
conclusively.
(e) A Perfection Certificate from the Parent, duly signed by an
authorised officer.
2. Delivery of Security Documents. The Borrower, each of its Subsidiaries and
the Parent shall have delivered to the Bank the Security Documents set forth
opposite its name below, each duly executed, in form and substance satisfactory
to the Bank, and accompanied by all schedules and exhibits required by the terms
of each such Security Document:
Company Security Documents
------- ------------------
Parent (a) Parent Guarantee
(b) Security Agreement
(c) UCC-1 financing
statements naming
the Bank as Secured
<PAGE>
-30-
Party and the Parent
as Debtor
3. Delivery of Other Documents
---------------------------
(a) A copy of any other resolution, authorisation, approval,
consent, licence, notarisation, filing, recording, certificate
or other document which the Bank considers to be necessary or
desirable in connection with the entry into and performance
of, and the transactions contemplated by, any Loan Document or
for the validity and enforceability of any Loan Document or
for the perfection of any security interest created pursuant
to any of the Security Documents.
(b) Evidence of company searches in England and Wales and any
other jurisdiction in which the collateral is located showing
the absence of any Encumbrances on any assets of any of the
Borrower and its Subsidiaries.
(c) The Disclosure Letter.
4. Delivery of Legal Opinions.
---------------------------
Legal opinion of Nutter, McClennen & Fish LLP, counsel for the Parent
addressed to the Bank, in form and substance satisfactory to the Bank.
<PAGE>
-31-
The Third Schedule
------------------
Subsidiaries
------------
None
<PAGE>
-32-
The Fourth Schedule
-------------------
Presently Existing Encumbrances
-------------------------------
<TABLE>
<CAPTION>
GenRad Limited (pound sterling)
--------------
Company Description Value Total Value Balance
- ------- ----------- ----- ----------- -------
<S> <C> <C> <C> <C>
GVD Finance Slplace 80S15 45160.00 Qtrly 541920.00 270960.00
BT Contract rentals Telephone System 4492.27 Qtrly 89845.40 76368.59
BT Contract rentals Telephone System 5179.87 Qtrly 98417.53 88057.79
--------------------------------
Total Costs 730182.93 435386.38
================================
</TABLE>
<PAGE>
-33-
The Fifth Schedule
------------------
Presently Existing Indebtedness
-------------------------------
None
<PAGE>
-34-
The Sixth Schedule
------------------
DX 2205 Portsmouth
FAX: (01705) 862831
===========
BOLITHO WAY
===========
SOLICITORS
13/18 KING'S TERRACE
PORTSMOUTH PO5 3AL
Telephone: (01705) 820747
International +44 1705 820747
Your ref:
Our ref: DJG.AH
Bingham Dana Gould LLP
39 Victoria Street
London SW1H OEE 26 June 1997
For the attention of Mr. Wenniger
Dear Sirs
Re: GENRAD LIMITED FACILITY AGREEMENT
- -------------------------------------
We refer to the Facility Agreement to be entered into by our client GenRad
Limited and your client BankBoston NA London Branch. This letter is to be the
Disclosure Letter referred to at clause 1.1 and the Sixth Schedule of the
Facility Agreement.
GenRad Limited is a Defendant to an action brought by Firmview Associates
Limited ("Firmview") in the High Court of England and Wales bearing name and
number Firmview Associates Limited-v-GenRad Limited 1997 F No. 141. Firmview
claims that it is entitled to unpaid fees and damages for breach of a contract
for services that subsisted between Firmview and GenRad Limited. Firmview
claims:
(a) the balance due or alternatively damages for wrongful termination of
(pound sterling)150,523.21 plus interest
(b) further unspecified sums in respect of payments that it is alleged would
have been made pursuant to GenRad Inc.'s incentive compensation plan.
It is estimated that under this head of claim Firmview claims in the
order of (pound sterling) 88,000 plus interest
(c) the costs of the proceedings.
GenRad Limited is defending the action on the ground that the contract for
services was terminated as a result of a breach of breaches of the contract for
services for Firmview entitling GenRad Limited to so terminate.
A Defence has been served in the action. Discovery and inspection has not
yet taken place. GenRad Limited is seeking an order for security for costs
against Firmview.
<PAGE>
BOLITHO WAY Continuation Sheet
- --------------------------------------------------------------------------------
Firmview has intimated that if successful in this action a further claim
will be brought by Firmview or Mr. William Drummond Duncan ("Mr. Duncan") (the
moving force behind Firmview) or both of them, against GenRad Limited or GenRad
Inc., or both of them, for the loss suffered as a result of GenRad Inc.'s
refusal to permit Mr. Duncan to exercise stock options under GenRad Inc.'s stock
option plan or plans. Firmview and Mr. Duncan assert that the losses in respect
of the refusal to permit the exercise of stock options are in the order of $US
1,175,000.00. Such a claim would be defended by GenRad Inc. or GenRad Limited,
or both, as appropriate, upon the basis that the options were not exercisable
because the contract for services between GenRad Limited and Firmview was
terminated for cause.
Yours faithfully
BOLITHO WAY
-----------
<PAGE>
IN WITNESS WHEREOF this Agreement has been duly executed and delivered by or on
behalf of the parties on the day and year first written above.
SIGNED by ) /s/ Walter A. Shephard
for and on behalf ) ----------------------
of GENRAD ) Director
LIMITED in the )
presence of: )
Witness Signature: /s/ Louise Eastman
Name: Louise Eastman
Address: 39 Victoria Street
London SW1H OEE
Occupation: Legal Secretary
SIGNED by )
for and on behalf of ) Robert White
BANKBOSTON, N.A., ) -----------------------
LONDON BRANCH, in the ) Authorised Signatory
presence of: )
Witness Signature: /s/ Ian M. Wenniger
Name: Ian M. Wenniger
Address: 39 Victoria Street
London SW1H OEE
Occupation American Lawyer
Ex 10.2
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
dated as of May 6, 1997
among
GENRAD, INC.,
GENRAD EUROPE LIMITED,
GENRAD LIMITED,
BANKBOSTON, N.A.
and the other lending institutions set forth on Schedule 1 hereto
and
BANKBOSTON, N.A.,
as Agent
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION. .......................................................1
1.1. Definitions. ........................................................................1
1.2. Rules of Interpretation. ............................................................16
2. THE REVOLVING CREDIT FACILITY. .................................................................17
2.1. Commitment to Lend. .................................................................17
2.2. Commitment Fee. .....................................................................17
2.3. Reduction of Total Commitment. ......................................................18
2.4. The Revolving Credit Notes. .........................................................18
2.5. Interest on Revolving Credit Loans. .................................................18
2.6. Requests for Revolving Credit Loans. ................................................19
2.7. Conversion Options. .................................................................19
2.7.1. Conversion to Different Type of Revolving Credit Loan. ...................19
2.7.2. Continuation of Type of Revolving Credit Loan. ...........................20
2.7.3. Eurocurrency Rate Loans. .................................................20
2.8. Funds for Revolving Credit Loan. ....................................................21
2.8.1. Funding Procedures. ......................................................21
2.8.2. Advances by Agent. .......................................................21
2.9. Optional Currencies. ................................................................22
2.9.1. Request for Optional Currency..............................................22
2.9.2. Exchange Rate. ...........................................................23
2.9.3. Multiple Denominations. ..................................................23
2.9.4. Repayment. ...............................................................23
2.9.5. Funding. .................................................................24
2.10. Change in Borrowing Base. ..........................................................24
2.11. Overdraft Facility...................................................................24
3. REPAYMENT OF THE REVOLVING CREDIT LOANS. .......................................................26
3.1. Maturity. ...........................................................................26
3.2. Mandatory Repayments of Revolving Credit Loans. .....................................27
3.3. Optional Repayments of Revolving Credit Loans. ......................................27
4. LETTERS OF CREDIT. .............................................................................27
4.1. Letter of Credit Commitments..........................................................27
4.1.1. Commitment to Issue Letters of Credit. ...................................27
4.1.2. Letter of Credit Applications. ...........................................28
4.1.3. Terms of Letters of Credit. ..............................................28
4.1.4. Reimbursement Obligations of Banks. ......................................29
4.1.5. Participations of Banks. .................................................29
4.2. Reimbursement Obligation of the Borrower. ...........................................29
4.3. Letter of Credit Payments. ..........................................................30
4.4. Obligations Absolute. ...............................................................30
4.5. Reliance by Issuer. .................................................................31
4.6. Letter of Credit Fee. ...............................................................31
5. CERTAIN GENERAL PROVISIONS. ....................................................................32
5.1. Closing Fee. ........................................................................32
5.2. Agent's Fee. ........................................................................32
<PAGE>
-ii-
5.3. Funds for Payments. .................................................................33
5.3.1. Payments to Agent. .......................................................33
5.3.2. No Offset, etc. ..........................................................33
5.4. Computations. .......................................................................33
5.5. Inability to Determine Eurocurrency Rate. ...........................................34
5.6. Illegality. .........................................................................34
5.7. Additional Costs, etc. ..............................................................35
5.8. Capital Adequacy. ...................................................................36
5.9. Certificate. ........................................................................37
5.10. Indemnity. .........................................................................37
5.11. Interest After Default. ............................................................37
5.11.1. Overdue Amounts. ........................................................37
5.11.2. Amounts Not Overdue. ....................................................38
5.12. Replacement Bank. ..................................................................38
5.13. Lending Office. ....................................................................39
6. GUARANTIES. ....................................................................................39
6.1. Guaranty. ...........................................................................39
6.2. Guaranty Absolute. ..................................................................39
6.3. Effectiveness, Enforcement. .........................................................41
6.4. Waiver. .............................................................................41
6.5. Subordination; Subrogation. .........................................................41
6.6. Payments. ...........................................................................42
6.7. Receipt of Information. .............................................................42
7. REPRESENTATIONS AND WARRANTIES. ................................................................42
7.1. Corporate Authority. ................................................................43
7.1.1. Incorporation; Good Standing. ............................................43
7.1.2. Authorization. ...........................................................43
7.1.3. Enforceability. ..........................................................43
7.2. Governmental Approvals. .............................................................43
7.3. Title to Properties; Leases. ........................................................44
7.4. Financial Statements. ...............................................................44
7.5. No Material Changes, etc. ...........................................................44
7.6. Franchises, Patents, Copyrights, etc. ...............................................45
7.7. Litigation. .........................................................................45
7.8. No Materially Adverse Contracts, etc. ...............................................45
7.9. Compliance with Other Instruments, Laws, etc. .......................................45
7.10. Tax Status. ........................................................................46
7.11. No Event of Default. ...............................................................46
7.12. Holding Company and Investment Company Acts. .......................................46
7.13. Absence of Financing Statements, etc. ..............................................46
7.14. Certain Transactions. ..............................................................46
7.15. Employee Benefit Plans. ............................................................47
7.15.1. In General. .............................................................47
7.15.2. Terminability of Welfare Plans. .........................................47
7.15.3. Guaranteed Pension Plans. ...............................................47
7.15.4. Multiemployer Plans. ....................................................48
7.16. Regulations U and X. ...............................................................48
<PAGE>
-iii-
7.17. Environmental Compliance. ..........................................................48
7.18. Subsidiaries, etc.. ................................................................50
7.19. Chief Executive Offices. ...........................................................50
7.20. Fiscal Year. .......................................................................50
7.21. No Amendments to Certain Documents. ................................................51
7.22. Disclosure. ........................................................................51
7.23. No Withholding, Etc. ...............................................................51
7.24. No Filing, Recording Required. .....................................................51
8. AFFIRMATIVE COVENANTS OF THE BORROWERS. ........................................................51
8.1. Punctual Payment. ...................................................................52
8.2. Maintenance of Office. ..............................................................52
8.3. Records and Accounts. ...............................................................52
8.4. Financial Statements, Certificates and Information. .................................52
8.5. Notices. ............................................................................54
8.5.1. Defaults. ................................................................54
8.5.2. Environmental Events. ....................................................54
8.5.3. Notice of Litigation and Judgments. ......................................55
8.6. Corporate Existence; Maintenance of Properties. .....................................55
8.7. Insurance. ..........................................................................56
8.8. Taxes. ..............................................................................56
8.9. Inspection of Properties and Books, etc. ............................................56
8.9.1. General. .................................................................56
8.9.2. Collateral Reports. ......................................................56
8.10. Compliance with Laws, Contracts, Licenses, and Permits. ............................57
8.11. Employee Benefit Plans. ............................................................57
8.12. Use of Proceeds. ...................................................................57
8.13. Fair Labor Standards Act. ..........................................................58
8.14. Further Assurances. ................................................................58
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. ...................................................58
9.1. Restrictions on Indebtedness. .......................................................58
9.2. Restrictions on Liens. ..............................................................59
9.3. Restrictions on Investments. ........................................................61
9.4. Distributions. ......................................................................62
9.5. Merger, Consolidation and Disposition of Assets. ....................................63
9.5.1. Mergers and Acquisitions. ................................................63
9.5.2. Disposition of Assets. ...................................................63
9.6. Sale and Leaseback. .................................................................63
9.7. Compliance with Environmental Laws. .................................................64
9.8. Employee Benefit Plans. .............................................................64
9.9. Fiscal Year. ........................................................................64
9.10. Negative Pledges. ..................................................................65
9.11. Transaction with Affiliates. .......................................................65
9.12. Upstream Limitations. ..............................................................65
9.13. Inconsistent Agreements. ...........................................................65
10. FINANCIAL COVENANTS OF THE COMPANY. ...........................................................65
10.1. Leverage Ratio. ....................................................................66
10.2. Profitable Operations. .............................................................66
<PAGE>
-iv-
10.3. Capital Expenditures. ..............................................................66
10.4. Debt Service. ......................................................................66
10.5. Current Ratio. .....................................................................66
11. CLOSING CONDITIONS. ...........................................................................66
11.1. Loan Documents. ....................................................................66
11.2. Certified Copies of Charter Documents. .............................................66
11.3. Corporate Action. ..................................................................67
11.4. Incumbency Certificate. ............................................................67
11.5. UCC Search Results. ................................................................67
11.6. Certificates of Insurance. .........................................................67
11.7. Borrowing Base Report. .............................................................67
11.8. Accounts Receivable Aging Report. ..................................................67
11.9. Solvency Certificate. ..............................................................68
11.10. Opinion of Counsel. ...............................................................68
11.11. Payment of Fees. ..................................................................68
12. CONDITIONS TO ALL BORROWINGS. .................................................................68
12.1. Representations True; No Event of Default. .........................................68
12.2. No Legal Impediment. ...............................................................69
12.3. Governmental Regulation. ...........................................................69
12.4. Proceedings and Documents. .........................................................69
12.5. Borrowing Base Report. .............................................................69
13. EVENTS OF DEFAULT; ACCELERATION; ETC. .........................................................69
13.1. Events of Default and Acceleration. ................................................69
13.2. Termination of Commitments. ........................................................73
13.3. Remedies. ..........................................................................73
13.4. Exchange Rate. .....................................................................73
14. SETOFF. .......................................................................................74
15. THE AGENT. ....................................................................................75
15.1. Authorization. .....................................................................75
15.2. Employees and Agents. ..............................................................76
15.3. No Liability. ......................................................................76
15.4. No Representations. ................................................................76
15.5. Payments. ..........................................................................77
15.5.1. Payments to Agent. ......................................................77
15.5.2. Distribution by Agent. ..................................................77
15.5.3. Delinquent Banks. .......................................................77
15.6. Holders of Revolving Credit Notes. ................................................78
15.7. Indemnity. .........................................................................78
15.8. Agent as Bank. .....................................................................78
15.9. Resignation. .......................................................................78
15.10. Notification of Defaults and Events of Default. ...................................79
16. EXPENSES. .....................................................................................79
17. INDEMNIFICATION. ..............................................................................80
18. SURVIVAL OF COVENANTS, ETC. ...................................................................80
19. ASSIGNMENT AND PARTICIPATION. .................................................................81
19.1. Conditions to Assignment by Banks. .................................................81
<PAGE>
-v-
19.2. Certain Representations and Warranties; Limitations; Covenants. ....................81
19.3. Register. ..........................................................................83
19.4. New Revolving Credit Notes. .......................................................83
19.5. Participations. ....................................................................83
19.6. Disclosure. ........................................................................84
19.7. Assignee or Participant Affiliated with the Borrower. ..............................84
19.8. Miscellaneous Assignment Provisions. ...............................................85
19.9. Assignment by Borrower. ............................................................85
20. NOTICES, ETC. .................................................................................85
21. GOVERNING LAW. ................................................................................86
22. HEADINGS. .....................................................................................86
23. COUNTERPARTS. .................................................................................86
24. ENTIRE AGREEMENT, ETC. ........................................................................87
25. WAIVER OF JURY TRIAL. .........................................................................87
26. CONSENTS, AMENDMENTS, WAIVERS, ETC. ...........................................................87
27. SEVERABILITY. .................................................................................88
28. TRANSITIONAL ARRANGEMENTS. ....................................................................88
28.1. Original Credit Agreement Superseded. ..............................................88
28.2. Return and Cancellation of Notes. ..................................................88
28.3. Interest and Fees Under Superseded Agreement. ......................................88
</TABLE>
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
-----------------------------------------------
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of May
6, 1997, by and among (a) GENRAD, INC. (the "Company"), a Massachusetts
corporation having its principal place of business at 300 Baker Avenue, Concord,
Massachusetts 01742, (b) GENRAD EUROPE LIMITED ("Genrad Europe"), a corporation
organized under the laws of the United Kingdom and having its principal place of
business at __________________, (c) GENRAD LIMITED ("Genrad Ltd."), a
corporation organized under the laws of the United Kingdom and having its
principal place of business at _____________, (d) BANKBOSTON, N.A. (f/k/a The
First National Bank of Boston), a national banking association, and the other
lending institutions listed on Schedule 1 hereto and (g) BANKBOSTON, N.A. as
agent for itself and such other lending institutions.
WHEREAS, pursuant to the Revolving Credit Agreement dated as of
November 5, 1996 (as amended and in effect from time to time, the "Original
Credit Agreement"), by and among the Company, certain of the Banks (as
hereinafter defined) and the Agent (as hereinafter defined), the Banks party
thereto made loans and other extensions of credit to the Company for working
capital and general corporate purposes; and
WHEREAS, the Company has requested, among other things, to amend and
restate the Original Credit Agreement and to provide additional financing to
refinance existing Indebtedness (as hereinafter defined) and for general
corporate and working capital purposes, and the Banks are willing to provide
such additional financing on the terms and conditions set forth herein;
NOW, THEREFORE, the Borrowers, the Banks and the Agent agree that on
the Closing Date the Original Credit Agreement is hereby amended and restated in
its entirety as set forth herein and shall remain in full force and effect only
as set forth herein.
1. DEFINITIONS AND RULES OF INTERPRETATION.
-------------------------------------------
1.1. Definitions. The following terms shall have the meanings set forth
in this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Accounts Receivable. All rights of the Company or any of its
Subsidiaries to payment for goods sold, leased or otherwise marketed in the
ordinary course of business and all rights of the Company or any of its
Subsidiaries to payment for services rendered in the ordinary course of business
and all sums of money or other proceeds due thereon pursuant to transactions
with account debtors, except for that portion of the sum of money or other
proceeds due thereon that relate to sales, use or property taxes in conjunction
with such transactions,
<PAGE>
-2-
recorded on books of account in accordance with generally accepted accounting
principles.
Adjustment Date. The first day of the month immediately following the
month in which a Compliance Certificate is to be delivered by the Company
pursuant to ss.8.4(d).
Affected Bank. See ss.5.10.
Affiliate. Any Person that would be considered to be an affiliate of
any Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if such Borrower were
issuing securities.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent. BankBoston, N.A., acting as agent for the Banks.
Agent's Special Counsel. Bingham, Dana & Gould LLP or such other
counsel as may be approved by the Agent.
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable margin set
forth below with respect to the Company's Leverage Ratio, as determined for the
fiscal period of the Company and its Subsidiaries ending immediately prior to
the applicable Rate Adjustment Period.
<TABLE>
<CAPTION>
================================================================================================
Dollar Sterling Letter of
Tier Leverage Ratio Base Rate Base Rate Eurocurrency Credit Fees Commitment
Loans Loans Rate Loans (in basis Fees
(in basis (in basis (in basis pts) (in basis
pts) pts) pts) pts)
================================================================================================
<S> <C> <C> <C> <C> <C> <C>
5 Greater than or equal 0 175.00 175.00 175.00 62.50
to 1.75:1.00
================================================================================================
4 Less than 1.75:1.00 but
greater than or equal
to 1.50:100 0 162.50 162.50 162.50 50.00
================================================================================================
3
Less than 1.50:1.00 but
greater than or equal 0 150.00 150.00 150.00 50.00
to 1.25:1.00
================================================================================================
2 Less than 1.25:1.00 but 0 137.50 137.50 137.50 37.50
greater than or equal
to 1.00:1.00
================================================================================================
1
Less than 1.00:1.00 0 125.00 125.00 125.00 25.00
================================================================================================
</TABLE>
<PAGE>
-3-
Notwithstanding the foregoing, (a) for Revolving Credit Loans
outstanding, the Overdraft Facility, Letter of Credit Fees and the commitment
fee payable during the period commencing on the Closing Date through the date
immediately preceding the first Adjustment Date to occur after the fiscal
quarter ending June 30, 1997, the Applicable Margin shall be Tier 3, and (b) if
the Company fails to deliver any Compliance Certificate pursuant to ss.8.4(d)
hereof then, for the period commencing on the next Adjustment Date to occur
subsequent to such failure through the date immediately following the date on
which such Compliance Certificate is delivered, the Applicable Margin shall be
the highest Applicable Margin set forth above.
Assignment and Acceptance. See ss.19.1.
Balance Sheet Date. December 31, 1996.
Banks. BKB and the other lending institutions listed on Schedule 1
hereto and any other Person who becomes an assignee of any rights and
obligations of a Bank pursuant to ss.19.
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" and (b) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent.
Base Rate Loans. Revolving Credit Loans bearing interest calculated by
reference to the Base Rate.
BKB. BankBoston, N.A., a national banking association, in its
individual capacity.
Borrower. The Company or any Borrowing Subsidiary, and "Borrowers"
shall mean the Company and each Borrowing Subsidiary.
Borrowing Base. At the relevant time of reference thereto, an amount
determined by the Agent by reference to the most recent Borrowing Base Report
delivered to the Banks and the Agent pursuant to ss.8.4(h), which is equal to
the sum of (a) eighty-five percent (85%) of Eligible Accounts Receivable for
which invoices have been issued and are payable, plus (b) fifty percent (50%) of
Eligible Inventory.
<PAGE>
-4-
Borrowing Base Report. A Borrowing Base Report signed by the chief
financial officer or other financial officer of the Company and in substantially
the form of Exhibit A hereto.
Borrowing Subsidiary. Each of Genrad Europe and Genrad Ltd.
Business Day. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in
addition, (a) if Eurocurrency Rate Loans are involved, a day on which dealings
in Dollars and the relevant Optional Currency and exchange can be carried on in
the relevant Eurocurrency Interbank Market and Dollar settlements of such
dealings may be effected, in New York, New York, and (b) if any Optional
Currency is involved, a day on which dealings in Dollars and the relevant
Optional Currency and exchange can be carried on in the principal financial
center of the country in which such currency is legal tender.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by the
Company or any of its Subsidiaries in connection with the purchase or lease by
the Company or any of its Subsidiaries of Capital Assets that would be required
to be capitalized and shown on the balance sheet of such Person in accordance
with generally accepted accounting principles.
Capitalized Leases. Leases under which the Company or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. See ss.7.17.
Closing Date. The first date on which the conditions set forth in ss.12
have been satisfied and any Revolving Credit Loans are to be made or any Letter
of Credit is to be issued hereunder.
Collateral Instrument. Letters of credit, guarantees, indemnities and
performance bonds in form and substance satisfactory to the Overdraft Bank
issued or to be issued by the Overdraft Bank to or for the account of either
Genrad Europe or Genrad Ltd.
pursuant to ss.2.
Code. The Internal Revenue Code of 1986.
<PAGE>
-5-
Commitment. With respect to each Bank, the amount set forth on Schedule
1 hereto as the amount of such Bank's commitment to make Revolving Credit Loans
to, and to participate in the issuance, extension and renewal of Letters of
Credit for the respective accounts of, any Borrower, as the same may be reduced
from time to time; or if such commitment is terminated pursuant to the
provisions hereof, zero.
Commitment Fee Rate. The applicable rate per annum set forth in the
chart contained in the definition of Applicable Margin under the heading
"Commitment Fee".
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
Company. As defined in the preamble hereto.
Compliance Certificate. See ss.8.4(d) hereof.
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Company and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Current Assets. All assets of the Company and its
Subsidiaries on a consolidated basis that, in accordance with generally accepted
accounting principles, are properly classified as current assets.
Consolidated Current Liabilities. All liabilities of the Company and
its Subsidiaries on a consolidated basis maturing on demand or within one (1)
year from the date as of which Consolidated Current Liabilities are to be
determined, and such other liabilities as may properly be classified as current
liabilities in accordance with generally accepted accounting principles and
including all outstanding Revolving Credit Loans and the Maximum Drawing Amount
of all issued Letters of Credit, whether or not so classified.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Company and its Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with generally
accepted accounting principles.
Consolidated Recurring Operating Income. For any period, an amount
equal to (a) the Company's consolidated operating income (as such term is
defined in the Company's annual report) for such period less (b) nonrecurring
charges or credits for such period.
Consolidated Tangible Net Worth. The excess of Consolidated Total
Assets over Consolidated Total Liabilities, and less the sum of:
<PAGE>
-6-
(a) the total book value of all assets of the Company and its
Subsidiaries properly classified as intangible assets under generally
accepted accounting principles, including such items as good will, the
purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, brand names,
copyrights, patents and licenses, and rights with respect to the
foregoing; plus
(b) all amounts representing any write-up in the book value of
any assets of the Company or its Subsidiaries resulting from a
revaluation thereof subsequent to the Balance Sheet Date; plus
(c) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any subscriptions receivable.
Consolidated Total Assets. All assets of the Company and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest required to be paid or accrued by the Company and its
Subsidiaries during such period on all Indebtedness of the Company and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of Capitalized
Leases and including commitment fees, agency fees, facility fees, balance
deficiency fees and similar fees or expenses in connection with the borrowing of
money.
Consolidated Total Liabilities. All liabilities of the Company and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and all Indebtedness of the Company and its
Subsidiaries whether or not so classified.
Conversion Request. A notice given by any Borrower to the Agent of such
Borrower's election to convert or continue a Revolving Credit Loan in accordance
with ss.2.7.
Counter Indemnities. Any indemnity or counter indemnity from Genrad
Europe or Genrad Ltd., as the case may be, in favor of the Overdraft Bank with
respect to any Collateral Instrument issued to or for the account of either
Genrad Europe or Genrad Ltd., in the standard form of indemnity or counter
indemnity used by the Overdraft Bank or in such other form and substance as may
be satisfactory to the Overdraft Bank and including (without limitation) any
letter of credit application incorporating indemnification language satisfactory
to the Overdraft Bank.
Credit Agreement. This Amended and Restated Revolving Credit Agreement,
including the Schedules and Exhibits hereto.
<PAGE>
-7-
Default. See ss.13.1.
Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of any Borrower, other than
dividends payable solely in shares of common stock of such Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of any Borrower, directly or indirectly through a Subsidiary of such
Borrower or otherwise; the return of capital by any Borrower to its shareholders
as such; or any other distribution on or in respect of any shares of any class
of capital stock of such Borrower.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Base
Rate Loans.
Domestic Subsidiary. Any Subsidiary of any Borrower which conducts
substantially all of its business in the United States of America and that is
organized under the laws of the United States of America and the States (or the
District of Columbia) thereof.
Drawdown Date. The date on which any Revolving Credit Loan is made or
is to be made, and the date on which any Revolving Credit Loan is converted or
continued in accorance with ss.2.7.
EBITDA. With respect to any fiscal period, an amount equal to the sum
of (a) Consolidated Recurring Operating Income of the Company for such period,
plus (b) to the extent deducted in the calculation of the Company's Consolidated
Recurring Operating Income and without duplication, depreciation and
amortization for such period, all as determined in accordance with generally
accepted accounting principles.
Eligible Accounts Receivable. The aggregate of the unpaid portions of
Accounts Receivable of the Company or any of its Domestic Subsidiaries, the
United Kingdom branch of Genrad Europe and Genrad Ltd. (but excluding from
Accounts Receivable any Genrad Ltd. service contracts with automotive dealers),
each (net of any credits, rebates, offsets, holdbacks or other adjustments or
commissions payable to third parties that are adjustments to such Accounts
Receivable) (a) that the Company or such Subsidiary reasonably and in good faith
determines to be collectible; (b) that are with account debtors that (i) are not
Affiliates of any Borrower, (ii) purchased the goods or services giving rise to
the relevant Account Receivable in an arm's length transaction, (iii) are not
insolvent or involved in any case or proceeding, whether voluntary or
involuntary, under any bankruptcy, reorganization, arrangement, insolvency,
adjustment of debt, dissolution, liquidation or similar law of any jurisdiction
and (iv) are, in the Majority Banks' reasonable judgment, creditworthy; (c) that
<PAGE>
-8-
are in payment of obligations that have been fully performed and are not subject
to dispute or any other similar claims that would reduce the cash amount payable
therefor; (d) that are not subject to any pledge, restriction, security interest
or other lien or encumbrance other than those created by the Loan Documents; (e)
that are not outstanding for more than ninety (90) days past the earlier to
occur of (i) the date of the respective invoices therefor and (ii) the date of
shipment thereof in the case of goods or the end of the calendar month following
the provision thereof in the case of services; (f) that are not due from an
account debtor located in Minnesota or New Jersey unless the Company or such
Subsidiary (i) has received a certificate of authority to do business and is in
good standing in such state or (ii) has filed a notice of business activities
report with the appropriate office or agency of such state for the current year;
(g) other than Accounts Receivables relating to services rendered by the Company
or its Subsidiaries to IBM, Compaq Computers, Ford, Siemens, Alcatel, SCI,
Lucent Technology, BMW, Saab, Jaguar, Tokyo Electron and Solectron (provided, as
to Solectron, subject to the Agent's approval of satisfactory credit information
on such account debtor), that are not due from any single account debtor if more
than fifteen percent (15%) of the aggregate amount of all Accounts Receivable
owing from such account debtor would otherwise not be Eligible Accounts
Receivable; (h) that are payable in Dollars or Pounds Sterling; (i) other than
the entitites specified by name in clause (g) above, that are not payable from
an office outside of the United States or the United Kingdom; and (j) that are
not secured by a letter of credit unless the Agent has a prior, perfected
security interest in such letter of credit.
Eligible Assignee. Any of (a) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b) a
savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (d) the central
bank of any country which is a member of the OECD; and (e) if, but only if, any
Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial institution or other
Person approved by the Agent, such approval not to be unreasonably withheld.
Eligible Inventory. With respect to the Company or any of its Domestic
Subsidiaries, finished goods inventory owned by the Company or such Domestic
Subsidiary or owned by either Genrad Europe or Genrad Ltd, but only to the
extent such inventory, when sold, would generate an Account Receivable of Genrad
Europe or Genrad Ltd., as the case may be, which would be an Eligible Account
Receiveable; provided that Eligible Inventory shall not include any
<PAGE>
-9-
inventory (a) held on consignment, or not otherwise owned by the Company or such
Domestic Subsidiary, or of a type no longer sold by the Company or such Domestic
Subsidiary, (b) which has been returned by a customer or is damaged or subject
to any legal encumbrance other than Permitted Liens, (c) which is not in the
possession of the Company or such Domestic Subsidiary unless the Agent has
received a waiver from the party in possession of such inventory in form and
substance satisfactory to the Agent; (d) which is held by the Company or such
Domestic Subsidiary on property leased by the Company or such Domestic
Subsidiary, unless the Agent has received a waiver from the lessor of such
leased property and, if any, sublessor thereof in form and substance
satisfactory to the Agent; (e) which has been shipped to a customer of the
Company or such Domestic Subsidiary regardless of whether such shipment is on a
consignment basis; (f) which is not located within the United States of America
[or the United Kingdom], or (g) which the Majority Banks reasonably deem to be
obsolete or not marketable.
Employee Benefit Plan. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained of contributed to by any Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws. See ss.7.17(a).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with
any Borrower under ss.414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Interbank Market. Any lawful recognized market in which
deposits of Dollars and the relevant Optional Currencies are offered by
international banking units of United States banking institutions and by foreign
banking institutions to each other and in which foreign currency and exchange
operations or eurocurrency funding operations are customarily conducted.
Eurocurrency Lending Office. Initially, the office of each Bank
designated as such on Schedule 1 hereto; thereafter, such other office of such
Bank, if any, that shall be making or maintaining Eurocurrency Rate Loans.
Eurocurrency Offered Rate. With respect to the Interest Period of any
Eurocurrency Rate Advance, the annual rate of interest determined by the Agent
at or about 10:00 A.M. (in the jurisdiction in which the Eurocurrency Rate Loan
is requested) (or as soon thereafter as practicable) two (2) Business Days
preceding the first day of such Interest Period, as being the average of the
rates of interest per annum at which deposits in the currency of such
Eurocurrency
<PAGE>
-10-
Rate Loan are offered to the lending office of the Reference Bank
by prime banks in the Eurocurrency Interbank Market selected by the Reference
Bank in its sole discretion acting in good faith for such Interest Period, at
the time of the determination and in accordance with the usual practice in such
market, for delivery on the first day of such Interest Period in immediately
available funds and having a maturity equal to such Interest Period and for the
number of days comprised therein, in an amount equal (as nearly as may be) to
such Reference Bank's Commitment Percentage of such Eurocurrency Rate Loan.
Eurocurrency Rate. With respect to all Eurocurrency Rate Amounts for
any Interest Period, the annual rate of interest, rounded to the nearest 1/100
of one percent, determined by the Agent for such Interest Period in accordance
with the following formula:
Eurocurrency Offered Rate
-------------------------
Eurocurrency Rate = 1 - Eurocurrency Reserve Rate
Eurocurrency Rate Advance. Revolving Credit Loans denominated in
Dollars or in an Optional Currency bearing interest calculated by reference to
the Eurocurrency Rate.
Eurocurrency Rate Amounts. Any portion of the principal amount of the
Revolving Credit Loans denominated in Dollars or in an Optional Currency, on
which any Borrower has elected pursuant to ss.2.6 or 2.7 hereof to pay interest
based on the Eurocurrency Rate.
Eurocurrency Reserve Rate. For any day with respect to a Eurocurrency
Rate Loan, the maximum rate (expressed as a decimal) at which the Agent would be
required to maintain reserves under Regulation D of the Board of Governors of
the Federal Reserve System (or any successor or similar regulations relating to
such reserve requirements) against "Eurocurrency Liabilities" (as that term is
used in Regulation D), if such liabilities were outstanding. The Eurocurrency
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in the Eurocurrency Reserve Rate.
Event of Default. See ss.13.1.
Fee Letter. The fee letter dated as of the Closing Date between the
Company and the Agent.
Foreign Subsidiaries. Any Subsidiary that conducts substantially all of
its business in countries other than the United States of America and that is
organized under the laws of a jurisdiction other than the United States of
America and the states thereof.
generally accepted accounting principles. (a) When used in ss.10,
whether directly or indirectly through reference to a capitalized term used
therein, means (i) principles that are consistent with the principles
promulgated or
<PAGE>
-11-
adopted by the Financial Accounting Standards Board and its predecessors, in
effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the
extent consistent with such principles, the accounting practice of the Company
reflected in its financial statements for the year ended on the Balance Sheet
Date, and (b) when used in general, other than as provided above, means
principles that are (i) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as in effect from
time to time, and (ii) consistently applied with past financial statements of
the Company adopting the same principles, provided that in each case referred to
in this definition of "generally accepted accounting principles" a certified
public accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles) as
to financial statements in which such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by any Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantors. Each of the Domestic Subsidiaries other than GenRad
Securities Corporation until such time as the Company elects to make such
Subsidiary a Guarantor hereunder.
Guaranty. That certain Amended and Restated Guaranty dated on or prior
to the Closing Date from each Guarantor in favor of the Agent and the Banks and
in form and substance satisfactory to the Agent and the Banks.
Hazardous Substances. See ss.7.17(b).
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect; (b) all liabilities secured by any mortgage, pledge, security
interest, lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (c) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit.
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Interest Payment Date. (a) As to any Base Rate Loan, the last day of
the month which includes the Drawdown Date thereof; and (b) as to any
Eurocurrency Rate Loan in respect of which the Interest Period is (i) three (3)
months or less, the last day of such Interest Period and (ii) more than three
(3) months, the date that is three (3) months from the first day of such
Interest Period and, in addition, the last day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Revolving Credit
Loan and ending on the last day of one of the periods set forth below, as
selected by the relevant Borrower in a Loan Request (i) for any Base Rate Loan,
the last day of the fiscal quarter; and (ii) for any Eurocurrency Rate Loan, 1,
2, 3 or 6 months; and (b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Revolving Credit Loan and
ending on the last day of one of the periods set forth above, as selected by
such Borrower in a Conversion Request; provided that all of the foregoing
provisions relating to Interest Periods are subject to the following:
(a) if any Interest Period with respect to a Eurocurrency Rate
Loan would otherwise end on a day that is not a Business Day, that
Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day;
(b) if any Interest Period with respect to a Base Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if such Borrower shall fail to give notice as provided in
ss.2.7, (i) for Revolving Credit Loans denominated in Dollars, such
Borrower shall be deemed to have requested a conversion of the affected
Eurocurrency Rate Loan to a Base Rate Loan and the continuance of all
Base Rate Loans as Base Rate Loans on the last day of the then current
Interest Period with respect thereto and (ii) for Revolving Credit
Loans denominated in any Optional Currency, such Borrower shall repay
such Revolving Credit Loan on the last day of the then current Interest
Period with respect thereto;
(d) any Interest Period relating to any Eurocurrency Rate Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and
(e) any Interest Period relating to any Eurocurrency Rate Loan
that would otherwise extend beyond the Revolving Credit Loan Maturity
Date shall end on the Revolving Credit Loan Maturity Date.
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Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Letter of Credit. See ss.4.1.1.
Letter of Credit Application. See ss.4.1.1.
Letter of Credit Participation. See ss.4.1.4.
Leverage Ratio. As at the end of any fiscal quarter, the ratio of (a)
Total Funded Indebtedness of the Company and its Subsidiaries outstanding on
such date to (b) the EBITDA of the Company and its Subsidiaries for the period
of four (4) consecutive fiscal quarters (treated as a single accounting period)
ending on such date.
Loan Documents. This Credit Agreement, the Revolving Credit Notes, the
Letter of Credit Applications, the Letters of Credit, the Fee Letter and the
Guaranty.
Loan Request. See ss.2.6.
Majority Banks. As of any date, the Banks holding at least sixty-six
and two-thirds percent (66 2/3%) of the outstanding principal amount of the
Revolving Credit Notes on such date; and if no such principal is outstanding,
the Banks whose aggregate Commitments constitutes at least sixty-six and
two-thirds percent (66 2/3%) of the Total Commitment.
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
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Maximum Overdraft Amount. The Dollar equivalent of (pound)2,000,000, as
the same may be reduced from time to time; or if the Overdraft Facility is
terminated pursuant to the provisions hereof, zero.
Multiemployer Plan. Any multiemployer plan within the meaning of
ss.3(37) of ERISA maintained or contributed to by any Borrower or any ERISA
Affiliate.
Non-Affected Banks. As at any date of determination, those Banks which
are not Affected Banks.
Obligations. All indebtedness, obligations and liabilities of any of
the Company and its Subsidiaries to any of the Banks and the Agent, individually
or collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or in respect of any of the
Loans made or Reimbursement Obligations incurred or any of the Revolving Credit
Notes, Letter of Credit Application, Letter of Credit or other instruments at
any time evidencing any thereof.
OC Notice. See ss.2.9.1 hereof.
Optional Currency. Any currency other than Dollars which is freely
convertible into Dollars and which is traded on any recognized Eurocurrency
Interbank Market selected by the Agent in good faith.
outstanding. With respect to the Revolving Credit Loans, the aggregate
unpaid principal thereof as of any date of determination.
Overdraft Bank. BKB, acting through its London branch.
Overdraft Facility. See ss.2.11.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
Permitted Liens. Liens, security interests and other encumbrances
permitted by ss.19.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Rate Adjustment Period. See the definition of "Applicable Margin".
Rate of Exchange. See ss.2.9.2 hereof.
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Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by the Company or any of its Subsidiaries.
Record. The grid attached to a Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by any Bank with respect to any Revolving Credit Loan
referred to in such Revolving Credit Note.
Reference Bank. The First National Bank of Boston.
Reimbursement Obligation. Any Borrower's obligation to reimburse the
Agent and the Banks on account of any drawing under any Letter of Credit as
provided in ss.4.2.
Revolving Credit Loan Maturity Date. [December 31, 1998].
Revolving Credit Loans. Revolving credit loans made or to be made by
the Banks to any Borrower pursuant to ss.2 and advances made on the Overdraft
Facility pursuant to ss.2.
Revolving Credit Notes. See ss.2.4.
Sterling or (pound). Pounds Sterling in lawful currency of the United
Kingdom.
Sterling Base Rate. The annual rate of interest announced from time to
time by the Agent at its London branch as its "base rate" for loans denominated
in Sterling.
Sterling Base Rate Loans. Overdraft Facility advances bearing interest
calculated by reference to the Sterling Base Rate.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Total Funded Indebtedness. All Indebtedness of the Company and its
Subsidiaries for borrowed money, purchase money Indebtedness and with respect to
Capitalized Leases, determined on a consolidated basis in accordance with
generally accepted accounting principles.
Type. As to any Revolving Credit Loan, its nature as a Base Rate Loan
or a Eurocurrency Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
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Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Agent in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
any Borrower does not reimburse the Agent and the Banks on the date specified
in, and in accordance with, ss.4.2.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section of
this Credit Agreement unless otherwise indicated.
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(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to
any particular section or subdivision of this Credit Agreement.
2. THE REVOLVING CREDIT FACILITY.
---------------------------------
2.1. Commitment to Lend. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Banks severally agrees to lend to any
Borrower and any Borrower may borrow, repay, and reborrow from time to time
between the Closing Date and the Revolving Credit Loan Maturity Date upon notice
by such Borrower to the Agent given in accordance with ss.2.6, such sums, in
Dollars and/or at any Borrower's option from time to time, subject to ss.2.9
hereof, in an Optional Currency, as are requested by the Borrower up to a
maximum aggregate amount outstanding (after giving effect to all amounts
requested) at any one time equal to such Bank's Commitment minus such Bank's
Commitment Percentage of the sum of the Maximum Drawing Amount, all Unpaid
Reimbursement Obligations and the Maximum Overdraft Amount, provided that the
sum of the outstanding amount of the Revolving Credit Loans (after giving effect
to all amounts requested) plus the Maximum Overdraft Amount, plus the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations shall not at any time
exceed the lesser of (a) the Total Commitment and (b) the Borrowing Base. The
Revolving Credit Loans shall be made pro rata in accordance with each Bank's
Commitment Percentage. Each request for a Revolving Credit Loan and each
utilization of the Overdraft Facility hereunder shall constitute a
representation and warranty by the Borrower that the conditions set forth in
ss.11 and ss.12, in the case of the initial Revolving Credit Loans to be made,
and the utilizations of the Overdraft Facility, on the Closing Date, and ss.12,
in the case of all other Revolving Credit Loans and utilizations of the
Overdraft Facility, have been satisfied on the date of such request. Each Base
Rate Loan shall be donominated in Dollars, and each Eurocurrency Rate Loan shall
be denominated in Dollars or, subject to ss.2.9 hereof, in an Optional Currency.
2.2. Commitment Fee. The Company agrees to pay to the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at the rate of the Commitment Fee Rate per annum on
the average daily amount during each calendar quarter or portion thereof from
the date hereof to the Revolving Credit Loan Maturity Date by which the Total
Commitment minus the sum of (i) the Maximum Drawing Amount and (ii) all Unpaid
Reimbursement Obligations and (iii) the Total Overdraft Usage exceeds the
outstanding amount of Revolving Credit Loans during such calendar quarter. The
commitment fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the immediately preceding calendar quarter commencing on
the first such date following the date hereof, with a final payment on the
Revolving Credit Maturity Date or any earlier date on which the Commitments
shall terminate.
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2.3. Reduction of Total Commitment. The Company shall have the right at
any time and from time to time upon two (2) Business Days prior written notice
to the Agent to reduce by $500,000 or an integral multiple thereof or terminate
entirely the Total Commitment, whereupon the Commitments of the Banks shall be
reduced pro rata in accordance with their respective Commitment Percentages of
the amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Company delivered pursuant to this ss.2.3, the
Agent will notify the Banks of the substance thereof. Upon the effective date of
any such reduction or termination, the Company shall pay to the Agent for the
respective accounts of the Banks the full amount of any commitment fee then
accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
2.4. The Revolving Credit Notes. The Revolving Credit Loans shall be
evidenced by separate amended and restated promissory notes of each of the
Borrowers in substantially the form of Exhibit B hereto (each a "Revolving
Credit Note"), dated as of the Closing Date and completed with appropriate
insertions. One Revolving Credit Note shall be payable to the order of each Bank
in a principal amount equal to such Bank's Commitment or, if less, the
outstanding amount of all Revolving Credit Loans made by such Bank, plus
interest accrued thereon, as set forth below. Each Borrower irrevocably
authorizes each Bank to make or cause to be made, at or about the time of the
Drawdown Date of any Revolving Credit Loan or at the time of receipt of any
payment of principal on such Bank's Revolving Credit Note, an appropriate
notation on such Bank's Record reflecting the making of such Revolving Credit
Loan or (as the case may be) the receipt of such payment. The outstanding amount
of the Revolving Credit Loans set forth on such Bank's Record shall be prima
facie evidence of the principal amount thereof owing and unpaid to such Bank,
but the failure to record, or any error in so recording, any such amount on such
Bank's Record shall not limit or otherwise affect the obligations of the
applicable Borrower hereunder or under any Revolving Credit Note to make
payments of principal of or interest on any Revolving Credit Note when due.
2.5. Interest on Revolving Credit Loans. Except as otherwise provided
in ss.5.11,
(a) Each Base Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the Interest Period
with respect thereto at the Base Rate plus the Applicable Margin.
(b) Each Eurocurrency Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate per annum equal to the
Eurocurrency Rate for such Interest Period plus the Applicable Margin.
(c) Each of the Borrowers promises to pay interest on each Revolving
Credit Loan made to such Borrower in arrears on each Interest Payment Date with
respect thereto. Interest on the Revolving Credit Loans calculated by
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reference to the Base Rate shall be payable in Dollars, and interest on the
Revolving Credit Loans calculated by reference to the Eurocurrency Rate shall be
payable in Dollars or in the applicable Optional Currency in which the
underlying Revolving Credit Loan was made, as the case may be.
2.6. Requests for Revolving Credit Loans. The Borrower requesting any
Revolving Credit Loan shall give to the Agent, at the Agent's Head Office,
written notice in the form of Exhibit C hereto (or telephonic notice confirmed
in a writing in the form of Exhibit C hereto) of each Revolving Credit Loan
requested hereunder (a "Loan Request") no later than (a) 10:30 a.m. (Boston
time) on the proposed Drawdown Date of any Base Rate Loan and (b) two (2)
Business Days prior to the proposed Drawdown Date of any Eurocurrency Rate Loan
provided that any such notice requesting an Optional Currency must comply with
the requirements of this ss.2.6 and the requirements of an OC Notice pursuant to
ss.2.9.1. Each such notice shall specify (a) the principal amount of the
Revolving Credit Loan requested, stated in either Dollars, or, subject to ss.2.9
hereof, in an Optional Currency, (b) the proposed Drawdown Date of such
Revolving Credit Loan, (c) the Interest Period for such Revolving Credit Loan,
(d) the Type of such Revolving Credit Loan and (e) the Borrower's account to
which payment of the proceeds of such Revolving Credit Loan is to be made.
Promptly upon receipt of any such notice, the Agent shall notify each of the
Banks thereof. Each Loan Request shall be irrevocable and binding on the
Borrower and shall obligate the Borrower to accept the Revolving Credit Loan
requested from the Banks on the proposed Drawdown Date. Each Loan Request for a
Eurocurrency Rate Loan shall be in a minimum aggregate amount of $500,000 or an
integral multiple thereof, and each Loan Request for a Base Rate Loan shall be
in a minimum aggregate amount of $50,000 or an integral multiple thereof.
2.7. Conversion Options.
2.7.1. Conversion to Different Type of Revolving Credit Loan.
Any Borrower may elect from time to time to convert any outstanding
Revolving Credit Loan denominated in Dollars to a Revolving Credit Loan
of another Type denominated in Dollars, provided that (a) with respect
to any such conversion of a Eurocurrency Rate Loan to a Base Rate Loan,
such Borrower shall give the Agent at least one (1) Business Day prior
written notice of such election; (b) with respect to any such
conversion of a Base Rate Loan to a Eurocurrency Rate Loan, such
Borrower shall give the Agent at least three (3) Business Days prior
written notice of such election; (c) with respect to any such
conversion of a Eurocurrency Rate Loan into a Revolving Credit Loan of
another Type, such conversion shall only be made on the last day of the
Interest Period with respect thereto and (d) no Base Rate Loan may be
converted into a Eurocurrency Rate Loan when any Default or Event of
Default has occurred and is continuing. On the date on which such
conversion is being made each Bank shall take such action as is
necessary to transfer
<PAGE>
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its Commitment Percentage of such Revolving Credit Loans to its
Domestic Lending Office or its Eurocurrency Lending Office, as the case
may be. All or any part of outstanding Revolving Credit Loans
denominated in Dollars of any Type may be converted into a Revolving
Credit Loan of another Type as provided herein, provided that any
partial conversion shall be in an aggregate principal amount of
$1,000,000 or a whole multiple thereof. Each Conversion Request
relating to the conversion of a Revolving Credit Loan to a Eurocurrency
Rate Loan shall be irrevocable by the applicable Borrower.
2.7.2. Continuation of Type of Revolving Credit Loan. Any
Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period
with respect thereto by compliance by the applicable Borrower with the
notice provisions contained in ss.2.7.1; provided that (a) as to
Eurocurrency Rate Loans denominated in Dollars, no such Eurocurrency
Rate Loan may be continued as such when any Default or Event of Default
has occurred and is continuing, but shall be automatically converted to
a Base Rate Loan on the last day of the first Interest Period relating
thereto ending during the continuance of any Default or Event of
Default of which officers of the Agent active upon the Parent's account
have actual knowledge; and (b) as to Eurocurrency Rate Loans
denominated in Optional Currency, no such Eurocurrency Rate Loan may be
continued as such when any Default or Event of Default has occurred or
is continuing or the provisions of ss.2.9 hereof have not or cannot be
met at the time of such continuation, but shall be repaid by the
applicable Borrower on the last day of the Interest Period relating
thereto. In the event that a Borrower fails to provide any such notice
with respect to the continuation of any Eurocurrency Rate Loan as such,
then (a) as to Eurocurrency Rate Loans denominated in Dollars, such
Eurocurrency Rate Loans shall be automatically converted to a Base Rate
Loan on the last day of the first Interest Period relating thereto, and
(b) as to Eurocurrency Rate Advances denominated in an Optional
Currency, shall be repaid on the last day of the Interest Period
relating thereto. The Agent shall notify the Banks promptly when any
such automatic conversion contemplated by this ss.2.7 is scheduled to
occur.
2.7.3. Eurocurrency Rate Loans. Any conversion to or from
Eurocurrency Rate Loans shall be in such amounts and be made pursuant
to such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurocurrency Rate Loans having the same
Interest Period shall not be less than $500,000 or a whole multiple of
$10,000 in excess thereof (or, in the case of Eurocurrency Rate Loans
denominated in an Optional Currency, that whole number which is nearest
to the Dollar equivalent of $500,000 or $10,000, as the case may be,
rounded to the nearest one thousandth). In no event shall the Borrowers
have more than ten (10) Eurocurrency Rate Loans outstanding at any one
time.
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2.8. Funds for Revolving Credit Loan.
2.8.1. Funding Procedures. Not later than 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans, each
of the Banks will make available to the Agent, at the Agent's Head
Office, in immediately available funds, the amount of such Bank's
Commitment Percentage of the amount of the requested Revolving Credit
Loans. Upon receipt from each Bank of such amount, and upon receipt of
the documents required by ss.ss.11 and 12 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the Agent
will make available to the Borrower the aggregate amount of such
Revolving Credit Loans made available to the Agent by the Banks. The
failure or refusal of any Bank to make available to the Agent at the
aforesaid time and place on any Drawdown Date the amount of its
Commitment Percentage of the requested Revolving Credit Loans shall not
relieve any other Bank from its several obligation hereunder to make
available to the Agent the amount of such other Bank's Commitment
Percentage of any requested Revolving Credit Loans.
2.8.2. Advances by Agent. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such
Bank has made available to the Agent on such Drawdown Date the amount
of such Bank's Commitment Percentage of the Revolving Credit Loans to
be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Bank makes available to the
Agent such amount on a date after such Drawdown Date, such Bank shall
pay to the Agent on demand an amount equal to the product of (a) the
average computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times
(b) the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans, times (c) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to the
date on which the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans shall become immediately available to the Agent,
and the denominator of which is 365. A statement of the Agent submitted
to such Bank with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to the Agent
by such Bank. If the amount of such Bank's Commitment Percentage of
such Revolving Credit Loans is not made available to the Agent by such
Bank within three (3) Business Days following such Drawdown Date, the
Agent shall be entitled to recover such amount from the Borrower on
demand, with interest thereon at the rate per annum applicable to the
Revolving Credit Loans made on such Drawdown Date. In the event any
Bank fails to make such Bank's Commitment Percentage of such Revolving
Credit Loans available to the Agent within one (1) Business Day
following the Drawdown Date, the Agent shall provide to
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the Borrower written notice of such failure, provided, a failure by the
Agent to so provide such notice shall not affect the Agent's rights
under this ss.2.8.2.
2.9. Optional Currencies.
2.9.1. Request for Optional Currency. Subject to the
limitations set forth in ss.2.1.1, any Borrower may, upon at least
three (3) Business Days' notice to the Agent (an "OC Notice"), request
that one or more Revolving Credit Loans be made as Eurocurrency Rate
Loans in an Optional Currency, provided that any Revolving Credit Loan
proposed to be made under this ss.2.9.1 shall be in an amount not less
than $50,000, or a greater amount which is an integral multiple of
$10,000, or the equivalent in an Optional Currency. Each OC Notice
requesting a Revolving Credit Loan in an Optional Currency shall be by
telephone, telex, telecopy or cable (in each case confirmed in writing
by the requesting Borrower), specifying (a) the Revolving Credit Loan
to be made, (b) the requested date of the proposed borrowing, (c) the
requested currency in which the Revolving Credit Loan is to be made,
(d) the initial Interest Period for the Revolving Credit Loan to be
borrowed, and (e) such Borrower's account with the Agent, or, in the
case of an Optional Currency which is the legal tender of a country in
which the Agent has no office, with another depository specified by
such Borrower in such country, to which payment of the proceeds of such
Revolving Credit Loan is to be made. If any Bank, on or prior to the
second Business Day preceding the first day of any Interest Period for
which an OC Notice has been delivered requesting a Revolving Credit
Loan in an Optional Currency or on any funding date, determines (which
determination shall be conclusive) that the Optional Currency is not
freely transferable and convertible into Dollars or that it will be
impracticable for such Bank to fund the Revolving Credit Loan in such
Optional Currency, then such Bank shall so notify Agent, which
notification shall be given immediately by the Agent to the Borrower,
and such Bank's portion of the requested Revolving Credit Loan shall,
notwithstanding any contrary election by such Borrower or any other
provisions hereof, be denominated in Dollars as a Base Rate Loan unless
the Borrower, one Business Day prior to the commencement of the
Interest Period and pursuant to the terms of ss.2.6 hereof elects to
have such Revolving Credit Loan denominated in Dollars as a
Eurocurrency Rate Loan. In the event that such Borrower repays such
portion of a Revolving Credit Loan denominated in Dollars as a Base
Rate Loan or a Eurocurrency Rate Loan, as the case may be, in
accordance with ss.3.3 hereof and such repayment results in Revolving
Credit Loans outstanding that are not pro rata in accordance with the
Commitment Percentages, then all subsequent principal repayments
denominated in the Optional Currency which the applicable Bank did not
advance shall be made by the Borrower to the Agent for the respective
accounts of such Banks other than such Bank on a pro rata basis until
such time as the Revolving Credit Loans are outstanding on a pro rata
<PAGE>
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basis. Subject to the foregoing and to the satisfaction of the terms
and conditions of ss.ss.11 and 12, each Revolving Credit Loan requested
to be made in an Optional Currency will be made on the date specified
therefor in the OC Notice, in the currency requested in the OC Notice
and, upon being so made, will have the Interest Period requested in the
OC Notice.
2.9.2. Exchange Rate. For purposes of this Credit Agreement
the amount in one currency which shall be equivalent on any particular
date to a specified amount in another currency shall be that amount (as
conclusively ascertained by the Agent by its normal banking practices,
absent manifest error) in the first currency which is or could be
purchased by the Agent (in accordance with normal banking practices)
with such specified amount in the second currency in any recognized
Eurocurrency Interbank Market selected by the Agent in good faith for
delivery on such date at the spot rate of exchange prevailing at 10:00
A.M. (Boston time) (or as soon thereafter as practicable) on such date
(such amount described in this ss.2.9.2, the "Rate of Exchange").
2.9.3. Multiple Denominations. In the event that any portion
of the funds available under the terms of this Credit Agreement is
denominated in one or more Optional Currencies, the Dollar equivalent
of such portion of the funds shall be calculated pursuant to ss.2.9.2
above. The amount so determined shall then be added to the amount
already outstanding in Dollars for the purpose of determining the
remaining availability of funds under ss.2.1 and ss.2.9.1 hereof and
any required repayments under the following ss.2.9.4.
2.9.4. Repayment. If at any time prior to the Revolving Credit
Loan Maturity Date, the Dollar equivalent of the aggregate principal
amount outstanding of all Revolving Credit Loans Loans, Unpaid
Reimbursement Obligations and the Maximum Drawing Amount hereunder
shall exceed the Total Commitment as a result of fluctuations in
respective conversion rates, the Borrowers shall pay or cause to be
paid immediately, upon demand made by the Agent, such amounts as are
sufficient to eliminate such excess and to reduce the aggregate
principal amount outstanding to the Dollar equivalent of the Total
Commitment. In the event there are any Revolving Credit Loans
outstanding which are denominated in an Optional Currency, the Agent
shall provide the Banks and the Borrowers with calculations on the last
day of each calendar month that such Loans are outstanding as to the
Dollar Equivalents of such Loans.
2.9.5. Funding. Each Bank may make any Eurocurrency Rate Loan
denominated in an Optional Currency by causing any of its foreign
branches or foreign affiliates to make such Eurocurrency Rate Loan
(whether or not such branch or affiliate is named as a lending office
on the signature pages hereof); provided that in such event the
obligation of any Borrower to repay such Eurocurrency Rate Loan shall
nevertheless
<PAGE>
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be to such Bank and shall, for all purposes of this Credit Agreement
(including without limitation for purposes of the definition of the
term "Majority Banks") be deemed made by such Bank, to the extent of
such Eurocurrency Rate Loan, for the account of such branch or
affiliate.
2.10. Change in Borrowing Base. The Borrowing Base shall be determined
monthly (or at such other interval as may be specified pursuant to ss.8.4(f)) by
the Agent by reference to the Borrowing Base Report delivered to the Banks and
the Agent pursuant to ss.8.4(h).
2.11. Overdraft Facility.
(a) Subject to the terms and conditions of this Credit Agreement,
including, without limitation, the conditions of this ss.2.11, each of Genrad
Europe and Genrad Ltd. may from time to time between the date hereof and the
Revolving Credit Loan Maturity Date (i) utilize an overdraft facility on a
Sterling-denominated current account with the Overdraft Bank in the name of
Genrad Europe or Genrad Ltd., as the case may be, (the "Overdraft Facility") by
causing checks or other items denominated in Sterling to be presented for
payment against such current account in amounts greater than the then available
balance in such current account and (ii) request that the Overdraft Bank agree
to issue Collateral Instruments to or for the account of Genrad Europe and
Genrad Ltd., as the case may be upon receipt by it of a duly-completed and
executed Counter Indemnity from Genrad Europe or Genrad Ltd., as the case may
be, in respect of each such Collateral Instrument, in form and substance
satisfactory to the Overdraft Bank provided that the aggregate amount of all
liabilties of Genrad Europe and Genrad Ltd. in respect of the Overdraft Facility
and all such Counter Indemnities (whether contingent or otherwise) (the "Total
Overdraft Usage") shall not esceed the Maximum Overdraft Amount . As to the
Overdraft Facility, each such presentation shall be deemed to be a request by
Genrad Europe or Genrad Ltd., as the case may be, for a utilization of the
Overdraft Facility in an amount equal to the excess of such check or other item
over such available balance, and shall be irrevocable. Notwithstanding the
foregoing, at no time shall the Total Overdraft Usage exceed the Maximum
Overdraft Amount. After the occurrence of an Event of Default, the Overdraft
Bank may terminate the Overdraft Facility in its entirety and reduce the Maximum
Overdraft Amount to zero with immediate effect at its sole discretion by written
notice to the Company, Genrad Europe and Genrad Ltd., and the entire principal
amount of the debit balance in the Overdraft Facility, together with all
interest accrued thereon, shall become immediately due and payable. The entire
principal amount of the debit balance in the Overdraft Facility, together with
all interest accrued thereon, shall be due and payable on the Revolving Credit
Loan Maturity Date.
(b) If at any time the outstanding amount of the debit balance in the
Overdraft Facility plus the aggregate amount of all liabilities in respect of
all Counter Indemnities shall exceed the Maximum Overdraft Amount (due to
currency fluctuations or otherwise), the Borrowers hereby jointly and severally,
<PAGE>
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absolutely and unconditionally promise to repay the amount of such excess to the
Agent for the account of the Overdraft Bank.
(c) Interest on the Overdraft Facility shall be payable on the day to
day cleared debit balance in Genrad Europe's or Genrad Ltd.'s (as the case may
be) current account maintained with the Overdraft Bank. Except as provided in
ss.5.11 hereto, interest on the Overdraft Facility shall be payable at the
annual percentage rate of interest determined by the Agent to be the sum of (i)
the Sterling Base Rate, plus (ii) the Applicable Margin with respect to Sterling
Base Rate Loans as in effect from time to time. The rate of interest on the
Overdraft Facility shall be adjusted from time to time to reflect changes in the
Sterling Base Rate and the Applicable Margin. Any such change in such rate of
interest shall become effective on the date of the change in the Sterling Base
Rate and/or the date of the change in the Applicable Margin. The Borrowers
jointly and severally promise to pay interest on the Overdraft Facility (i)
monthly in arrears on the last day of each calendar month, commencing on the
first such date following the Closing Date and (ii) the date on which the
Overdraft Facility is repaid in full.
(d) Interest due with respect to the Overdraft Facility shall be paid
to the Agent for the account of the Overdraft Bank, provided that to the extent
that a Bank has paid to the Overdraft Bank any amount in respect of the
Overdraft Facility as provided in ss.2.11(e), interest to the extent of such
amount shall thereafter be for the account of such Bank, minus one-eighth of one
percent (1/8%) which shall be for the account of the Overdraft Bank.
(e) Each Bank irrevocably and unconditionally undertakes to pay to the
Agent for the account of the Overdraft Bank on demand made by the Overdraft Bank
through the Agent:
(i) its Commitment Percentage of the debit balance
from time to time in Genrad Europe's or Genrad Ltd.'s (as the
case may be) current account maintained with the Overdraft
Bank which Genrad Europe or Genrad Ltd., as the case may be,
fails to pay together with interest which has accrued with
respect thereto; and
(ii) such additional amount as shall be necessary to
reimburse the Overdraft Bank for its cost of funding the
amount payable by such Bank as mentioned in clause (i) above
during the period beginning on the date the amount was due
from Genrad Europe or Genrad Ltd., as the case may be, and
ending on the date demand is made on such Bank for payment of
the same,
and agrees that neither the Overdraft Bank nor the Agent shall be obliged to
make any demand on or take any proceedings against Genrad Europe or Genrad Ltd.
or any other person before making demand on such Bank hereunder. The provisions
of ss.15.5.3 shall apply to the obligations of the Banks under this ss.2.11.
<PAGE>
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(f) The Borrowers jointly and severally, irrevocably and
unconditionally agree to reimburse to each Bank any amount paid by such Bank
pursuant to this ss.2.11 and agree that such amounts shall be Obligations
hereunder. The Borrowers further agree to indemnify and hold such Bank harmless
against all actions, proceedings, liabilities, claims, demands, costs and
expenses of whatsoever nature and howsoever occurring which such Bank may
properly incur, suffer or sustain by reason of its payment of such amount.
(g) The applicable Borrower shall, on the date of issuance or any
extension or renewal of any Collateral Instrument and at such other time or
times as such charges are customarily made by the Overdraft Bank, pay a fee (in
each case, a "Collateral Instrument Fee") to the Overdraft Bank in respect of
each Collateral Instrument equal to the rate of the Applicable Margin for
Eurocurrency Rate Loans per annum on the face amount of each such Collateral
Instrument, plus the Overdraft Bank's customary issuance fee, such fee to be for
the account of the Overdraft Bank.
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
-------------------------------------------
3.1. Maturity. Each of the Borrowers promises to pay on the Revolving
Credit Loan Maturity Date, and there shall become absolutely due and payable on
the Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
3.2. Mandatory Repayments of Revolving Credit Loans. If at any time the
sum of the outstanding amount of the Revolving Credit Loans, the Overdraft
Facility, the Maximum Drawing Amount and all Unpaid Reimbursement Obligations
exceeds the lesser of (a) the Total Commitment and (b) the Borrowing Base, then
the Borrowers shall immediately pay the amount of such excess to the Agent for
the respective accounts of the Banks for application: first, to any Unpaid
Reimbursement Obligations; second, to reduce the debit balance in the Overdraft
Facility; third, to the Revolving Credit Loans; and fourth, to provide to the
Agent cash collateral for Reimbursement Obligations as contemplated by ss.4.2(b)
and (c). Each payment of any Unpaid Reimbursement Obligations or prepayment of
Revolving Credit Loans shall be allocated among the Banks, in proportion, as
nearly as practicable, to each Reimbursement Obligation or (as the case may be)
the respective unpaid principal amount of each Bank's Revolving Credit Note,
with adjustments to the extent practicable to equalize any prior payments or
repayments not exactly in proportion.
3.3. Optional Repayments of Revolving Credit Loans. Any of the
Borrowers shall have the right, at its election, to repay the outstanding amount
of the Revolving Credit Loans, as a whole or in part, at any time without
penalty or premium, provided that any full or partial prepayment of the
outstanding amount of any Eurocurrency Rate Loan pursuant to this ss.3.3 may be
made only on the last day of the Interest Period relating thereto. The
applicable Borrower
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shall give the Agent at least two (2) Business Days notice of any proposed
prepayment pursuant to this ss.3.3 of any Eurocurrency Rate Loans, specifying
the proposed date of prepayment of such Eurocurrency Rate Loans and the
principal amount to be prepaid. Each such partial prepayment of the Revolving
Credit Loans shall be in an integral multiple of $50,000, shall be accompanied
by the payment of accrued interest on the principal prepaid to the date of
prepayment and shall be applied, in the absence of instruction by the applicable
Borrower, first to the principal of the Base Rate Loans, if any, and then to the
principal of the Eurocurrency Rate Loans. Each partial prepayment shall be
allocated among the Banks, in proportion, as nearly as practicable, to the
respective unpaid principal amount of each Bank's Revolving Credit Note, with
adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion.
4. LETTERS OF CREDIT.
---------------------
4.1. Letter of Credit Commitments.
4.1.1. Commitment to Issue Letters of Credit. Subject to the
terms and conditions hereof and the execution and delivery by a
Borrower of a letter of credit application on the Agent's customary
form (a "Letter of Credit Application"), the Agent on behalf of the
Banks and in reliance upon the agreement of the Banks set forth in
ss.4.1.4 and upon the representations and warranties of such Borrower
contained herein, agrees, in its individual capacity, to issue, extend
and renew for the account of such Borrower one or more standby or
documentary letters of credit (individually, a "Letter of Credit"), in
such form as may be requested from time to time by the Borrower and
agreed to by the Agent; provided, however, that, after giving effect to
such request, (a) the sum of the aggregate Maximum Drawing Amount and
all Unpaid Reimbursement Obligations shall not exceed $500,000 and (b)
the sum of (i) the Maximum Drawing Amount on all Letters of Credit,
(ii) all Unpaid Reimbursement Obligations, (iii) the amount of all
Revolving Credit Loans outstanding, and (iv) the Maximum Overdraft
Amount shall not exceed the lesser of (A) the Total Commitment and (B)
the Borrowing Base. Notwithstanding the foregoing, the Agent shall have
no obligation to issue any Letter of Credit to support or secure any
Indebtedness of any Borrower or any of its Subsidiaries to the extent
that such Indebtedness was incurred prior to the proposed issuance date
of such Letter of Credit, unless in any such case such Borrower
demonstrates to the satisfaction of the Agent that (x) such prior
incurred Indebtedness was then fully secured by a prior perfected and
unavoidable security interest in collateral provided by such Borrower
or such Subsidiary to the proposed beneficiary of such Letter of Credit
or (y) such prior incurred Indebtedness was then secured or supported
by a letter of credit issued for the account of such Borrower or such
Subsidiary and the reimbursement obligation with respect to such letter
of credit was fully secured by a prior perfected and unavoidable
security interest in
<PAGE>
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collateral provided to the issuer of such letter of credit by such
Borrower or such Subsidiary.
4.1.2. Letter of Credit Applications. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In the
event that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Credit Agreement, then the
provisions of this Credit Agreement shall, to the extent of any such
inconsistency, govern.
4.1.3. Terms of Letters of Credit. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (a)
provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied by
the documents described therein, and (b) have an expiry date no later
than the date which is fourteen (14) days (or, if the Letter of Credit
is confirmed by a confirmer or otherwise provides for one or more
nominated persons, forty-five (45) days) prior to the Revolving Credit
Loan Maturity Date. Each Letter of Credit so issued, extended or
renewed shall be subject to the Uniform Customs.
4.1.4. Reimbursement Obligations of Banks. Each Bank severally
agrees that it shall be absolutely liable, without regard to the
occurrence of any Default or Event of Default or any other condition
precedent whatsoever, to the extent of such Bank's Commitment
Percentage, to reimburse the Agent on demand for the amount of each
draft paid by the Agent under each Letter of Credit to the extent that
such amount is not reimbursed by any Borrower pursuant to ss.4.2 (such
agreement for a Bank being called herein the "Letter of Credit
Participation" of such Bank).
4.1.5. Participations of Banks. Each such payment made by a
Bank shall be treated as the purchase by such Bank of a participating
interest in the applicable Borrower's Reimbursement Obligation under
ss.4.2 in an amount equal to such payment. Each Bank shall share in
accordance with its participating interest in any interest which
accrues pursuant to ss.4.2.
4.2. Reimbursement Obligation of the Borrower. In order to induce the
Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, each Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder,
(a) except as otherwise expressly provided in ss.4.2(b) and
(c), on each date that any draft presented under such Letter of Credit
is honored by the Agent, or the Agent otherwise makes a payment with
respect
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thereto, (i) the amount paid by the Agent under or with respect to such
Letter of Credit, and (ii) the amount of any taxes, fees, charges or
other costs and expenses whatsoever incurred by the Agent or any Bank
in connection with any payment made by the Agent or any Bank under, or
with respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, an amount
equal to such difference, which amount shall be held by the Agent for
the benefit of the Banks and the Agent as cash collateral for all
Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all
Letters of Credit in accordance with ss.13, an amount equal to the then
Maximum Drawing Amount on all Letters of Credit, which amount shall be
held by the Agent for the benefit of the Banks and the Agent as cash
collateral for all Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
such Borrower under this ss.4.2 at any time from the date such amounts become
due and payable (whether as stated in this ss.4.2, by acceleration or otherwise)
until payment in full (whether before or after judgment) shall be payable to the
Agent on demand at the rate specified in ss.5.11 for overdue principal on the
Revolving Credit Loans.
4.3. Letter of Credit Payments. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Agent
shall notify the applicable Borrower of the date and amount of the draft
presented or demand for payment and of the date and time when it expects to pay
such draft or honor such demand for payment. If such Borrower fails to reimburse
the Agent as provided in ss.4.2 on or before the date that such draft is paid or
other payment is made by the Agent, the Agent may at any time thereafter notify
the Banks of the amount of any such Unpaid Reimbursement Obligation. No later
than 3:00 p.m. (Boston time) on the Business Day next following the receipt of
such notice, each Bank shall make available to the Agent, at the Agent's Head
Office, in immediately available funds, such Bank's Commitment Percentage of
such Unpaid Reimbursement Obligation, together with an amount equal to the
product of (a) the average, computed for the period referred to in clause (c)
below, of the weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times (b) the
amount equal to such Bank's Commitment Percentage of such Unpaid Reimbursement
Obligation, times (c) a fraction, the numerator of which is the number of days
that elapse from and including the date the Agent paid the draft presented for
honor or otherwise made payment to the date on which such Bank's Commitment
Percentage of such Unpaid Reimbursement obligation shall become immediately
available to the Agent, and the
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denominator of which is 360. The responsibility of the Agent to the Borrowers
and the Banks shall be only to determine that the documents (including each
draft) delivered under each Letter of Credit in connection with such presentment
shall be in conformity in all material respects with such Letter of Credit.
4.4. Obligations Absolute. Each Borrower's obligations under this ss.4
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which such Borrower may have or have had against the Agent, any Bank or any
beneficiary of a Letter of Credit. Each Borrower further agrees with the Agent
and the Banks that the Agent and the Banks shall not be responsible for, and the
Borrower's Reimbursement Obligations under ss.4.2 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
such Borrower, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of such Borrower against the beneficiary of
any Letter of Credit or any such transferee. The Agent and the Banks shall not
be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. Each Borrower agrees that any action taken
or omitted by the Agent or any Bank under or in connection with each Letter of
Credit and the related drafts and documents, if done in good faith and without
gross negligence or willful misconduct, shall be binding upon such Borrower and
shall not result in any liability on the part of the Agent or any Bank to such
Borrower.
4.5. Reliance by Issuer. To the extent not inconsistent with ss.4.4,
the Agent shall be entitled to rely, and shall be fully protected in relying,
upon any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Majority Banks as it
reasonably deems appropriate or it shall first be indemnified to its reasonable
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon the Banks and all future holders of the Revolving Credit Notes
or of a Letter of Credit Participation.
<PAGE>
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4.6. Letter of Credit Fee. The applicable Borrower shall, on the date
of issuance or any extension or renewal of any Letter of Credit and at such
other time or times as such charges are customarily made by the Agent, pay a fee
(in each case, a "Letter of Credit Fee") to the Agent (a) in respect of each
standby Letter of Credit equal to the rate of the Applicable Margin per annum on
the face amount of each such Letter of Credit, plus the Agent's customary
issuance fee, and (b) in respect of each documentary Letter of Credit equal to
(i) the Agent's customary issuance fee or amendment fee, as the case may be,
plus (ii) the Agent's customary time negotiation fee per document examination
plus [one half of one percent (1/2%) per annum on the face amount of such
documentary] Letter of Credit, plus (iii) a negotiation fee of one quarter of
one percent (1/4%) of the face amount of such documentary Letter of Credit, such
Letter of Credit Fee (but not such issuance, amendment, negotiation or document
examination fee) to be for the accounts of the Banks in accordance with their
respective Commitment Percentages.
5. CERTAIN GENERAL PROVISIONS.
------------------------------
5.1. Closing Fee. The Company agrees to pay to the Agent a closing fee
in the amount and at the times specified in the Fee Letter.
5.2. Agent's Fee. The Company shall pay to the Agent for the Agent's
own account, an Agent's fee in the amount and at the times specified in the Fee
Letter.
5.3. Funds for Payments.
5.3.1. Payments to Agent. All payments of principal of and
interest on Revolving Credit Loans made to any Borrower which are
denominated in Dollars, and all Reimbursement Obligations, commitment
fees, Letter of Credit Fees and any other amounts due hereunder or
under any of the other Loan Documents shall be made to the Agent, for
the respective accounts of the Banks and the Agent, at the Agent's Head
Office or at such other location in the Boston, Massachusetts, area
that the Agent may from time to time designate, in each case in
immediately available funds. All payments of principal of and interest
on Revolving Credit Loans made to any Borrower which are denominated in
an Optional Currency or Currencies and all other fees hereunder by any
local branch or affiliate of any Bank or the Agent located outside of
the United States shall be made by such Borrower to the Agent in the
currency of such Revolving Credit Loans, at or prior to 11:00 a.m.,
local time, on any payment date, in immediately available funds, for
the account of the Agent, at a depository designated by the Agent in
the country in which such Optional Currency is legal tender.
5.3.2. No Offset, etc. All payments by any Borrower hereunder
and under any of the other Loan Documents shall be made without setoff
or counterclaim and free and clear of and without deduction for any
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taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein
unless such Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon any Borrower with
respect to any amount payable by it hereunder or under any of the other
Loan Documents, such Borrower will pay to the Agent, for the account of
the Banks or (as the case may be) the Agent, on the date on which such
amount is due and payable hereunder or under such other Loan Document,
such additional amount in Dollars as shall be necessary to enable the
Banks or the Agent to receive the same net amount which the Banks or
the Agent would have received on such due date had no such obligation
been imposed upon such Borrower. The applicable Borrower will deliver
promptly to the Agent certificates or other valid vouchers for all
taxes or other charges deducted from or paid with respect to payments
made by the Borrower hereunder or under such other Loan Document.
5.4. Computations. All computations of interest on the Revolving Credit
Loans, the Sterling Base Rate Loans and of commitment fees, Letter of Credit
Fees or other fees shall, unless otherwise expressly provided herein, be based
on a 360-day year and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest Period" with respect
to Eurocurrency Rate Loans, whenever a payment hereunder or under any of the
other Loan Documents becomes due on a day that is not a Business Day, the due
date for such payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension. The outstanding amount of the Loans
as reflected on the Records from time to time shall be considered correct and
binding on the applicable Borrower unless within five (5) Business Days after
receipt of any notice by the Agent or any of the Banks of such outstanding
amount, the Agent or such Bank shall notify such Borrower to the contrary.
5.5. Inability to Determine Eurocurrency Rate. In the event, prior to
the commencement of any Interest Period relating to any Eurocurrency Rate Loan,
the Agent shall determine or be notified by the Majority Banks that adequate and
reasonable methods do not exist for ascertaining the Eurocurrency Rate that
would otherwise determine the rate of interest to be applicable to any
Eurocurrency Rate Loan during any Interest Period or deposits of Dollars or the
relevant Optional Currency, as the case may be, in the relevant Interest Period
are not available to the Agent or the Banks in any Eurocurrency Interbank
Market, the Agent shall forthwith give notice of such determination (which shall
be conclusive and binding on the Borrowers and the Banks) to the Borrowers and
the Banks. In such event (a) any Loan Request or Conversion Request with respect
to Eurocurrency Rate Loans shall be automatically withdrawn and shall be deemed
a request for Base Rate Loans, (b) each Eurocurrency Rate Loan will
automatically, on the last day of the then current Interest Period relating
thereto, if denominated in Dollars, become a Base Rate Loan and if denominated
in any Optional Currency, be repaid, and (c) the obligations of the Banks to
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make Eurocurrency Rate Loans or Revolving Credit Loans denominated in such
Optional Currency, as the case may be, shall be suspended until the Agent or the
Majority Banks determines that the circumstances giving rise to such suspension
no longer exist, whereupon the Agent or, as the case may be, the Agent upon the
instruction of the Majority Banks, shall so notify the Borrowers and the Banks.
5.6. Illegality. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Bank to make or maintain
Eurocurrency Rate Loans or perform its obligations in respect of any
Eurocurrency Rate Loans in an Optional Currency or Currencies, such Bank shall
forthwith give notice of such circumstances to the Borrowers and the other Banks
and thereupon (a) the commitment of such Bank to make Eurocurrency Rate Loans,
to convert Revolving Credit Loans of another Type to Eurocurrency Rate Loans or
to make Eurocurrency Rate Loans in such Optional Currency, as the case may be,
shall forthwith be suspended and (b) such Bank's Revolving Credit Loans then
outstanding as Eurocurrency Rate Loans and denominated in Dollars, if any, shall
be converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurocurrency Rate Loans or within such earlier period
as may be required by law and the Eurocurrency Rate Loans then outstanding as
Eurocurrency Rate Loans and denominated in Optional Currency, if any, shall be
repaid on the last day of each Interest Period applicable to such Eurocurrency
Rate Loan or within such earlier period as may be required by law. Each of the
Borrowers hereby agrees promptly to pay the Agent for the account of such Bank,
upon demand by such Bank, any additional amounts necessary to compensate such
Bank for any costs incurred by such Bank in making any conversion in accordance
with this ss.5.6, including any interest or fees payable by such Bank to lenders
of funds obtained by it in order to make or maintain its Eurocurrency Rate Loans
hereunder.
5.7. Additional Costs, etc. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect
to this Credit Agreement, the other Loan Documents, any Letters of
Credit, such Bank's Commitment or the Revolving Credit Loans (other
than taxes based upon or measured by the income or profits of such Bank
or the Agent), or
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(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Revolving Credit Loans or any other
amounts payable to any Bank or the Agent under this Credit Agreement or
any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Revolving Credit Loans, such
Bank's Commitment, or any class of loans, letters of credit or
commitments of which any of the Revolving Credit Loans or such Bank's
Commitment forms a part, and the result of any of the foregoing is
(i) to increase the cost to any Bank of making,
funding, issuing, renewing, extending or maintaining any of
the Revolving Credit Loans or such Bank's Commitment or any
Letter of Credit, or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Bank
or the Agent hereunder on account of such Bank's Commitment,
any Letter of Credit or any of the Revolving Credit Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or Reimbursement Obligation
or other sum payable hereunder, the amount of which payment or
foregone interest or Reimbursement Obligation or other sum is
calculated by reference to the gross amount of any sum
receivable or deemed received by such Bank or the Agent from
any Borrower hereunder,
then, and in each such case, such Borrower will, upon demand made by such Bank
or (as the case may be) the Agent at any time and from time to time and as often
as the occasion therefor may arise, pay to such Bank or the Agent such
additional amounts as will be sufficient to compensate such Bank or the Agent
for such additional cost, reduction, payment or foregone interest or
Reimbursement Obligation or other sum. To the extent that the amount of such
additional costs, reduction, payment or foregone interest or Reimbursement
Obligation or other sum is not reflected in the Base Rate or the Eurocurrency
Rate, as the case may be, the applicable Borrower agrees to pay the Bank for the
amount of such additional cost, reduction, payment or foregone interest or
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Reimbursement Obligation or other sum as and when such additional cost,
reduction, payment or foregone interest or Reimbursement Obligation or other sum
is determined upon presentation by the Bank of a certificate in accordance with
ss.5.9 hereof.
5.8. Capital Adequacy. If after the date hereof any Bank or the Agent
determines that (a) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (b) compliance by such Bank or the
Agent or any corporation controlling such Bank or the Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Revolving Credit Loans to a level below that which such Bank or
the Agent could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's or the Agent's then existing policies
with respect to capital adequacy and assuming full utilization of such entity's
capital) by any amount deemed by such Bank or (as the case may be) the Agent to
be material, then such Bank or the Agent may notify the Borrower of such fact.
To the extent that the amount of such reduction in the return on capital is not
reflected in the Base Rate or the Eurocurrency Rate, as the case may be, the
applicable Borrower agrees to pay such Bank or (as the case may be) the Agent
for the amount of such reduction in the return on capital as and when such
reduction is determined upon presentation by such Bank or (as the case may be)
the Agent of a certificate in accordance with ss.5.9 hereof. Each Bank shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
5.9. Certificate. A certificate setting forth any additional amounts
payable pursuant to ss.ss.5.7 or 5.8 and a brief explanation of such amounts
which are due, submitted by any Bank or the Agent to the applicable Borrower,
shall be conclusive, absent manifest error, that such amounts are due and owing.
5.10. Indemnity. Each of the Borrowers agrees to indemnify each Bank
and to hold each Bank harmless from and against any loss, cost or expense
(including loss of anticipated profits) that such Bank may sustain or incur as a
consequence of (a) a default by any Borrower in payment of the principal amount
of or any interest on any Eurocurrency Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by the
Agent or any of the Banks to lenders of funds obtained by it in order to
maintain its Eurocurrency Rate Loans, (b) a default by any Borrower in making a
borrowing or conversion after such Borrower has given (or is deemed to have
given) a Loan Request or a Conversion Request relating thereto in accordance
with ss.2.6 or ss.2.7 or (c) the making of any payment of a Eurocurrency Rate
Loan or the making of any conversion of any such Eurocurrency Rate Loan to a
Base
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Rate Loan on a day that is not the last day of the applicable Interest Period
with respect thereto, including interest or fees payable by such Bank to lenders
of funds obtained by it in order to make any such Eurocurrency Rate Loans.
5.11. Interest After Default.
5.11.1. Overdue Amounts. Overdue principal and (to the extent
permitted by applicable law) interest on the Revolving Credit Loans and
all other overdue amounts payable hereunder or under any of the other
Loan Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to three percent (3%) above (a) the
rate otherwise applicable to such Revolving Credit Loans pursuant to
ss.2.5 (with respect to Revolving Credit Loans other than the advances
made pursuant to the Overdraft Facility) and (b) the Sterling Base Rate
with respect to the Overdraft Facility, until such amount shall be paid
in full (after as well as before judgment).
5.11.2. Amounts Not Overdue. During the continuance of a
Default or an Event of Default the principal of the Revolving Credit
Loans not overdue shall, until such Default or Event of Default has
been cured or remedied or such Default or Event of Default has been
waived by the Majority Banks pursuant to ss.26, bear interest at a rate
per annum equal to the greater of (a) two percent (2%) above the rate
of interest otherwise applicable to such Revolving Credit Loans
pursuant to ss.2.5 and (b) the rate of interest applicable to overdue
principal pursuant to ss.5.11.1.
5.12. Replacement Bank. Within thirty (30) days after any Bank has (i)
given notice pursuant to ss.5.6 or (ii) demanded compensation from any Borrower
pursuant to ss.ss.5.7 or 5.8 hereof or any Bank has become a Delinquent Bank, as
defined in ss.15.5.3 hereof (any such Bank described in the foregoing is
hereinafter referred to as an "Affected Bank"), the Company may request that the
Non-Affected Banks acquire all, but not less than all, of the Affected Bank's
outstanding Revolving Credit Loans and assume all, but not less than all, of the
Affected Bank's Commitment. If the Company so requests, the Non-Affected Banks
may elect to acquire all or any portion of the Affected Bank's outstanding
Revolving Credit Loans and to assume all or any portion of the Affected Bank's
Commitment. If the Non-Affected Banks do not elect to acquire and assume all of
the Affected Bank's outstanding Revolving Credit Loans and Commitment, the
Company may designate a replacement bank or banks, which must be satisfactory to
the Agent, to acquire and assume that portion of the outstanding Revolving
Credit Loans and Commitment of the Affected Bank not being acquired and assumed
by the Non-Affected Banks. The provisions of ss.19 hereof shall apply to all
reallocations pursuant to this ss.5.12, and the Affected Bank and any
Non-Affected Banks and/or replacement banks which are to acquire the Revolving
Credit Loans and Commitment of the Affected Bank shall execute and deliver to
the Agent, in accordance with the provisions of ss.19 hereof, such
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Assignments and Acceptances and other instruments, including, without
limitation, Notes, as are required pursuant to ss.19 hereof to give effect to
such reallocations. Any Non-Affected Banks and/or replacement banks which are to
acquire the Revolving Credit Loans and Commitment of the Affected Bank shall be
deemed to be Eligible Assignees for all purposes of ss.19 hereof. On the
effective date of the applicable Assignments and Acceptances, the Company shall
pay to the Affected Bank all interest accrued on its Revolving Credit Loans up
to but excluding such date, along with any fees payable to such Affected Bank
hereunder up to but excluding such date.
5.13. Lending Office. Each Revolving Credit Loan made by any Bank in an
Optional Currency, and each payment by any Borrower in respect thereof, shall be
made by, or, as the case may be, for the account of, such applicable lending
office of the Agent as the Agent shall designate.
6. GUARANTIES.
--------------
6.1. Guaranty. The Obligations shall be guaranteed pursuant to the
terms of the Guaranty. In addition, for value received and hereby acknowledged
and as an inducement to the Banks to make Eurocurrency Rate Loans to the
Borrowers, including the Foreign Subsidiaries, the Company hereby
unconditionally and irrevocably guarantees: (a) the full punctual payment when
due, whether at stated maturity, by acceleration or otherwise, of all
obligations of each Borrower now or hereafter existing hereunder whether for
principal, interest, fees, expenses or otherwise, and (b) the strict performance
and observance by each such Borrower of all agreements, warranties and covenants
in this Credit Agreement applicable to each such Borrower (such obligations
collectively being the "Guaranteed Obligations").
6.2. Guaranty Absolute. The Company guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms hereof,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent or any Bank
with respect thereto. The liability of the Company under this guaranty with
regard to the Guaranteed Obligations of each Borrower shall be absolute and
unconditional irrespective of:
(a) any lack of authorization, execution, validity or
enforceability or any illegality of such Borrower to become a Borrower
hereunder, this Credit Agreement and any amendment hereof (with regard
to such Guaranteed Obligations), or any other obligation, agreement or
instrument relating thereto (it being agreed by the Company that the
Guaranteed Obligations shall not be discharged prior to the final and
complete satisfaction of all of the Obligations of the Borrowers) or
any failure to obtain any necessary governmental consent or approvals
or necessary third party consents or approvals;
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(b) the Agent's or any Bank's exercise or enforcement of, or
failure or delay in exercising or enforcing, legal proceedings to
collect the Obligations or the Guaranteed Obligations or any power,
right or remedy with respect to any of the Obligations or the
Guaranteed Obligations, including (i) any suspension of the Agent's or
any Bank's right to enforce against any other Borrower of the
Guaranteed Obligations, or (ii) any change in the time, manner or place
of payment of, or in any other term of, all or any of the Guaranteed
Obligations of such Borrower or any other amendment or waiver of or any
consent to departure from this Credit Agreement or the other Loan
Documents (with regard to such Guaranteed Obligations) or any other
agreement or instrument governing or evidencing any of the Guaranteed
Obligations;
(c) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations of
such Borrower;
(d) any change in ownership of such Borrower;
(e) any acceptance of any partial payment(s) from such
Borrower;
(f) any insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors,
appointment of a receiver or trustee for all or any part of any
Borrower's assets;
(g) any assignment, participation or other transfer, in whole
or in part, of the Agent's or any Bank's interest in and rights under
this Credit Agreement or any other Loan Document, or of the Agent's or
any Bank's interest in the obligations or the Guaranteed Obligations;
(h) any cancellation, renunciation or surrender of any pledge,
guaranty or any debt instrument evidencing the Obligations or the
Guaranteed Obligations;
(i) the Agent's or any Bank's vote, claim, distribution,
election, acceptance, action or inaction in any bankruptcy or
reorganization case related to the Obligations or the Guaranteed
Obligations; or
(j) any other action or circumstance, other than payment,
which might otherwise constitute a defense available to, or a discharge
of, such Borrower in respect of its Guaranteed Obligations.
This guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any Guaranteed Obligation is
rescinded or must otherwise be returned by the Agent or any Bank upon the
insolvency,
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bankruptcy or reorganization of any Borrower or otherwise, all as though such
payment had not been made.
6.3. Effectiveness, Enforcement. The guaranty herein of the Company
shall be effective and shall be deemed to be made with respect to each Revolving
Credit Loan made to a Borrower as of the time it is made. No invalidity,
irregularity or unenforceability by reason of any bankruptcy or similar law, or
any law or order of any government or agency thereof purporting to reduce, amend
or otherwise affect any liability of a Borrower, and no defect in or
insufficiency or want of powers of any Borrower or irregular or improperly
recorded exercise thereof, shall impair, affect, be a defense to or claim
against such guaranty. This guaranty is a continuing guaranty and shall (a)
survive any termination of this Credit Agreement and (b) remain in full force
and effect until payment in full and performance of all Guaranteed Obligations
and all other amounts payable under this guaranty. This guaranty is made for the
benefit of the Agent and each of the Banks and their respective successors and
assigns, and may be enforced from time to time as often as occasion therefor may
arise and without requirement on the part of the Agent or any Bank first to
exercise any rights against any Borrower or to exhaust any remedies available to
it against any Borrower or to resort to any other source or means of obtaining
payment of any of the Guaranteed Obligations or to elect any other remedy. In
the event that acceleration of the time for payment (or the giving of notice of
such acceleration) of the Guaranteed Obligations of any Borrower is stayed upon
the insolvency, bankruptcy or reorganization of such Borrower or for any other
reason, all such amounts otherwise subject to acceleration under the terms of
this Credit Agreement shall be immediately due and payable by the Company under
the guaranty herein provided.
6.4. Waiver. The Company hereby waives promptness, diligence, protest,
notice of protest, all suretyship defenses, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this guaranty and
any requirement that the Agent or any Bank secure, perfect or protect any
security interest or lien or any property subject thereto or exhaust any right
or take any action against any Borrower or any other person or any collateral.
The Company also irrevocably waives, to the fullest extent permitted by law, all
defenses which at any time may be available to it in respect of the Guaranteed
Obligations by virtue of any statute of limitations, valuation, stay, moratorium
law or other similar law now or hereafter in effect.
6.5. Subordination; Subrogation. Until the payment and performance in
full of all the Obligations, the Company shall not exercise and hereby waives
any rights against any Borrower as a result of payment by the Company hereunder,
by way of subrogation, reimbursement, restitution, contribution or otherwise,
and the Company will not prove any claim in competition with the Agent or any
Bank in respect of any payment hereunder in bankruptcy, insolvency or
reorganization proceedings of any nature; the Company will not claim any
set-off, recoupment or counterclaim against the Borrowers in respect of any
liability of the Company to such Borrower; and the Company waives any
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benefit of and any right to participate in any collateral which may be held by
the Agent and any Bank. The payment of any amounts due with respect to any
Indebtedness of the Borrowers now or hereafter held by the Company is hereby
subordinated to the prior payment in full of the Guaranteed Obligations. The
Company agrees that after the occurrence of any default in the payment or
performance of the Guaranteed Obligations, the Company will not demand, sue for,
or otherwise attempt to collect any such Indebtedness of any of the Borrowers to
the Company until the Guaranteed Obligations then due shall have been paid in
full. If, notwithstanding the foregoing sentence, the Company shall collect or
receive any amounts in respect of such indebtedness, such amounts shall be
collected and received by the Company as trustee for the Agent and the Banks and
be paid over to the Agent for the respective accounts of the Agent and the Banks
on account of the Guaranteed Obligations without affecting in any manner the
liability of the Company under the other provisions of this ss.6. The provisions
of this section shall survive the expiration or termination of the Credit
Agreement and the other Loan Documents and the provisions of this section shall
be supplemental to and not in derogation of any rights and remedies of the Agent
or any Bank under any separate subordination agreement which the Agent or any
Bank may at any time and from time to time entered into with the Company for the
benefit of the Agent or any Bank.
6.6. Payments. All payments made by the Company pursuant to this ss.6
in respect of any Revolving Credit Loans made to any Borrower shall be made in
the same currency in which such Revolving Credit Loan was made, unless otherwise
agreed to in writing by the Agent or the Banks.
6.7. Receipt of Information. The Company acknowledges and confirms that
the Company itself has established its own adequate means of obtaining from each
Borrower on a continuing basis all information desired by the Company concerning
the financial condition of any Borrower and that the Company will look to each
Borrower and not to the Agent or any Bank in order for the Company to keep
adequately informed of changes in each Borrower's financial condition.
7. REPRESENTATIONS AND WARRANTIES.
----------------------------------
Representations and warranties are made to the Banks and the Agent as
follows:
7.1. Corporate Authority.
7.1.1. Incorporation; Good Standing. Each Borrower represents
and warrants that such Borrower and its Subsidiaries (a) is a
corporation duly organized, validly existing and in good standing under
the laws of its state of incorporation, (b) has all requisite corporate
power to own its property and conduct its business as now conducted and
as presently contemplated, and (c) is in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction
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where such qualification is necessary except where a failure to be so
qualified would not have a materially adverse effect on the business,
assets or financial condition of such Borrower or such Subsidiary.
7.1.2. Authorization. Each Borrower represents and warrants
that the execution, delivery and performance of this Credit Agreement
and the other Loan Documents to which such Borrower or any of its
Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby (a) are within the corporate authority
of such Person, (b) have been duly authorized by all necessary
corporate proceedings, (c) do not conflict with or result in any breach
or contravention of any provision of law, statute, rule or regulation
to which such Borrower or any of its Subsidiaries is subject or any
judgment, order, writ, injunction, license or permit applicable to such
Borrower or any of its Subsidiaries and (d) do not conflict with any
provision of the corporate charter or bylaws of, or any agreement or
other instrument binding upon, such Borrower or any of its
Subsidiaries.
7.1.3. Enforceability. Each Borrower represents and warrants
that the execution and delivery of this Credit Agreement and the other
Loan Documents to which such Borrower or any of its Subsidiaries is or
is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with
the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any proceeding
therefor may be brought.
7.2. Governmental Approvals. Each Borrower represents and warrants that
the execution, delivery and performance by such Borrower and any of its
Subsidiaries of this Credit Agreement and the other Loan Documents to which such
Borrower or any of its Subsidiaries is or is to become a party and the
transactions contemplated hereby and thereby (including, but not limited to the
making by such Borrower of the borrowings contemplated by this Credit Agreement
or the obtaining of any Letters of Credit) do not require the approval, consent,
order, authorization or license by, or giving notice to, or taking any other
action with respect to, any governmental agency or authority of any
jurisdiction, or other fiscal, monetary or other authority, under any provisions
of any laws or governmental rules, regulations, orders or decrees of any
jurisdictio or the central bank of any jurisdiction or other fiscal monetary or
other authority, under any provisions of any laws or governmental rules,
regulations, orders or decrees of any jurisdiction applicable to and binding on
such Borrower other than those already obtained.
7.3 Title to Properties; Leases. The Company represents and warrants
that except as indicated on Schedule 7.3 hereto, the Company and its
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Subsidiaries own all of the assets reflected in the consolidated balance sheet
of the Company and its Subsidiaries as at the Balance Sheet Date or acquired
since that date (except property and assets sold or otherwise disposed of in the
ordinary course of business since that date), subject to no rights of others,
including any mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
7.4 Financial Statements. The Company represents and warrants that
there has been furnished to the Agent a consolidated balance sheet of the
Company and its Subsidiaries as at the Balance Sheet Date, and a consolidated
statement of income and cash flow of the Company and its Subsidiaries for the
fiscal year then ended, certified by Price Waterhouse LLP. Such balance sheet
and statement of income and cash flow have been prepared in accordance with
generally accepted accounting principles and fairly present the financial
condition of the Borrowers as at the close of business on the date thereof and
the results of operations for the fiscal year then ended. There are no
contingent liabilities of the Company or any of its Subsidiaries as of such date
involving material amounts, known to the officers of the Company, which were not
disclosed in such balance sheet and the notes related thereto.
7.5. No Material Changes, etc. The Company represents and warrants that
since the Balance Sheet Date there has occurred no materially adverse change in
the financial condition or business of the Company and its Subsidiaries as shown
on or reflected in the consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date, or the consolidated statement of
income for the fiscal year then ended, other than changes in the ordinary course
of business that have not had any materially adverse effect either individually
or in the aggregate on the business or financial condition of the Company or any
of its Subsidiaries. Since the Balance Sheet Date, neither the Company nor any
of its Subsidiaries has made any Distributions.
7.6. Franchises, Patents, Copyrights, etc. Each Borrower represents and
warrants that such Borrower and its Subsidiaries possesses all franchises,
patents, copyrights, trademarks, trade names, licenses and permits, and rights
in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any rights of others.
7.7. Litigation. Each Borrower represents and warrants that except as
set forth in Schedule 7.7 hereto, there are no actions, suits, proceedings or
investigations of any kind pending or threatened against such Borrower or any of
its Subsidiaries before any court, tribunal or administrative agency or board
that, if adversely determined, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition or
business of such Borrowers and its Subsidiaries or materially impair the right
of such Borrowers and its Subsidiaries, considered as a whole, to carry on
business substantially as now conducted by them, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet of the Company and its
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Subsidiaries, or which question the validity of this Credit Agreement or any of
the other Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.
7.8. No Materially Adverse Contracts, etc. Each Borrower represents
that neither such Borrower nor any of its Subsidiaries is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation that has or is expected in the future to have a materially
adverse effect on the business, assets or financial condition of any of such
Borrowers or any of its Subsidiaries. Neither such Borrower nor any of its
Subsidiaries is a party to any contract or agreement that has or is expected, in
the judgment of such Borrower's officers, to have any materially adverse effect
on the business of such Borrower or any of its Subsidiaries.
7.9. Compliance with Other Instruments, Laws, etc. Each Borrower
represents and warrants that neither such Borrowers nor any of its Subsidiaries
is in violation of any provision of its charter documents, bylaws, or any
agreement or instrument to which it may be subject or by which it or any of its
properties may be bound or any decree, order, judgment, statute, license, rule
or regulation, in any of the foregoing cases in a manner that could result in
the imposition of substantial penalties or materially and adversely affect the
financial condition, properties or business of such Borrower or any of its
Subsidiaries.
7.10. Tax Status. Each Borrower represents that such Borrower and its
Subsidiaries (a) has made or filed all federal, state and, if applicable,
foreign income and all other tax returns, reports and declarations required by
any jurisdiction to which any of them is subject, (b) have paid all taxes and
other governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and by appropriate proceedings and (c) have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. Except as set
forth on Schedule 7.10 hereto, there are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers
of the Company know of no basis for any such claim.
7.11. No Event of Default. Each Borrower represents and warrants that
as to itself no Default or Event of Default has occurred and is continuing.
7.12. Holding Company and Investment Company Acts. Each Borrower
represents and warrants that neither such Borrower nor any of its Subsidiaries
is a "holding company", or a "subsidiary company" of a "holding company", or an
affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is it an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment company", as
such terms are defined in the Investment Company Act of 1940.
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7.13. Absence of Financing Statements, etc. Each Borrower represents
and warrants that except with respect to Permitted Liens, there is no financing
statement, security agreement, chattel mortgage, real estate mortgage or other
document filed or recorded with any filing records, registry or other public
office, that purports to cover, affect or give notice of any present or possible
future lien on, or security interest in, any assets or property of such Borrower
or any of its Subsidiaries or any rights relating thereto.
7.14. Certain Transactions. Each Borrower represents and warrants that
except as set forth on Schedule 7.14 hereto and except for arm's length
transactions pursuant to which such Borrower or any of its Subsidiaries makes
payments in the ordinary course of business upon terms no less favorable than
such Borrower or such Subsidiary could obtain from third parties, none of the
officers, directors, or employees of such Borrower or any of its Subsidiaries is
presently a party to any transaction with such Borrower or any of its
Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of such Borrower, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
7.15. Employee Benefit Plans. Each Borrower represents and warrants as
to its own Employee Benefit Plans, if any:
7.15.1. In General. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including
but not limited to the provisions thereunder respecting prohibited
transactions. Such Borrower has heretofore delivered to the Agent the
most recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under
ss.103(d) of ERISA, with respect to each Guaranteed Pension Plan.
7.15.2. Terminability of Welfare Plans. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the
meaning of ss.3(1) or ss.3(2)(B) of ERISA, no benefits are due unless
the event giving rise to the benefit entitlement occurs prior to plan
termination (except as required by Title I, Part 6 of ERISA). Such
Borrower or an ERISA Affiliate, as appropriate, may terminate each such
Plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) in the discretion of such Borrower or
such ERISA Affiliate without liability to any Person.
7.15.3. Guaranteed Pension Plans. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice
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or lien provisions of ss.302(f) of ERISA, or otherwise, has been timely
made. No waiver of an accumulated funding deficiency or extension of
amortization periods has been received with respect to any Guaranteed
Pension Plan. No liability to the PBGC (other than required insurance
premiums, all of which have been paid) has been incurred by the
Borrower or any ERISA Affiliate with respect to any Guaranteed Pension
Plan and there has not been any ERISA Reportable Event, or any other
event or condition which presents a material risk of termination of any
Guaranteed Pension Plan by the PBGC. Based on the latest valuation of
each Guaranteed Pension Plan (which in each case occurred within twelve
months of the date of this representation), and on the actuarial
methods and assumptions employed for that valuation, the aggregate
benefit liabilities of all such Guaranteed Pension Plans within the
meaning of ss.4001 of ERISA did not exceed the aggregate value of the
assets of all such Guaranteed Pension Plans, disregarding for this
purpose the benefit liabilities and assets of any Guaranteed Pension
Plan with assets in excess of benefit liabilities.
7.15.4. Multiemployer Plans. Neither such Borrower nor any
ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
ss.4201 of ERISA or as a result of a sale of assets described in
ss.4204 of ERISA. Neither the Borrowers nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of ss.4241 or ss.4245 of ERISA
or that any Multiemployer Plan intends to terminate or has been
terminated under ss.4041A of ERISA.
7.16. Regulations U and X. Each Borrower represents, with respect to
its Loans, that the proceeds of the Revolving Credit Loans shall be used (a) to
convert existing Indebtedness under the Original Credit Agreement to
Indebtedness hereunder; (b) for acquisitions permitted by ss.9.5.1 up to a
maximum aggregate amount of $10,000,000 during the term of this Credit
Agreement; (c) for working capital and general corporate purposes; and (d) to
fund Distributions permitted to be made pursuant to ss.9.4(b) hereof. The
Borrower will obtain Letters of Credit solely for working capital and general
corporate purposes. No portion of any Revolving Credit Loan is to be used, and
no portion of any Letter of Credit is to be obtained, for the purpose of
purchasing or carrying any "margin security" or "margin stock" as such terms are
used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
7.17. Environmental Compliance. Each Borrower represents and warrants
that such Borrower has taken all necessary steps to investigate the past and
present condition and usage of the Real Estate and the operations conducted
thereon and, based upon such diligent investigation, has determined that:
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(a) none of such Borrower, its Subsidiaries or any operator of
the Real Estate or any operations thereon 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 state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (hereinafter
"Environmental Laws"), which violation would have a material adverse
effect on the environment or the business, assets or financial
condition of such Borrower or any of its Subsidiaries;
(b) neither such Borrowers nor any of its Subsidiaries has
received notice from any third party including, without limitation, any
federal, state or local governmental authority, (i) that any one of
them 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; (ii) that any hazardous waste, as defined by 42
U.S.C. ss.6903(5), any hazardous substances as defined by 42 U.S.C.
ss.9601(14), any pollutant or contaminant as defined by 42 U.S.C.
ss.9601(33) and any toxic substances, oil or hazardous materials or
other chemicals or substances regulated by any Environmental Laws
("Hazardous Substances") which any one of them has generated,
transported or disposed of has been found at any site at which a
federal, state or local agency or other third party has conducted or
has ordered that such Borrower or any of its Subsidiaries conduct a
remedial investigation, removal or other response action pursuant to
any Environmental Law; 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 Substances;
(c) except as set forth on Schedule 7.17 attached hereto: (i)
no portion of its Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws; and no underground tank
or other underground storage receptacle for Hazardous Substances is
located on any portion of the Real Estate; (ii) in the course of any
activities conducted by such Borrowers, its Subsidiaries or operators
of its properties, no Hazardous Substances have been generated or are
being used on its Real Estate except in accordance with applicable
Environmental Laws; (iii) there have been no releases (i.e. any past or
present releasing, spilling, leaking, pumping, pouring, emitting,
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emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Substances on, upon, into or from the
properties of such Borrower or its Subsidiaries, which releases would
have a material adverse effect on the value of any of its Real Estate
or adjacent properties or the environment; (iv) to the best of such
Borrower's knowledge, there have been no releases on, upon, from or
into any real property in the vicinity of any of its Real Estate which,
through soil or groundwater contamination, may have come to be located
on, and which would have a material adverse effect on the value of, its
Real Estate; and (v) in addition, any Hazardous Substances that have
been generated on any of its Real Estate have been transported offsite
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 such Borrower's knowledge, operating in compliance with such permits
and applicable Environmental Laws; and
(d) none of such Borrower and its Subsidiaries or any of its
Real Estate is subject to any applicable environmental law requiring
the performance of Hazardous Substances site assessments, or the
removal or remediation of Hazardous Substances, or the giving of notice
to any governmental agency or the recording or delivery to other
Persons of an environmental disclosure document or statement by virtue
of the transactions set forth herein and contemplated hereby.
7.18. Subsidiaries, etc.. The Company represents and warrants that its
only Subsidiaries are set forth on Schedule 7.18(a) attached hereto, and those
Subsidiaries have no other Subsidiaries. Except as set forth on Schedule 7.18(b)
hereto, neither the Company nor any Subsidiary of the Company is engaged in any
joint venture or partnership with any other Person.
7.19. Chief Executive Offices. The Company represents and warrants that
the Company's chief executive office is at 300 Baker Avenue, Concord,
Massachusetts 01742 at which location its books and records are kept. Each
Subsidiary's chief executive office is as set forth on Schedule 7.18(a) attached
hereto.
7.20. Fiscal Year. The Company represents and warrants that the Company
has a fiscal year which is the twelve (12) months ending on December 28, 1996
for the 1996 fiscal year, December 27, 1997 for the 1997 fiscal year and
December 26 for the 1998 fiscal year. Each other Borrower has a fiscal year
which is the twelve (12) months ending on the same dates.
7.21. No Amendments to Certain Documents. Each Borrower represents that
each of the representations and warranties made by it in any of the Loan
Documents was true and correct in all material respects when made and continues
to be true and correct in all material respects on the Closing Date, except to
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the extent that any of such representations and warranties relate, by the
express terms thereof, solely to a date falling prior to the Closing Date, and
except to the extent that any of such representations and warranties may have
been affected by the consummation of the transactions contemplated and permitted
or required by the Loan Documents.
7.22. Disclosure. The Company represents and warrants that no
representation or warranty made by the Company or any of its Subsidiaries in
this Credit Agreement or in any agreement, instrument, document, certificate,
statement or letter furnished to the Agent or any Bank by or on behalf of the
Company or any of its Subsidiaries in connection with any of the transactions
contemplated by any of the Loan Documents, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which they are made.
7.23. No Withholding, Etc. Each Borrower represents that it is not
required by the laws of any jurisdiction to make any deduction or withholding of
any nature whatsoever from any payment ot be made by it hereunder unless
disclosed in writing to the Agent and such deductions or withholdings are not,
in the Agent's reasonable discretion, material. Neither this Credit Agreement
nor any of the Loan Documents is subject to any registratrion or stamp tax or
any other similar or like takes payable in any jurisdiction.
7.24. No Filing, Recording Required. The Company represents that no
filing, recording or enrolling of this Credit Agreement or any other Loan
Document is required to ensure the legality, validity, enforceability or
admissibility in evidence of this Credit Agreement or any other Loan Document.
8. AFFIRMATIVE COVENANTS OF THE BORROWERS.
---------------------------------------
Each of the Borrowers (or the Company when so specified) covenants and
agrees that, so long as any Revolving Credit Loan, Unpaid Reimbursement
Obligation, Letter of Credit or Revolving Credit Note is outstanding or any Bank
has any obligation to make any Revolving Credit Loans or the Agent has any
obligation to issue, extend or renew any Letters of Credit:
8.1. Punctual Payment. Such Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Revolving Credit Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the commitment fees, the
Agent's fee and all other amounts provided for in this Credit Agreement and the
other Loan Documents to which such Borrower or any of its Subsidiaries is a
party, all in accordance with the terms of this Credit Agreement and such other
Loan Documents.
8.2. Maintenance of Office. The Company covenants that it will maintain
its chief executive office at 300 Baker Avenue, Concord, Massachusetts, or at
such other place in the United States of America as the Company shall designate
upon written notice to the Agent, where notices, presentations and demands to or
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upon the Borrowers in respect of the Loan Documents to which the Borrowers are a
party may be given or made.
8.3. Records and Accounts. The Company covenants that it will (a) keep,
and cause each of its Subsidiaries to keep, true and accurate records and books
of account in which full, true and correct entries will be made in accordance
with generally accepted accounting principles and (b) maintain adequate accounts
and reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves.
8.4. Financial Statements, Certificates and Information. The Company
will deliver to the Agent, with sufficient copies for each of the Banks:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Company, the
consolidated balance sheet of the Company and its Subsidiaries and the
consolidating balance sheet of the Company and its Subsidiaries (other
than the consolidating balance sheet of any Subsidiary of the Company
which the Company's accountant does not in its reasonable discretion
deem to be a material Subsidiary of the Company, unless such a
Subsidiary is a Borrower), each as at the end of such year, and the
related consolidated statement of income and consolidated statement of
cash flow and consolidating statement of income and consolidating
statement of cash flow for such year, each setting forth in comparative
form the figures for the previous fiscal year and all such consolidated
and consolidating statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and certified
(without qualification or otherwise reasonably acceptable to the Agent;
provided that such certificate may set forth qualifications to the
extent such qualifications pertain solely to changes in generally
accepted accounting principles from those applied during earlier
accounting periods, the implementation of which changes is reflected in
the financial statements accompanying such certification) by Price
Waterhouse LLP or by other independent certified public accountants
satisfactory to the Agent, together with a written statement from such
accountants to the effect that they have read a copy of this Credit
Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event
of Default pursuant to ss.10 hereof, or, if such accountants shall have
obtained knowledge of any then existing Default or Event of Default
pursuant to ss.10 hereof, they shall disclose in such statement any
such Default or Event of Default arising pursuant to ss.10 hereof;
provided that such accountants shall not be liable to the Banks for
failure to obtain knowledge of any Default or Event of Default;
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(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of
the Company, copies of the unaudited consolidated balance sheet of the
Company and its Subsidiaries and the unaudited consolidating balance
sheet of the Company and its Subsidiaries, each as at the end of such
quarter, and the related consolidated statement of income and
consolidated statement of cash flow and consolidating statement of
income and consolidating statement of cash flow for the portion of the
Company's fiscal year then elapsed, all in reasonable detail and
prepared in accordance with generally accepted accounting principles,
together with a certification by the principal financial or accounting
officer of the Company that the information contained in such financial
statements fairly presents the financial position of the Company and
its Subsidiaries on the date thereof (subject to year-end adjustments);
(c) as soon as practicable, but in any event within thirty
(30) days after the end of each month in each fiscal year of the
Company, unaudited monthly consolidated financial statements of the
Company and its Subsidiaries for such month and unaudited monthly
consolidating financial statements of the Company and its Subsidiaries
for such month, each prepared in accordance with generally accepted
accounting principles, together with a certification by the principal
financial or accounting officer of the Company that the information
contained in such financial statements fairly presents the financial
condition of the Company and its Subsidiaries on the date thereof
(subject to year-end adjustments);
(d) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the principal financial or accounting officer of the
Company in substantially the form of Exhibit D hereto (the "Compliance
Certificate") and setting forth in reasonable detail computations
evidencing compliance with the covenants contained in ss.10 and (if
applicable) reconciliations to reflect changes in generally accepted
accounting principles since the Balance Sheet Date;
(e) contemporaneously with the filing or mailing thereof,
copies of all material of a financial nature filed with the Securities
and Exchange Commission or sent to the stockholders of any of the
Borrowers;
(f) within fifteen (15) days after the end of each calendar
month or at such earlier time as the Agent may reasonably request, a
Borrowing Base Report setting forth the Borrowing Base as at the end of
such calendar month or other date so requested by the Agent;
(g) within fifteen (15) days after the end of each calendar
month, an Accounts Receivable aging report;
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(h) by not later than thirty (30) days prior to the end of any
fiscal year, the annual projections of the Borrowers for the next
fiscal year, and upon the request of the Agent or any Bank, any
quarterly projections of the Borrower prepared by the Borrowers for the
next fiscal quarter; and
(i) from time to time such other financial data and
information (including accountants, management letters) as the Agent or
any Bank may reasonably request.
8.5. Notices.
--------
8.5.1. Defaults. The Company covenants that it will promptly
notify the Agent in writing of the occurrence of any Default or Event
of Default. If any Person shall give any notice or take any other
action in respect of a claimed default (whether or not constituting an
Event of Default) under this Credit Agreement or any other note,
evidence of indebtedness, indenture or other credit or similar monetary
obligation to which or with respect to which any of the Borrowers or
any of their Subsidiaries is a party or obligor, whether as principal,
guarantor, surety or otherwise, such Borrower shall forthwith give
written notice thereof to the Agent and each of the Banks, describing
the notice or action and the nature of the claimed default.
8.5.2. Environmental Events. The Company covenants that it
will promptly give notice to the Agent (a) of any violation of any
Environmental Law that the Company or any of its Subsidiaries reports
in writing or is reportable by such Person in writing (or for which any
written report supplemental to any oral report is made) to any federal,
state or local environmental agency and (b) upon becoming aware
thereof, of any inquiry, proceeding, investigation, or other action,
including a notice from any agency of potential environmental
liability, of any federal, state or local environmental agency or
board, that has the potential to materially affect the assets,
liabilities, financial conditions or operations of the Company and its
Subsidiaries, taken as a whole.
8.5.3. Notice of Litigation and Judgments. The Company will,
and will cause each of its Subsidiaries to, give notice to the Agent in
writing within fifteen (15) days of becoming aware of any litigation or
proceedings threatened in writing or any pending litigation and
proceedings affecting the Company or any of its Subsidiaries or to
which the Company or any of its Subsidiaries is or becomes a party
involving an uninsured claim against the Company or any of its
Subsidiaries that could reasonably be expected to have a materially
adverse effect on the Company and its Subsidiaries and stating the
nature and status of such litigation or proceedings. The Company will,
and will cause each of its Subsidiaries to, give notice to the Agent
and each of the Banks, in writing, in form and detail satisfactory to
the Agent, within ten (10) days of any judgment not covered by
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insurance, final or otherwise, against the Company or any of its
Subsidiaries in an amount in excess of $250,000.
8.6. Corporate Existence; Maintenance of Properties. Such Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries and will not, and will not cause or permit any of its Subsidiaries
to, convert to a limited liability company. Such Borrower (a) will cause all of
its properties and those of its Subsidiaries used or useful in the conduct of
its business or the business of its Subsidiaries to be maintained and kept in
good condition, repair and working order (ordinary wear and tear excepted and
damage by fire and other casualty which is fully covered by insurance excepted)
and supplied with all necessary equipment, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of such Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (c) will, and will cause each of its Subsidiaries to, continue
to engage primarily in the businesses now conducted by them and in related
businesses; provided that nothing in this ss.8.6 shall prevent any Borrower from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries (unless such Subsidiary is a Borrower hereunder) if
such discontinuance is, in the judgment of such Borrower, desirable in the
conduct of its or their business.
8.7. Insurance. Such Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent.
8.8. Taxes. Such Borrower will, and will cause each of its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if such Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that such Borrower and each Subsidiary of such
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
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8.9. Inspection of Properties and Books, etc.
----------------------------------------
8.9.1. General. Such Borrower shall permit the Banks, through
the Agent or any of the Banks' other designated representatives, to
visit and inspect any of the properties of such Borrower or any of its
Subsidiaries, to examine the books of account of such Borrower and its
Subsidiaries (and to make copies thereof and extracts therefrom), and
to discuss the affairs, finances and accounts of such Borrower and its
Subsidiaries with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals as the Agent or
any Bank may reasonably request.
8.9.2. Collateral Reports. No more frequently than once each
calendar year, or more frequently as determined by the Agent if an
Event of Default shall have occurred and be continuing, upon the
request of the Agent, the Company agrees to obtain and deliver to the
Agent a report of an independent collateral auditor satisfactory to the
Agent (which may be affiliated with one of the Banks) with respect to
the Accounts Receivable components included in the Borrowing Base,
which report shall indicate whether or not the information set forth in
the Borrowing Base Report most recently delivered is accurate and
complete in all material respects based upon a review by such auditors
of the Accounts Receivable (including verification with respect to the
amount, aging, identity and credit of the respective account debtors
and the billing practices of the Company and its applicable
Subsidiary). All such collateral value reports shall be conducted and
made at the expense of the Borrowers.
8.10. Compliance with Laws, Contracts, Licenses, and Permits. Such
Borrower will, and will cause each of its Subsidiaries to, comply with (a) the
applicable laws and regulations wherever its business is conducted, including
all Environmental Laws, (b) the provisions of its charter documents and by-laws,
(c) all agreements and instruments by which it or any of its properties may be
bound and (d) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that such Borrower or any of its Subsidiaries may fulfill any of its obligations
hereunder or any of the other Loan Documents to which such Borrower or such
Subsidiary is a party, such Borrower will, or (as the case may be) will cause
such Subsidiary to, immediately take or cause to be taken all reasonable steps
within the power of such Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Agent and
the Banks with evidence thereof.
8.11. Employee Benefit Plans. Such Borrower will, if applicable, (a)
promptly upon filing the same with the Department of Labor or Internal Revenue
Service, furnish to the Agent a copy of the most recent actuarial statement
required to be submitted under ss.103(d) of ERISA and Annual Report, Form 5500,
with all required attachments, in respect of each Guaranteed
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Pension Plan and (b) promptly upon receipt or dispatch, furnish to the Agent
any notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under ss.ss.302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or
in respect of a Multiemployer Plan, under ss.ss.4041A, 4202, 4219, 4242, or 4245
of ERISA.
8.12. Use of Proceeds. Such Borrower will use the proceeds of the
Revolving Credit Loans solely (a) to convert existing Indebtedness under the
Original Credit Agreement into Indebtedness hereunder; (b) for acquisitions
permitted pursuant to ss.9.5.2. up to an aggregate amount not to exceed
$10,000,000 during the term of this Credit Agreement; (c) for working capital
and general corporate purposes, including making loans to Subsidiaries; and (d)
to fund Distributions permitted to be made pursuant to ss.9.4(b) hereof. The
Borrower will obtain Letters of Credit solely for working capital and general
corporate purposes.
8.13. Fair Labor Standards Act. Such Borrower will, and each of its
Subsidiaries shall at all times operate its business in compliance with all
material applicable provisions of the Fair Labor Standards Act of 1938, as
amended. None of the inventory of such Borrower or any of its Subsidiaries are
or will be produced by employees of such Borrower or any of its Subsidiaries who
are employed in violation of the applicable minimum wage or maximum hour
provisions of the Fair Labor Standards Act (29 U.S.C. ss.ss.206 and 207) or any
regulations promulgated thereunder, in each case, as in effect from time to
time.
8.14. Further Assurances. Such Borrower will, and will cause each of
its Subsidiaries to, cooperate with the Banks and the Agent and execute such
further instruments and documents as the Banks or the Agent shall reasonably
request to carry out to their satisfaction the transactions contemplated by this
Credit Agreement and the other Loan Documents.
9. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
--------------------------------------------
Each of the Borrowers (or the Company where so stated) covenants and
agrees that, so long as any Revolving Credit Loan, Unpaid Reimbursement
Obligation, Letter of Credit or Revolving Credit Note is outstanding or any Bank
has any obligation to make any Revolving Credit Loans or the Agent has any
obligations to issue, extend or renew any Letters of Credit:
9.1. Restrictions on Indebtedness. Such Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Banks and the Agent arising under any
of the Loan Documents;
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(b) current liabilities of such Borrower or such Subsidiary
incurred in the ordinary course of business not incurred through (i)
the borrowing of money, or (ii) the obtaining of credit except for
credit on an open account basis customarily extended and in fact
extended in connection with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of ss.8.8;
(d) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which
such Borrower or such Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which
a stay of execution shall have been obtained pending such appeal or
review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) obligations under Capitalized Leases not exceeding
$12,000,000 in aggregate amount at any time outstanding;
(g) Indebtedness incurred after the date hereof in connection
with the acquisition of any real or personal property by such Borrower
or such Subsidiary, provided that the aggregate principal amount of
such Indebtedness of the Borrowers and their Subsidiaries shall not
exceed the aggregate amount of $3,000,000 at any one time;
(h) Indebtedness existing on the date hereof and listed and
described on Schedule 9.1 hereto;
(i) Indebtedness of a Subsidiary of any Borrower existing on
the Closing Date to such Borrower, so long as such Subsidiary is a
Borrower hereunder or prior to the date of the incurrence or existence
of such Indebtedness such Subsidiary becomes a guarantor of all the
Obligations hereunder on terms and conditions satisfactory to the
Agent;
(j) Indebtedness of a Borrower to any other Borrower or to a
Guarantor or of a Guarantor to another Guarantor; and
(k) unsecured Indebtedness of the Company or any of its
Subsidiaries not otherwise provided for in this ss.9.1;
provided, however, notwithstanding the foregoing provisions of ss.9.1, the total
principal amount of all Indebtedness outstanding under clauses (f), (g), (h) and
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(k) of this ss.9.1 shall not at any time exceed in the aggregate $15,000,000 at
any one time outstanding.
9.2. Restrictions on Liens. Such Borrower will not, and will not permit
any of its Subsidiaries to, (a) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (d) suffer to exist
for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over its general creditors; or (e) sell, assign, pledge or otherwise
transfer any accounts, contract rights, general intangibles, chattel paper or
instruments, with or without recourse; provided that such Borrower and its
Subsidiary may create or incur or suffer to be created or incurred or to exist:
(i) liens in favor of such Borrower on all or part of the
assets of Subsidiaries of such Borrower securing Indebtedness owing by
Subsidiaries of such Borrower to such Borrower;
(ii) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties to
secure claims for labor, material or supplies in respect of obligations
not overdue;
(iii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iv) liens on properties in respect of judgments or awards,
the Indebtedness with respect to which is permitted by ss.9.1(d);
(v) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in existence less than
120 days from the date of creation thereof in respect of obligations
not overdue;
(vi) encumbrances on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which such Borrower or a
Subsidiary of such Borrower is a party, and other minor liens or
encumbrances none of which in the opinion of such Borrower interferes
materially with the use of the property affected in the ordinary
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conduct of the business of such Borrower and its Subsidiaries, which
defects do not individually or in the aggregate have a materially
adverse effect on the business of such Borrower individually or of the
Borrowers and their Subsidiaries on a consolidated basis;
(vii) liens existing on the date hereof and listed on
Schedule 9.2 hereto;
(viii) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof
to secure purchase money Indebtedness of the type and amount permitted
by ss.9.1(g), incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired;
(ix) liens on office equipment of the Company or any of its
Subsidiaries existing on the Closing Date but not set forth on Schedule
9.2 provided such liens do not secure Indebtedness in excess of $25,000
in the aggregate; and
(x) liens in respect of Capitalized Leases permitted pursuant
to ss.9.1(f).
9.3. Restrictions on Investments. Such Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of
purchase by such Borrower;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total
assets in excess of $1,000,000,000 or banks organized under the laws
any OECD country and having total assets in excess of $10,000,000,000;
(c) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase
have been rated and the ratings for which are not less than "P 2" if
rated by Moody's Investors Services, Inc., and not less than "A 2" if
rated by Standard and Poor's;
(d) Investments existing on the date hereof and listed on
Schedule 9.3 hereto;
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(e) Investments with respect to Indebtedness permitted by
ss.9.1(j) so long as such entities remain Subsidiaries of such
Borrower;
(f) Investments consisting of the guaranty arrangements
provided for in ss.6 hereof or Investments by any Borrower in
Subsidiaries of such Borrower either existing on the Closing Date or
made subsequent to the Closing Date so long as such Subsidiary is a
Borrower or prior to the date of such Investment such Subsidiary
becomes a guarantor hereunder on terms and conditions, and pursuant to
an agreement, in form and substance satisfactory to the Agent;
(g) Investments consisting of promissory notes received as
proceeds of asset dispositions permitted by ss.9.5.2;
(h) money market mutual funds provided (i) each such fund in
which such Borrower or its Subsidiaries makes an Investment has assets
of not less than $50,000,000; and (ii) the proportional Investment in
each such fund by such Borrower or such Subsidiary does not exceed one
percent (1%) of the aggregate amount of all Investments in such fund;
and
(i) Investments made by the Agent on behalf of such Borrower.
9.4. Distributions. Such Borrower will not make any Distributions;
provided, however, so long as no Default or Event of Default has occurred and is
continuing or would exist as a result thereof, (a) any Subsidiary of the Company
shall be permitted to make Distributions to its parent or the Company, and (b)
the Company shall be permitted to make Distributions in respect of stock
repurchases up to an aggregate amount in any fiscal year of ten percent (10%) of
the Company's Consolidated Tangible Net Worth for the previous fiscal year.
9.5. Merger, Consolidation and Disposition of Assets.
------------------------------------------------
9.5.1. Mergers and Acquisitions. The Company will not, and
will not permit any of its Subsidiaries to, become a party to any
merger or consolidation, or agree to or effect any asset acquisition or
stock acquisition other than (a) the acquisition of assets in the
ordinary course of business consistent with past practices; (b) the
merger or consolidation of one or more of the Subsidiaries of any
Borrower with and into such Borrower, or the merger or consolidation of
two (2) or more Subsidiaries of any Borrower (so long as the Subsidiary
which does not survive such a merger or consolidation is not a
Borrower); and (c) the acquisition by the Company of assets of Persons
in the same or similar line of business so long as (i) the Company has
provided the Agent with three (3) Business Days prior written notice of
such acquisition, which notice shall include a reasonably detailed
description of such acquisition; (ii) no Default or Event of Default
has occurred and is continuing or would exist as a result of such
proposed acquisition; (iii) the business to be acquired would not
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subject the Agent or the Banks to regulatory or third party approvals
in connection with the exercise of its rights and remedies under this
Credit Agreement or any other Loan Document; (iv) the Company has
demonstrated to the satisfaction of the Agent pro forma compliance with
its covenants contained in ss.10 both prior to and immediately after
giving effect to each such acquisition; (vi) the aggregate purchase
price for all acquisitions (exclusive of consideration evidenced by the
capital stock of any Borrower) in any one twelve month period does not
exceed ten percent (10%) of the Company's Consolidated Tangible Net
Worth as of the most recent fiscal quarter then ended.
9.5.2. Disposition of Assets. The Company will not, and will
not permit any of its Subsidiaries to, become a party to or agree to or
effect any disposition of assets, other than (a) the disposition of
assets in the ordinary course of business, consistent with past
practices; and (b) other sales of assets not otherwise provided for
herein, provided, (i) no Default or Event of Default has occurred and
is continuing at the time of such sale; (ii) the fair market value of
all assets sold in any fiscal year does not exceed, in the aggregate,
$2,000,000; and (iii) the Person selling such asset receives 100% of
the purchase price in cash; (iv) the purchase price received by such
Person is not less than the fair market value of the property being
sold.
9.6. Sale and Leaseback. Such Borrower will not, and will not permit
any of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby such Borrower or any of its Subsidiaries shall sell or transfer any
property owned by it in order then or thereafter to lease such property or lease
other property that such Borrower or any Subsidiary of such Borrower intends to
use for substantially the same purpose as the property being sold or
transferred.
9.7. Compliance with Environmental Laws. Such Borrower will not, and
will not permit any of its Subsidiaries to, (a) use any of its Real Estate or
any portion thereof for the handling, processing, storage or disposal of
Hazardous Substances, (b) cause or permit to be located on any of its Real
Estate any underground tank or other underground storage receptacle for
Hazardous Substances, (c) generate any Hazardous Substances on any of its Real
Estate, (d) conduct any activity at its Real Estate or use its Real Estate in
any manner so as to cause a release (i.e. releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous Substances on, upon or
into its Real Estate or (e) otherwise conduct any activity at its Real Estate or
use its Real Estate in any manner that would violate any Environmental Law or
bring such Real Estate in violation of any Environmental Law.
9.8. Employee Benefit Plans. Neither such Borrower nor any
ERISA Affiliate will
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(a) engage in any "prohibited transaction" within the meaning
of ss.406 of ERISA or ss.4975 of the Code which could result in a
material liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in ss.302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of such Borrower or any of its Subsidiaries pursuant to
ss.302(f) or ss.4068 of ERISA; or
(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss.4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the aggregate
assets of such Plans, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of
benefit liabilities.
9.9. Fiscal Year. Neither such Borrower nor any of its Subsidiaries
will change the date of the end of its respective fiscal years from that set
forth in ss.7.20 hereof.
9.10. Negative Pledges. Neither such Borrower nor any of its
Subsidiaries will enter into any agreement (excluding this Credit Agreement and
the Loan Documents) prohibiting the creation or assumption of any lien upon its
properties, revenues or assets or those of any of its Subsidiaries, whether now
owned or hereafter acquired other than agreements with Persons prohibiting any
such lien on assets in which such Person has a prior security interest which is
permitted by ss.9.2.
9.11. Transaction with Affiliates. Such Borrower will not, nor will it
permit any of its Subsidiaries to enter into, or cause, suffer or permit to
exist (a) any arrangement or contract with any of its other Affiliates of a
nature customarily entered into by Persons which are Affiliates of each other
(including management and similar contracts or arrangements relating to the
allocation of revenues, taxes and expenses or otherwise) requiring any payments
to be made by such Borrower or any of its Subsidiaries to any Affiliate unless
such arrangement is fair and equitable to such Borrower or such Subsidiary; or
(b) any other transaction, arrangement, contract with any of their other
Affiliates which would not be entered into by a prudent Person in the position
of such Borrower or such Subsidiary with, or which is on terms which are less
favorable than are obtainable from, any Person which is not one of its
Affiliates.
9.12. Upstream Limitations. Such Borrower will not, nor will it permit
any of its Subsidiaries to, enter into any agreement, contact or arrangement
(other than the Credit Agreement and the other Loan Documents) restricting the
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ability of any Subsidiary to pay or make dividends or distributions in cash or
kind, to make loans, advances or other payments of whatsoever nature or to make
transfers or distributions of all or any part of its assets to such Borrower to
any Subsidiary of such Subsidiary.
9.13. Inconsistent Agreements. Such Borrower will not nor will it
permit any of its Subsidiaries to enter into any agreement containing any
provision which would be violated or breached by the performance by such
Borrower or such Subsidiary of its obligations hereunder or under any of the
Loan Documents.
10. FINANCIAL COVENANTS OF THE COMPANY.
-----------------------------------
The Company covenants and agrees that, so long as any Revolving Credit
Loan, Unpaid Reimbursement Obligation, Letter of Credit or Revolving Credit Note
is outstanding or any Bank has any obligation to make any Revolving Credit Loans
or the Agent has any obligation to issue, extend or renew any Letters of Credit:
10.1. Leverage Ratio. The Company will not permit the Leverage Ratio to
be greater than 2.00:1.00 for any fiscal quarter.
10.2. Profitable Operations. The Company will not permit Consolidated
Net Income and Consolidated Recurring Operating Income for any fiscal quarter to
be less than $1.00.
10.3. Capital Expenditures. The Company will not make, or permit any of
its Subsidiaries to make, Capital Expenditures (other than any Capital
Expenditures pertaining to the fit-out of the Westford, Massachusetts facility)
in any fiscal year that exceed, in the aggregate, $10,000,000 for such fiscal
year.
10.4. Debt Service. The Company will not, during any fiscal quarter,
permit the ratio of (a) EBITDA for the period of four (4) consecutive fiscal
quarters (treated as a single accounting period) ending on such date to (b)
Consolidated Total Interest Expense for such fiscal quarter, to be less than
4.00:1.00.
10.5. Current Ratio. The Company will not permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities to be less than
1.20:1.00 at any time.
11. CLOSING CONDITIONS.
-------------------
The obligations of the Banks to make the initial Revolving Credit Loans
and of the Agent to issue any initial Letters of Credit shall be subject to the
satisfaction of the following conditions precedent on or prior to Closing Date:
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11.1. Loan Documents. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
The Agent shall have received a fully executed copy of each such document.
11.2. Certified Copies of Charter Documents. Each of the Banks shall
have received from each of the Borrowers a copy, certified by a duly authorized
officer of such Person to be true and complete on the Closing Date, of each of
(a) its charter or other incorporation documents as in effect on such date of
certification, and (b) its by-laws as in effect on such date.
11.3. Corporate Action. All corporate action necessary for the valid
execution, delivery and performance by each of the Borrowers of this Credit
Agreement and the other Loan Documents to which it is or is to become a party
shall have been duly and effectively taken, and evidence thereof satisfactory to
the Banks shall have been provided to each of the Banks.
11.4. Incumbency Certificate. The Agent shall have received from each
of the Borrowers an incumbency certificate, dated as of the Closing Date, signed
by a duly authorized officer of such Borrower, and giving the name and bearing a
specimen signature of each individual who shall be authorized: (a) to sign, in
the name and on behalf of each Borrower, each of the Loan Documents to which
such Borrower is or is to become a party; (b) to make Loan Requests and
Conversion Requests and to apply for Letters of Credit; and (iii) to give
notices and to take other action on its behalf under the Loan Documents.
11.5. UCC Search Results. The Agent shall have received the results of
UCC searches with respect to the Borrowers, indicating no liens other than
Permitted Liens and otherwise in form and substance satisfactory to the Agent.
11.6. Certificates of Insurance. The Agent shall have received (s) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Credit Agreement and (b) certified copies of all policies
evidencing such insurance (or certificates therefore signed by the insurer or an
agent authorized to bind the insurer).
11.7. Borrowing Base Report. The Agent shall have received from the
Company the initial Borrowing Base Report dated as of the Closing Date.
11.8. Accounts Receivable Aging Report. The Agent shall have received
from the Company the most recent Accounts Receivable aging report of the Company
and its Subsidiaries dated as of a date which shall be no more than forty-five
(45) days prior to the Closing Date and the Company shall have notified the
Agent in writing on the Closing Date of any material deviation from the Accounts
Receivable values reflected in such Accounts Receivable aging report and shall
have provided the Agent with such supplementary documentation as the Agent may
reasonably request.
11.9. Solvency Certificate. The Agent shall have received an officer's
certificate of the Company dated as of the Closing Date as to the solvency of
the Company and its Subsidiaries following the consummation of the transactions
contemplated herein and in form and substance satisfactory to the Banks.
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11.10. Opinion of Counsel. Each of the Banks and the Agent shall have
received a favorable legal opinion addressed to the Banks and the Agent, dated
as of the Closing Date, in form and substance satisfactory to the Banks and the
Agent, from Nutter, McClennen & Fish, LLP, counsel to the Borrowers.
11.11. Payment of Fees. The Company shall have paid to the Banks or the
Agent, as appropriate, the closing fee pursuant to the Fee Letter.
12. CONDITIONS TO ALL BORROWINGS.
-----------------------------
The obligations of the Banks to make any Revolving Credit Loan, and of
the Agent to issue, extend or renew any Letter of Credit, in each case whether
on or after the Closing Date, shall also be subject to the satisfaction of the
following conditions precedent:
12.1. Representations True; No Event of Default. Each of the
representations and warranties of any of the Borrowers contained in this Credit
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
the making of such Revolving Credit Loan or the issuance, extension or renewal
of such Letter of Credit, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Credit Agreement and the other Loan Documents and changes
occurring in the ordinary course of business that singly or in the aggregate are
not materially adverse, and to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing.
12.2. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Revolving Credit
Loan or to participate in the issuance, extension or renewal of such Letter of
Credit or in the reasonable opinion of the Agent would make it illegal for the
Agent to issue, extend or renew such Letter of Credit.
12.3. Governmental Regulation. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
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12.4. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
12.5. Borrowing Base Report. The Agent shall have received the most
recent Borrowing Base Report required to be delivered to the Agent in accordance
with ss.8.4(f) and, if requested by the Agent, a Borrowing Base Report dated
within five (5) days of the Drawdown Date of such Revolving Credit Loan or of
the date of issuance, extension or renewal of such Letter of Credit.
13. EVENTS OF DEFAULT; ACCELERATION; ETC.
-------------------------------------
13.1. Events of Default and Acceleration. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) any of the Borrowers shall fail to pay any principal of
the Revolving Credit Loans or any Reimbursement Obligation when the
same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed
for payment;
(b) any of the Borrowers shall fail to pay any interest on the
Revolving Credit Loans, the commitment fee, any Letter of Credit Fee,
the Agent's fee, or other sums due hereunder or under any of the other
Loan Documents, when the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at
any other date fixed for payment;
(c) any of the Borrowers shall fail to comply with any of its
covenants contained in ss.ss.6, 8.1, 8.2, 8.4, 8.5.1., 8.5.3, 8.5.4,
8.7, 8.9, 8.12, 8.14, 9 or 10;
(d) any Borrower or any of its Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this
ss.13.1) for fifteen (15) days after written notice of such failure has
been given to the Company by the Agent;
(e) any representation or warranty of any Borrower or any of
its Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
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or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
(f) any Borrower or any of its Subsidiaries shall fail to pay
at maturity, or within any applicable period of grace, any obligation
in excess of $1,000,000 for borrowed money or credit received or in
respect of any Capitalized Leases, or fail to observe or perform any
material term, covenant or agreement contained in any agreement by
which it is bound, evidencing or securing borrowed money or credit
received or in respect of any Capitalized Leases for such period of
time as would permit (assuming the giving of appropriate notice if
required) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof;
(g) any Borrower or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of any Borrower or any of
its Subsidiaries or of any substantial part of the assets of any
Borrower or any of its Subsidiaries or shall commence any case or other
proceeding relating to any Borrower or any of its Subsidiaries under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any jurisdiction,
now or hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall
be commenced against any Borrower or any of its Subsidiaries and any
Borrower or any of its Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within forty-five (45) days
following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Borrower or any
of its Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of any Borrower or any Subsidiary of such Borrower
in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against any Borrower or any of its Subsidiaries that,
with other outstanding final judgments, undischarged, against such
Borrower or any of its Subsidiaries exceeds in the aggregate
$1,000,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
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approval of the Banks, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan Documents
shall be commenced by or on behalf of any Borrower or any of its
Subsidiaries party thereto or any of their respective stockholders, or
any court or any other governmental or regulatory authority or agency
of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more
of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of any Borrower or any of its
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $1,000,000 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall
have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate
such Guaranteed Pension Plan;
(l) any Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(m) there shall occur any material damage to, or loss, theft
or destruction of, any of the property of any Borrower or its
Subsidiaries, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other
casualty, which in any such case causes, for more than fifteen (15)
consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of any Borrower or any of its
Subsidiaries if such event or circumstance is not covered by business
interruption insurance and would have a material adverse effect on the
business or financial condition of such Borrower or such Subsidiary;
(n) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by any Borrower or any of its Subsidiaries if such loss,
suspension, revocation or failure to renew would have a material
adverse effect on the business or financial condition of such Borrower
or such Subsidiary;
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(n) any Borrower or any of its Subsidiaries shall be indicted
for a state or federal crime, or any civil or criminal action shall
otherwise have been brought or threatened against such Borrower or any
of its Subsidiaries, a punishment for which in any such case could
include the forfeiture of any assets of such Borrower or such
Subsidiary included in the Borrowing Base or any assets of such
Borrower or such Subsidiary not included in the Borrowing Base but
having a fair market value in excess of $1,000,000;
(p) the Company shall at any time, legally or beneficially own
less than one hundred percent (100%) of the capital stock of the other
Borrowers, as adjusted pursuant to any stock split, stock dividend or
recapitalization or reclassification of the capital of each such other
Borrower; or
(q) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of twenty percent (20%) or more of the outstanding shares of
common stock of the Company; or, during any period of twelve (12)
consecutive calendar months, individuals who were directors of the
Company on the first day of such period shall cease to constitute a
majority of the board of directors of the Company;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Revolving Credit Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by each of the Borrowers; provided that
in the event of any Event of Default specified in ss.ss.13.1(g) or 13.1(h), all
such amounts shall become immediately due and payable automatically and without
any requirement of notice from the Agent or any Bank.
13.2. Termination of Commitments. If any one or more of the Events of
Default specified in ss.13.1(g) or ss.13.1(h) shall occur, any unused portion of
the credit hereunder shall forthwith terminate and each of the Banks shall be
relieved of all further obligations to make Revolving Credit Loans to the
Borrowers and the Agent shall be relieved of all further obligations to issue,
extend or renew Letters of Credit. If any other Event of Default shall have
occurred and be continuing, or if on any Drawdown Date or other date for
issuing, extending or renewing any Letter of Credit the conditions precedent to
the making of the Revolving Credit Loans to be made on such Drawdown Date or (as
the case may be) to issuing, extending or renewing such Letter of Credit on such
other date are not satisfied, the Agent may and, upon the request of the
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Majority Banks, shall, by notice to the Company, terminate the unused portion of
the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Revolving Credit Loans and the Agent
shall be relieved of all further obligations to issue, extend or renew Letters
of Credit. No termination of the credit hereunder shall relieve the Borrowers of
any of the Obligations.
13.3. Remedies. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Revolving Credit Loans pursuant to ss.13.1, each
Bank, if owed any amount with respect to the Revolving Credit Loans or the
Reimbursement Obligations, may, with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank are
evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Revolving Credit Note or purchaser of any
Letter of Credit Participation is intended to be exclusive of any other remedy
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law.
13.4. Exchange Rate. If, for the purpose of obtaining judgment in any
court or obtaining an order enforcing a judgment, it becomes necessary to
convert any amount due under this Credit Agreement in Dollars or in any other
currency (hereinafter in this ss.13.4 called the "first currency") into any
other currency (hereinafter in this ss.13.4 called the "second currency"), then
the conversion shall be made at the Agent's spot rate of exchange for buying the
first currency with the second currency prevailing at the Agent's close of
business on the Business Day next preceding the day on which the judgment is
given or (as the case may be) the order is made. Any payment made to the Agent
or any Bank pursuant to this Credit Agreement in the second currency shall
constitute a discharge of the obligations of the respective Borrower to pay to
the Agent and the Banks any amount originally due to the Agent and the Banks in
the first currency under this Credit Agreement only to the extent of the amount
of the first currency which the Agent and each of the Banks is able, on the date
of the receipt by it of such payment in any second currency, to purchase, in
accordance with the Agent's and such Bank's normal banking procedures, the
amount of such second currency so received. If the amount of the first currency
falls short of the amount originally due to the Agent and the Banks in the first
currency under this Credit Agreement, the Borrowers hereby agree that they will
indemnify the Agent and each of the Banks against and save the Agent and each of
the Banks harmless from any shortfall so arising.
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This indemnity shall constitute an obligation of each such Borrower separate and
independent from the other obligations contained in this Credit Agreement, shall
give rise to a separate and independent cause of action and shall continue in
full force and effect notwithstanding any judgment or order for a liquidated sum
or sums in respect of amounts due to the Agent or any Bank under this Credit
Agreement or under any such judgment or order. Any such shortfall shall be
deemed to constitute a loss suffered by the Agent and each such Bank, as the
case may be, and the Borrowers shall not be entitled to require any proof or
evidence of any actual loss. The covenant contained in this ss.13.4 shall
survive the payment in full of all of the other obligations of the Borrowers
under this Credit Agreement.
14. SETOFF.
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Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to any Borrower and any securities or other property of any Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, which are due, now existing or hereafter
arising, of any Borrower to such Bank. Each of the Banks agrees with each other
Bank that (a) if an amount to be set off is to be applied to Indebtedness of the
Borrowers to such Bank, other than Indebtedness evidenced by the Revolving
Credit Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, such amount shall be applied ratably to such other Indebtedness and
to the Indebtedness evidenced by all such Revolving Credit Notes held by such
Bank or constituting Reimbursement Obligations owed to such Bank, and (b) if
such Bank shall receive from any Borrower, whether by voluntary payment,
exercise of the right of setoff, counterclaim, cross action, enforcement of the
claim evidenced by the Revolving Credit Notes held by, or constituting
Reimbursement Obligations owed to, such Bank by proceedings against the Borrower
at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall retain
and apply to the payment of the Revolving Credit Note or Revolving Credit Notes
held by, or Reimbursement Obligations owed to, such Bank any amount in excess of
its ratable portion of the payments received by all of the Banks with respect to
the Revolving Credit Notes held by, and Reimbursement Obligations owed to, all
of the Banks, such Bank will make such disposition and arrangements with the
other Banks with respect to such excess, either by way of distribution, pro
tanto assignment of claims, subrogation or otherwise as shall result in each
Bank receiving in respect of the Revolving Credit Notes held by it or
Reimbursement obligations owed it, its proportionate payment as contemplated by
this Credit Agreement; provided that if all or any part of such excess payment
is thereafter recovered from such Bank, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such recovery, but without
interest.
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15. THE AGENT.
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15.1. Authorization.
--------------
(a) The Agent is authorized to take such action on behalf of
each of the Banks and to exercise all such powers as are hereunder and
under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably
incident thereto, provided that no duties or responsibilities not
expressly assumed herein or therein shall be implied to have been
assumed by the Agent.
(b) The relationship between the Agent and each of the Banks
is that of an independent contractor. The use of the term "Agent" is
for convenience only and is used to describe, as a form of convention,
the independent contractual relationship between the Agent and each of
the Banks. Nothing contained in this Credit Agreement nor the other
Loan Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to
exercise certain rights and perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Agent is nevertheless
a "representative" of the Banks, as that term is defined in Article 1
of the Uniform Commercial Code, for purposes of actions for the benefit
of the Banks and the Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions include the
designation of the Agent as "secured party", "mortgagee" or the like on
all financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment, perfection, priority
or enforcement of any security interests, mortgages or deeds of trust
in collateral security intended to secure the payment or performance of
any of the Obligations, all for the benefit of the Banks and the Agent.
15.2. Employees and Agents. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrowers.
15.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
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15.4. No Representations. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Revolving
Credit Notes, the Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute, collateral
security for the Revolving Credit Notes, or for the value of any such collateral
security or for the validity, enforceability or collectability of any such
amounts owing with respect to the Revolving Credit Notes, or for any recitals or
statements, warranties or representations made herein or in any of the other
Loan Documents or in any certificate or instrument hereafter furnished to it by
or on behalf of the Borrowers or any of their Subsidiaries, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the Revolving
Credit Notes or to inspect any of the properties, books or records of the
Borrowers or any of their Subsidiaries. The Agent shall not be bound to
ascertain whether any notice, consent, waiver or request delivered to it by the
Borrowers or any holder of any of the Revolving Credit Notes shall have been
duly authorized or is true, accurate and complete. The Agent has not made nor
does it now make any representations or warranties, express or implied, nor does
it assume any liability to the Banks, with respect to the credit worthiness or
financial conditions of the Borrowers or any of their Subsidiaries. Each Bank
acknowledges that it has, independently and without reliance upon the Agent or
any other Bank, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into this Credit
Agreement.
15.5. Payments.
---------
15.5.1. Payments to Agent. A payment by any Borrower to the
Agent hereunder or any of the other Loan Documents for the account of
any Bank shall constitute a payment to such Bank. The Agent agrees
promptly to distribute to each Bank such Bank's pro rata share of
payments received by the Agent for the account of the Banks except as
otherwise expressly provided herein or in any of the other Loan
Documents.
15.5.2. Distribution by Agent. If in the opinion of the Agent
the distribution of any amount received by it in such capacity
hereunder, under the Revolving Credit Notes or under any of the other
Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have
been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined
by such court.
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15.5.3. Delinquent Banks. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (a) to make available to the Agent its
pro rata share of any Revolving Credit Loan or to purchase any Letter
of Credit Participation or (b) to comply with the provisions of ss.14
with respect to making dispositions and arrangements with the other
Banks, where such Bank's share of any payment received, whether by
setoff or otherwise, is in excess of its pro rata share of such
payments due and payable to all of the Banks, in each case as, when and
to the full extent required by the provisions of this Credit Agreement,
shall be deemed delinquent (a "Delinquent Bank") and shall be deemed a
Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments
due to it from the Borrower, whether on account of outstanding
Revolving Credit Loans, Unpaid Reimbursement Obligations, interest,
fees or otherwise, to the remaining nondelinquent Banks for application
to, and reduction of, their respective pro rata shares of all
outstanding Revolving Credit Loans and Unpaid Reimbursement
Obligations. The Delinquent Bank hereby authorizes the Agent to
distribute such payments to the nondelinquent Banks in proportion to
their respective pro rata shares of all outstanding Revolving Credit
Loans and Unpaid Reimbursement Obligations. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and if, as a result
of application of the assigned payments to all outstanding Revolving
Credit Loans and Unpaid Reimbursement Obligations of the nondelinquent
Banks, the Banks' respective pro rata shares of all outstanding
Revolving Credit Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
15.6. Holders of Revolving Credit Notes. The Agent may deem and treat
the payee of any Revolving Credit Note or the purchaser of any Letter of Credit
Participation as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee or transferee.
15.7. Indemnity. The Banks ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrowers as
required by ss.16), and liabilities of every nature and character arising out of
or related to this Credit Agreement, the Revolving Credit Notes, or any of the
other Loan Documents or the transactions contemplated or evidenced hereby or
thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
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15.8. Agent as Bank. In its individual capacity, BKB shall have the
same obligations and the same rights, powers and privileges in respect to its
Commitment and the Revolving Credit Loans made by it, and as the holder of any
of the Revolving Credit Notes and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Agent.
15.9. Resignation. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Company. Upon any
such resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
15.10. Notification of Defaults and Events of Default. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this ss.15.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
16. EXPENSES.
---------
The Borrowers agree to pay (a) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of the
Banks (other than taxes based upon the Agent's or any Bank's net income) on or
with respect to the transactions contemplated by this Credit Agreement (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (c) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel or any local counsel to the Agent incurred in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, (d) the fees, expenses and disbursements of
the Agent incurred by the Agent in connection with the preparation,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, including all title insurance premiums and surveyor,
engineering and appraisal charges, (e) all reasonable out-of-pocket expenses
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(including without limitation reasonable attorneys' fees and costs, which
attorneys may be employees of any Bank or the Agent, and reasonable consulting,
accounting, appraisal, investment banking and similar professional fees and
charges) incurred by any Bank or the Agent in connection with (i) the
enforcement of or preservation of rights under any of the Loan Documents against
the Borrowers or any of their Subsidiaries or the administration thereof after
the occurrence of a Default or Event of Default and (ii) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way related
to any Bank's or the Agent's relationship with the Borrowers or any of their
Subsidiaries and (f) all reasonable fees, expenses and disbursements of any Bank
or the Agent incurred in connection with UCC searches. The covenants of this
ss.16 shall survive payment or satisfaction of all other Obligations.
17. INDEMNIFICATION.
----------------
Each of the Borrowers agrees to indemnify and hold harmless the Agent
and the Banks from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Credit
Agreement or any of the other Loan Documents or the transactions contemplated
hereby including, without limitation, (a) any actual or proposed use by the
Borrowers or any of their Subsidiaries of the proceeds of any of the Revolving
Credit Loans or Letters of Credit, (b) the Borrowers or any of their
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (c) with respect to the Borrowers and their Subsidiaries
and their respective properties and assets, the violation of any Environmental
Law, the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with respect to
any Hazardous Substances (including, but not limited to, claims with respect to
wrongful death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding, except any of the foregoing which
result solely from the gross negligence or willful misconduct of the indemnified
party. In litigation, or the preparation therefor, the Banks and the Agent shall
be entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrowers agree to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrowers
under this ss.17 are unenforceable for any reason, the Borrowers hereby agree to
make the maximum contribution to the payment in satisfaction of such obligations
which is permissible under applicable law. The covenants contained in this ss.17
shall survive payment or satisfaction in full of all other Obligations.
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18. SURVIVAL OF COVENANTS, ETC.
---------------------------
All covenants, agreements, representations and warranties made herein,
in the Revolving Credit Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of any of the Borrowers or
any of their Subsidiaries pursuant hereto shall be deemed to have been relied
upon by the Banks and the Agent, notwithstanding any investigation heretofore or
hereafter made by any of them, and shall survive the making by the Banks of any
of the Revolving Credit Loans and the issuance, extension or renewal of any
Letters of Credit, as herein contemplated, and shall continue in full force and
effect so long as any Letter of Credit or any amount due under this Credit
Agreement or the Revolving Credit Notes or any of the other Loan Documents
remains outstanding or any Bank has any obligation to make any Revolving Credit
Loans or the Agent has any obligation to issue, extend or renew any Letter of
Credit, and for such further time as may be otherwise expressly specified in
this Credit Agreement. All statements contained in any certificate or other
paper delivered to any Bank or the Agent at any time by or on behalf of the
Borrowers or any of their Subsidiaries pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and warranties
by the Borrowers or such Subsidiary hereunder.
19. ASSIGNMENT AND PARTICIPATION.
-----------------------------
19.1. Conditions to Assignment by Banks. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Revolving Credit Loans at the time owing to it, the Revolving Credit Notes
held by it and its participating interest in the risk relating to any Letters of
Credit); provided that (a) each of the Agent and, unless a Default or Event of
Default shall have occurred and be continuing, the Company shall have given its
prior written consent to such assignment, which consent, in the case of the
Company, will not be unreasonably withheld, (b) each such assignment shall be of
a constant, and not a varying, percentage of all the assigning Bank's rights and
obligations under this Credit Agreement, (c) each assignment shall be in an
amount that is a whole multiple of $2,500,000 and (d) the parties to such
assignment shall execute and deliver to the Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance, substantially in the
form of Exhibit E hereto (an "Assignment and Acceptance"), together with any
Revolving Credit Notes subject to such assignment. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (a) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder, and (b) the assigning Bank
shall, to the extent provided in such assignment and upon payment to the Agent
of the registration fee referred to in ss.19.3, be released from its obligations
under this Credit Agreement.
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19.2. Certain Representations and Warranties; Limitations; Covenants.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or
mortgage,
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by the Borrowers and their Subsidiaries or
any other Person primarily or secondarily liable in respect of any of
the Obligations of any of their obligations under this Credit Agreement
or any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in ss.7.4 and ss.8.4 and such other documents
and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Bank, the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
(e) such assignee represents and warrants that it is an
Eligible Assignee;
(f) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Credit Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
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(g) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements
with the assigning Bank satisfactory to such assignee with respect to
its pro rata share of Letter of Credit Fees in respect of outstanding
Letters of Credit.
19.3. Register. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to and
Letter of Credit Participations purchased by, the Banks from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection by the Company and the
Banks at any reasonable time and from time to time upon reasonable prior notice.
Upon each such recordation, the assigning Bank agrees to pay to the Agent a
registration fee in the sum of $5,000.
19.4. New Revolving Credit Notes. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together with each
Revolving Credit Note subject to such assignment, the Agent shall (a) record the
information contained therein in the Register, and (b) give prompt notice
thereof to the Borrowers and the Banks (other than the assigning Bank). Within
five (5) Business Days after receipt of such notice, the Borrowers, at their own
expense, shall execute and deliver to the Agent, in exchange for each
surrendered Revolving Credit Note, a new Revolving Credit Note to the order of
such Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Revolving Credit
Note to the order of the assigning Bank in an amount equal to the amount
retained by it hereunder. Such new Revolving Credit Notes shall provide that
they are replacements for the surrendered Revolving Credit Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Revolving Credit Notes, shall be dated the effective date of such in
Assignment and Acceptance and shall otherwise be substantially the form of the
assigned Revolving Credit Notes. Within five (5) days of issuance of any new
Revolving Credit Notes pursuant to this ss.19.4, the Borrowers shall deliver an
opinion of counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Revolving Credit Notes and the
legality, validity and binding effect thereof, in form and substance
satisfactory to the Banks. The surrendered Revolving Credit Notes shall be
cancelled and returned to the Borrowers.
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19.5. Participations. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) each such participation shall be in an amount of not less than
$1,000,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrowers and (c) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce the
principal of or the interest rate on any Revolving Credit Loans, extend the term
or increase the amount of the Commitment of such Bank as it relates to such
participant, reduce the amount of any commitment fees or Letter of Credit Fees
to which such participant is entitled or extend any regularly scheduled payment
date for principal or interest.
19.6. Disclosure. The Borrowers agree that in addition to disclosures
made in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement
only to assignees or participants and potential assignees or participants
hereunder; provided that such assignees or participants or potential assignees
or participants shall agree (a) to treat in confidence such information unless
such information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and (c)
not to make use of such information for purposes of transactions unrelated to
such contemplated assignment or participation.
19.7. Assignee or Participant Affiliated with the Borrower. If any
assignee Bank is an Affiliate of any Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to ss.13.1 or ss.13.2, and
the determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Revolving Credit Loans. If any Bank sells a
participating interest in any of the Revolving Credit Loans or Reimbursement
Obligations to a participant, and such participant is any Borrower or an
Affiliate of any Borrower, then such transferor Bank shall promptly notify the
Agent of the sale of such participation. A transferor Bank shall have no right
to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Agent pursuant to ss.13.1 or ss.13.2 to the extent that
such participation is beneficially owned by any Borrower or any Affiliate of any
Borrower, and the determination of the Majority Banks shall for all purposes of
this Agreement and the other Loan Documents be made without regard to the
interest of such transferor Bank in the Loans to the extent of such
participation.
<PAGE>
-79-
19.8. Miscellaneous Assignment Provisions. Any assigning Bank shall
retain its rights to be indemnified pursuant to ss.16 with respect to any claims
or actions arising prior to the date of such assignment. If any assignee Bank is
not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. If the Reference Bank
transfers all of its interest, rights and obligations under this Credit
Agreement, the Agent shall, in consultation with the Company and with the
consent of the Company and the Majority Banks, appoint another Bank to act as a
Reference Bank hereunder. Anything contained in this ss.19 to the contrary
notwithstanding, any Bank may at any time pledge all or any portion of its
interest and rights under this Credit Agreement (including all or any portion of
its Revolving Credit Notes) to any of the twelve Federal Reserve Banks organized
under ss.4 of the Federal Reserve Act, 12 U.S.C. ss.341. No such pledge or the
enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
19.9. Assignment by Borrower. The Borrowers shall not assign or
transfer any of their rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
20. NOTICES, ETC.
-------------
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Revolving Credit Notes or any Letter of Credit
Applications shall be in writing and shall be delivered in hand, mailed by
United States registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, facsimile or telex and
confirmed by delivery via courier or postal service, addressed as follows:
(a) if to the Borrowers, at 300 Baker Avenue, Concord,
Massachusetts 01742-2174, Attention: Walter A. Shephard, Treasurer, or
at such other address for notice as the Borrower shall last have
furnished in writing to the Person giving the notice;
(b) if to the Agent, at 100 Federal Street, Boston,
Massachusetts 02110, USA, Attention: Daniel G. Head, Jr., Vice
President, or such other address for notice as the Agent shall last
have furnished in writing to the Person giving the notice; and
<PAGE>
-80-
(c) if to any Bank, at such Bank's address set forth on
Schedule 1 hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(b) if sent by registered or certified first-class mail, postage prepaid, on the
third Business Day following the mailing thereof.
21. GOVERNING LAW.
--------------
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE
BORROWERS AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH
OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS SPECIFIED IN ss.20. EACH OF
THE BORROWERS HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
22. HEADINGS.
---------
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
23. COUNTERPARTS.
-------------
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
<PAGE>
-81-
24. ENTIRE AGREEMENT, ETC.
----------------------
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in ss.26.
25. WAIVER OF JURY TRIAL.
---------------------
Each of the Borrowers hereby waives its right to a jury trial with
respect to any action or claim arising out of any dispute in connection with
this Credit Agreement, the Revolving Credit Notes or any of the other Loan
Documents, any rights or obligations hereunder or thereunder or the performance
of which rights and obligations. Except as prohibited by law, each of the
Borrowers hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each Borrower (a) certifies that no representative, agent or
attorney of any Bank or the Agent has represented, expressly or otherwise, that
such Bank or the Agent would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that the Agent and the Banks have
been induced to enter into this Credit Agreement, the other Loan Documents to
which it is a party by, among other things, the waivers and certifications
contained herein.
26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
-----------------------------------
Any consent or approval required or permitted by this Credit Agreement
to be given by all of the Banks may be given, and any term of this Credit
Agreement, the other Loan Documents or any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by the
Borrower or any of its Subsidiaries of any terms of this Credit Agreement, the
other Loan Documents or such other instrument or the continuance of any Default
or Event of Default may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the written
consent of the Borrowers and the written consent of the Majority Banks.
Notwithstanding the foregoing, the rate of interest on the Revolving Credit
Notes (other than interest accruing pursuant to ss.5.9.2 following the effective
date of any waiver by the Majority Banks of the Default or Event of Default
relating thereto), the term of the Revolving Credit Notes, the amount of the
Commitments of the Banks, and the amount of commitment fee or Letter of Credit
Fees hereunder may not be changed without the written consent of the Borrowers
and the written consent of each Bank affected thereby; the definition of
Majority Banks may not be amended without the written consent of all of the
Banks; and the amount of the Agent's Fee or any Letter of Credit Fees payable
for the Agent's account and ss.15 may not be amended without the written consent
of the Agent. No waiver shall extend to or affect any obligation not expressly
<PAGE>
-82-
waived or impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Agent or any Bank in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon the Borrowers shall entitle the Borrowers to other or further notice
or demand in similar or other circumstances.
27. SEVERABILITY.
-------------
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
28. TRANSITIONAL ARRANGEMENTS.
--------------------------
28.1. Original Credit Agreement Superseded. This Credit Agreement shall
on the Closing Date amend and restate the Original Credit Agreement in its
entirety, except as provided in this ss.28. On the Closing Date, the rights and
obligations of the parties evidenced by the Original Credit Agreement shall be
evidenced by the Credit Agreement and the other Loan Documents, the "Revolving
Credit Loans" as defined in the Original Credit Agreement shall be converted to
Revolving Credit Loans as defined herein and all outstanding letters of credit
issued by the Agent for the account of the Company prior to the Closing Date
shall, for purposes of this Credit Agreement, be Letters of Credit for the
account of the Company.
28.2. Return and Cancellation of Notes. In exchange for the Revolving
Credit Notes delivered hereunder, on the Closing Date the Banks will return to
the Company, marked "Substituted" or "Cancelled" as the case may be, any notes
of the Company held by the Banks pursuant to the Original Credit Agreement.
28.3. Interest and Fees Under Superseded Agreement. All interest and
fees and expenses, if any, owing or accruing under or in respect of the Original
Credit Agreement through the Closing Date shall be calculated as of the Closing
Date (prorated in the case of any fractional periods), and shall be paid in
accordance with the method, and on the dates, specified in the Original Credit
Agreement, as if the Original Credit Agreement were still in effect. Commencing
on the Closing Date, the commitment fee shall be payable by the Company to the
Agent for the account of the Banks in accordance with ss.2.2 hereof.
<PAGE>
-83-
IN WITNESS WHEREOF, the undersigned have duly executed this Amended and
Restated Revolving Credit Agreement as a sealed instrument as of the date first
set forth above.
GENRAD, INC.
By: /s/ Walter A. Shephard
---------------------------------------
Name:
Title: Treasurer
GENRAD EUROPE LIMITED
By: /s/ Walter A. Shephard
---------------------------------------
Name:
Title: Treasurer
GENRAD LIMITED
By: /s/ Walter A. Shephard
---------------------------------------
Name:
Title: Treasurer
BANKBOSTON, N.A., individually
and as Agent
By: /s/ Daniel G. Head, Jr.
---------------------------------------
Daniel G. Head, Jr., Vice President
BANKBOSTON, N.A., acting through
its London branch, as Overdraft Bank
By: /s/ Priscilla Bushway
---------------------------------------
Title: Head, Multinational Banking
<PAGE>
SCHEDULE 1
Banks; Commitments; Commitment Percentages
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Commitment Percentage
Revolving Credit of Revolving Credit
Banks Loan Commitment Loans
- --------------------------------------------------------------------------------
<S> <C> <C>
BankBoston, N.A.
100 Federal Street
Boston, MA 02110 $25,000,000 100%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Schedule 7.3 Leases
1997
Ending Principal Balances for March
<TABLE>
<CAPTION>
Short Term Long Term
<S> <C> <C> <C>
Flash $115,359 $ 95,772 $ 211,131
Sensomatic $ 26,533 $ 6,941 $ 33,474
Express Test Services $ 62,246 $ 51,820 $ 114,066
Altatron $ 29,898 $ 0 $ 29,898
The SMT Centre Inc $129,570 $103,509 $ 233,079
ATI $ 81,346 $128,438 $ 209,784
Aspen Test $ 3,902 $ 0 $ 3,902
Design Circuit $ 50,479 $ 77,402 $ 127,881
Comtel, Inc. $112,428 $205,210 $ 317,638
Columbus Software $ 77,811 $ 98,118 $ 175,929
Excelsior Mfg. $ 55,694 $201,176 $ 256,870
Genesis Mfg. $166,816 $ 0 $ 166,816
Total $912,082 $968,386 $1,880,468
</TABLE>
<PAGE>
Schedule 7.7 Litigation
1. Re: Colosi Land Purchase
Issue: Revolves around GenRad buying land which was polluted in the early
1980's next to its Bolton facility.
Strategy: Since 1988, GenRad has paid the real estate tax on the property, but
the owner (Colosi) has wanted to sell the land to GenRad ever since
GenRad asked him to change their agreement, due to GenRad selling the
Bolton facility. The decision was made to pursue this avenue, and
therefore eliminate a potential future lawsuit. GenRad has offered
$575,000 to purchase the property. We have a handshake agreement in
place. The finalization of the paperwork is expected within the next
few weeks.
2. Re: Firmview Associates Limited/William Duncan
Issue: GenRad Limited is a defendant to a claim made by Firmview Associates
Limited ("Firmview"). The claim is for breach of a Contract for
Services between Firmview and GenRad Limited and claims damages for
wrongful termination of 150,523.21 pounds sterling, plus interest and
unspecified sums in respect of payment that would have been made
under GenRad Inc's incentive compensation plan and which may total an
additional 87,609.60 pounds sterling. If the foregoing claim is
successful Duncan may bring suit against GenRad regarding the
termination of the stock options.
Merits of Case: GenRad has a strong case, as the foundation of
Firmview/Duncan's claim is that GenRad wrongfully terminated
his employment. GenRad can show by clear evidence that the
termination was justified due to lack of performance and that
the options were not exercisable because the Contract for
Services was terminated for cause.
Note: GenRad has proposed a 50,000 (British Pounds) Settlement
which has been rejected by Duncan.
Strategy: GenRad Limited is defending the claim on the grounds that the
Contract for Services was terminated as a result of breach of the
Contract for Services by Firmview/Duncan.
3. Re: B. Brown
Issue: R. Brown has filed a sexual harassment case against GenRad. No
damages are specified in the claim.
Strategy: GenRad proceeded to gather facts about the claim and filed an answer
with the MCAD. This is somewhat difficult as a good number of the
people "with
<PAGE>
knowledge" are no longer with the Company. Our Counsel (Ms. Fabbo at
Skoler, Abbott and Presser) attended a Hearing with the MCAD on
4/1/96 and interviewed a number of GenRad (present and former)
individuals which were named by Brown as having known of these
incidents. GenRad will await a ruling from the MCAD.
<PAGE>
Schedule 7.10 Tax Status
None
<PAGE>
Schedule 7.14 Transactions with Affiliates
None.
<PAGE>
Schedule 7.17 Environmental Matters
A portion of the Borrower's Bolton premises was the subject of closure
activities associated with a former interim status Resource Conservation
Recovery Act treatment facility, as summarized in the attached letter from GZA
Geoenvironmental, Inc., the environmental engineering firm that conducted the
closure activities and has been monitoring post-closure activities (the "GZA
Letter").
The closure and post-closure activities described in the GZA Letter were
undertaken pursuant to a Consent Order entered into on September 29, 1989 by
and between the Borrower and the Massachusetts Department of Environmental
Protection. In addition, the Borrower entered into a Trust Fund Agreement
pursuant to 310 CMR 30.906 to guarantee thirty years of post-closure monitoring.
In connection with the matters described in the GZA Letter, the Borrower
entered into an agreement dated September 9, 1988 with an adjacent landowner,
Anthony L. Colosi (the "Colosi Agreement"), pursuant to which Mr. Colosi agreed
to indemnify, release and hold the Borrower harmless for losses, damages, costs
and expenses arising from the presence of any substance in, on or under Mr.
Colosi's property due to the Borrower's activities at its Bolton facility. In
exchange, the Borrower agreed to reimburse Mr. Colosi for real estate taxes
owed by him from 1985 until the date on which the groundwater under Mr.
Colosi's property achieves certain standards described in the Colosi Agreement.
In January of 1995, the Borrower sold its Bolton facility to Future
Electronics; however, it retained title to approximately 10 acres of the
contaminated property and continues today with its post-closure activities. The
Borrower recently began negotiating with Mr. Colosi to purchase the 20 acres of
his land that was contaminated.
<PAGE>
Schedule 7.18(a) Subsidiaries
Active
------
GenRad Holdings Limited (England)
GenRad Europe Limited
GenRad SA (France)
GenRad Limited
Mitron Corporation
Dormant
-------
GenRad Securities Corporation
GenRad Designs, Inc.
Cirrus Computer, Inc.
GenRad Limited (Canada)
GenRad GmbH (Germany)
GenRad BV.
<PAGE>
Schedule 7.18(b) Joint Ventures
None.
<PAGE>
Schedule 9.1 Indebtedness
GenRad, Inc.
Breakout of Debt
For Period Ending: 3/29/97
<TABLE>
<CAPTION>
Concord TTA Mitron Total
--------- ------- ------ ----------
<S> <C> <C> <C> <C>
Current
- ----------------------------
Current Debt--TTA acquisition 500,000 500,000
Other Debt -- -- 2,748 2,748
--------- ------- ----- ----------
500,000 -- 2,748 502,748
========= ======= ===== =========
LT DEBT
- ----------------------------
Long-Term--TTA acquisition 1,000,000 1,000,000
Other Debt -- 124,989 -- 124,989
--------- ------- ----- ----------
1,000,000 124,989 -- 1,124,989
========= ======= ===== ==========
Grand total current and LT 1,500,000 124,989 2,748 1,627,737
========= ======= ===== ==========
</TABLE>
<PAGE>
Schedule 9.2 Liens
See UCC-11's on file with Bank.
<PAGE>
Schedule 9.3 Investments
As of 3/29/97
<TABLE>
<CAPTION>
<S> <C>
Escrow Accounts
Fleet Bank--Westford $2,357,322
State Street--Tufts Health $ 75,000
Boston Safe & Deposit--Bolton $ 300,000
----------
$2,732,322
Cash Investments
BankBoston--Loan Participation $1,900,000
Total $4,632,322
==========
</TABLE>
EXHIBIT 11
GENRAD, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- ------------------------
June 28, June 29, June 28, June 29,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Primary:
- --------
Weighted average number of
shares outstanding 26,697,000 21,901,000 26,414,000 21,681,000
Shares deemed outstanding from the
assumed exercise of stock options 1,480,000 2,080,000 1,683,000 1,889,000
---------- ---------- ----------- -----------
Total: 28,177,000 23,981,000 28,097,000 23,570,000
========== ========== =========== ===========
Earnings applicable to common shares $7,921,000 $5,711,000 $19,638,000 $12,660,000
========== ========== =========== ===========
Earnings per share of common stock $0.28 $0.24 $0.70 $0.54
========== ========== =========== ===========
Fully Diluted:
- --------------
Weighted average number of
shares outstanding 26,697,000 21,901,000 26,414,000 21,681,000
Shares deemed outstanding from the
assumed exercise of stock options 2,044,000 2,259,000 1,990,000 2,259,000
---------- ---------- ----------- -----------
Total: 28,741,000 24,160,000 28,404,000 23,940,000
========== ========== =========== ===========
Earnings applicable to common shares $7,921,000 $5,711,000 $19,638,000 $12,660,000
========== ========== =========== ===========
Earnings per share of common stock $0.28 $0.24 $0.69 $0.53
========== ========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF JUNE 28, 1997 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE PERIOD ENDED JUNE 28, 1997 FOR GENRAD, INC. AND SUBSIDIARIES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000040972
<NAME> 10-Q
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1997
<PERIOD-END> JUN-28-1997
<EXCHANGE-RATE> 1
<CASH> 14,540
<SECURITIES> 0
<RECEIVABLES> 61,556
<ALLOWANCES> 969
<INVENTORY> 20,608
<CURRENT-ASSETS> 101,772
<PP&E> 89,601
<DEPRECIATION> 60,445
<TOTAL-ASSETS> 148,393
<CURRENT-LIABILITIES> 30,847
<BONDS> 0
0
0
<COMMON> 26,814
<OTHER-SE> 60,038
<TOTAL-LIABILITY-AND-EQUITY> 148,393
<SALES> 50,213
<TOTAL-REVENUES> 61,050
<CGS> 24,920
<TOTAL-COSTS> 31,513
<OTHER-EXPENSES> 20,619
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 191
<INCOME-PRETAX> 8,727
<INCOME-TAX> 806
<INCOME-CONTINUING> 7,921
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,921
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
