<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended November 27, 1994.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from to .
------------ -------------
Commission File Number 1-8770
M E A S U R E X C O R P O R A T I O N
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of 94-1658697
incorporation or Organization) (I.R.S. Employer Identification No.)
One Results Way, Cupertino, California 95014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 255-1500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- ----------------------------------------
Common Stock, $0.01 par value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of voting stocks held by
non-affiliates as of January 31, 1995 $355,356,116
Number of shares of common stock outstanding as
of January 31, 1995 16,210,205
--------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended
November 27, 1994, are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement for registrant's 1995 Annual Meeting of
Shareholders to be held April 18, 1995, are incorporated into Part III.
This Report on Form 10-K includes 197 pages with the Index to Exhibits
---
located on pages 21 to 22.
-- --
<PAGE>
MEASUREX CORPORATION
INDEX TO
ANNUAL REPORT ON FORM 10-K
FOR YEAR ENDED NOVEMBER 27, 1994
<TABLE>
<CAPTION>
Page
-----
<C> <S> <C>
PART I
Item 1 Business 3
Item 2 Properties 10
Item 3 Legal Proceedings 10
Item 4 Submission of Matters to a Vote of Security Holders 10
Executive Officers of the Registrant 11-12
PART II
Item 5 Market for the Registrant's Common Equity and Related
Shareholder Matters 13
Item 6 Selected Financial Data 13
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 8 Financial Statements and Supplementary Financial Data 13
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 13
PART III
Item 10 Directors and Executive Officers of the Registrant 14
Item 11 Executive Compensation 14
Item 12 Security Ownership of Certain Beneficial Owners
and Management 14
Item 13 Certain Relationships and Related Transactions 14
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports
on Form 8-K 15
Signatures 16
</TABLE>
2
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PART I
ITEM 1. BUSINESS
GENERAL
Measurex Corporation (the "Company") provides its customers computer-
integrated manufacturing through design, production, marketing and servicing of
sensor-based information and control systems. The Company's broad, integrated
product line ensures economic results for customers by increasing productivity,
reducing raw material usage and energy consumption, and improving product
quality and uniformity.
Measurex's primary marketplace is within the manufacturing industries that
produce products by continuous or batch processes. The principal industries
served by the Company are: pulp and paper, plastics, metals, rubber and
chemicals.
Measurex supports its systems with a worldwide sales, support and service
organization totaling approximately 1,280 employees. Service technicians work
directly with customers, in their plants and mills, providing an important and
stable source of revenue. The service teams provide quality installations,
training and continuing service support to ensure results for the Company's
customers.
Measurex was originally incorporated in California in 1968. The Company's
state of incorporation was changed from California to Delaware in 1984.
Measurex's principal executive offices are located at One Results Way,
Cupertino, California, 95014-5991; its telephone number is (408) 255-1500.
Unless the context otherwise indicates, the terms "Measurex" and "the Company"
include Measurex Corporation, the predecessor California corporation, and its
subsidiaries.
PRODUCT INFORMATION
The following table shows the annual shipment revenues (in millions of
dollars) and the percentages of annual shipment revenues during the last three
fiscal years, attributable to the delivery of systems used in the pulp and paper
and industrial systems industries. "Industrial Systems" includes systems for
plastics, metals, rubber, and other products.
<TABLE>
<CAPTION>
Fiscal Year
---------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Systems used in:
Pulp and Paper $133.0 85% $128.6 84% $116.7 79%
Industrial Systems 23.3 15% 24.2 16% 31.7 21%
------ --- ------ --- ------ ---
$156.3 100% $152.8 100% $148.4 100%
------ --- ------ --- ------ ---
</TABLE>
For information regarding sales by geographic location see the section
"Business Segments" under Notes to Consolidated Financial Statements in the
Company's 1994 Annual Report to Shareholders.
MXOPEN
The MXOpen product line was introduced at the Technical Association of the
Pulp and Paper Institute (TAPPI) trade show in Atlanta, Georgia in March 1992.
MXOpen is an integrated information and control system that uses industry-
standard computer and communication protocols. The product line was developed
over a three-year period and represents a substantial investment in research and
development, manufacturing and marketing expenses.
3
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In January 1993, at the Canadian Pulp and Paper Association (CPPA) trade
show in Montreal, Quebec, Canada, the Company launched the MXOpen
PrecisionPLUS(TM) intelligent measurement system. PrecisionPLUS features new
distributed sensor intelligence, advanced sensor technology and faster scanning
capabilities.
In February 1994, at the Technical Association of the Pulp and Paper
Industry (TAPPI) Conference, Measurex announced further enhancements to its
MXOpen(TM) product line.
The MXOpen Integrated Control System provides end-users with a combination
of integration and open architecture. MXOpen features include:
. Modular systems with capability for total machine optimization;
. Open systems architecture based on international industry standards for
flexibility and expandability; and
. Integrated information and control with real-time millwide visibility for
management decision-making.
The MXOpen millwide product line includes:
. Intelligent Sensors and Scanners
. Distributed Control System
. Profile Actuation
. Web Inspection
. Millwide Information
. Integrated Machine Monitoring
. Complete Integrated Control System
PROPRIETARY SENSORS
Measurex provides sensor technology for the process industries, currently
offering more than 70 sensors. Its sensors include those that monitor the basis
weight, moisture, caliper, ash content, coating, smoothness, gloss, formation,
opacity, strength and color of processed paper, as well as the physical
properties of other processed products, such as the wire spacing faults on steel
belted tires. These sensors use a variety of proprietary applications involving
technologies which include microwave, infrared, visible light, ultraviolet,
beta, X-ray and gamma radiation.
CROSS-DIRECTION CONTROLS
Measurex is a leader in the complex technology of cross-direction (CD)
profile control. The center of this business is in the Measurex Devron
Division, based in Vancouver, British Columbia, Canada. CD control, as used for
example in the pulp and paper industry, allows precise control of paper
characteristics in small segments across the entire width of the paper sheet.
Cross-direction controls are complementary to the average profile taken along
the paper's direction of travel, referred to as machine direction. The combined
control strategy significantly enhances a customer's ability to achieve optimum
quality levels, thus reducing raw material and energy usage, lowering scrappage
rates and enhancing the customer's competitive position.
Measurex has a variety of CD control products including AutoSlice(TM),
ThermaTrol(TM), AquaTrol(R), Devronizer(TM), InfraTrol(TM), CalTrol(TM),
Calcoil(TM), Calendizer(TM), ProCoat(TM), and GlossTrol(TM) actuators.
4
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CD controls can be ordered with new systems or can be integrated into
existing installed systems. The CDOpen(TM) System allows Measurex's cross-
direction control products to be integrated with non-Measurex measurement
systems.
MILLWIDE INFORMATION
Measurex's Management Systems Division (MSD), provides plant level computing
expertise for production processes. The Division's OptiVISION(TM) Full Spectrum
Production and Quality Management System (PQMS) gives Measurex the ability to
offer a system that manages processes from long-term planning and order entry
through scheduling, product tracking, shipping and invoicing the product. The
OptiVISION system provides users with a modular design that reduces development
and installation time.
INTEGRATED MACHINE MONITORING
The Integrated Monitoring System (IMS), marketed as a part of the MXOpen
product line, consists of digital systems for on-line process and machine
monitoring and analysis of the papermaking process and production machinery.
IMS products provide process and machine-condition diagnosis and trending,
giving papermakers tools to address maintenance problems before failure.
WEB INSPECTION SYSTEMS
The MXOpen web inspection system analyzes the moving paper web by measuring
the intensity variations of light transmitted through the sheet or reflected
from the sheet. The system uses Charge Coupled Device (CCD) camera technology
to continuously detect - on line - visual defects in paper or other web-produced
material. Like other MXOpen Systems, this web-inspection product helps
customers to produce superior quality products at lower cost, adding
significantly to the basic value of an Integrated Control System.
INDUSTRIAL SYSTEMS
The MXOpen Measurement Control System (MCS) was introduced to industrial
system customers in October 1992. For plastics, non-wovens and makers of coated
materials such as flooring and building products, the MCS is an affordable
solution for process improvement - all in a competitive, technologically
advanced control system.
In September 1994, the Company restructured the Industrial Systems Group
(ISD) as an independent division. The formation of the ISD consolidates sales,
engineering, marketing and management into one cross-functional unit, focused on
opportunities in plastics, nonwovens, metals, rubber and other industries.
In October 1994, Measurex introduced its new MetalsMaster(TM) system to the
aluminum industry at the Alumitech trade show in Atlanta. The system includes
alloy-insensitive PrecisionPLUS(TM) thickness sensors in addition to flatness
and shape control.
In December, 1994 the Company announced that it had acquired the Webart
Division of The Ohmart Corporation, and its family of on-line measurement and
control systems, including the ConceptOne(TM) gauging system. The Webart family
of products will expand Measurex's existing family of measurement and control
offerings for its Industrial Systems Division. Ohmart, headquartered in
Cincinnati, Ohio, supplies web measurement and control systems to the plastics,
extrusion, nonwovens, and coating industries, as well as level, density, and
weight measurements for the general process industries.
5
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STRATEGIC ALLIANCES
BELOIT CORPORATION
In 1990, Measurex and Beloit Corporation, agreed to expand and strengthen
their 1987 strategic alliance. This cooperative agreement includes provisions
for integrated marketing and sales of all Measurex paper industry products with
Beloit's full line of pulp and paper machinery. Simultaneously executed was a
seven-year "standstill" agreement between Measurex and Harnischfeger Industries,
Inc., Beloit's parent company, following which Harnischfeger purchased 20
percent of Measurex's stock on the open market, the maximum allowed under the
agreement. Subsequent to the Company's 1994 fiscal year-end, in December 1994
the Company bought back approximately two million shares of its stock held by
Harnischfeger Industries, Inc., reducing Harnischefeger's holdings to
approximately ten percent of common stock outstanding. For additional
information, see the "Subsequent Event" Note to Consolidated Financial
Statements in the Company's 1994 Annual Report to Shareholders.
MITSUBISHI HEAVY INDUSTRIES, LTD.
In 1988, Measurex and Mitsubishi Heavy Industries, Ltd. (MHI) entered into an
agreement whereby the two companies offered certain products and services to the
pulp and papermaking industry of Asia. In 1991, MHI became a signatory to the
Measurex/Beloit strategic alliance, and a full participant in that agreement.
All Measurex products for the pulp and paper industry are now made available to
MHI on the same basis as they are made to Beloit.
SIEMENS AG
In June 1993, Siemens AG, pulp and paper division, selected Measurex as its
Original Equipment Manufacturer (OEM) for certain MXOpen products. Siemens has
integrated these products with other Siemens products for their total turnkey
pulp and paper automation projects.
SALES AND SERVICE
Measurex offers its systems, related products and services principally
through its own worldwide marketing and service organization. This organization
offers customers a broad range of on-site and on-call services including 24-
hours-a-day, 365-days-a-year service contracts.
To support the Company's product line, Measurex maintains 44 regional sales
offices and service centers which are located in 30 countries throughout the
world. The Company has sold over 4,600 systems in 54 countries, primarily
located in North America, Latin America, Europe and the Pacific Rim.
The sales and service organization consists of regional and area managers
who are responsible for selling Measurex's products and supervising service at
customer sites. Under their supervision are software control and application
engineers who assist customers in making the most efficient use of their
systems, technical service engineers and supervisory personnel who are
responsible for the installation, start-up and routine preventive maintenance of
the systems, as well as any emergency services that may be required.
Customers may acquire Measurex systems either by direct purchase or through
Measurex lease plans. For additional information, see the Notes to Consolidated
Financial Statements in the Company's 1994 Annual Report to Shareholders.
RESEARCH AND PRODUCT DEVELOPMENT
6
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Measurex's systems are the result of the integration of a number of complex
technologies including electronics, physics, mechanical design and software.
Central to the Company's strategic goals is a commitment to research and
development. The Company strongly believes the continued investment in new
product development is key to its long-term success.
Product development costs were $22.7 million in 1994, 9% of total revenues
and 15% of system revenue. Product development costs were $22.9 million in 1993
and $25.2 million in 1992. Of this total, Measurex capitalized $2.7 million,
$1.7 million, and $4.6 million of software development costs in fiscal 1994,
1993 and 1992, respectively. Measurex amortized $4.2 million, $3.4 million and
$1.7 million of capitalized software to systems costs in 1994, 1993 and 1992,
respectively.
BACKLOG
System backlog at November 27, 1994, was $92 million, one percent higher
than the backlog of $91 million at the end of fiscal 1993. Approximately 90% of
the $92 million year-end 1994 backlog is scheduled to be shipped during fiscal
1995.
PATENTS
Measurex follows a policy of filing appropriate patent applications on
inventions it considers significant. As of November 27, 1994, the Company had
97 United States patents and 167 foreign patents in effect. Although important
to the business, Measurex believes that the invalidity or expiration of any
single such patent would not have a material adverse effect on its operations.
SUPPLY OF MATERIALS AND PURCHASED COMPONENTS
Measurex produces most of the software, sensors, scanners, digital logic
circuits, peripheral devices and various terminals used in its systems. Many
components, such as integrated circuits, video monitors, printers, disks, and
microcomputers are purchased from other manufacturers and integrated into the
systems.
Measurex currently purchases certain components from single sources of
supply. In each instance, components performing similar functions are available
from alternative sources, except for radioactive source material which is
available from only two suppliers. Use of these alternative components might
require a change in the design of certain portions of the system which could
result in production delays, additional expenses and contract cancellations
while changing vendors. The Company has contracts with certain vendors which
entitle, but do not require, Measurex to purchase specific quantities of
components.
MANUFACTURING
Systems are manufactured at Measurex's facilities in Cupertino, California;
Waterford, Republic of Ireland; Vancouver, British Columbia, Canada; Cincinnati,
Ohio; and Kuopio, Finland. Certain subassemblies are manufactured in Cupertino
and shipped to other locations for incorporation in the final systems. The
systems are generally installed at the customer's site under the supervision of
Measurex personnel.
7
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COMPETITION
The market for process measurement and control is highly competitive and is
subject to technological change in both hardware and software development. The
principal competitive factors in this market are product quality and
reliability, product features, customer support, corporate reputation and
relative price/performance. Measurex's competitive strategy is to provide
customers with greater economic results than available from competitors by
focusing on quality and the unique performance characteristics of the customers'
systems. However, any inability of the Company to match or exceed the
price/performance or other features of the systems offered by its competitors
could adversely affect future operating results.
The Company's principal competition is from distributed control systems
suppliers and packaged system suppliers, as well as factory automation system
suppliers, many of which have substantially greater resources than the Company.
In the supervisory measurement and process control business area, competition
includes Asea Brown Boveri Process Automation Inc. (ABB); Lippke, a wholly
owned subsidiary of Honeywell; the Valmet Automation Group, a division of Valmet
Oy; and Yokogawa-YEW in Japan. The distributed control system business area
competition includes Honeywell, Fisher, Foxboro (a subsidiary of Siebe, Inc.),
Siemens, and many other companies. In the web-inspection products area, the
Company faces competition from ABB and other smaller companies. Competition for
production management and process analysis and quality management is very
fragmented.
EMPLOYEES
As of November 27, 1994, Measurex had 2,090 full-time employees, of whom
approximately 1,050 were located outside of the United States.
Measurex has various employee benefit plans, including a stock purchase plan
for all United States and Canadian employees, stock option plans for key
employees, a Savings and Deferred Profit Sharing Plan, management incentive
programs, pension plans in certain foreign countries, and health, dental, life
and disability plans.
NUCLEAR REGULATORY LICENSES
In the United States, Measurex and its customers are subject to licensing
and regulation by the United States Nuclear Regulatory Commission (NRC) under
the Atomic Energy Act of 1954 (the Act) with respect of those parts of its
products and systems which utilize nuclear radiation. The NRC has transferred a
portion of its licensing and regulatory functions to several state governments,
including California, pursuant to Section 274 of the Act. Measurex holds all
such licenses necessary for its current operations. Licenses are renewed
periodically as required.
Measurex also holds all necessary foreign licenses regarding nuclear
radiation for the applicable countries in which it operates.
United States customers possessing Measurex systems containing radioactive
sources hold the radioactive material under a General or Specific License issued
by their state or federal regulatory authority. Similarly, foreign customers
hold licenses issued by their local authorities for radioactive material in
Measurex systems.
LICENSES TO EXPORT FROM THE UNITED STATES
Measurex is subject to licensing and regulation by the United States
Department of Commerce under the Export Administration Act of 1969, as amended
and extended, with respect to Measurex systems or parts thereof, exported from
the United States or by any of its subsidiaries.
8
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INDUSTRY SEGMENTS
Measurex operates within the computer-integrated control and information
systems industry. All necessary disclosures regarding revenues, earnings from
operations and identifiable assets are included in "Business Segments" under
Notes to Consolidated Financial Statements in the Company's 1994 Annual Report
to Shareholders.
GEOGRAPHIC SEGMENTS
For information regarding geographic operations in 1994, 1993, and 1992, see
"Business Segments" included in the Notes to Consolidated Financial Statements
in the Company's 1994 Annual Report to Shareholders.
Measurex is subject to the normal risks of foreign currency fluctuations;
however, to the extent practical, Measurex attempts to minimize the exposure
from losses associated with such risks with foreign exchange contracts and other
hedging activities. See "Summary of Significant Accounting Policies (Foreign
Currency Translation and Foreign Exchange Contracts)" and "Interest Income and
Other" in the Notes to Consolidated Financial Statements in the Company's 1994
Annual Report to Shareholders.
9
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ITEM 2. PROPERTIES
Located in Cupertino, California, the Company's headquarters, offices,
research and manufacturing plant total 360,000 square feet. The offices,
research and manufacturing operations of Measurex Management Systems Division
are located in a 43,000 square-foot facility in Cincinnati, Ohio. The U.S.
Sales and Service Headquarters are located in a 32,000 square-foot facility in
Atlanta, Georgia. All of these facilities are owned by the Company. Measurex
leases office space for sales and service operations throughout the United
States and various other countries.
The Measurex Devron Division owns two facilities for its offices, research
and manufacturing operations, totaling 94,000 square feet in Vancouver, British
Columbia, Canada. In Waterford, Ireland, the Company owns a 60,000 square foot
manufacturing facility and leases a further 20,000 square feet. Measurex Roibox
Oy leases two facilities totaling approximately 16,000 square feet in Kuopio,
Finland for manufacturing, engineering, and sales support.
During 1994, the Company was productively utilizing the space in its
facilities, while disposing of space determined to be under-utilized. The
Company believes current facilities provide adequate production capacity to meet
the Company's planned business activities.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or any
of its subsidiaries are a party or of which any of their property is the
subject, other than ordinary routine litigation incidental to the business.
Management believes that the final outcome of such matters will not have a
material adverse effect on the Company's consolidated financial position and
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has not submitted any matters to a vote of security holders
during the fourth quarter of the fiscal year ended November 27, 1994.
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EXECUTIVE OFFICERS OF REGISTRANT
The following table shows the executive officers of Measurex Corporation as
of January 31, 1995, (ages are as of November 27, 1994), their positions with
Measurex, their business experience for the last five years, and the number of
years during which they have been executive officers of the Company.
<TABLE>
<CAPTION>
Number of
Years as
Executive
Name Age Title and Business Experience Officer
- ----------------- --- ------------------------------------------------------- -----------
<C> <C> <S> <C>
David A. Bossen 67 Chairman and Chief Executive Officer and Director since
December 1993, President and Chief Executive Officer
and Director 1968 to December 1993. 27
John C. Gingerich 58 President and Chief Operating Officer and Director
since December 1993; Executive Vice President,
Worldwide Sales and Service and President, Measurex
International Corporation 1992 to December 1993;
President, Americas and Pacific 1991 to 1992 and
Executive Vice President 1990-1991; Executive Vice
President-U.S. Operations 1989 to 1990; Executive Vice
President-Operations 1987 to 1989; President, Industrial
Systems Group 1985 to 1987; Executive Vice President
1982 to 1985; Senior Vice President-U.S. Sales and
Service 1981 to 1982; Vice President-Sales and Service
1980 to 1981. 14
Glenn R. Wienkoop 47 Executive Vice President and Division President,
Industrial Systems Division since September 1994;
Executive Vice President, Engineering and Marketing 1991
to September 1994; President-Measurex Automation
Systems 1985 to 1991; Vice President U.S. Sales and
Service 1982 to 1984, Vice President, Pulp, Paper and
Industrial Systems 1980 to 1982. 14
Robert McAdams, Jr. 55 Senior Vice President and Chief Financial Officer since
September 1994; Senior Vice President, Operations and
Information Services 1992 to September 1994; Senior Vice
President-Finance and Administration and Chief Financial
Officer 1985 to 1992; Senior Vice President, Finance
1983 to 1985. 11
</TABLE>
11
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<TABLE>
<CAPTION>
Number of
Years as
Executive
Name Age Title and Business Experience Officer
- ---------------------- --- ----------------------------------------------------------- ----------
<C> <C> <S> <C>
William J. Weyand 50 Senior Vice President, Worldwide Sales and Service since
December 1994; President, North and South America February
to December 1994; Senior Vice President, U.S. and Canada
Sales and Service 1993 to February 1994; Senior Vice President
and Division Manager, U.S. Sales and Service 1991 to 1993;
Senior Vice President U.S. Sales and Service, Pulp and Paper
Group 1989 to 1991. 0
Lance M. Lissner 44 Vice President, Corporate Planning and Development since
1991; Vice President, Engineering and Marketing, Industry
Groups 1989 to 1991; Vice President and General
Manager, Pacific Division 1981 to 1989. 5
John G. Preston 51 Vice President, General Manager, Integrated Control Systems
Business Unit since September 1994; President - Measurex Europe
1992 to September 1994; President and Chief Executive Officer,
Devron Division 1991 to 1992; President, Measurex Canada 1990
to 1991; Vice President, Engineering and Marketing; Industrial
Systems Group 1989 to 1990. 1
Charles Van Orden 40 General Counsel and Secretary since 1988. 6
</TABLE>
Officers are elected annually but may be removed at any time at the
discretion of the Board of Directors. There are no family relationships among
any of the above officers.
12
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The information under the heading "Market for the Registrant's Common Stock
and Related Security Holder Matters," which appears on page 31 of Registrant's
1994 Annual Report to Shareholders, is incorporated by reference in this Annual
Report on Form 10-K.
The Company paid quarterly dividends of $0.11 per quarter in 1994 and 1993.
While the Company intends to pay regular quarterly dividends, the payment of any
future dividends is within the discretion of the Board of Directors of the
Company.
ITEM 6. SELECTED FINANCIAL DATA
The information under the heading "Selected Financial Data," which appears
on page 32 of Registrant's 1994 Annual Report to Shareholders, is incorporated
by reference in this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the heading "Management's Discussion and Analysis"
which appears on pages 16 to 18 of Registrant's 1994 Annual Report to
Shareholders, is incorporated by reference in this Annual Report on Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information under the heading "Financial Statements and Supplemental
Financial Data," which appears on pages 19 to 31 of Registrant's 1994 Annual
Report to Shareholders, is incorporated by reference in this Annual Report on
Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company appears in Registrant's
definitive Proxy Statement for the annual meeting of shareholders to be held
April 18, 1995, under the caption "Election of Directors" and is incorporated
herein by reference. Information concerning the executive officers of the
Company appears at the end of Part I, pages 11 and 12, of this Annual Report on
Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference to Registrant's definitive Proxy Statement for its
annual meeting of shareholders to be held April 18, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to Registrant's definitive Proxy Statement for its
annual meeting of shareholders to be held April 18, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to Registrant's definitive Proxy Statement for its
annual meeting of shareholders to be held April 18, 1995.
14
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a.) 1. The consolidated financial statements of Measurex Corporation
included herein are set forth in the Index to Financial Statements
and Schedules submitted as a separate section of this Report.
2. The Financial Statement Schedules are contained in the
accompanying Index to Financial Statements and Schedules submitted
as a separate section of this Report.
3. Exhibits
See Index to Exhibits, page 21 and 22
(b.) Reports on Form 8-K.
No Report on Form 8-K was filed in the fourth quarter of fiscal
year 1994. Subsequent to the Company's fiscal year-end, the Company
filed a Report on Form 8-K dated December 29, 1994 in which the
Company reported that it had bought back from Harnischfeger
Industries, Inc. 2,026,900 shares of outstanding Measurex Common
Stock, par value $.01 per share, at a purchase price of $21.50 per
share on December 29, 1994.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MEASUREX CORPORATION
(Registrant)
Date February 24, 1995 By /S/ DAVID A. BOSSEN
------------------- --------------------------------
David A. Bossen
Chairman
Know all persons by these presents, that each person whose signature
appears below constitutes and appoints David A. Bossen and Robert McAdams Jr.,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Report on Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/S/ DAVID A. BOSSEN Chairman, Chief Executive February 24, 1995
- ---------------------------- Officer and Director
(David A. Bossen) (Principal Executive Officer)
/S/ JOHN C. GINGERICH President, Chief Operating February 24, 1995
- ---------------------------- Officer and Director
(John C. Gingerich)
/S/ ROBERT MCADAMS JR. Senior Vice President February 24, 1995
- ---------------------------- (Principal Financial and
(Robert McAdams Jr.) Accounting Officer)
/S/ PAUL BANCROFT, III Director February 24, 1995
- ----------------------------
(Paul Bancroft, III)
/S/ DWIGHT C. BAUM Director February 24, 1995
- ----------------------------
(Dwight C. Baum)
/S/ JEFFERY T. GRADE Director February 24, 1995
- ----------------------------
(Jeffery T. Grade)
/S/ ORION L. HOCH Director February 24, 1995
- ----------------------------
(Orion L. Hoch)
/S/ JOHN W. LARSON Director February 24, 1995
- ----------------------------
(John W. Larson)
/S/ J.W. MCKITTRICK Director February 24, 1995
- ----------------------------
(J.W. McKittrick)
/S/ GRAHAM TYSON Director February 24, 1995
- ----------------------------
(Graham Tyson)
</TABLE>
16
<PAGE>
MEASUREX CORPORATION
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Fiscal Year 1994
<TABLE>
<CAPTION>
Exhibit 13
Page
----
<S> <C>
(1) Consolidated Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations 1-5
Consolidated Statements of Income
Three years ended November 27, 1994 6
Consolidated Balance Sheets
November 27, 1994 and November 28, 1993 7
Consolidated Statements of Shareholders' Equity
Three years ended November 27, 1994 8
Consolidated Statements of Cash Flows
Three years ended November 27, 1994 9
Notes to Consolidated Financial Statements 10-21
Report of Independent Accountants 22
Supplemental Financial Data 23
Selected Financial Data 24
</TABLE>
With the exception of the aforementioned information, the 1994 Annual Report
to Shareholders is not to be deemed filed as part of this report unless
otherwise noted.
<TABLE>
<CAPTION>
Form 10-K
Page
----
<S> <C>
(2) Financial Statement Schedules for fiscal years
1994, 1993 and 1992
Report of Independent Accountants on Financial Statement Schedules 18
VIII Valuation and Qualifying Accounts 19
X Supplementary Income Statement Information 20
</TABLE>
Other schedules have not been filed because the conditions requiring the
filing do not exist or the required information is given in the financial
statements or notes thereto.
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders
Measurex Corporation
Our report on the consolidated financial statements of Measurex Corporation and
Subsidiaries as of November 27, 1994 and November 28, 1993 and for each of the
three fiscal years in the period ended November 27, 1994, has been incorporated
by reference in this Form 10-K from page 30 of Measurex Corporation's 1994
Annual Report to Shareholders. In connection with our audits of such financial
statements, we have also audited the related financial statement schedules
listed in the index on page 17 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/S/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
San Jose, California
December 14, 1994, except for the note titled "subsequent events", as to which
the date is February 10, 1995.
18
<PAGE>
SCHEDULE VIII
MEASUREX CORPORATION
VALUATION AND QUALIFYING ACCOUNTS (1)
Fiscal years 1994, 1993 and 1992
(Amounts in thousands)
<TABLE>
<CAPTION>
Balance at Additions Write-offs Balance
Beginning Charged to and at End
Description of Year Expenses Deductions(2) Other(5) of Year
- --------------------- ---------- ---------- ------------- -------- -------
<S> <C> <C> <C> <C> <C>
1994
- ---------------------
Allowance for
noncollection
and system returns $7,147 $1,659 $ (164)(3) -- $8,642(6)
====== ====== ======= ======
Inventory reserves $8,896 $1,343 $(3,660)(4) $(3,579) $3,000
====== ====== ======= ======= ======
1993
- ---------------------
Allowance for
noncollection
and system returns $7,250 $2,051 $(2,154)(3) -- $7,147(6)
====== ====== ======= ======
Inventory reserves $6,999 $3,473 $(1,576)(4) -- $8,896
====== ====== ======= ======
1992
- ---------------------
Allowance for
noncollection
and system returns $4,952 $4,649 $(2,351)(3) -- $7,250(6)
====== ====== ======= ======
Inventory reserves $6,795 $2,954 $(2,750)(4) -- $6,999
====== ====== ======= ======
</TABLE>
NOTES:
(1) See the Notes to Consolidated Financial Statements.
(2) Represents write-offs and deductions.
(3) Deductions for returns of systems or parts of systems and for write-off of
noncollectible amounts.
(4) Deductions for write-offs of obsolete and scrapped parts and translation
adjustments.
(5) Represents the reclassification of reserves from current inventories to
service parts.
(6) Includes allowance on contracts receivable.
19
<PAGE>
SCHEDULE X
MEASUREX CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Fiscal Years 1994, 1993, and 1992
(Amounts in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Charged to costs and expenses: (1)
Amortization of intangible assets (2) $5,218 $4,380 $3,267
====== ====== ======
</TABLE>
NOTES:
(1) Items omitted are less than 1% of net sales.
(2) Intangible assets include goodwill, patents and capitalized software.
20
<PAGE>
MEASUREX CORPORATION
INDEX TO EXHIBITS
Fiscal Year 1994
Exhibits
- --------
3.1 Certificate of Incorporation of Registrant, (incorporated by reference
from Exhibit 3.1 on page 30 of Report on Form 10-K for the fiscal Year
ended November 29, 1987).
3.2 Bylaws of Registrant, restated and amended as of April 19, 1994.
4.1 Copy of Registrant's Rights Agreement dated as of December 14, 1988, as
amended by Amendment No. 1 thereto dated May 30, 1990, (incorporated by
reference from Exhibit 4.1 on page 47 of Report on Form 10-K for the
fiscal year ended December 2, 1990).
10.1 Copy of Registrant's Employee's Stock Option Plan (1981) (incorporated by
reference from Exhibit 28.1 to Post Effective Amendment No. 2 to
Registration Statement No. 33-22589, filed with the SEC on June 25,
1990).
10.2 Copy of Registrant's Employee's Stock Option Plan (1993) (incorporated by
reference from Form S-8 Registration Statement No. 33-65762 filed with
the SEC on July 8, 1993).
10.3 Copy of Registrant's Management Incentive Plan. (incorporated by
reference from Exhibit 10.8 on page 24 of Report on Form 10-K for the
fiscal year ended November 30, 1986).
10.4 Copy of Registrant's Employee Stock Purchase Plan, amended and restated
effective December 14, 1993.
10.5 Copy of Registrant's Affiliation Agreement dated as of May 30, 1990,
between Measurex Corporation and Harnischfeger Industries, Inc.
(incorporated by reference from Exhibit 4.1 to Form 8K filed with the SEC
on June 12, 1990).
10.6 Copy of Repurchase Agreement dated December 29, 1994 (which contains
certain amendments to the Affiliation Agreement referred to in Exhibit
10.5).
10.7 Copy of Registrant's Joint Marketing, Sales and Development Agreement
dated May 30, 1990 between Measurex Corporation and Beloit Corporation
(incorporated by reference from Exhibit 10.1 to Form 8K filed with the
SEC on June 12, 1990).
10.8 Copy of Registrant's Joint Marketing, Sales and Development Agreement
dated February 12, 1991 between Measurex Corporation and Enertec,
(incorporated by reference from Exhibit 10.8 on page 33 of Report on Form
10-K for the fiscal year ended December 1, 1991).
10.9 Copy of Registrant's Joint Marketing, Sales and Development Agreement
dated February 28, 1991 between Measurex Corporation and Mitsubishi Heavy
Industries, Ltd., (incorporated by reference from Exhibit 10.9 on page 34
of Report on Form 10-K for the fiscal year ended December 1, 1991).
10.10 Copy of Term Loan Agreement dated as of May 21, 1993, between Measurex
Corporation and the Bank of New York (incorporated by reference from
Exhibit 10 on Form 10-Q for the period ended May 30, 1993).
21
<PAGE>
MEASUREX CORPORATION
INDEX TO EXHIBITS
Fiscal Year 1994
10.11 Copy of Amendment dated as of February 10, 1995, to Term Loan Agreement
referred to in Exhibit 10.10.
10.12 Copy of Credit Agreement dated as of July 22, 1993, between Measurex
Corporation and ABN Amro Bank N.V., San Francisco International Branch
and/or Cayman Islands Branch (incorporated by reference from Exhibit 10
on Form 10-Q for the period ended August 28, 1994).
10.13 Copy of First Amendment dated as of July 8, 1994 to Credit Agreement
referred to in Exhibit 10.12.
10.14 Copy of Second Amendment dated as of December 29, 1994 to Credit
Agreement referred to in Exhibit 10.12.
10.15 Copy of Third Amendment dated as of February 10, 1995 to Credit Agreement
referred to in Exhibit 10.11.
10.16 Copy of Credit Agreement dated as of February 10, 1995 among Measurex
Corporation, Bank of America National Trust and Savings Association, as
Agent, and the other financial institutions party hereto.
10.17 Copy of Registrant's Stock Option Agreement (Special Acceleration Grant)
dated as of December 14, 1993. (Incorporated by reference from Exhibit
10.10 on page 45 of Report on 10-K for the fiscal year ended November 25,
1993).
11.0 Computation of Net Income per Share of Common Stock of the Registrant.
13.0 Registrant's Annual Report to Shareholders. (In accordance with item
601(B)(13) of Regulation S-K, such Annual Report is not filed as part of
this Form 10-K, except to the extent incorporated by reference).
21.0 Subsidiaries of Registrant.
23.0 Consent of Independent Accountants.
24.0 Power of Attorney (included on page 16).
27.0 Financial Data Schedule.
Other exhibits have not been filed because conditions requiring the filing do
not exist.
22
<PAGE>
Exhibit 3.2
---
RESTATED BYLAWS
OF
MEASUREX CORPORATION
ARTICLE I
OFFICERS
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Cupertino, State of California, at such
place as may be fixed from time to time by the Board of Directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
1
<PAGE>
Exhibit 3.2
---
Section 2. Annual meetings of stockholders shall be held on the third
Thursday of April of each year if not a legal holiday and, if a legal holiday,
then on the next secular day following, at 10:00 A.M. or such other date and
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting, at which they shall elect by a plurality
vote a Board of Directors, and transact such other business as may properly be
brought before the meeting.
Section 3. At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, (b) otherwise properly brought before
the meeting by or at the direction of a majority of the total number of
Directors which the Corporation would have if there were no vacancies, or (c)
otherwise properly be requested to be brought before the meeting by a
stockholder. For business to be properly requested to be brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
stockholder 's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than thirty (30) days
prior to the meeting;
2
<PAGE>
Exhibit 3.2
---
provided, however, that in the event that the date of the meeting is not
publicly announced by the Corporation by mail, press release or otherwise more
than thirty (30) days prior to the meeting, notice by the stockholder to be
timely must be delivered to the Secretary of the Corporation not later than the
close of business on the tenth day following the day on which such announcement
of the date of the meeting was communicated to stockholders. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the By-Laws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section. The Chairman of the
Board or such other presiding Director of an annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this Section,
and if he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Section 4. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to vote
at such
3
<PAGE>
Exhibit 3.2
---
meeting not less than ten (10) nor more than sixty (60) days before the date of
the meeting.
Section 5. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present
Section 6. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute may only be called in the
manner set forth in the certificate of incorporation.
Section 7. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten (10) nor more than sixty (60) days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 8. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
4
<PAGE>
Exhibit 3.2
---
Section 9. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 10. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question properly brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the certificate of incorporation, a different vote is required,
in which case such express provision shall govern and control the decision of
such question.
Section 11. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such
5
<PAGE>
Exhibit 3.2
---
stockholder, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.
At all elections of directors of the corporation each stockholder
having voting power shall be entitled to exercise the right of cumulative voting
as provided in the certificate of incorporation.
Section 12. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
Section 13. Nominations for election to the Board of Directors must
be made by the Board of Directors or by any stockholder of any outstanding class
of capital stock of the corporation entitled to vote for the election of
directors. Nominations, other than those made by the Board of Directors of the
corporation, must be preceded by notification in writing in fact received by the
Secretary of the corporation not less than ten days prior to any meeting of
stockholders called for the election of directors. Such notification shall
contain the written consent of each
6
<PAGE>
Exhibit 3.2
---
proposed nominee to serve as a director if so elected and the following
information as to each proposed nominee and as to each person, acting alone or
in conjunction with one or more other persons as a partnership, limited
partnership, syndicate or other group, who participates or is expected to
participate in making such nomination or in organizing, directing or financing
such nomination or solicitation of proxies to vote for the nominee:
(a) the name, age, residence, address, and business address of each
proposed nominee and of each such person;
(b) the principal occupation or employment, the name, type of business
and address of the corporation or other organization in which such employment is
carried on of each proposed nominee and of each such person;
(c) the amount of stock of the corporation owned beneficially, either
directly or indirectly, by each proposed nominee and each such person; and
(d) a description of any arrangement or understanding of each proposed
nominee and of each such person with each other or any other person regarding
future employment or any future transaction to which the corporation will or may
be a party.
The presiding officer of the meeting shall have the authority to
determine and declare to the meeting that a nomination not preceded by
notification made in accordance with the foregoing procedure shall be
disregarded.
ARTICLE III
7
<PAGE>
Exhibit 3.2
---
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be (9) nine until changed as provided in the certificate of
incorporation. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 1 of this Article, and each director
elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
Section 1. Vacancies and new created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office or by a sole remaining director, and a director so
chosen shall hold office until the next election of the class for which such
director shall have been chosen and until his successor shall have been duly
elected and qualified, or until his earlier resignation, removal from office,
death or incapacity.
Section 2. The business of the corporation shall be managed by or
under the direction of its board of directors which may exercise all such powers
of the corporation and do all such lawful acts and things as are not by statute
or by the certificate of incorporation or by these bylaws directed or required
to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 3. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
8
<PAGE>
Exhibit 3.2
---
Section 4. The first meeting of each newly elected Board of Directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 5. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board of Directors.
Section 6. Special meetings of the Board of Directors may be called
by the president on five (5) days' notice to each director by mail or forty-
eight (48) hours notice to each director either personally or by telegram;
special meetings shall be called by the president or secretary in like manner
and on like notice on the written request of a majority of the Directors unless
the Board of Directors consists of only one director, in which case special
meetings shall be called by the president or secretary in like manner and on
like notice on the written request of the sole director.
Section 7. At all meetings of the Board of Directors a majority of
the directors shall constitute a quorum for the transaction of business and the
act of a
9
<PAGE>
Exhibit 3.2
---
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 8. Unless otherwise restricted by the certificate of
incorporation or these bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the Board of Directors or committee
thereof, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 10. The Board of Directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board of
Directors may
10
<PAGE>
Exhibit 3.2
---
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Section 11. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when required.
COMPENSATION OF DIRECTORS
Section 12. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the Board of Directors shall have the authority
to fix the compensation
11
<PAGE>
Exhibit 3.2
---
of directors. The directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these bylaws, a director may be removed only for good cause
shown by a majority of shares entitled to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
12
<PAGE>
Exhibit 3.2
---
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
Board of Directors and shall be a president and a secretary. The Board of
Directors may elect from among its members a Chairman of the Board and a Vice
Chairman of the Board. The Board of Directors may also choose one or more vice-
presidents, assistant secretaries, treasurers and assistant treasurers. Any
number of offices may be held by the same person, unless the certificate of
incorporation or these bylaws otherwise provide.
Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a president and a secretary and may
choose a vice-president and a treasurer.
Section 3. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
13
<PAGE>
Exhibit 3.2
---
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 5. The officers of the corporation shall hold office until
their successors are duly elected and qualified. Any officer elected or
appointed by the Board of Directors may be removed at any time by the
affirmative vote of a majority of the Board of Directors. Any vacancy occurring
in any office of the corporation may only be filled by the Board of Directors.
THE CHAIRMAN OF THE BOARD
Section 6. The Chairman of the Board shall be the Chief Executive
Officer of the corporation and shall preside at all meetings of the Board of
Directors and of the stockholders at which he shall be present. The Chairman of
the Board shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. He shall have and may exercise such powers
as are, from time to time, assigned by the Board of Directors and as may be
provided by law.
Section 7. In the absence of the Chairman of the Board of Directors,
the Vice Chairman, if any, shall preside at all meetings of the Board of
Directors and of the stockholders at which he shall be present. The Vice
Chairman shall have and may exercise such powers as are, from time to time,
assigned to him by the Board of Directors and as may be provided by law.
14
<PAGE>
Exhibit 3.2
---
THE PRESIDENT AND VICE-PRESIDENT
Section 8. The President shall be the Chief Operating Officer and in
the absence of the Chairman and Vice Chairman of the Board of Directors shall
preside at all meetings of the stockholders and the Board of Directors. The
President shall generally have the management responsibility for the day to day
operations of the business of the corporation and shall have and may exercise
such powers as are, from time to time, assigned to him by the Board of Directors
and the Chairman of the Board.
Section 9. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the corporation.
Section 10. In the absence of the president or in the event of his
inability or refusal to act, the vice-president, if any, (or in the event there
be more than one vice-president, the vice-presidents in the order designated by
the directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
15
<PAGE>
Exhibit 3.2
---
THE SECRETARY AND ASSISTANT SECRETARY
Section 11. The secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or president, under whose supervision he shall be. The secretary shall have
custody of the corporate seal of the corporation and the secretary, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The Board of Directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 12. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the Board of Directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the secretary or in the event of his or her inability or
refusal to act, perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the Board of
Directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
16
<PAGE>
Exhibit 3.2
---
Section 13. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
Section 14. The treasurer shall disburse the funds of the corporation
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 15. If required by the Board of Directors, the treasurer
shall give the corporation a bond (which shall be renewed every six years) in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his office and for
the restoration to the corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation.
Section 16. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the Board of Directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise
17
<PAGE>
Exhibit 3.2
---
the powers of the treasurer and shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the Board of Directors, or the president or a vice-
president and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
the shareholder in the corporation.
Certificates may be issued for partly paid shares and in such case
upon the face or back of the certificates issued to represent any such partly
paid shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
18
<PAGE>
Exhibit 3.2
---
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give
19
<PAGE>
Exhibit 3.2
---
the corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall be
the duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholder or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
20
<PAGE>
Exhibit 3.2
---
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock.
Section 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
directors
21
<PAGE>
Exhibit 3.2
---
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
directors shall think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal having
inscribed thereon the name of the corporation, the year of its organization.
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
INDEMNIFICATION
22
<PAGE>
Exhibit 3.2
---
Section 6. The corporation shall indemnify its officers, directors,
employees and agents to the full extent permitted by the General Corporation Law
of Delaware. Expenses incurred by a director or member of the Executive
Committee of the corporation in defending a civil or criminal action, suit or
proceeding by reason of the fact that he is or was a director or member of the
Executive Committee of the corporation (or was serving at the corporation's
request as a director or officer of another corporation) shall be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
member of the Executive Committee to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized by relevant sections of the General Corporation Law of Delaware.
BOOKS AND RECORDS
Section 7. Any stockholder or any director shall have the right to
inspect the books and records of the corporation to the full extent permitted
by, and subject to the terms and conditions of, the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new
bylaws may be adopted by the stockholders or by the Board of Directors only in
the manner set forth in the certificate of incorporation.
23
<PAGE>
EXHIBIT 10.4
----
MEASUREX CORPORATION
--------------------
EMPLOYEE STOCK PURCHASE PLAN
(AMENDED AND RESTATED EFFECTIVE DECEMBER 14, 1993)
--------------------------------------------------
I. PURPOSE
-------
The Measurex Corporation Employee Stock Purchase Plan (the
"Plan") is intended to provide eligible employees of Measurex Corporation (the
"Company") and such of its wholly-owned United States and Canadian subsidiaries
("Participating Subsidiaries") as the Board of Directors of the Company shall
from time to time designate, with an opportunity to acquire a proprietary
interest in the Company through their participation in a plan which will allow
them to purchase common stock of the Company at a discount through regular
payroll deductions.
II. ADMINISTRATION
--------------
The Plan shall be administered by the Company's Board of
Directors (the "Board") or by a committee (the "Committee") comprised of at
least three Board members appointed from time to time by, and serving at the
pleasure of, the Board. If the Committee is appointed, no member of the
Committee while serving as such shall be, or during the one-year period prior
to such service shall have been, eligible to participate in the Plan or any
other stock option, stock appreciation, stock bonus or other stock plan of the
Company or its affiliates (including Participating Subsidiaries), except to the
extent such member may become entitled to one or more periodic option grants
pursuant to the automatic grant provisions of the Company's 1993 Stock Option
Plan (or the predecessor 1981 Stock Option Plan).
The Plan Administrator (whether the Board or the Committee) shall
have full authority to administer the Plan, including authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan.
III. PURCHASE PERIODS
----------------
The Plan shall be implemented in a series of Purchase Periods
over the term of the Plan. Each Purchase Period shall have a commencement date
determined by the Plan Administrator and shall be of a duration of three months.
The commencement date of the first Purchase Period shall be June 1, 1980,
provided (i) the Plan shall have been approved prior to such date by the
Company's shareholders and (ii) the Company shall have complied with all
applicable requirements of the Securities Act of 1933 (as amended), all
applicable listing requirements of any securities exchange on which the
Company's common stock is listed and all other applicable requirements
established by law
1
<PAGE>
Exhibit 10.4
----
or regulation. No two Purchase Periods shall run concurrently, and no Purchase
Period shall have a commencement date later than the first day of the second
fiscal quarter of fiscal year 2000.
IV. ELIGIBILITY AND PARTICIPATION
-----------------------------
(a) Every employee of the Company or a Participating
Subsidiary is eligible to participate in the Plan during a Purchase Period if on
the commencement date of such Purchase Period the employee:
(i) has completed at least six months of service
with the Company or a Participating Subsidiary;
(ii) is not employed on a basis which customarily
requires less than 20 hours of service per week or less than five months of
service per calendar year; and
(iii) is on the payroll of either the Company or any
Participating Subsidiary.
(b) In order to participate in the Plan for a particular
Purchase Period, an eligible employee must complete the enrollment forms
prescribed by the Plan Administrator (including a purchase right agreement and a
payroll deduction authorization) and file such forms, no later than 15 days
prior to the commencement date of the Purchase Period, with the Plan
Administrator or its designate.
2
<PAGE>
Exhibit 10.4
----
(c) The payroll deduction authorized by a participating employee
may be at any rate from 2% through 10% (in a multiple of 1%) of the salary or
wages (including bonuses, commissions, overtime pay and any salary deferral
contributions made to the qualified Code Section 401(k) program in effect under
the Company's Savings and Deferred Profit-Sharing Plan) paid to such employee
during the relevant Purchase Period. The deduction rate so authorized shall
continue in effect for the entire Purchase Period and each subsequent Purchase
Period, unless the employee shall, not less than 15 days prior to the
commencement of a Purchase Period, elect a different rate by filing the
appropriate form with the Plan Administrator or its designate. The new rate
shall become effective as of the Purchase Period commencing immediately after
the filing of such form. Payroll deductions, however, will automatically cease
if the employee's right to purchase is terminated in accordance with Section
VI(d) or (e).
V. STOCK SUBJECT TO PLAN
---------------------
(a) The stock which is purchasable by employees under the Plan
shall be the Company's authorized but unissued shares of common stock, $0.01 par
value ("Stock"), or shares of such Stock reacquired by the Company and held as
Treasury shares, including shares purchased on the open market. The total number
of shares which may be sold to employees under the Plan shall not exceed
1,225,000/*/ shares (subject to adjustment under subparagraph (b) below).
(b) In the event any change is made to the Stock purchasable under
the Plan (whether by reason of merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares or other change in corporate structure effected without the Company's
receipt of consideration), then unless such change is the result of a
transaction described in Section VI(j), appropriate adjustments shall be made by
the Plan Administrator to (I) the class and maximum number of shares purchasable
under the Plan and (II) the class and number of shares and price per share of
Stock subject to outstanding purchase rights held by employees under the Plan.
VI. PURCHASE RIGHTS
---------------
An eligible employee who participates in the Plan for a particular
Purchase Period shall have the right to purchase Stock upon the terms and
conditions set forth below and shall execute an agreement embodying such terms
and conditions and such other provisions, not inconsistent with the Plan, as the
Plan Administrator may deem advisable.
____________________
/*/
The number of shares has been adjusted to reflect (i) the two-for-one stock
spilt effected on January 3, 1984, (ii) the two-for-one stock spilt effected on
February 20, 1987 and (iii) the 225,000-share increase authorized by the Board
on December 14, 1993, subject to maximum number of shares which may be issued
under the Plan shall not exceed 322,797 shares, subject to adjustment in the
event of certain changes in corporate structure.
3
<PAGE>
Exhibit 10.4
----
(a) Purchase Price. The Purchase Price per share for each purchase
--------------
period commencing on or after April 25, 1990 shall be the lesser of (i) 85% of
------
the fair market value per share of Stock on the date on which the purchase right
is granted or (ii) 85% of the fair market value per share of Stock on the date
on which the right is exercised. For purposes of the preceding sentence, the
fair market value per share of Stock on any relevant date shall be the mean of
the highest and lowest selling prices per share, as officially quoted on the New
York Stock Exchange--Composite Tape, on such date, or, if there are no selling
prices quoted for such date, then on the immediately preceding date for which
such quotations exist.
(b) Number of Shares. The number of shares purchasable by a
----------------
participant for any particular Purchase Period shall be the number of whole
shares obtained by dividing the balance credited to the participant's individual
account under the Plan as of the last day of the Purchase Period by the Purchase
Price in effect for such Purchase Period.
(c) Payment. Payment for Stock under the Plan shall be effected by
-------
means of the participant's authorized payroll deductions, which shall begin with
the first pay period which ends coincident with or immediately following the
commencement date of the relevant Purchase Period and shall terminate with the
pay period ending with or immediately prior to the last day of the Purchase
Period. The amounts so deducted shall be credited to the Plan account
maintained on the participant's behalf on the Company's books, and to the extent
it is practicable to deposit the deducted amounts in an interest-bearing account
maintained for Plan participants with a responsible bank or other financial
institution, the amounts credited to participant's account shall accrue interest
at the same rate as the interest-bearing account. Should it not be practicable
to establish or maintain such an interest-bearing account, then the deducted
amounts may be commingled with the general assets of the Company and used for
its general corporate purposes without the payment of interest.
(d) Termination of Purchase Right. A participant may, at any time
-----------------------------
prior to the last 15 days of the Purchase Period, terminate his/her purchase
right by filing the prescribed notification form with the Plan Administrator or
its designate. Any amounts deducted from the participant's pay or otherwise
collected from him/her by reason of his/her participation in the Plan for such
Purchase Period shall be refunded, and no further amounts will be collected from
the participant (by payroll deduction or otherwise) during the remainder of the
Purchase Period. The termination of such right shall be irrevocable with
respect to the Purchase Period to which it pertains and shall require the
participant to re-enroll in the Plan (by making a timely filing of a new
purchase right agreement and payroll deduction authorization) if he/she wishes
to resume participation in a subsequent Purchase Period.
(e) Termination of Employment. If a participant ceases to be an
-------------------------
Employee for any reason (including death or retirement) during a Purchase
Period, his/her purchase right shall immediately terminate and all payroll
deductions previously collected from the participant for that Purchase Period
shall be refunded to the participant or the personal representative of his/her
estate. For all purposes under the Plan, an individual shall be deemed to be an
Employee for so long as such individual remains in the employ of the Company or
any Participating Subsidiary.
4
<PAGE>
Exhibit 10.4
----
(f) Exercise. Each purchase right other than a right which has been
--------
previously terminated in accordance with Section VI(d) or (e) shall be exercised
automatically on the last business day of the Purchase Period. The exercise of
the purchase right shall be effected by applying the amount credited to each
participant's account on the exercise date to the purchase of whole shares of
Stock at the Purchase Price. Any amount remaining in the participant's account
after such application shall be held for the purchase of Stock in the next
Purchase Period.
(g) Proration of Purchase Rights. If the total number of shares of
----------------------------
Stock for which purchase rights are to be exercised on any particular date
exceeds the number of shares then available for issuance under the Plan, the
Plan Administrator shall make a pro-rata allocation of the available shares on a
uniform and non-discriminatory basis, and any payroll deductions not applied to
the purchase of Stock shall be refunded to the participants.
(h) Rights as Shareholder. A participant shall have no rights as a
---------------------
shareholder with respect to shares covered by any purchase right granted him/her
under the Plan until such right is exercised. No adjustments shall be made for
dividends, distributions or other rights for which the record date is prior to
the date of exercise.
As soon as practicable after the date of exercise, the participant
shall be issued a stock certificate for the number of shares for which his/her
purchase right has been exercised. Such certificate may, upon the participant's
request, be issued in the names of the participant and his/her spouse as
community property or as joint tenants with right of survivorship.
(i) Assignability. No purchase right granted under the Plan shall be
-------------
assignable or transferable by a participant, and the purchase right shall be
exercisable only by the participant.
(j) Merger or Liquidation of Company. In the event the Company or
--------------------------------
its shareholders enter into an agreement to dispose of all or substantially all
of the assets or outstanding capital stock of the Company by means of a sale,
merger or reorganization in which the Company will not be the surviving
corporation or in the event the Company is liquidated, then the Plan
Administrator may, in connection with the consummation of such sale, merger,
reorganization or liquidation, cancel each outstanding purchase right and refund
all sums previously collected from participants during the Purchase Period or,
in its discretion, provide each participant with an election to exercise one of
the two alternatives below:
A. receive a cash refund of all sums previously collected from
the participant during the Purchase Period; or
B. have his/her outstanding purchase right exercised immediately
prior to the consummation of such sale, merger, reorganization or
liquidation and thereby have the balance of his/her account applied to the
purchase of whole shares of
5
<PAGE>
Exhibit 10.4
----
Stock at the Purchase Price. The balance of the account not so applied
shall be promptly refunded.
(k) Interest. Interest shall be paid on any sums refunded to a
--------
participant by reason of the termination of his/her purchase right prior to
exercise, provided and only if: (i) the refunded sums were held in an interest-
--------------------
bearing account maintained for Plan participants or (ii) the Plan Administrator
determines that payment of interest on the refunded sums is necessary to satisfy
applicable requirements of Federal or state law or regulation.
VII. AMENDMENT
---------
The Board may from time to time alter, amend, suspend or
discontinue the Plan; provided, however, that no such action shall adversely
---------
affect rights and obligations with respect to purchase rights at the time
outstanding under the Plan; and provided, further, that no such action of the
------------------
Board may, without the approval of shareholders of the Company, increase the
number of shares of Stock issuable under the Plan (unless necessary to effect
the adjustment required by Section V(b)), extend the term of the Plan, alter the
purchase price formula so as to reduce the purchase price specified in the Plan,
otherwise materially increase the benefits accruing to participants under the
Plan or materially modify the requirements for eligibility to participate in the
Plan.
IX. GENERAL PROVISIONS
------------------
(a) The Plan became effective on June 1, 1980. On February 2,
1989, the Board amended the Plan to authorize the issuance of Treasury shares
under the Plan, including shares purchased on the open market. The Board further
amended the Plan effective April 10, 1989 to except automatic option grants
under the Company's Stock Option Plan (1981) from the requirement that members
of the Committee administering the Plan be ineligible to participate in the Plan
or any other stock option, stock bonus or stock plan of the Company. On April
25, 1990, the Company's shareholders approved an amendment and restatement of
the Plan which extended the term of the Plan to the last day of the second
fiscal quarter in fiscal year 2000 and reduced the Purchase Price for shares
offered under the Plan to the lesser of (i) 85% of the fair market value per
------
share on the date on which the Purchase Period begins or (ii) 85% of the fair
market value per share on the date on which the Purchase Period ends.
(b) This December 14, 1993 restatement incorporates the
amendment to the Plan authorized by the Board on December 14, 1993 which (i)
provides explicit authority for eligible employees of the participating Canadian
subsidiaries to participate in the Plan and (ii) increases the number of shares
available for issuance under the Plan from 1,000,000 shares to 1,225,000 shares
of Stock. The 225,000-share increase, however, is subject to shareholder
approval at the 1994 Annual Meeting, and none of the shares subject to such
increase shall be issued under the Plan until such approval is obtained. Should
shareholder approval of the 225,000-share increase not be obtained at the 1994
Annual Meeting, then that increase shall not be implemented, and the number of
shares
6
<PAGE>
Exhibit 10.4
----
authorized for issuance over the term of the Plan shall be limited to 1,000,000
shares of Stock, as adjusted from time to time pursuant to Section V(b) above.
(c) The Plan shall terminate upon the earlier of (i) the last day
-------
of the second fiscal quarter in fiscal year 2000 or (ii) the date on which all
shares available for issuance under the Plan shall have been sold pursuant to
purchase rights exercised under the Plan.
(d) All costs and expenses incurred in the administration of the
Plan shall be paid by the Company.
(e) Neither the action of the Company in establishing the Plan,
nor any action taken under the Plan by the Board or the Plan Administrator, nor
any provision of the Plan itself shall be construed so as to grant any person
the right to remain in the employ of the Company or any of its subsidiaries for
any period of specific duration, and such person's employment may be terminated
at any time, with or without cause.
(f) The provisions of the Plan shall be governed by the laws of
the State of Delaware.
7
<PAGE>
EXHIBIT 10.6
----
STOCK REPURCHASE AGREEMENT
THIS STOCK REPURCHASE AGREEMENT (this "Agreement"), dated as of
December 29, 1994, is entered into between Measurex Corporation, a Delaware
corporation (the "Company"), and Harnischfeger Industries, Inc., a Delaware
corporation ("Harnischfeger"), and HIHC, Inc., a Delaware corporation
("Investor").
RECITALS
--------
WHEREAS, the Company and Harnischfeger are parties to that certain
Affiliation Agreement, dated as of May 30, 1990 (the "Affiliation Agreement")
and the Company and Beloit Corporation ("Beloit"), a subsidiary of
Harnischfeger, are parties to that certain Joint Marketing, Sales and
Development Agreement dated as of May 30, 1990 (the "Marketing Agreement"); and
WHEREAS, Investor is a wholly owned subsidiary of Harnischfeger and
the direct beneficial owner of certain of the company's outstanding Common Stock
par value $.01 per share, acquired in connection with the Affiliation Agreement;
and
WHEREAS, Harnischfeger has determined to cause Investor to sell to
the Company and the Company has determined to purchase from Investor an
aggregate of 2,026,900 shares of the Company's outstanding Common Stock, par
value $.01 per share, held by Investor (the "Shares"); and
WHEREAS, the Company and Harnischfeger have determined to make
certain amendments to the Affiliation Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. The Company will purchase from Investor and Investor will sell to
the Company the Shares for an aggregate price of Forty-Three Million, Five
Hundred Seventy-Eight Thousand, Three Hundred Fifty Dollars ($43,578,350) (the
"Purchase Price")in full consideration for its repurchase of the Shares.
2. In payment of the Purchase Price, the Company will deliver to
Investor a Promissory Note in the form attached hereto as Exhibit A (the
"Note").
1
<PAGE>
Exhibit 10.6
----
3. Investor will deliver to the Company a stock certificate
representing the Shares (the "Certificate"), duly endorsed for transfer to the
Company (or cause the Shares to be transferred by wire transfer to an account
designated by Company for such purpose), in exchange for the Note. The Company
will promptly return to Investor a stock certificate representing the remaining
shares of the Company's Common Stock, par value $.01 per share, represented by
the Certificate in excess of the Shares.
4. The Company represents and warrants to Harnischfeger and Investor
that the Board of Directors of the Company has authorized the execution and
delivery of this Agreement and the performance of its obligations contained
herein. Notwithstanding the provisions of Section 1.02 of the Affiliation
Agreement, the Company hereby consents to the sale of the Shares by Investor as
contemplated hereby.
5. Harnischfeger and Investor have taken all necessary corporate
action and possess the requisite corporate authority to authorize the execution
and delivery of this Agreement and the Note and the performance of its
obligations contained therein.
6. Section 1.03(a) of the Affiliation Agreement is hereby modified
in the following respects:
(a) the figure "15%" in lines three and eight thereof is deleted
and the figure "10%" is inserted in its place;
(b) the term "the total combined voting power of the Voting
Securities then outstanding" appearing in lines three and four thereof is
deleted and replaced by the term "the total number of securities of the Company
entitled to vote generally for the election of directors, including Shares, or
outstanding securities convertible into such voting securities, but excluding
options, warrants and other rights to acquire such voting securities
(collectively "Outstanding Securities")";
(c) the term "the total combined voting power of the Voting
Securities then outstanding" appearing in lines eight and nine thereof is
deleted and replaced by the term "the Outstanding Securities"; and
(d) in all other respects, Section 1.03(a) shall remain
unchanged.
2
<PAGE>
Exhibit 10.6
-------
7. Section 6.01(d) of the Affiliation Agreement is hereby modified
in the following respects:
(a) to delete the term "10% of the total combined voting power
of the Voting Securities outstanding at such time" appearing in lines two, three
and four thereof and insert the term "10% of the Outstanding Securities at such
time" in its place;
(b) to delete the term "total combined voting power" appearing
in line five and insert the term "Voting Securities" in its place;
(c) the reference to "2.03(b)" in the tenth line thereof is
deleted and replaced by "2.03"; and
(d) in all other respects, Section 6.01(d) shall remain
unchanged.
8. With the exception of the waiver contained in paragraph 4 and
the modifications contained in paragraphs 6 and 7 of this Agreement, all
covenants, undertakings and agreements contained in the Affiliation Agreement
and the Marketing Agreement are and shall remain in effect and the respective
obligations and rights of the Company, Harnischfeger and Beloit therein are not
otherwise amended.
9. This Agreement may not be modified, amended, altered or
supplemented except by a written agreement signed by the Company, Harnischfeger
and Investor which agreement shall be authorized by all necessary corporate
action of each party, provided that paragraphs 1, 2 and 3 may be modified,
amended, altered or supplemented without the written agreement of Harnischfeger
and provided further that paragraphs 6 and 7 may be modified, amended, altered
or supplemented without the written agreement of Investor. All representations,
promises or other inducements made to cause either party to enter into this
Agreement are set forth herein. Each party may waive any condition to the
obligations of such party hereunder; all such waivers to be in writing.
3
<PAGE>
Exhibit 10.6
------
10. This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the successors of the parties hereto. Except as
otherwise provided herein, this Agreement shall not be assignable.
11. Each party hereto shall pay its own expenses incurred in
connection with this Agreement.
12. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
deemed to have been duly given upon receipt) by delivery, by hand, by mail
(registered or certified mail, postage prepaid, return receipt requested), by
overnight courier or by telex or telecopy as follows:
If to the Company:
Measurex Corporation
One Results Way
Cupertino, California 95014
Attention: Chief Executive Officer
With copies to:
Brobeck, Phleger & Harrison
Spear Street Tower
One Market Plaza
San Francisco, California 94105
Attention: John W. Larson, Esq.
If to Harnischfeger:
Harnischfeger Industries, Inc.
13400 Bishops Lane
Brookfield, Wisconsin 53005
Attention: Chief Executive Officer
With copies to:
Harnischfeger Industries, Inc.
13400 Bishops Lane
Brookfield, Wisconsin 53005
Attention: General Counsel
If to Investor:
HIHC, Inc.
Bank of Delaware Building
4
<PAGE>
Exhibit 10.6
----
Suite 512, 300 Delaware Avenue
Wilmington, Delaware 19801
With copies to:
Harnischfeger Industries, Inc.
13400 Bishops Lane
Brookfield, Wisconsin 53005
Attention: General Counsel
or to such other address as any party may have furnished to the other in writing
in accordance herewith.
13. If any term or provision of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void, unenforceable
or against its regulatory policy, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
14. This Agreement contains the entire understanding of the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, warranties, covenants or undertakings other than those expressly set
forth herein with respect to any matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter.
15. No failure or delay on the part of either party in the exercise
of any power, right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights or remedies existing under this Agreement are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
16. This Agreement shall be governed by and interpreted in
accordance with the internal laws of the State of Delaware.
17. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
5
<PAGE>
Exhibit 10.6
-----
IN WITNESS WHEREOF, the Company and Investor have caused this
Agreement to be executed as of the day and year first above written.
COMPANY:
--------
MEASUREX CORPORATION
By: __________________________
Senior Vice President and
Chief Financial OFficer
HARNISCHFEGER:
--------------
HARNISCHFEGER INDUSTRIES, INC.
By: _________________________
Chairman and Chief
Executive Officer
INVESTOR:
--------
HIHC, INC.
By: _________________________
Title:
6
<PAGE>
Exhibit 10.13
-----
FIRST AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment")
dated as of this ____ day of July, 1994, by and between ABN AMRO BANK N.V. SAN
----------------------
FRANCISCO INTERNATIONAL BRANCH AND/OR CAYMAN ISLANDS BRANCH ("Bank") and
- -----------------------------------------------------------
MEASUREX CORPORATION, a Delaware corporation ("Company"),
- --------------------
W I T N E S S E T H:
WHEREAS, the parties hereto entered into that certain Credit
Agreement, dated July 22, 1993 (the "Credit Agreement"), pursuant to which Bank
agreed to lend to Company the principal amount of twenty million Dollars
($20,000,000) plus interest thereon with a maturity date of July 21, 1994; and
WHEREAS, the parties hereto desire to amend the Credit Agreement to
extend the maturity date and to amend certain other provisions of the Credit
Agreement as set forth herein:
NOW, THEREFORE, in consideration of the premises set forth above and
other good and valuable considerations, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein and not otherwise
-----------
defined herein shall have the meanings given to such terms in the Credit
Agreement.
2. Extension of Termination Date.
-----------------------------
(a) The definition of "Termination Date" contained in Article 1
of the Credit Agreement is hereby amended by deleting the date "July 21,
1994" and replacing such date with the following date: "July 20, 1995."
(b) The first sentence of Section 2.6 of the Credit Agreement is
hereby deleted in its entirety and replaced with the following sentence:
"The Facility established hereunder shall terminate on the
Termination Date."
1
<PAGE>
Exhibit 10.13
-------
3. Issuance of Letters of Credit. Section 3.1 of the Credit Agreement is
-----------------------------
hereby amended by deleting the phrase "two million five hundred thousand Dollars
($2,500,000)" from the first sentence of such section and replacing such phrase
with the following phrase: "five million Dollars ($5,000,000)."
4. Commitment Fee. The first sentence of Section 2.7 of the Credit
--------------
Agreement is hereby deleted in its entirety and replaced with the following
sentence:
"The Company agrees to pay to the Bank a commitment fee (the
"Commitment Fee") for the period from the Effective Date to the
Termination Date computed (on the basis of days elapsed and a year
of three hundred sixty (360) days) on the unused amount of the
Maximum Amount as follows: (a) at a rate equal to three eighths of
one percent (0.375%) per annum on that portion of the unused amount
of the Maximum Amount up to and including five million Dollars
($5,000,000) minus the aggregate undrawn amount of Letters of Credit
issued hereunder with expiration dates more than twenty-four (24)
months after the date of issuance, and (b) at a rate equal to one
quarter of one percent (0.25%) per annum on the remainder of the
unused amount of the Maximum Amount."
5. Ratification of Credit Agreement. Except as amended hereby, all of
--------------------------------
the provisions set forth in the Credit Agreement remain in full force and
effect. From and after the date hereof, any reference in the Credit Agreement
to "this Agreement" shall mean the Credit Agreement as amended by this First
Amendment.
6. Severability. If any provision of this First Amendment shall be held
------------
to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
7. Governing Law. This First Amendment shall be governed by and
-------------
construed in accordance with the internal laws of the State of California.
8. Counterparts. This First Amendment may be executed in any number of
------------
counterparts, all of which together shall constitute a single instrument, and it
shall not be necessary that any counterpart be signed by all the parties hereto.
2
<PAGE>
Exhibit 10.13
-------
9. Headings. The headings hereof are for convenience only and are not
--------
intended to affect the meaning or interpretation of this First Amendment.
10. Benefit of Agreement. This First Amendment shall inure to the
--------------------
benefit of, and be enforceable by Bank, Company, and their respective successors
and assigns.
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to
Credit Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
MEASUREX CORPORATION
By _______________________________
Its ___________________________
By _______________________________
Its ___________________________
ABN AMRO BANK N.V.
By _______________________________
Carol A. Levine
Vice President
By _______________________________
Its ___________________________
3
<PAGE>
Exhibit 10.14
-------
SECOND AMENDMENT TO CREDIT AGREEMENT
------------------------------------
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second Amendment")
dated as of this 29th day of December, 1994, by and between ABN AMRO BANK N.V.
------------------
SAN FRANCISCO INTERNATIONAL BRANCH AND/OR CAYMAN ISLANDS BRANCH ("Bank") and
- ---------------------------------------------------------------
MEASUREX CORPORATION, a Delaware corporation ("Company"),
- --------------------
W I T N E S S E T H:
WHEREAS, the parties hereto entered into that certain Credit
Agreement, dated July 22, 1993, as amended by a First Amendment to Credit
Agreement dated as of July 8, 1994 (as so amended, the "Credit Agreement"),
pursuant to which Bank agreed to provide certain credit facilities to Company;
WHEREAS, Company has requested Bank to amend one financial covenant
and waive another financial covenant set forth in the Credit Agreement; and
WHEREAS, Bank has agreed to such an amendment and waiver upon the
terms and subject to the conditions set forth herein:
NOW, THEREFORE, in consideration of the premises set forth above and
other good and valuable considerations, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used
-----------
herein and not otherwise defined herein shall have the meanings given to such
terms in the Credit Agreement.
2. Amendment. The Credit Agreement shall be
---------
and hereby is amended by changing clause (iv) of Section 5.7 to read in its
entirety as follows:
(iv) the lesser of (x) forty-eight million, five hundred thousand
Dollars ($48,500,000) or (y) the aggregate amount expended by the
Company on and after April 21, 1993 to reacquire up to two million,
five hundred thousand (2,500,000) shares of common stock (the
"Reacquired Shares").
3. Waiver. Bank hereby waives compliance by Company with the
------
financial covenant set forth in Section 6.3 of the Credit Agreement for the
quarter ending March 5, 1995 (and only for such quarter) and agrees that the
failure of Company to comply with
1
<PAGE>
Exhibit 10.14
-------
Section 6.3 for such quarter (and only for such quarter) shall not constitute an
Event of Default.
4. Ratification of Credit Agreement. Except as amended or waived
--------------------------------
hereby, all of the provisions set forth in the Credit Agreement remain in full
force and effect. From and after the date hereof, any reference in the Credit
Agreement to "this Agreement" shall mean the Credit Agreement as amended by this
Second Amendment.
5. Severability. If any provision of this Second Amendment shall be
------------
held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6. Governing Law. This Second Amendment shall be governed by and
-------------
construed in accordance with the internal laws of the State of California.
7. Counterparts. This Second Amendment may be executed in any number
------------
of counterparts, all of which together shall constitute a single instrument, and
it shall not be necessary that any counterpart be signed by all the parties
hereto.
8. Headings. The headings hereof are for convenience only and are
--------
not intended to affect the meaning or interpretation of this Second Amendment.
9. Benefit of Agreement. This Second Amendment shall inure to the
--------------------
benefit of, and be enforceable by Bank, Company, and their respective successors
and assigns.
[The next page is the signature page.]
2
<PAGE>
Exhibit 10.14
-------
IN WITNESS WHEREOF, the undersigned have caused this Second Amendment
to Credit Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
MEASUREX CORPORATION
By ___________________________
Name: _____________________
Title: ____________________
By ___________________________
Name: _____________________
Title: ____________________
ABN AMRO BANK N.V.
By ___________________________
Name: _____________________
Title: ____________________
By ___________________________
Name: _____________________
Title: ____________________
3
<PAGE>
Exhibit 10.15
-----
THIRD AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Third Amendment") dated as
of this 10th day of February, 1995, by and between ABN AMRO BANK N.V. SAN
----------------------
FRANCISCO INTERNATIONAL BRANCH AND/OR CAYMAN ISLANDS BRANCH ("Bank") and
- -----------------------------------------------------------
MEASUREX CORPORATION, a Delaware corporation ("Company"),
- --------------------
W I T N E S S E T H:
WHEREAS, the parties hereto entered into that certain Credit Agreement,
dated July 22, 1993, as amended by a First Amendment to Credit Agreement dated
as of July 8, 1994 and a Second Amendment to Credit Agreement dated as of
December 29, 1994 (as so amended, the "Credit Agreement"), pursuant to which
Bank agreed to provide certain credit facilities to Company;
WHEREAS, Company has requested Bank to amend two financial covenants set
forth in the Credit Agreement; and
WHEREAS, Bank has agreed to such an amendment upon the terms and subject to
the conditions set forth herein:
NOW, THEREFORE, in consideration of the premises set forth above and other
good and valuable considerations, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. All capitalized terms used herein and not otherwise
-----------
defined herein shall have the meanings given to such terms in the Credit
Agreement.
2. Amendment. The Credit Agreement shall be and hereby is amended as
---------
follows:
(a) Section 1.1 is amended by (i) deleting the definition of
"Consolidated Tangible Net Worth" set forth therein and (ii) adding thereto,
in the appropriate alphabetical order, new definitions of "Subsidiaries" and
"Tangible Net Worth" to read in their entirety as follows :
"Subsidiary" of any Person shall mean any corporation,
association, partnership, joint venture or other business entity of
which more than 50% of the voting stock or other equity interests (in
the case of
1
<PAGE>
Exhibit 10.15
-----
Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a Subsidiary of
the Company.
"Tangible Net Worth" shall mean total assets (exclusive of
------------------
goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and premium, deferred charges
and other like intangibles) less all liabilities (including accrued and
deferred income taxes and subordinated liabilities).
(b) Section 5.7 is deleted.
(c) Section 6.3 is amended to read in its entirety as follows:
Section 6.3 Quick Ratio. At the end of each fiscal quarter of
-----------
the Company, the Company shall not permit on a consolidated basis the
ratio of (a) the sum of cash, cash equivalents, short-term marketable
investments (each as determined in accordance with GAAP), and
receivables net of bad debt reserves maintained in accordance with
GAAP, to (b) the sum of all amounts which would, in accordance with
GAAP, be included under current liabilities on a consolidated balance
sheet of the Company and its Subsidiaries and, without duplication, all
Syndicated Loans, to be less than 1.10 to 1.00. (As used in this
Section 6.3, "Syndicated Loans" shall mean all loans outstanding under
the Credit Agreement dated as of February 10, 1995 among the Company,
the financial institutions from time to time parties to such agreement,
and Bank of America National Trust and Savings Association, as agent
for such financial institutions, as such agreement is amended, modified
or replaced from time to time.)
(d) Section 6.5 is amended by adding thereto at the end a new sentence
to read in its entirety as follows:
This Section 6.5 shall not be deemed to restrict the Company from
selling or disposing of any Margin Stock consisting of common stock of
the Company.
2
<PAGE>
Exhibit 10.15
-----
(e) Article 6 is further amended by adding thereto, immediately after
Section 6.6, a new Section 6.7 to read in its entirety as follows:
Section 6.7 Tangible Net Worth. At the end of each fiscal
------------------
quarter of the Company, the Company shall not permit on a consolidated
basis the Tangible Net Worth for the Company to be less than the sum of
(1) $131,421,650 plus (b) 50% of quarterly net income for the Company
for each fiscal quarter ending subsequent to the fiscal quarter ended
November 27, 1994 with no reduction for net losses, plus (c) the sum of
(1) 100% of the net proceeds for any capital stock issued by the
Company after the fiscal quarter ended November 27, 1994 less (2) 100%
of the net purchase price paid by the Company for repurchases of its
outstanding shares of common stock pursuant to the Company's stock
option and employee stock option plans; provided, however, that if the
-----------------
amount determined pursuant to clause (2) of this clause (c) exceeds the
amount under clause (1) of this clause (c) and such excess is greater
than $5,00,000, then for purposes of this calculation, $5,000,000 shall
be subtracted from the sum of clauses (a) and (b), and provided,
--------
further, that the aggregate amount subtracted from the sum of clauses
-------
(a) and (b) for any calendar year shall be limited to $5,000,000.
(f) Section 8.1(b) is amended to read in its entirety as follows:
(b) The Company shall fail to observe or perform any covenant
contained in Article 6;
3. Termination of Waiver. In Section 3 of the Second Amendment to Credit
---------------------
Agreement dated as of December 29, 1994 between Borrower and Bank (the "Second
Amendment"), Bank waived compliance by Company with the financial covenant set
forth in Section 6.3 of the Credit Agreement for the quarter ending March 5,
1995 and agreed that the failure of Company to comply with Section 6.3 for such
quarter would not constitute an Event of Default. Such waiver and agreement are
hereby terminated and are no longer of any force or effect.
4. Ratification of Credit Agreement. Except as amended or waived hereby,
--------------------------------
all of the provisions set forth in the Credit Agreement remain in full force and
effect. From and after the date hereof, any reference in the Credit Agreement
to "this Agreement" shall mean the Credit Agreement as amended by this Third
Amendment.
3
<PAGE>
Exhibit 10.15
-----
5. Severability. If any provision of this Third Amendment shall be held
------------
to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6. Governing Law. This Third Amendment shall be governed by and
-------------
construed in accordance with the internal laws of the State of California.
7. Counterparts. This Third Amendment may be executed in any number of
------------
counterparts, all of which together shall constitute a single instrument, and it
shall not be necessary that any counterpart be signed by all the parties hereto.
8. Headings. The headings hereof are for convenience only and are not
--------
intended to affect the meaning or interpretation of this Third Amendment.
9. Benefit of Agreement. This Third Amendment shall inure to the benefit
--------------------
of, and be enforceable by Bank, Company, and their respective successors and
assigns.
IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to
Credit Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
MEASUREX CORPORATION
By ___________________________
Name: _____________________
Title: ____________________
By ___________________________
Name: _____________________
Title: ____________________
ABN AMRO BANK N.V.
By ___________________________
Name: _____________________
Title: ____________________
4
<PAGE>
Exhibit 10.15
-----
By ___________________________
Name: _____________________
Title: ____________________
5
<PAGE>
Exhibit 10.16
-----
Execution Copy
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
DATED AS OF FEBRUARY 10, 1995
AMONG
MEASUREX CORPORATION,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS AGENT,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 10.16
-----
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C>
ARTICLE I
DEFINITIONS................................
1.01 Certain Defined Terms............................................ 1
1.02 Other Interpretive Provisions.................................... 14
1.03 Accounting Principals............................................ 15
ARTICLE II
THE CREDITS................................ 16
2.01 Amounts and Terms of Commitments................................. 16
(a) Committed Revolving Loans................................... 16
(b) Discretionary Revolving Loans............................... 16
2.02 Loan Accounts.................................................... 16
2.03 Procedure for Borrowing.......................................... 17
2.04 Local Currency Loans............................................. 18
2.05 Conversion and Continuation Elections............................ 20
2.06 Voluntary Termination or Reduction of Commitments................ 21
2.07 Optional Prepayments............................................. 22
2.08 Repayment and Mandatory Prepayment............................... 22
2.09 Interest......................................................... 22
2.10 Fees
(a) Agency Fees................................................. 23
(b) Facility Fees; Commitment Fee............................... 23
2.11 Computation of Fees and Interest................................. 24
2.12 Payments by the Company or Other Borrowing Entities.............. 25
2.13 Payments By the Banks to the Agent............................... 26
2.14 Sharing of Payments, Etc......................................... 26
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY........................... 27
3.01 Taxes............................................................ 27
3.02 Illegality....................................................... 28
3.03 Increased Costs and Reduction of Return.......................... 29
3.04 Funding Losses................................................... 29
3.05 Inability to Determine Rates..................................... 30
3.06 Certificates of Banks............................................ 31
3.07 Survival......................................................... 31
</TABLE>
i
<PAGE>
Exhibit 10.16
-----
ARTICLE IV
<TABLE>
<C> <S> <C>
CONDITIONS PRECEDENT...................... 31
4.01 Conditions to Initial Loans...................................... 31
(a) Credit Agreement; Guaranty.................................. 31
(b) Resolutions; Incumbency.................................... 31
(c) Organization Documents; Good Standing....................... 32
(d) Legal Opinion............................................... 32
(e) Payment of Fees............................................. 32
(f) Certificate................................................. 33
(g) Other Documents............................................. 33
4.02 Conditions to All Borrowings
(a) Notice of Borrowing or Conversion/Continuation....................32
(b) Continuation of Representations and Warranties....................32
(c) No Existing Default......................................... 33
4.03 Conditions to All Loans to Other Borrowing Entities....................33
(a) Credit Documentation........................................ 33
(b) Compliance with Conditions Precedent........................ 33
(c) Other Evidence.............................................. 33
ARTICLE V
REPRESENTATIONS AND WARRANTIES................ 33
5.01 Corporate Existence and Power.................................... 33
5.02 Corporate Authorization; No Contravention........................ 34
5.03 Governmental Authorization....................................... 34
5.04 Binding Effect................................................... 34
5.05 Litigation....................................................... 35
5.06 No Default....................................................... 35
5.07 ERISA Compliance................................................. 35
5.08 Use of Proceeds; Margin Regulations.............................. 36
5.09 Title to Properties.............................................. 36
5.10 Taxes............................................................ 36
5.11 Financial Condition.............................................. 36
5.12 Environmental Matters............................................ 37
5.13 Regulated Entities............................................... 37
5.14 No Burdensome Restrictions....................................... 37
5.15 Copyrights, Patents, Trademarks and Licenses, etc................ 37
5.16 Subsidiaries..................................................... 38
5.17 Insurance........................................................ 38
5.18 Full Disclosure.................................................. 38
ARTICLE V
AFFIRMATIVE COVENANTS..................... 38
6.01 Financial Statements............................................. 38
</TABLE>
ii
<PAGE>
Exhibit 10.16
-----
<TABLE>
<C> <S> <C>
6.02 Certificates; Other Information.................................. 39
6.03 Notices.......................................................... 40
6.04 Preservation of Corporate Existence, Etc......................... 41
6.05 Maintenance of Property.......................................... 41
6.06 Insurance........................................................ 41
6.07 Payment of Obligations........................................... 41
6.08 Compliance with Laws............................................. 42
6.09 Compliance with ERISA............................................ 42
6.10 Inspection of Property and Books and Records..................... 42
6.11 Environmental Laws............................................... 42
6.12 Use of Proceeds.................................................. 43
ARTICLE VII
NEGATIVE COVENANTS....................... 43
7.01 Limitation on Liens.............................................. 43
7.02 Disposition of Assets............................................ 45
7.03 Consolidations and Mergers....................................... 46
7.04 Loans and Investments............................................ 46
7.05 Limitations on Indebtedness...................................... 47
7.06 Transactions with Affiliates..................................... 48
7.07 Use of Proceeds.................................................. 48
7.08 Contingent Obligations........................................... 48
7.09 Joint Ventures................................................... 49
7.10 Lease Obligations................................................ 49
7.11 Restricted Payments.............................................. 49
7.12 ERISA............................................................ 49
7.13 Change in Business............................................... 50
7.14 Accounting Changes............................................... 50
7.15 Quick Ratio...................................................... 50
7.16 Tangible Net Worth............................................... 50
7.17 Leverage Ratio................................................... 50
7.18 Profitability.................................................... 50
7.19 Capital Expenditures............................................. 51
ARTICLE VIII
EVENTS OF DEFAULT....................... 51
8.01 Event of Default................................................. 51
(a) Non-Payment................................................. 51
(b) Representation or Warranty.................................. 51
(c) Specific Defaults........................................... 51
(d) Other Defaults.............................................. 51
(e) Cross-Default............................................... 51
(f) Insolvency; Voluntary Proceedings........................... 52
(g) Involuntary Proceedings..................................... 52
(h) ERISA....................................................... 52
(i) Monetary Judgements......................................... 52
</TABLE>
iii
<PAGE>
Exhibit 10.16
-----
<TABLE>
<C> <S> <C>
(j) Non-Monetary Judgements..................................... 53
(k) Change of Control........................................... 53
(l) Loss of Licenses............................................ 53
(m) Adverse Change.............................................. 53
(n) Guaranty.................................................... 53
8.02 Remedies......................................................... 53
8.03 Rights Not Exclusive............................................. 54
8.04 Certain Financial Covenant Defaults.............................. 54
ARTICLE IX
THE AGENT AND THE ISSUING BANK..... 54
9.01 Appointment and Authorization.................................... 54
9.02 Delegation of Duties............................................. 54
9.03 Liability of Agent............................................... 55
9.04 Reliance by Agent................................................ 55
9.05 Notice of Default................................................ 56
9.06 Credit Decision.................................................. 56
9.07 Indemnification of Agent......................................... 57
9.08 Agent in Individual Capacity..................................... 57
9.09 Successor Agent.................................................. 57
9.10 Withholding Tax.................................................. 58
ARTICLE X
10.01 Amendments and Waivers...................................... 59
10.02 Notices..................................................... 60
10.03 No Waiver; Cumulative Remedies.............................. 61
10.04 Costs and Expenses.......................................... 61
10.05 Company Indemnification..................................... 61
10.06 Payment Set Aside........................................... 62
10.07 Successors and Assigns...................................... 62
10.08 Assignments, Participations, etc............................ 63
10.09 Confidentiality............................................. 64
10.10 Set-off..................................................... 65
10.11 Automatic Debits of Fees.................................... 65
10.12 Notification of Addresses, Lending
Offices, Etc................................................ 65
10.13 Counterparts................................................ 66
10.14 Severability................................................ 66
10.15 No Third Parties Benefitted................................. 66
10.16 Governing Law and Jurisdiction.............................. 66
10.17 Waiver of Jury Trial........................................ 66
10.18 Entire Agreement............................................ 67
10.19 Obligations of Other Borrowing Entities..................... 67
</TABLE>
iv
<PAGE>
Exhibit 10.16
-----
SCHEDULES
- ---------
Schedule 2.01 Commitments and Pro Rata Shares
Schedule 5.05 Litigation
Schedule 5.06 Certain Defaults
Schedule 5.12 Environmental Matters
Schedule 5.16 Subsidiaries
Schedule 7.01 Permitted Liens
Schedule 7.05 Permitted Indebtedness
Schedule 10.02 Offshore and Domestic Lending Offices; Addresses for
Notices
EXHIBITS
- --------
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Opinion of Counsel
Exhibit E Form of Assignment and Acceptance Agreement
Exhibit F Form of Promissory Note
Exhibit G Form of Guaranty
v
<PAGE>
Exhibit 10.16
-----
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is entered into as of February 10, 1995, among
Measurex Corporation, a Delaware corporation (the "Company"), the several
-------
financial institutions from time to time party to this Agreement (collectively,
the "Banks"; individually, a "Bank"), and Bank of America National Trust and
----- ----
Savings Association, as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a revolving
credit facility upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
1.01 Certain Defined Terms. The following terms have the following
---------------------
meanings:
"Acquisition" means any transaction or series of related transactions
-----------
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of in excess of 50% of
the capital stock, partnership interests or equity of any Person, or
otherwise causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a
Person that is a Subsidiary) provided that the Company or the Subsidiary is
the surviving entity.
"Affiliate" means, as to any Person, any other Person which, directly
---------
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
other Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agent" means BofA in its capacity as agent for the Banks hereunder,
-----
and any successor agent arising under Section 9.09.
"Agent-Related Persons" means the Agent together with its Affiliates,
---------------------
and the officers, directors, employees, agents and attorneys-in-fact of the
Agent and its Affiliates.
"Agent's Payment Office" means the address for payments set forth on
----------------------
Schedule 10.02 in relation to the Agent, or
--------------
1
<PAGE>
Exhibit 10.16
-----
such other address as the Agent may from time to time specify.
"Agreement" means this Credit Agreement.
---------
"Applicable Margin" means
-----------------
(i) with respect to Base Rate Loans, 0.00%; and
(ii) with respect to Offshore Rate Loans, 0.75%; provided,
however, that on any day when the Utilization Rate is greater than 50%, the
Applicable Margin for Offshore Rate Loans shall be 1.00%.
"Assignee" has the meaning specified in subsection 10.08(a).
--------
"Attorney Costs" means and includes all fees and disbursements of any
--------------
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause hereto.
----
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
---------------
U.S.C. (S)101, et seq.).
-------
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
---------
plus the latest Federal Funds Rate; and (b) the rate of interest in effect
for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect at
the opening of business on the day specified in the public announcement of
such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
--------------
Rate.
"BofA" means Bank of America National Trust and Savings Association, a
----
national banking association.
"Borrowing" means a borrowing hereunder consisting of (a) Revolving
---------
Loans of the same Type made to the Company on the same day by the Banks
under Article II, and, other than in the case of Base Rate Loans, having the
same Interest Period and (b) Local Currency Loans made to any Other
Borrowing Entity on the same day by the Banks under Section 2.04 and having
the same Interest Period.
2
<PAGE>
Exhibit 10.16
-----
"Borrowing Date" means any date on which a Borrowing occurs under
--------------
Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or other day
------------
on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to
any Offshore Rate Loan, means such a day on which dealings are carried on in
the London interbank market and, if the applicable Business Day relates to
any Local Currency Loan, means such a day on which commercial banks are open
for foreign exchange business in London, England, and on which dealings in
the relevant Local Currency are carried on in the applicable offshore
foreign exchange interbank market in which disbursement of or payment in
such Local Currency will be made or received hereunder.
"Capital Adequacy Regulation" means any guideline, request or
---------------------------
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Change in Control" means the direct or indirect acquisition by any
-----------------
person (as such term is used in Section 13(d) and Section 14(d)(2) of the
Exchange Act), or related persons constituting a group (as such term is used
in Rule 13d-5 under the Exchange Act), of (a) beneficial ownership of issued
and outstanding shares of voting stock of the Company, the result of which
acquisition is that such person or such group possesses in excess of 40% of
the combined voting power of all then-issued and outstanding voting stock of
the Company, or (b) the power to elect, appoint, or cause the election or
appointment of at least a majority of the members of the board of directors
of the Company.
"Closing Date" means the date on which all conditions precedent set
------------
forth in Section 4.01 are satisfied or waived by all Banks (or, in the case
of subsection 4.01(e), waived by the Person entitled to receive such
payment).
"Code" means the Internal Revenue Code of 1986, and regulations
----
promulgated thereunder.
"Commitment", as to each Bank, has the meaning specified in Section
----------
2.01.
"Compliance Certificate" means a certificate substantially in the form
----------------------
of Exhibit C.
---------
"Computation Date" has the meaning specified in subsection 2.04(f).
----------------
"Contingent Obligation" means, as to any Person, any direct or
---------------------
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other
3
<PAGE>
Exhibit 10.16
-----
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of
any such primary obligation, or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition
of the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation, or (iv) otherwise to assure or hold harmless the holder
of any such primary obligation against loss in respect thereof (each, a
"Guaranty Obligation"); (b) with respect to any Surety Instrument issued for
the account of that Person or as to which that Person is otherwise liable
for reimbursement of drawings or payments; (c) to purchase any materials,
supplies or other property from, or to obtain the services of, another
Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such
materials, supplies or other property is ever made or tendered, or such
services are ever performed or tendered, or (d) in respect of any Swap
Contract. The amount of any Contingent Obligation shall, in the case of
Guaranty Obligations, be deemed equal to the stated or determinable amount
of the primary obligation in respect of which such Guaranty Obligation is
made or, if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof, and in the case of other
Contingent Obligations, shall be equal to the maximum reasonably anticipated
liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under Section
----------------------------
2.05, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the giving of
-------
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of the United
------- ------- -
States.
4
<PAGE>
Exhibit 10.16
-----
"Eligible Assignee" means (i) a commercial bank organized under the
-----------------
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) 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 a combined capital and
surplus of at least $100,000,000, provided that such bank is acting through
a branch or agency located in the United States; and (iii) a Person that is
primarily engaged in the business of commercial banking and that is (A) a
Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is a
Subsidiary, or (C) a Person of which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
--------------------
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
------------------
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and land
use matters.
"Equivalent Amount" means the equivalent amount in Dollars of an
-----------------
amount expressed in a Local Currency, calculated at the applicable Exchange
Rate.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
-----
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
-----------
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any
ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the
5
<PAGE>
Exhibit 10.16
-----
termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Company or any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in the
-----------------------------
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances specified
----------------
in Section 8.01.
"Exchange Act" means the Securities and Exchange Act of 1934, and
------------
regulations promulgated thereunder.
"Exchange Rate" means for any Local Currency, the rate quoted by BofA
-------------
as the spot rate for the purchase by BofA of such Local Currency with
Dollars through its Foreign Exchange Trading Center Number 5193 San
Francisco, California (or such other of its offices as BofA may designate
from time to time) at approximately 8:00 a.m. (San Francisco time) on the
date two Business Days prior to the date on which the foreign exchange
computation is to be made.
"Existing Loan" means the Japanese Yen loan made by BofA through its
-------------
Tokyo branch to Measurex Japan Ltd., which loan has a Dollar equivalent
principal balance as of the Closing Date of approximately $4,000,000.
"FDIC" means the Federal Deposit Insurance Corporation, and any
----
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
------------------
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
----------
"FRB" means the Board of Governors of the Federal Reserve System, and
---
any Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth from
----
time to time in the opinions and
6
<PAGE>
Exhibit 10.16
-----
pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession),
which are applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guaranty" means the Guaranty executed by the Company on the Closing
--------
Date substantially in the form of Exhibit G.
"Guaranty Obligation" has the meaning specified in the definition of
-------------------
"Contingent Obligation."
"Indebtedness" of any Person means, without duplication, (a) all
------------
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing, in either
case with respect to property acquired by such Person (even though the
rights and remedies of the seller or bank under such agreement in the event
of default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all net obligations with
respect to Swap Contracts; (h) all indebtedness referred to in clauses (a)
through (g) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien
upon or in property (including accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; and (i) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses
(a) through (g) above.
"Indemnified Liabilities" has the meaning specified in Section 10.05.
-----------------------
"Indemnified Person" has the meaning specified in Section 10.05.
------------------
7
<PAGE>
Exhibit 10.16
-----
"Independent Auditor" has the meaning specified in subsection 6.01(a).
-------------------
"Insolvency Proceeding" means (a) any case, action or proceeding
---------------------
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-
up or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign
law, including the Bankruptcy Code.
"Interest Payment Date" means, as to any Loan other than a Base Rate
---------------------
Loan, the last day of each Interest Period applicable to such Loan and, as
to any Base Rate Loan, the last Business Day of each calendar quarter and
each date such Loan is converted into another Type of Loan, provided,
--------
however, that if any Interest Period for an Offshore Rate Loan or a Local
-------
Currency Loan exceeds three months, the date that falls three months after
the beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan or Local
---------------
Currency Loan, the period commencing on the Borrowing Date of such Loan or
on the Conversion/
Continuation Date on which an Offshore Rate Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
--------
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following 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 preceding Business Day;
(ii) any Interest Period 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 the calendar month at the
end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond the
Revolving Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
---
Authority succeeding to any of its principal functions under the Code.
8
<PAGE>
Exhibit 10.16
-----
"Joint Venture" means a single-purpose corporation, limited liability
-------------
company, partnership, joint venture or other similar legal arrangement
(whether created by contract or conducted through a separate legal entity)
now or hereafter formed by the Company or any of its Subsidiaries with
another Person in order to conduct a common venture or enterprise with such
Person.
"Lending Office" means, as to any Bank, the office or offices of such
--------------
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 10.02, or such
--------------
other office or offices as such Bank may from time to time notify the
Company and the Agent.
"Lien" means any security interest, mortgage, deed of trust, pledge,
----
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the foregoing,
or the filing of any financing statement naming the owner of the asset to
which such lien relates as debtor, under the Uniform Commercial Code or any
comparable law) and any contingent or other agreement to provide any of the
foregoing, but not including the interest of a lessor under an operating
lease or any financing statement filed by any such lessor.
"Loan" means an extension of credit by a Bank to the Company or an
----
Other Borrowing Entity under Article II, and may be a Base Rate Loan or an
Offshore Rate Loan (each, a "Type" of Loan) or any Local Currency Loan.
----
"Loan Documents" means this Agreement, the Guaranty, any Notes, the
--------------
Fee Letter and all other documents delivered to the Agent or any Bank in
connection herewith (including all documents executed by the Company, any
Other Borrowing Entity, the Agent or any of the Banks in connection with the
making of any Local Currency Loans).
"Local Currency" means a lawful currency other than United States
--------------
dollars which is available at branches of each of the Banks located in a
country other than the United States and is the legal tender of that
country where such branches are located.
"Local Currency Loan" means a Loan in a Local Currency made pursuant
-------------------
to and in accordance with the provisions of Section 2.04.
"Majority Banks" means at any time, Banks then holding at least 51% of
--------------
the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then
9
<PAGE>
Exhibit 10.16
-----
outstanding, Banks then having at least 51% of the Commitments.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
-----------------------
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or the
Company and its Subsidiaries taken as a whole; (b) a material impairment of
the ability of the Company or any Subsidiary to perform under any Loan
Document and to avoid any Event of Default; or (c) a material adverse effect
upon the legality, validity, binding effect or enforceability against the
Company or any Subsidiary of any Loan Document.
"Multiemployer Plan" means a "multiemployer plan", within the meaning
------------------
of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions.
"Note" means a promissory note executed by the Company in favor of a
----
Bank pursuant to subsection 2.02(b), in substantially the form of Exhibit F.
---------
"Notice of Borrowing" means a notice in substantially the form of
-------------------
Exhibit A.
---------
"Notice of Conversion/Continuation" means a notice in substantially
---------------------------------
the form of Exhibit B.
---------
"Obligations" means all advances, debts, liabilities, obligations,
-----------
covenants and duties arising under any Loan Document owing by the Company or
any Other Borrowing Entity to any Bank, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter
arising.
"Offshore Rate" means, for any Interest Period, with respect to
-------------
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Agent as follows:
Offshore Rate = LIBOR
-----------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
-----------------------------
Interest Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day
(whether or not applicable to any Bank) under regulations issued from
time to time by the FRB for determining the maximum
10
<PAGE>
Exhibit 10.16
-----
reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by the
-----
Agent to be the rates (rounded upward to the next 1/16th of 1%) of
interest per annum notified to the Agent by the Reference Bank as the
rate of interest at which dollar deposits in the approximate amount of
the amount of the Loan to be made or continued as, or converted into,
an Offshore Rate Loan by the Reference Bank and having a maturity
comparable to such Interest Period would be offered to major banks in
the London interbank market at their request at approximately 11:00
a.m. (London time) two Business Days prior to the commencement of such
Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
------------------
Offshore Rate.
"Organization Documents" means, for any corporation, the certificate
----------------------
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
"Other Borrowing Entity" has the meaning specified in subsection
----------------------
2.01(b).
"Other Taxes" means any present or future stamp or documentary taxes
-----------
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or under any other Loan Document or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Overnight Rate" means, for any day, the rate of interest per annum at
--------------
which overnight deposits in the applicable Local Currency, in an amount
approximately equal to the amount with respect to which such rate is being
determined, would be offered for such day by BofA's London Branch to major
banks in the London or other applicable offshore interbank market.
"Participant" has the meaning specified in subsection 10.08(d).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation, or any
----
Governmental Authority succeeding to any of its principal functions under
ERISA.
11
<PAGE>
Exhibit 10.16
-----
"Pension Plan" means a pension plan (as defined in Section 3(2) of
------------
ERISA) subject to Title IV of ERISA which the Company sponsors or maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the immediately preceding
five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.01.
---------------
"Person" means an individual, partnership, corporation, business
------
trust, joint stock company, trust, unincorporated association, joint venture
or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the percentage
--------------
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"Reference Bank" means BofA or any successor Bank designated by the
--------------
Majority Banks.
"Reportable Event" means, any of the events set forth in Section
----------------
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
------------------
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property
is subject.
"Responsible Officer" means the chief executive officer or the
-------------------
president of the Company, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants, the chief financial officer or the treasurer of the Company, or
any other officer having substantially the same authority and
responsibility.
"Revolving Loan" means Base Rate Loans and Offshore Rate Loans.
--------------
"Revolving Termination Date" means the earlier to occur of:
--------------------------
(a) February 10, 1998; and
12
<PAGE>
Exhibit 10.16
-----
(b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any
---
Governmental Authority succeeding to any of its principal functions.
"Subsidiary" of a Person means any corporation, association,
----------
partnership, joint venture or other business entity of which more than 50%
of the voting stock or other equity interests (in the case of Persons other
than corporations), is owned or controlled directly or indirectly by such
Person, or one or more of the Subsidiaries of such Person, or a combination
thereof. Unless the context otherwise clearly requires, references herein to
a "Subsidiary" refer to a Subsidiary of the Company.
"Surety Instruments" means all letters of credit (including standby
------------------
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"Swap Contract" means any agreement (including any master agreement
-------------
and any agreement, whether or not in writing, relating to any single
transaction) that is an interest rate swap agreement, basis swap, forward
rate agreement, commodity swap, commodity option, equity or equity index
swap or option, bond option, interest rate option, forward foreign exchange
agreement, rate cap, collar or floor agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option or any other,
similar agreement (including any option to enter into any of the foregoing).
"Tangible Net Worth" means total assets (exclusive of goodwill,
------------------
patents, trademarks, trade names, organization expense, treasury stock,
unamortized debt discount and premium, deferred charges and other like
intangibles) less all liabilities (including accrued and deferred income
taxes and subordinated liabilities), and when determined with respect to the
Company, shall be determined on a consolidated basis.
"Taxes" means any and all present or future taxes, levies, imposts,
-----
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Bank and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Bank's net income by the jurisdiction under the laws of which such Bank
or the Agent, as the case may be, is organized or maintains a lending
office, or any political subdivision of the related state.
"Type" has the meaning specified in the definition of "Loan."
----
13
<PAGE>
Exhibit 10.16
-----
"Unfunded Pension Liability" means the excess of a Plan's benefit
--------------------------
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding that Plan pursuant to Section 412 of the Code for the applicable
plan year.
"United States" and "U.S." each means the United States of America.
------------- ----
"Utilization Rate" means the daily rate as determined with respect to
----------------
the credit facility described in this Agreement on each day by dividing the
amount of the total outstanding Loans for such day by the combined
Commitments for such day. For purposes of determining utilization of Local
Currency Loans, the amount of any outstanding Local Currency Loan on any
date shall be determined by converting the amount of such outstanding Local
Currency Loan to its Equivalent Amount in Dollars based upon the Exchange
Rate in effect as of the last Business Day of the preceding fiscal quarter.
"Wholly-Owned Subsidiary" means any corporation in which (other than
-----------------------
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Company, or by
one or more of the other Wholly-Owned Subsidiaries, or both.
1.02 Other Interpretive Provisions. (a) The meanings of defined terms
-----------------------------
are equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
14
<PAGE>
Exhibit 10.16
-----
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement and the table of
contents are for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company,
the Other Borrowing Entities and the other parties, and are the products of all
parties. Accordingly, they shall not be construed against the Banks or the
Agent merely because of the Agent's or Banks' involvement in their preparation.
1.03 Accounting Principles. (a) Unless the context otherwise clearly
---------------------
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Company.
15
<PAGE>
Exhibit 10.16
-----
ARTICLE II
THE CREDITS
-----------
2.01 Amounts and Terms of Commitments.
--------------------------------
(a) Committed Revolving Loans. Each Bank severally agrees, on the terms
-------------------------
and conditions set forth herein, to make Revolving Loans to the Company from
time to time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount set forth on Schedule 2.01 (such amount, as the same may
-------------
be reduced under Section 2.06 or changed as a result of one or more assignments
under Section 10.08, such Bank's "Commitment"); provided, however, that, after
---------- -------- -------
giving effect to any Borrowing of Revolving Loans, the aggregate principal
amount of all outstanding Revolving Loans and all Local Currency Loans shall not
exceed the combined Commitments. In determining compliance with the immediately
preceding sentence, all Loans denominated in Local Currencies shall be deemed to
be converted to their Equivalent Amounts in Dollars at such time when such
compliance is determined. Within the limits of each Bank's Commitment, and
subject to the other terms and conditions hereof, the Company may borrow under
this subsection 2.01(a), prepay pursuant to Section 2.07 and reborrow pursuant
to this subsection 2.01(a).
(b) Discretionary Loans. From time to time on any Business Day during
-------------------
the period from the Closing Date to the Revolving Termination Date, upon the
request of the Company, and if agreed to by the Agent and all the Banks in their
sole discretion (except as provided in subsection 2.04(g)), each Bank agrees
severally to make Local Currency Loans to the Company's Subsidiaries in
accordance with Section 2.04. If the Agent and the Banks shall agree to make a
Local Currency Loan to a Subsidiary of the Company, such Subsidiary shall be
deemed then to be an "Other Borrowing Entity" and such Subsidiary shall remain
an Other Borrowing Entity for so long as any such Local Currency Loan remains
outstanding. The total amount of Revolving Loans and Local Currency Loans made
to the Company and the Other Borrowing Entities shall not at any time exceed the
combined Commitments. In determining compliance at any time with the immediately
preceding sentence, all Local Currency Loans shall be deemed to be converted to
their Equivalent Amounts in Dollars at such time when such compliance is
determined.
2.02 Loan Accounts. (a) The Loans made by each Bank shall be evidenced
-------------
by one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the Agent and
each Bank shall be conclusive absent manifest error of the amount of the Loans
made by the Banks to the Company or any Other Borrowing Entity and the interest
and payments thereon. Any failure so to record or any error in doing so shall
not, however, limit or otherwise affect the obligation of the Company or any
Other Borrowing Entity hereunder.
16
<PAGE>
Exhibit 10.16
-----
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank shall endorse on the schedules annexed to its Note(s)
the date, amount and maturity of each Loan made by it and the amount of each
payment of principal made by the Company or any Other Borrowing Entity with
respect thereto. Each such Bank is irrevocably authorized by the Company to
endorse its Note(s) and each Bank's record shall be conclusive absent manifest
error; provided, however, that the failure of a Bank to make, or an error in
-------- -------
making, a notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Company hereunder or under any such Note to such
Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing of Revolving Loans shall
-----------------------
be made upon the Company's irrevocable written notice delivered to the Agent in
the form of a Notice of Borrowing (which notice must be received by the Agent
prior to 9:00 a.m. (San Francisco time) (i) three Business Days prior to the
requested Borrowing Date, in the case of Offshore Rate Loans; and (ii) on the
requested Borrowing Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $3,000,000 or any multiple of $1,000,000
in excess thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing; and
(D) the duration of the Interest Period applicable to such
Loans included in such notice. If the Notice of Borrowing fails to
specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be three
months;
provided, however, that with respect to the Borrowing to be made on the Closing
-------
Date, the Notice of Borrowing shall be delivered to the Agent not later than
2:00 p.m. San Francisco time) one Business Day before the Closing Date and such
Borrowing will consist of Base Rate Loans only.
(b) The Agent will promptly notify each Bank of its receipt of any
Notice of Borrowing and of the amount of such Bank's Pro Rata Share of the
related Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Company at the Agent's
Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date
requested by the Company in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the Company by the
Agent at such office by crediting the account of the Company on the books of
BofA with the aggregate of the amounts made
17
<PAGE>
Exhibit 10.16
-----
available to the Agent by the Banksand in like funds as received by the Agent.
(d) After giving effect to any Borrowing, there may not be more than
six different Interest Periods in effect.
2.04 Local Currency Loans.
--------------------
(a) From time to time from the Closing Date until the Revolving
Termination Date, if agreed to by the Agent and all the Banks in each case (in
the Agent's and the Banks' sole discretion), the Banks severally agree to
consider requests to make Local Currency Loans to the Other Borrowing Entities.
If the Banks do decide to make Local Currency Loans, the Agent, the Banks, the
Company and the appropriate Other Borrowing Entity shall make their best efforts
to agree, at the time of the request for a Local Currency Loan, on the terms of
such Borrowing, including the Borrowing Date, the Local Currency in which such
Local Currency Loan is to be made, the principal amount of such Local Currency
Loan, the principal payment dates, the indicative interest rate and Interest
Period, prepayment and overdue payment terms, conversion and continuation terms,
and the reserve and tax provisions for such Local Currency Loan. The interest
rate for each Local Currency Loan shall be determined on the applicable
Borrowing Date by the Agent and shall be equal to the highest interest rate
offered by the Banks for the requested Borrowing. Upon determination of the
applicable interest rate on each Borrowing Date for a Local Currency Loan, the
Agent shall notify the Company and each Bank thereof. Each Local Currency Loan
shall be due and payable no later than the Revolving Termination Date.
(b) Each Borrowing of Local Currency Loans and each continuance and
renewal thereof shall be extended by each Bank on the same terms applicable to
each other Bank. If the Banks agree to make a Local Currency Loan and agree to
the terms of such Local Currency Loan as provided in subsection 2.04(a), each
Bank will make the amount of its Pro Rata Share of such Local Currency Loan
available to the Agent for the account of the Company at the Agent's office
located in the applicable foreign country by 11:00 a.m. local time on the
Borrowing Date requested by the Company in funds immediately available to the
Agent and denominated in the applicable Local Currency. The proceeds of all
such Loans will then be made available to the applicable Other Borrowing Entity
by the Agent at such office. If, upon the maturity or expiration of any
Interest Period applicable to a Local Currency Loan, the Company notifies the
Agent of its desire to renew or continue such Local Currency Loan, the Agent
will promptly notify each Bank, and the Agent, the Banks, the Company and the
applicable Other Borrowing Entity shall make their best efforts to agree on the
terms of such renewal or continuance; provided, however, that the Banks shall be
-------- -------
under no obligation to renew or continue Local Currency Loans if any Bank
determines that it cannot continue to provide Loans in the applicable Local
Currency.
(c) The Company shall notify the Agent of each request for a Local
Currency Loan by telephone and confirmed by facsimile not less than ten Business
Days prior to the requested Borrowing
18
<PAGE>
Exhibit 10.16
-----
Date. The Agent will promptly notify each Bank of its receipt of any such
notice. Upon agreement among the Banks of the terms of a Local Currency Loan
(other than the interest rate, which shall be determined on the Borrowing Date
as provided in subsection 2.04(a)), the Agent will notify the Company thereof
and shall provide the Company an indication of the applicable interest rate
based on the highest interest rate indicated by the Banks. If the Company agrees
to such terms, not less than four Business Days prior to the requested Borrowing
Date the Company will provide irrevocable written notice to the Agent in the
form of a Notice of Borrowing executed by the Company or, if so required by the
Agent (at the request of the Majority Banks), by the Company and the appropriate
Other Borrowing Entity, specifying the identity of the Other Borrowing Entity,
the applicable Local Currency, the amount of the Borrowing, the requested
Borrowing Date, which shall be a Business Day, and the duration of any Interest
Period applicable to such Local Currency Loans. Upon the Company's submission of
a Notice of Borrowing for a Local Currency Loan, the Agent shall promptly notify
each Bank of the amount of each Bank's Pro Rata Share of that Borrowing.
(d) The Company acknowledges and agrees (and shall cause each Other
Borrowing Entity to acknowledge and agree) that (i) prior to the Banks making
any Local Currency Loan, the Agent and the Banks expect to receive such
documents or information as may be required by the Banks or the Agent (or any of
them in their sole discretion), in accordance with the terms of this Agreement,
(ii) reasonable delays are to be anticipated by the Company and the Other
Borrowing Entities in connection with the Agent's and the Banks' review of, and
satisfaction with, such documents and information required to be received by the
Agent and the Banks prior to the Banks making any Local Currency Loan, (iii) the
Company and the Other Borrowing Entities assume all of the risks associated with
any reasonable delays in the Other Borrowing Entities' receiving any Local
Currency Loan from the Banks, and (iv) under no circumstances shall the total
amount of Local Currency Loans and Revolving Loans made to the Company and the
Other Borrowing Entities at any time exceed the combined Commitments. In
determining compliance at any time with clause (iv) of the immediately preceding
sentence, all Loans denominated in Local Currencies shall be deemed to be
converted to their Equivalent Amounts in Dollars at such time when such
compliance is determined.
(e) The Equivalent Amount of any Borrowing in a Local Currency will be
determined by the Agent for such Borrowing on the Computation Date therefor in
accordance with subsection 2.04(f). Upon receipt of a Notice of Borrowing as
provided in subsection 2.04(c), the Agent will promptly notify each Bank thereof
and of the approximate amount of such Bank's Pro Rata Share of the related
Borrowing. Upon the determination of the Equivalent Amount of such Borrowing as
specified in the applicable Notice of Borrowing, the Agent will promptly notify
the Company and each Bank of the exact amount of such Bank's Pro Rata Share of
such Borrowing.
(f) The Agent will determine the Equivalent Amount with respect to any
(i) Borrowing comprised of Local Currency
19
<PAGE>
Exhibit 10.16
-----
Loans, as of the requested Borrowing Date and (ii) outstanding Local Currency
Loans, as of the last Business Day of each month (each such date, a "Computation
-----------
Date"). The Agent will notify the Company and the Banks as to the determination
- ----
of the Equivalent Amounts of outstanding Local Currency Loans upon determination
thereof pursuant to clause (ii) in the immediately preceding sentence.
(g) The Company shall submit a request to the Agent and shall cause
the appropriate Other Borrowing Entity to obtain Local Currency Loans in an
amount sufficient to repay the Existing Loan. Such Local Currency Loans shall
have a Borrowing Date no later than thirty days following the Closing Date, and
the proceeds of such Local Currency Loans will be used to repay the Existing
Loan. Each Bank hereby agrees to make such a Local Currency Loan in the amount
of its Pro Rata Share of the outstanding Existing Loan and within such period
time, and subject to such additional terms as shall be agreed upon by the Agent,
the Banks, the Company and the applicable Other Borrowing Entity.
2.05 Conversion and Continuation Elections. (a) The Company may, upon
-------------------------------------
irrevocable written notice to the Agent in accordance with subsection 2.05(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the case
of any other Type of Revolving Loans, to convert any such Loans (or any part
thereof in an amount not less than $3,000,000, or that is in a multiple of
$1,000,000 in excess thereof) into Revolving Loans of any other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Offshore Rate Loans having Interest Periods expiring
on such day (or any part thereof in an amount not less than $3,000,000, or
that is in a multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
- --------
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation to
be received by the Agent not later than 9:00 a.m. (San Francisco time) at least
(i) three Business Days in advance of the Conversion/Continuation Date, if the
Loans are to be converted into or continued as Offshore Rate Loans; and (ii) one
Business Day in advance of the Conversion/
Continuation Date, if the Loans are to be converted into Base Rate Loans,
specifying:
20
<PAGE>
Exhibit 10.16
-----
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Revolving Loans to be converted
or renewed;
(C) the Type of Revolving Loans resulting from the proposed
conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, or if any Default or Event
of Default then exists, subject to subsection 2.05(e), the Company shall be
deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made ratably
according to the respective outstanding principal amounts of the Revolving Loans
with respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, during the existence of
a Default or Event of Default, the Company may not elect to have a Revolving
Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Revolving
Loans, there may not be more than six different Interest Periods in effect.
2.06 Voluntary Termination or Reduction of Commitments. The Company may,
-------------------------------------------------
upon not less than five Business Days' prior notice to the Agent, terminate the
Commitments, or permanently reduce the Commitments by an aggregate minimum
amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; unless,
------
after giving effect thereto and to any prepayments of Loans made on the
effective date thereof, the then outstanding principal amount of the Revolving
Loans and Local Currency Loans would exceed the amount of the combined
Commitments then in effect. Once reduced in accordance with this Section 2.06,
the Commitments may not be increased. Any reduction of the Commitments shall be
applied to each Bank according to its Pro Rata Share. All accrued commitment
fees to, but not including the effective date of any reduction or termination of
Commitments, shall be paid on the effective date of such reduction or
termination. The Agent shall notify the Banks of any termination or reduction
of the Commitments.
21
<PAGE>
Exhibit 10.16
-----
2.07 Optional Prepayments. Subject to Section 3.04, the Company may, at any
--------------------
time or from time to time, upon not less than three Business Days' irrevocable
notice to the Agent in the case of Offshore Rate Loans, and upon not less than
one Business Day's irrevocable notice to the Agent in the case of Base Rate
Loans, ratably prepay Revolving Loans in whole or in part, in minimum amounts of
$3,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of
prepayment shall specify the date and amount of such prepayment and the Type(s)
of Revolving Loans to be prepaid. The Agent will promptly notify each Bank of
its receipt of any such notice, and of such Bank's Pro Rata Share of such
prepayment. If such notice is given by the Company, the Company shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant to Section
3.04.
2.08 Repayment and Mandatory Prepayment. The Company shall (and shall
----------------------------------
cause each Other Borrowing Entity to) repay to the Banks on the Revolving
Termination Date the aggregate principal amount of Loans outstanding on such
date. The Company shall (and shall cause each Other Borrowing Entity to)
immediately prepay that portion of the principal amount of any Loans at any time
outstanding which exceeds the combined Commitments, including any such excess
that results from foreign currency exchange fluctuations in respect of any Local
Currency Loans, and reimburse the Banks for any funding losses incurred by the
Banks in connection with such prepayments as set forth in Section 3.04. In
determining whether any such prepayment is required at any time in accordance
with the immediately preceding sentence, all Local Currency Loans shall be
deemed to be converted to their Equivalent Amounts in Dollars at such time when
such compliance is determined.
2.09 Interest. (a) Each Revolving Loan shall bear interest on the
--------
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Offshore Rate or the Base Rate, as the case may be
(and subject to the Company's right to convert to other Types of Revolving Loans
under Section 2.05), plus the Applicable Margin.
----
(b) Interest on each Revolving Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Revolving Loans under Section 2.07 or 2.08 for the portion of the
Revolving Loans so prepaid and upon payment (including prepayment) in full
thereof and, during the existence of any Event of Default, interest shall be
paid on demand of the Agent at the request or with the consent of the Majority
Banks.
(c) Notwithstanding subsection (a) of this Section, if any amount of
principal of or interest on any Loan, or any other amount payable hereunder or
under any other Loan Document is not paid in full when due (whether at stated
maturity, by acceleration, demand or otherwise), the Company agrees to pay
interest on such unpaid principal or other amount, from the date such amount
becomes due until the date such amount is paid in
22
<PAGE>
Exhibit 10.16
-----
full, after as well as before any entry of judgment thereon to the extent
permitted by law, payable on demand, at a fluctuating rate per annum equal to
the Base Rate plus 2%, or, in the case of Offshore Rate Loans, at a fluctuating
rate per annum equal to the applicable Offshore Rate plus 2% through the end of
the current Interest Period.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Company to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
2.10 Fees. (a) Agency Fee. The Company shall pay an agency fee to the
---- ----------
Agent for the Agent's own account, as required by the letter agreement ("Fee
---
Letter") between the Company and the Agent dated January 25, 1995.
- ------
(b) Facility Fees; Commitment Fee. The Company shall pay to the Agent
-----------------------------
for the account of each Bank a facility fee on such Bank's Commitment from time
to time in effect, computed by the Agent on a quarterly basis in arrears on the
last Business Day of each calendar quarter, equal to 0.150 percent per annum.
In addition, the Company shall pay to the Agent for the account of each Bank a
commitment fee on the average daily unused portion of such Bank's Commitment,
computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter based upon the daily utilization for that quarter as calculated
by the Agent and by converting Local Currency Loans to their Equivalent Amounts
in Dollars based upon the Exchange Rate in effect as of the last Business Day of
such calendar quarter, equal to 0.125 percent per annum. Such facility fee and
commitment fee shall accrue from the Closing Date to the Revolving Termination
Date and shall be due and payable quarterly in arrears on the last Business Day
of each calendar quarter commencing on March 31, 1995 through the Revolving
Termination Date, with the final payment to be made on the Revolving Termination
Date; provided that, in connection with any reduction or termination of
--------
Commitments under Section 2.06, the accrued facility fee and commitment fee
calculated for the period ending on such date shall also be paid on the date of
such reduction or termination, with the following quarterly payment being
calculated on the basis of the period from such reduction or termination date to
such quarterly payment date. The facility fees and commitment fees provided in
this subsection shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions in Article IV
are not met.
23
<PAGE>
Exhibit 10.16
-----
2.11 Computation of Fees and Interest. (a) All computations of interest
--------------------------------
for Base Rate Loans when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year). Interest
and fees shall accrue during each period during which interest or such fees are
computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Company and the Banks in the absence of manifest
error. At the request of the Company or any Bank, the Agent will deliver to the
Company or such Bank, as the case may be, a statement showing the quotations
used by the Agent in determining any interest rate and the resulting interest
rate and the Exchange Rates used in determining any Equivalent Amounts. The
Agent will invoice the Company for accrued interest on the Loans and for the
fees set forth in Section 2.10 as such interest and fees become due, provided,
--------
however, that the Agent's failure to provide any such invoices to the Company
- -------
shall not affect the Company's obligation to make all such payments on a timely
basis.
24
<PAGE>
Exhibit 10.16
-----
2.12 Payments by the Company or Other Borrowing Entities. (a) All
---------------------------------------------------
payments to be made by the Company or any Other Borrowing Entity shall be made
without set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Company and the Other Borrowing Entities
shall be made to the Agent for the account of the Banks (i) with respect to
principal of, interest on, and any other amounts relating to, any Local Currency
Loan, at the Agent's local payment office designated by the Agent in connection
with each Borrowing of a Local Currency Loan and shall be made in the Local
Currency in which such Loan is denominated or payable, and (ii) at the Agent's
Payment Office and in Dollars, with respect to all other amounts payable
hereunder. Such payments shall be made in immediately available funds, and (x)
in the case of Local Currency payments, no later than the time and on the dates
specified in the terms that are agreed to among the Company, the applicable
Other Borrowing Entity, the Agent and the Banks, as set forth in subsection
2.04(a) (provided that if no time is so specified, no later than 11:00 a.m.
-------- ----
local time in the country in which the applicable Local Currency Loan is made,
and provided, further, that any amounts due on a date that is not a Business Day
-------- -------
shall be due on the next succeeding Business Day), and as may otherwise be
determined by the Agent to be necessary for such payment to be credited on such
date in accordance with normal banking procedures in the place of payment, and
(y) in the case of any Dollar payments, no later than 11:00 a.m. (San Francisco
time) on the date specified herein. The Agent will promptly distribute to each
Bank its Pro Rata Share (or other applicable share as expressly provided herein)
of such payment in like funds as received, and in the case of payments of Local
Currency Loans, in each Bank's office located in the applicable foreign country.
Any payment received by the Agent later than 11:00 a.m. (San Francisco time) or
later than the time specified by the Agent as provided in clause (i) above (in
the case of Local Currency payments) shall be deemed to have been received on
the following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, whenever any payment is due on a day other than a Business Day,
such payment shall be made on the following Business Day, and such extension of
time shall in such case be included in the computation of interest or fees, as
the case may be.
(c) Unless the Agent receives notice from the Company prior to the
date on which any payment is due to the Banks that the Company will not make
such payment in full as and when required, the Agent may assume that the Company
has made such payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Agent, each Bank shall repay to the Agent on demand such
amount distributed to such Bank, together with interest thereon at the Federal
Funds Rate or, in the case of a payment in a Local Currency, the Overnight Rate,
for each day
25
<PAGE>
Exhibit 10.16
-----
from the date such amount is distributed to such Bank until the date repaid.
2.13 Payments by the Banks to the Agent. (a) Unless the Agent receives
----------------------------------
notice from a Bank on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Bank will not make available as and when required
hereunder to the Agent for the account of the Company the amount of that Bank's
Pro Rata Share of such Borrowing, the Agent may assume that such Bank has made
such amount available to the Agent in immediately available funds on the
Borrowing Date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Agent in immediately available funds and the Agent in such
circumstances has made available to the Company such amount, that Bank shall on
the Business Day following such Borrowing Date make such amount available to the
Agent, together with interest at the Federal Funds Rate or, in the case of any
Borrowing consisting of Local Currency Loans, the Overnight Rate, for each day
during such period. A notice of the Agent submitted to any Bank with respect to
amounts owing under this subsection (a) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the Agent shall
constitute such Bank's Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to the Agent on the Business
Day following the Borrowing Date, the Agent will notify the Company of such
failure to fund and, upon demand by the Agent, the Company shall pay such amount
to the Agent for the Agent's account, together with interest thereon for each
day elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly provided
-------------------------
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (other than pursuant to Section 10.08, and whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Pro Rata Share, such Bank shall immediately (a) notify the Agent
of such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all or
-------- -------
any portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor, together with an
amount equal to such paying Bank's
26
<PAGE>
Exhibit 10.16
-----
ratable share (according to the proportion of (i) the amount of such paying
Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 10.10) with respect to such
participation as fully as if such Bank were the direct creditor of the Company
in the amount of such participation. The Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
3.01 Taxes. (a) Any and all payments by the Company or any Other Borrowing
-----
Entity to each Bank or the Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction or withholding
for, any Taxes. In addition, the Company shall and shall cause any Other
Borrowing Entity to pay all Other Taxes.
(b) The Company agrees to and shall cause each Other Borrowing Entity
to indemnify and hold harmless each Bank and the Agent for the full amount of
Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by such Bank or the
Agent and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date such Bank or the
Agent makes written demand therefor.
(c) If the Company or any Other Borrowing Entity shall be required by
law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum
payable hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Bank or the Agent, as the case may be, receives an amount equal to the sum
it would have received had no such deductions or withholdings been made;
(ii) the Company shall, or shall cause any Other Borrowing Entity
to, make such deductions and withholdings;
27
<PAGE>
Exhibit 10.16
-----
(iii) the Company shall, or shall cause any Other Borrowing
Entity to, pay the full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with applicable law; and
(iv) the Company shall, or shall cause any Other Borrowing Entity
to, also pay to each Bank or the Agent for the account of such Bank, at the
time interest is paid, all additional amounts which the respective Bank
specifies as necessary to preserve the after-tax yield such Bank would have
received if such Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall, or shall cause any Other Borrowing
Entity to, furnish the Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to the
Agent.
(e) If the Company or any Other Borrowing Entity is required to pay
additional amounts to any Bank or the Agent pursuant to subsection (c) of this
Section, then such Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Company or any Other Borrowing
Entity which may thereafter accrue, if such change in the judgment of such Bank
is not otherwise disadvantageous to such Bank.
3.02 Illegality. (a) If any Bank determines that the introduction of any
----------
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or any central bank or other Governmental Authority has asserted that
it is unlawful, for any Bank or its applicable Lending Office to make Offshore
Rate Loans or to make Local Currency Loans in respect of any foreign
jurisdiction ("Prohibited LC Loans"), then, on notice thereof by such Bank to
the Company or the relevant Other Borrowing Entity through the Agent, any
obligation of that Bank to make Offshore Rate Loans or Prohibited LC Loans shall
be suspended until such Bank notifies the Agent and the Company that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines or any Governmental Authority has asserted
that it is unlawful to maintain any Offshore Rate Loan or Prohibited LC Loan,
the Company shall (or shall cause the relevant Other Borrowing Entity to), upon
its receipt of notice of such fact and demand from such Bank (with a copy to the
Agent), prepay in full such Offshore Rate Loans or Prohibited LC Loan of that
Bank then outstanding, together with interest accrued thereon and amounts
required under Section 3.04, either on the last day of the Interest Period
therefor, if such Bank may lawfully continue to maintain such Offshore Rate
Loans or Prohibited LC Loan to such day, or immediately, if such Bank may not
lawfully continue to maintain such Offshore Rate Loan or Prohibited LC Loan. If
the Company is required to so prepay any Offshore Rate Loan or Prohibited LC
Loan, then
28
<PAGE>
Exhibit 10.16
-----
concurrently with such prepayment, the Company shall borrow (or shall cause the
relevant Other Borrowing Entity to borrow) from the affected Bank, in the
amount, or in the case of a Prohibited LC Loan, Equivalent Amount, of such
repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, the Company shall elect, by giving
notice to such Bank through the Agent that all Revolving Loans which would
otherwise be made by such Bank as Offshore Rate Loans shall be instead Base Rate
Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans or Prohibited LC Loans if such designation will avoid the
need for giving such notice or making such demand and will not, in the judgment
of such Bank, be illegal or otherwise disadvantageous to such Bank.
3.03 Increased Costs and Reduction of Return. (a) If any Bank determines
----------------------------------------
that, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance by that Bank with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans or Local Currency Loans, then the Company shall or the
relevant Other Borrowing Entity shall be liable for, and shall (or shall cause
the relevant Other Borrowing Entity to), within 30 days after demand therefor by
such Bank (with a copy of such demand to be sent to the Agent), pay to the Agent
for the account of such Bank, additional amounts as are sufficient to compensate
such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Bank (or
its Lending Office) or any corporation controlling such Bank with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's or such corporation's desired return
on capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this
Agreement, then, within 30 days after demand by such Bank to the Company through
the Agent, the Company shall pay to such Bank, from time to time as specified by
the Bank, additional amounts sufficient to compensate such Bank or such
corporation for such increase.
3.04 Funding Losses. The Company shall (or shall cause the relevant Other
--------------
Borrowing Entity to) reimburse each Bank and hold
29
<PAGE>
Exhibit 10.16
-----
each Bank harmless from any loss or expense which such Bank may sustain or incur
as a consequence of:
(a) the failure of the Company or the relevant Other Borrowing Entity
to make on a timely basis any payment of principal of any Offshore Rate Loan or
Local Currency Loan;
(b) the failure of the Company (or the relevant Other Borrowing Entity)
to borrow, continue or convert a Loan after the Company has given (or is deemed
to have given) a Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in accordance
with any notice delivered under Section 2.07;
(d) the prepayment (including pursuant to Section 2.08 and Section
3.02) or other payment (including after acceleration thereof) of an Offshore
Rate Loan or a Local Currency Loan on a day that is not the last day of the
relevant Interest Period; or
(e) the automatic conversion under Section 2.05 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or Local Currency
Loans or from fees payable to terminate the deposits from which such funds were
obtained. For purposes of calculating amounts payable by the Company to the
Banks under this Section and under subsection 3.03(a), (i) each Offshore Rate
Loan made by a Bank (and each related reserve, special deposit or similar
requirement) shall be conclusively deemed to have been funded at the Offshore
Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the
London interbank market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded, and (ii) each Local
Currency Loan made by a Bank (and each related reserve, special deposit or
similar requirement) shall be conclusively deemed to have been funded at the
applicable similar interest rate used by the Banks in determining the interest
rate for such Local Currency Loan in a comparable amount and for a comparable
period, whether or not such Local Currency Loan is in fact so funded.
3.05 Inability to Determine Rates. If the Agent determines that for any
----------------------------
reason adequate and reasonable means do not exist for determining the Offshore
Rate for any requested Interest Period with respect to a proposed Offshore Rate
Loan, or that the Offshore Rate applicable pursuant to subsection 2.09(a) for
any requested Interest Period with respect to a proposed Offshore Rate Loan does
not adequately and fairly reflect the cost to any Banks of funding such Loan,
the Agent will promptly so notify the Company and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans hereunder shall
be suspended until the Agent revokes such notice in writing. Upon receipt of
such notice, the Company may revoke
30
<PAGE>
Exhibit 10.16
-----
any Notice of Borrowing or Notice of Conversion/Continuation then submitted by
it. If the Company does not revoke such notice, the Banks shall make, convert or
continue the Revolving Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but such Revolving
Loans shall be made, converted or continued as Base Rate Loans instead of
Offshore Rate Loans.
3.06 Certificates of Banks. Any Bank claiming reimbursement or
---------------------
compensation under this Article III shall deliver to the Company (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to such Bank hereunder and such certificate shall be conclusive and binding on
the Company and each Other Borrowing Entity in the absence of manifest error.
3.07 Survival. The agreements and obligations of the Company in this
--------
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.01 Conditions of Initial Loans. The obligation of each Bank to make its
---------------------------
initial Loan hereunder is subject to the condition that the Agent have received
on or before the Closing Date all of the following, in form and substance
satisfactory to the Agent and each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement; Guaranty. This Agreement and the Guaranty,
--------------------------
executed by each party thereto;
(b) Resolutions; Incumbency.
-----------------------
(i) Copies of the resolutions of the board of directors of the
Company authorizing the transactions contemplated hereby, certified as of
the Closing Date by the Secretary or an Assistant Secretary of the Company;
and
(ii) A certificate of the Secretary or Assistant Secretary of the
Company certifying the names and true signatures of the officers of the
Company authorized to execute, deliver and perform, as applicable, this
Agreement, and all other Loan Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the following
-------------------------------------
documents:
(i) the articles or certificate of incorporation and the bylaws
of the Company as in effect on the Closing Date, certified by the Secretary
or Assistant Secretary of the Company as of the Closing Date; and
31
<PAGE>
Exhibit 10.16
-----
(ii) a good standing and tax good standing certificate for the
Company from the Secretary of State (or similar, applicable Governmental
Authority) of its state of incorporation and the State of California as of a
recent date, together with a bring-down certificate by facsimile, dated the
Closing Date or immediately prior thereto;
(d) Legal Opinion. An opinion of Brobeck, Phleger & Harrison, counsel
-------------
to the Company and addressed to the Agent and the Banks, substantially in the
form of Exhibit D;
---------
(e) Payment of Fees. Evidence of payment by the Company of all accrued
---------------
and unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with Attorney Costs of BofA to the extent invoiced prior
to or on the Closing Date, including any such costs, fees and expenses arising
under or referenced in Sections 2.10 and 10.04;
(f) Certificate. A certificate signed by a Responsible Officer, dated
-----------
as of the Closing Date, stating that:
(i) the representations and warranties contained in Article V are
true and correct on and as of such date, as though made on and as of such
date;
(ii) no Default or Event of Default exists or would result from
the initial Borrowing; and
(iii) there has occurred since August 28, 1994, no event or
circumstance that has resulted or could reasonably be expected to result in
a Material Adverse Effect; and
(g) Other Documents. Such other approvals, opinions, documents or
---------------
materials as the Agent or any Bank may request.
4.02 Conditions to All Borrowings. The obligation of each Bank to make any
----------------------------
Loan to be made by it (including its initial Loan) or to continue or convert any
Revolving Loan under Section 2.05 is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date or Conversion/
Continuation Date:
(a) Notice of Borrowing or Conversion/Continuation. The Agent shall
----------------------------------------------
have received (with, in the case of the initial Loan only, a copy for each Bank)
a Notice of Borrowing or a Notice of Conversion/Continuation, as applicable;
(b) Continuation of Representations and Warranties. The
----------------------------------------------
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date, and
Section 5.11 shall be deemed to refer to the last day of the most recent fiscal
quarter for
32
<PAGE>
Exhibit 10.16
-----
which financial statements have then been delivered hereunder); and
(c) No Existing Default. No Default or Event of Default shall exist
-------------------
or shall result from such Borrowing or continuation or conversion.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Company hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice and as of each Borrowing Date or
Conversion/Continuation Date, as applicable, that the conditions in this Section
4.02 are satisfied.
4.03 Conditions to All Local Currency Loans to Other Borrowing Entities.
------------------------------------------------------------------
Except with respect to the Local Currency Loans to be used to repay the Existing
Loan, the Banks shall not make any Loan to an Other Borrowing Entity unless and
until all of the Banks have decided, in their sole reasonable discretion, to
make any such requested Loan (it being understood by the parties hereto that the
Banks have no commitment or obligation to make Loans to the Other Borrowing
Entities) and there shall have been delivered, in form and substance
satisfactory to the Banks with respect to each such requested Loan:
(a) Credit Documentation. Credit documentation relating to the
--------------------
requested credit extension executed by the relevant Other Borrowing Entity (such
credit documentation shall contain such terms and provisions (including but not
limited to the amount of the Loan, interest, fees, conditions precedent,
covenants, and events of default) as any Bank deems appropriate for such
requested Loan in such Bank's sole reasonable discretion) and such other
instruments, agreements, documents, and evidence that any Bank may reasonably
require;
(b) Compliance with Conditions Precedent. Evidence that all
------------------------------------
conditions precedent relating to such requested credit extension have been
complied with; and
(c) Other Evidence. Such other evidence as any Bank may reasonably
--------------
request to establish and effect fully the consummation of the transactions
contemplated thereby, the taking of all proceedings in connection therewith, and
compliance with the conditions set forth in the agreements relating to such
requested Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants to the Agent and each Bank that:
5.01 Corporate Existence and Power. The Company and each of its
-----------------------------
Subsidiaries:
33
<PAGE>
Exhibit 10.16
-----
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation except where
the failure to be so qualified, or to be in good standing, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business,
except, in the case of any Subsidiary, where any failure could not reasonably be
expected to have a Material Adverse Effect, and to execute, deliver, and perform
its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation and is licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
or license, except where any failure could not reasonably be expected to have a
Material Adverse Effect; and
(d) is in compliance with all Requirements of Law, except where any
failure could not reasonably be expected to have a Material Adverse Effect.
5.02 Corporate Authorization; No Contravention. The execution, delivery
-----------------------------------------
and performance by the Company of this Agreement and each other Loan Document to
which the Company is party, have been duly authorized by all necessary corporate
action, and do not and will not:
(a) contravene the terms of any of the Company's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which the Company or any Subsidiary is a party or any order, injunction, writ
or decree of any Governmental Authority to which the Company or any Subsidiary
or their respective property is subject; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
--------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of this Agreement or any other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document to which
--------------
the Company is a party constitute the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the
34
<PAGE>
Exhibit 10.16
-----
enforcement of creditors' rights generally or by equitable principles relating
to enforceability.
5.05 Litigation. Except as specifically disclosed in Schedule 5.05, there
---------- -------------
are no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Company, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Company, or its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect. No injunction, writ,
temporary restraining order or order of any nature has been issued by any court
or other Governmental Authority purporting to enjoin or restrain the execution,
delivery or performance of this Agreement or any other Loan Document, or
directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists or would result
----------
from the incurring of any Obligations by the Company. Except as set forth in
Schedule 5.06, as of the Closing Date, neither the Company nor any Subsidiary is
- -------------
in default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect, or that would, if such default had
occurred after the Closing Date, create an Event of Default under subsection
8.01(e).
5.07 ERISA Compliance.
----------------
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and, to the best knowledge of the
Company, nothing has occurred which would cause the loss of such qualification.
The Company and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material
Adverse Effect.
35
<PAGE>
Exhibit 10.16
-----
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the
Company nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section 4201
or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the
Company nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
-----------------------------------
be used solely for the purposes set forth in and permitted by Section 6.12 and
Section 7.07. Neither the Company nor any Subsidiary is generally engaged in
the business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
5.09 Title to Properties. The Company and each Subsidiary have good record
-------------------
and marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Closing Date, the
property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
5.10 Taxes. The Company and its Subsidiaries have filed all Federal and
-----
other material tax returns and reports required to be filed, and have paid all
Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against the Company or
any Subsidiary that would, if made, have a Material Adverse Effect.
5.11 Financial Condition. (a) The unaudited consolidated financial
-------------------
statements of the Company and its Subsidiaries dated August 28, 1994, and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for the fiscal quarter ended on that date:
(i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject to ordinary, good faith year end audit adjustments;
(ii) fairly present the financial condition of the Company and
its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
36
<PAGE>
Exhibit 10.16
-----
(iii) except for other Indebtedness and liabilities incurred
since August 28, 1994 and permitted hereunder, show all material
indebtedness and other liabilities, direct or contingent, of the Company and
its consolidated Subsidiaries as of the date thereof, including liabilities
for taxes, material commitments and Contingent Obligations.
(b) Since August 28, 1994, there has been no Material Adverse Effect.
5.12 Environmental Matters. The Company conducts in the ordinary course of
---------------------
business a review of the effect of existing Environmental Laws and existing
Environmental Claims on its business, operations and properties, and as a result
thereof the Company has reasonably concluded that to the best of its knowledge,
except as specifically disclosed in Schedule 5.12, such Environmental Laws and
-------------
Environmental Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.13 Regulated Entities. None of the Company, any Person controlling the
------------------
Company, or any Subsidiary, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Company is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
5.14 No Burdensome Restrictions. Neither the Company nor any Subsidiary is
--------------------------
a party to or bound by any Contractual Obligation, or subject to any restriction
in any Organization Document, or any Requirement of Law, which could reasonably
be expected to have a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company or its
-------------------------------------------------
Subsidiaries own or are licensed or otherwise have the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably necessary for
the operation of their respective businesses, without conflict by, or with the
rights of, any other Person (to the best knowledge of the Company). To the best
knowledge of the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Subsidiary infringes upon any
rights held by, or is infringed upon by, any other Person where such
infringement could reasonably be expected to have a Material Adverse Effect.
Except as specifically disclosed in Schedule 5.05, no claim or litigation
-------------
regarding any of the foregoing is pending or threatened, and no patent,
invention, device, application, principle, statute, law, rule, regulation,
standard or code is pending or, to the knowledge of the Company, proposed,
which, in either case, could reasonably be expected to have a Material Adverse
Effect.
37
<PAGE>
Exhibit 10.16
-----
5.16 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries
------------
other than those specifically disclosed in Schedule 5.16 and has no equity
-------------
investments in any other corporation or entity.
5.17 Insurance. The properties of the Company and its Subsidiaries are
---------
insured with financially sound and reputable insurance companies not Affiliates
of the Company, in such amounts, with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or such Subsidiary operates.
5.18 Full Disclosure. None of the representations or warranties made by
---------------
the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials, if any, delivered by
or on behalf of the Company to the Banks prior to the Closing Date), 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 light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to the Agent, in form
--------------------
and detail satisfactory to the Agent and the Majority Banks, with sufficient
copies for each Bank:
38
<PAGE>
Exhibit 10.16
-----
(a) as soon as available, but not later than one hundred days after the
end of each fiscal year (commencing with the fiscal year ended November 27,
1994), a copy of the audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year and the related consolidated statements
of income or operations, shareholders' equity and cash flows for such year,
setting forth in each case in comparative form the figures as of the end of and
for the previous fiscal year, and accompanied by the opinion of Coopers &
Lybrand or another nationally-recognized independent public accounting firm
("Independent Auditor") which report shall state that such consolidated
- ---------------------
financial statements present fairly the financial condition as of the date
thereof and results of operation for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years. Such opinion shall not be
qualified or limited because of a restricted or limited examination by the
Independent Auditor of any material portion of the Company's or any Subsidiary's
records; and
(b) as soon as available, but not later than fifty days after the end
of each of the first three fiscal quarters of each fiscal year (commencing with
the fiscal quarter ending March 5, 1995), a copy of the unaudited consolidated
balance sheet of the Company and its Subsidiaries as of the end of such quarter
and the related consolidated statements of income, shareholders' equity and cash
flows for the period commencing on the first day and ending on the last day of
such quarter, and certified by a Responsible Officer as fairly presenting, in
accordance with GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial condition of the Company and its Subsidiaries as of
the date thereof and the results of operations for the period covered thereby.
Notwithstanding the foregoing, the Company shall be in compliance with
the requirements of this Section 6.01 with respect to its obligation to furnish
financial statements upon delivery to the Agent, with sufficient copies for each
Bank, of its annual and quarterly reports as filed by it with the SEC within the
time periods specified above.
6.02 Certificates; Other Information. The Company shall furnish to the
-------------------------------
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsections 6.01(a) and (b), a Compliance Certificate executed by
a Responsible Officer;
(b) promptly, copies of all financial statements and reports that the
Company sends to its public shareholders, and not later than five days of filing
with the SEC, copies of all financial statements and regular, periodic or
special reports (including Forms 10K, 10Q and 8K) that the Company or any
Subsidiary may make to, or file with, the SEC; and
(c) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or
39
<PAGE>
Exhibit 10.16
-----
any Subsidiary as the Agent, at the request of any Bank, may from time to time
request.
6.03 Notices. The Company shall promptly notify the Agent and each Bank:
-------
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of the Company or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or suspension between
the Company or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Company or any Subsidiary, including pursuant to any applicable
Environmental Laws;
(c) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Agent and each Bank a copy of any notice with respect
to such event that is filed with a Governmental Authority and any notice
delivered by a Governmental Authority to the Company or any ERISA Affiliate with
respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of any
Pension Plan;
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by the Company or any ERISA
Affiliate; or
(iv) the adoption of any amendment to a Plan subject to Section
412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability; and
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 6.03(a) shall describe with particularity any and all clauses
or provisions of this Agreement or any other Loan Document that have been (or
foreseeably will be) breached or violated.
40
<PAGE>
Exhibit 10.16
-----
6.04 Preservation of Corporate Existence, Etc. The Company shall, and
----------------------------------------
shall cause each Subsidiary to:
(a) except in connection with a transaction permitted by Section
7.02(d), 7.02(e), 7.02(g) and 7.03, preserve and maintain in full force and
effect its corporate existence and good standing under the laws of its state or
jurisdiction of incorporation and each state or jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its business is such that the failure to maintain its existence
or to so qualify could reasonably be expected to have a Material Adverse Effect;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business except where the failure to
do so could not reasonably be expected to have a Material Adverse Effect;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.05 Maintenance of Property. The Company shall maintain, and shall cause
-----------------------
each Subsidiary to maintain, and preserve all its property which is used or
useful in its business in good working order and condition, ordinary wear and
tear excepted, and make all necessary repairs thereto and renewals and
replacements thereof, except in each case where the failure to do so could not
reasonably be expected to have a Material Adverse Effect. The Company and each
Subsidiary shall use the standard of care typical in the industry in the
operation and maintenance of its facilities.
6.06 Insurance. The Company shall maintain, and shall cause each
---------
Subsidiary to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
6.07 Payment of Obligations. Except where the failure to do so could not
----------------------
reasonably be expected to have a Material Adverse Effect, the Company shall, and
shall cause each Subsidiary to, pay and discharge as the same shall become due
and payable, all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested in good
faith by
41
<PAGE>
Exhibit 10.16
-----
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien upon
its property and which would not constitute a Permitted Lien; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
6.08 Compliance with Laws. The Company shall comply, and shall cause each
--------------------
Subsidiary to comply, in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
6.09 Compliance with ERISA. The Company shall, and shall cause each of its
---------------------
ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records. The Company shall
--------------------------------------------
maintain and shall cause each Subsidiary to maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and such Subsidiary. The
Company shall permit, and shall cause each Subsidiary to permit, representatives
and independent contractors of the Agent or any Bank to visit and inspect any of
their respective properties, to examine their respective corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
the Company (if an Event of Default exists) and at such reasonable times during
normal business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Company; provided, however, when an Event of Default
-------- -------
exists the Agent or any Bank may do any of the foregoing at the expense of the
Company at any time during normal business hours and without advance notice.
6.11 Environmental Laws. The Company shall, and shall cause each
------------------
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
42
<PAGE>
Exhibit 10.16
-----
6.12 Use of Proceeds. The Company shall (and shall cause each Other
---------------
Borrowing Entity to) use the proceeds of the Loans for the refinancing of the
Existing Loan and the "Harnischfeger Note" described in Schedule 7.05, and
-------------
working capital and other general corporate purposes, but not in contravention
of any Requirement of Law or of any Loan Document. The Company shall request a
Local Currency Loan and shall cause the applicable Other Borrowing Entity to
obtain such Loan within the time period and as provided in Section 2.04 for the
refinancing of the Existing Loan.
ARTICLE VII
NEGATIVE COVENANTS
------------------
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall not suffer or
-------------------
permit any Subsidiary to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("Permitted
---------
Liens"):
- -----
(a) any Lien existing on property of the Company or any Subsidiary on
the Closing Date and set forth in Schedule 7.01 securing Indebtedness
-------------
outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that non-payment thereof is permitted by Section 6.07, provided that no notice
of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges
or deposits required in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of the Company or its Subsidiaries securing
(i) the non-delinquent performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, (ii) contingent obligations on
surety and appeal bonds, and (iii) other non-delinquent obligations of a like
nature; in each case, incurred in the ordinary course of
43
<PAGE>
Exhibit 10.16
-----
business, provided all such Liens in the aggregate would not (even if enforced)
cause a Material Adverse Effect;
(g) Liens consisting of judgment or judicial attachment Liens,
provided that the enforcement of such Liens is effectively stayed and all such
Liens in the aggregate at any time outstanding for the Company and its
Subsidiaries do not exceed $10,000,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its Subsidiaries;
(i) Liens on assets of corporations which become Subsidiaries after
the date of this Agreement, provided, however, that such Liens existed at the
-------- -------
time the respective corporations became Subsidiaries and were not created in
anticipation thereof;
(j) purchase money security interests on any property acquired or held
by the Company or its Subsidiaries in the ordinary course of business, securing
Indebtedness incurred or assumed for the purpose of financing all or any part of
the cost of acquiring such property; provided that (i) any such Lien attaches to
-------- ----
such property concurrently with or within 20 days after the acquisition thereof,
(ii) such Lien attaches solely to the property so acquired in such transaction,
and (iii) the principal amount of the Indebtedness secured thereby does not
exceed 100% of the cost of such property;
(k) Liens securing obligations in respect of capital leases on assets
subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
(l) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
-------- ----
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to such depository institution;
(m) Liens on Margin Stock consisting of common stock of the Company;
(n) Liens on the property of a Subsidiary in favor of its parent or
another Subsidiary;
(o) Liens securing Indebtedness, together with Liens permitted by
clauses (c) and (d) above, in an aggregate principal amount at any time
outstanding of not more than 10% of
44
<PAGE>
Exhibit 10.16
-----
the Tangible Net Worth of the Company on a consolidated basis; and
(p) Liens in connection with the extension, renewal or refinancing
of the Indebtedness secured by Liens described in clauses (i) and (j) above,
provided that any such extension, renewal or replacement Lien shall be limited
- --------
to the property encumbered by the existing Lien and the principal amount of the
Indebtedness being extended, renewed or refinanced does not increase.
7.02 Disposition of Assets. The Company shall not, and shall not suffer or
---------------------
permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
any property (including accounts and notes receivable, with or without recourse)
or enter into any agreement to do any of the foregoing, except:
(a) dispositions of inventory or the non-exclusive licensing in the
ordinary course of business of the Company's intellectual property, or
dispositions of used, worn-out or surplus equipment, all in the ordinary course
of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment;
(c) dispositions of Margin Stock consisting of common stock of the
Company;
(d) the dissolution or liquidation of any Subsidiary, unless a Material
Adverse Effect could reasonably be expected to result therefrom;
(e) the sale or other disposition of any shares of capital stock of any
Subsidiary to the Company or its Subsidiaries;
(f) the sale or other disposition of any assets of the Company or any
Subsidiary to any other Subsidiary of the Company or to the Company, unless a
Material Adverse Effect could reasonably be expected to result therefrom;
(g) the sale or other disposition of any shares of capital stock of any
Subsidiary for full, fair and reasonable consideration, to the extent that such
sale or disposition, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, and provided, that (i) at the time
--------
of any disposition, no Event of Default shall exist or shall result from such
disposition, and (ii) the aggregate value of all shares so sold by the Company
and its Subsidiaries, together, shall not exceed in any fiscal year $10,000,000;
and
45
<PAGE>
Exhibit 10.16
-----
(h) dispositions not otherwise permitted hereunder which are made for
full, fair and reasonable consideration; provided, that (i) at the time of any
--------
disposition, no Event of Default shall exist or shall result from such
disposition, (ii) if such disposition is a sale of accounts receivables, lease
receivables or notes receivables, the aggregate sales price from such
disposition shall be paid in cash, and (iii) the aggregate value of all assets
so sold by the Company and its Subsidiaries, other than sales of assets of a
type described in the foregoing clause (ii), together, shall not exceed in any
fiscal year $10,000,000.
7.03 Consolidations and Mergers. The Company shall not, and shall not
--------------------------
suffer or permit any Subsidiary to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise), to the Company or another Wholly-
Owned Subsidiary; and
(c) the Company may merge with another entity if (i) the Company is the
corporation surviving the merger; and (ii) immediately before and after giving
effect thereto, no Default or Event of Default would exist.
7.04 Loans and Investments. The Company shall not purchase or acquire, or
---------------------
suffer or permit any Subsidiary to purchase or acquire, or make any commitment
therefor, any capital stock, equity interest, or obligations or other securities
of, or any interest in, any Person, or make or commit to make any Acquisitions,
or make or commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any Person including any Affiliate
of the Company, except for:
(a) investments in cash equivalents and other short term marketable
securities and investments;
(b) extensions of credit in the nature of accounts receivable, lease
receivables or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business;
(c) extensions of credit by the Company to any of its Wholly-Owned
Subsidiaries or by any of its Wholly-Owned Subsidiaries to the Company or
another of its Wholly-Owned Subsidiaries;
46
<PAGE>
Exhibit 10.16
-----
(d) investments incurred in order to consummate Acquisitions if the
Person or business acquired is engaged in or is a business reasonably related
to, or is engaged in or is a reasonable extension of, the business of the
Company and its Subsidiaries as presently conducted, provided that, (a) at the
--------
time of and after giving effect to such Acquisition, no Default or Event of
Default shall have occurred and be continuing, and (b) such Acquisitions are
undertaken in accordance with all applicable Requirements of Law.
Notwithstanding anything to the contrary contained in this Section 7.03, (a) if
any Person or business acquired, in accordance with this Section 7.03 (the
"Acquiree"), is subject to Section 12 of the Exchange Act or subject to the
requirements of Section 15(d) of the Exchange Act, the prior effective written
consent of the board of directors or equivalent governing body of the Acquiree
shall be obtained and delivered to the Agent, or (b) if the Acquiree does not
meet the qualifications set forth in subclause (a), the prior effective written
consent of the board of directors or equivalent governing body and the percent
of any and all classes of stock or other equity of such Acquiree the consent of
which, notwithstanding any provisions in the organization documents of the
Acquiree to the contrary, is required by applicable statute to consummate the
Acquisition, shall be obtained and delivered to the Agent;
(e) investments in Joint Ventures permitted by Section 7.09;
(f) loans to employees of the Company and its Subsidiaries in an
aggregate amount not in excess of $2,000,000 at any time outstanding; and
(g) loans to employees of the Company made during the month of December
in 1995 to finance the exercise by such employees of stock option rights in the
Company, provided that such loans shall mature no later than thirty days
following the incurrence of such loans and the aggregate amount of such loans at
any time outstanding shall not exceed $10,000,000.
7.05 Limitation on Indebtedness. The Company shall not, and shall not
--------------------------
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 7.08;
(c) Indebtedness existing on the Closing Date and set forth in the
financial statements of the Company and/or Schedule 7.05, and any extension,
-------------
renewal or refinancing thereof; provided that the principal amount of the
--------
Indebtedness being extended, renewed or refinanced does not increase;
47
<PAGE>
Exhibit 10.16
-----
(d) Indebtedness secured by Liens permitted by subsections 7.01(i) and
(j);
(e) Indebtedness incurred in connection with leases permitted pursuant
to Section 7.10;
(f) Indebtedness, in an aggregate principal amount not to exceed
$10,000,000 at any time, pursuant to uncommitted "guidance" lines; and
(g) other Indebtedness in an aggregate principal amount not to exceed
$5,000,000 at any time.
7.06 Transactions with Affiliates. The Company shall not, and shall not
----------------------------
suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company or such Subsidiary, except upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company or such Subsidiary.
7.07 Use of Proceeds. Except in connection with the refinancing of the
---------------
Existing Loan and the "Harnischfeger Note" described in Schedule 7.05, the
-------------
Company shall not, and shall not suffer or permit any Subsidiary to, use any
portion of the Loan proceeds, directly or indirectly, (i) to purchase or carry
Margin Stock other than Margin Stock constituting the Company's common stock,
(ii) to repay or otherwise refinance indebtedness of the Company or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
7.08 Contingent Obligations. The Company shall not, and shall not suffer
----------------------
or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) Swap Contracts entered into in the ordinary course of business as
bona fide hedging transactions;
(c) Contingent Obligations of the Company and its Subsidiaries existing
as of the Closing Date and listed in the Company's financial statements;
(d) the Guaranty and Contingent Obligations incurred for the benefit of
the Company or any Wholly-Owned Subsidiary;
(e) Contingent Obligations in favor of customers of the Company or its
Subsidiaries incurred in the ordinary course of business; and
(f) Guaranties of the obligations of employees of the Company or its
Subsidiaries in the ordinary course of
48
<PAGE>
Exhibit 10.16
-----
business in an aggregate amount not in excess of $2,000,000 at any time
outstanding.
7.09 Joint Ventures. The Company shall not, and shall not suffer or permit
--------------
any Subsidiary to enter into any Joint Venture, other than (a) in the ordinary
course of business or (b) any Joint Venture engaged in a business reasonably
related to, or in a reasonable extension of, the business of the Company and its
Subsidiaries as presently conducted, provided that, at the time of and after
--------
giving effect to such entry, no Default or Event of Default shall have occurred
and be continuing.
7.10 Lease Obligations. The Company shall not, and shall not suffer or
-----------------
permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for:
(a) leases of the Company and of Subsidiaries in existence on the
Closing Date and any renewal, extension or refinancing thereof;
(b) operating leases entered into by the Company or any Subsidiary
after the Closing Date in the ordinary course of business; and
(c) capital leases other than those permitted under clause (a) of this
Section, entered into by the Company or any Subsidiary after the Closing Date to
finance the acquisition of equipment.
7.11 Restricted Payments. The Company shall not, and shall not suffer or
-------------------
permit any Subsidiary to, declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities on
account of any shares of any class of its capital stock, or purchase, redeem or
otherwise acquire for value any shares of its capital stock or any warrants,
rights or options to acquire such shares, now or hereafter outstanding; except
that the Company and any Wholly-Owned Subsidiary may:
(a) declare and make dividend payments or other distributions payable
solely in its common stock;
(b) purchase, redeem or otherwise acquire shares of its common stock or
warrants or options to acquire any such shares with the proceeds received from
the substantially concurrent issue of new shares of its common stock; and
(c) declare or pay cash dividends to its stockholders and purchase,
redeem or otherwise acquire shares of its capital stock or warrants, rights or
options to acquire any such shares for cash, provided, that, immediately after
--------
giving effect to such proposed action, no Default or Event of Default would
exist.
7.12 ERISA. The Company shall not, and shall not suffer or permit any of
-----
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary
49
<PAGE>
Exhibit 10.16
-----
responsibility rules with respect to any Plan which could result or could
reasonably be expected to result in liability of the Company in an aggregate
amount in excess of 5% of Tangible Net Worth of the Company; or (b) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
7.13 Change in Business. The Company shall not, and shall not suffer or
------------------
permit any Subsidiary to, engage in any material line of business substantially
different from those lines of business carried on by the Company and its
Subsidiaries on the date hereof.
7.14 Accounting Changes. The Company shall not, and shall not suffer or
------------------
permit any Subsidiary to, make any significant change in accounting treatment or
reporting practices, except as permitted or required by GAAP, or change the
fiscal year of the Company or of any Subsidiary.
7.15 Quick Ratio. At the end of each fiscal quarter of the Company, the
-----------
Company shall not permit on a consolidated basis the ratio of (a) the sum of
cash, cash equivalents, short-term marketable investments (each as determined in
accordance with GAAP), and receivables net of bad debt reserves maintained in
accordance with GAAP, to (b) all amounts which would, in accordance with GAAP,
be included under current liabilities on a consolidated balance sheet of the
Company and its Subsidiaries and the outstanding amount of any Loans not
included under current liabilities, to be less than 1.10 to 1.00.
7.16 Tangible Net Worth. At the end of each fiscal quarter of the Company,
------------------
the Company shall not permit on a consolidated basis the Tangible Net Worth for
the Company to be less than the sum of (a) $131,421,650 plus (b) 50% of
quarterly net income for the Company for each fiscal quarter ending subsequent
to the fiscal quarter ended November 27, 1994 with no reduction for net losses,
plus (c) the sum of (1) 100% of the net proceeds for any capital stock issued by
the Company after the fiscal quarter ended November 27, 1994 less (2) 100% of
the net purchase price paid by the Company for repurchases of its outstanding
shares of common stock pursuant to the Company's stock option and employee stock
option plans; provided, however, that if the amount determined pursuant to
-------- -------
clause (2) of this clause (c) exceeds the amount under clause (1) of this clause
(c) and such excess is greater than $5,000,000, then for purposes of this
calculation, $5,000,000 shall be subtracted from the sum of clauses (a) and (b),
and provided, further, that the aggregate amount subtracted from the sum of
-------- -------
clauses (a) and (b) for any calendar year shall be limited to $5,000,000.
7.17 Leverage Ratio. At the end of each fiscal quarter of the Company, the
--------------
Company shall not permit on a consolidated basis the ratio of total liabilities
for the Company to Tangible Net Worth for the Company to be greater than 1.00 to
1.00 during the Company's 1995 fiscal year, and 0.90 to 1.00 for each fiscal
quarter thereafter.
7.18 Profitability. The Company shall not incur or suffer to exist more
-------------
than one quarterly loss for any fiscal year,
50
<PAGE>
Exhibit 10.16
-----
whether on a net operating or a net after taxes basis and such loss shall not
exceed $5,000,000.
7.19 Capital Expenditures. The Company shall not make any additional
--------------------
investment in fixed assets which investments shall exceed, in the aggregate for
any fiscal year, $17,500,000, excluding assets acquired as part of any
Acquisition.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
8.01 Event of Default. Any of the following shall constitute an "Event of
---------------- --------
Default":
- -------
(a) Non-Payment. The Company or any Other Borrowing Entity fails to
-----------
pay, (i) when and as required to be paid herein, any amount of principal of any
Loan, or (ii) within five days after the same becomes due, any interest, fee or
any other amount payable hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
--------------------------
Company or any Subsidiary made or deemed made herein or in any other Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any other Loan
Document, is incorrect in any material respect on or as of the date made or
deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any
-----------------
term, covenant or agreement contained in any of Section 6.04, 6.12 or Article
VII; or
(d) Other Defaults. The Company or any Other Borrowing Entity fails to
--------------
perform or observe any other term or covenant contained in this Agreement or any
other Loan Document, and such default shall continue unremedied for a period of
30 days after the earlier of (i) the date upon which a Responsible Officer knew
or reasonably should have known of such failure or (ii) the date upon which
written notice thereof is given to the Company or such Other Borrowing Entity by
the Agent or any Bank; or
(e) Cross-Default. The Company or any Subsidiary (i) fails to make any
-------------
payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $5,000,000 when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after the applicable grace or notice period, if any, specified in the
relevant document on the date of such failure; or (ii) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent
51
<PAGE>
Exhibit 10.16
-----
Obligation, and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such failure
if the effect of such failure, event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or any Subsidiary
---------------------------------
(i) ceases or fails to be solvent, or generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding
-----------------------
is commenced or filed against the Company or any Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's or any Subsidiary's
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Company or any Subsidiary admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Company or any Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion of its
property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
-----
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of 5% of
Tangible Net Worth of the Company; (ii) the aggregate amount of Unfunded Pension
Liability among all Pension Plans at any time exceeds 5% of Tangible Net Worth
of the Company; or (iii) the Company or any ERISA Affiliate shall fail to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of 5% of Tangible
Net Worth of the Company; or
(i) Monetary Judgments. One or more non-interlocutory judgments, non-
------------------
interlocutory orders, decrees or arbitration awards is entered against the
Company or any Subsidiary involving in the aggregate a liability as to any
52
<PAGE>
Exhibit 10.16
-----
single or related series of transactions, incidents or conditions, of
$10,000,000 or more which is not covered by independent third-party insurance as
to which the insurer does not dispute coverage, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 15 days after
the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or decree
----------------------
is entered against the Company or any Subsidiary which does or would reasonably
be expected to have a Material Adverse Effect, and there shall be any period of
10 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(k) Change of Control. There occurs any Change of Control; or
-----------------
(l) Loss of Licenses. Any Governmental Authority revokes or fails to
----------------
renew any material license, permit or franchise of the Company or any
Subsidiary, or the Company or any Subsidiary for any reason loses any material
license, permit or franchise, or the Company or any Subsidiary suffers the
imposition of any restraining order, escrow, suspension or impound of funds in
connection with any proceeding (judicial or administrative) with respect to any
material license, permit or franchise; or
(m) Adverse Change. There occurs a Material Adverse Effect; or
--------------
(n) Guaranty. The Company or any of its Subsidiaries contests the
--------
validity or enforceability of any Guaranty.
8.02 Remedies. If any Event of Default occurs and is continuing, the Agent
--------
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be terminated,
whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company and each Other Borrowing Entity; and
(c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
- -------- -------
(f) or (g) of Section 8.01 (in the
53
<PAGE>
Exhibit 10.16
-----
case of clause (i) of subsection (g) upon the expiration of the 60-day period
mentioned therein), the obligation of each Bank to make Loans shall
automatically terminate and the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable without further act of the Agent or any Bank and without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company and each Other Borrowing Entity.
8.03 Rights Not Exclusive. The rights provided for in this Agreement and
--------------------
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
8.04 Certain Financial Covenant Defaults. In the event that, after taking
-----------------------------------
into account any extraordinary charge to earnings taken or to be taken as of the
end of any fiscal period of the Company (a "Charge"), and if solely by virtue of
------
such Charge, there would exist an Event of Default due to the breach of any of
Sections 7.15, 7.16, 7.17 or 7.18 as of such fiscal period end date, such Event
of Default shall be deemed to arise upon the earlier of (a) the date after such
fiscal period end date on which the Company announces publicly it will take, is
taking or has taken such Charge (including an announcement in the form of a
statement in a report filed with the SEC) or, if such announcement is made prior
to such fiscal period end date, the date that is such fiscal period end date,
and (b) the date the Company delivers to the Agent its audited annual or
unaudited quarterly financial statements in respect of such fiscal period
reflecting such Charge as taken.
ARTICLE IX
THE AGENT
---------
9.01 Appointment and Authorization. Each Bank hereby irrevocably (subject
-----------------------------
to Section 9.09) appoints, designates and authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.
9.02 Delegation of Duties. The Agent may execute any of its duties under
--------------------
this Agreement or any other Loan Document by or
54
<PAGE>
Exhibit 10.16
-----
through agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The Agent shall not
be responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No Agent-
Related Person shall be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
9.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation 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 (including counsel
to the Company), 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 or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks (or all of the Banks if
this Agreement so requires) as it deems appropriate and, if it so requests, it
shall first be indemnified to its 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 or any
other Loan Document in accordance with a request or consent of the Majority
Banks (or all of the Banks if this Agreement so requires) and such request and
any action taken or failure to act pursuant thereto shall be binding upon all of
the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Bank for consent,
55
<PAGE>
Exhibit 10.16
-----
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Bank.
9.05 Notice of Default. The Agent shall not be deemed to have knowledge or
-----------------
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest and fees required to be paid
to the Agent for the account of the Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Majority Banks in accordance with Article
VIII; provided, however, that unless and until the Agent has received any such
-------- -------
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
9.06 Credit Decision. (a) Each Bank represents to each other Bank and the
---------------
Agent that such Bank, in good faith, has not relied upon any Margin Stock
constituting the Company's common stock as collateral in extending or
maintaining the extension of credit contemplated by this Agreement.
(b) Each Bank acknowledges that none of the Agent-Related Persons has
made any representation or warranty to it, and that no act by the Agent
hereafter taken, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Bank. Each Bank represents to the Agent that it
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company and its Subsidiaries hereunder.
Each Bank also represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by the Agent or required to be furnished to the Banks by the Agent
pursuant to specific instructions by the Company (with sufficient copies for
each Bank), the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning
56
<PAGE>
Exhibit 10.16
-----
the business, prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
9.07 Indemnification of Agent. Whether or not the transactions
------------------------
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
-------- -------
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Bank shall reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
9.08 Agent in Individual Capacity. BofA and its Affiliates may make loans
----------------------------
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks except as specifically required
hereby. The Banks acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Company or such Subsidiary) and acknowledge that the Agent shall be
under no obligation to provide such information to them. With respect to its
Loans, BofA shall have the same rights and powers under this Agreement as any
other Bank and may exercise the same as though it were not the Agent, and the
terms "Bank" and "Banks" include BofA in its individual capacity.
9.09 Successor Agent. The Agent may, and at the request of the Majority
---------------
Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent
resigns under this Agreement, the Majority Banks shall appoint from among the
Banks a successor agent for the Banks, which successor Agent shall be reasonably
acceptable to the Company. If no successor agent is appointed prior to the
effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Banks and the Company, a successor agent from among the
Banks. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean
57
<PAGE>
Exhibit 10.16
-----
such successor agent and the retiring Agent's appointment, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of the
Agent hereunder until such time, if any, as the Majority Banks appoint a
successor agent as provided for above.
9.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
---------------
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to
the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Forms 1001 and W-8 before the payment of any interest in the first calendar
year and before the payment of any interest in each third succeeding
calendar year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid under
this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Company owed to such Bank, then such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
58
<PAGE>
Exhibit 10.16
-----
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of the Company owed to
such Bank, then such Bank agrees to undertake sole responsibility for complying
with the withholding tax requirements imposed by Sections 1441 and 1442 of the
Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that the Agent did not properly withhold
tax from amounts paid to or for the account of any Bank (because the appropriate
form was not delivered, was not properly executed, or because such Bank failed
to notify the Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Banks under this subsection shall
survive the payment of all Obligations and the resignation or replacement of the
Agent.
ARTICLE X
MISCELLANEOUS
-------------
10.01 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any Other Borrowing Entity therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Agent at the written request of the Majority Banks) and the Company
and each Other Borrowing Entity affected by such amendment or waiver, and
acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
-------- -------
unless in writing and signed by all the Banks, the Company and each Other
Borrowing Entity affected by such amendment or waiver, and acknowledged by the
Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 8.02);
59
<PAGE>
Exhibit 10.16
-----
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on, any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which is required for the Banks or any of them to
take any action hereunder;
(e) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks; or
(f) release the Company from its obligations under the Guaranty;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letters may be amended,
or rights or privileges thereunder waived, in a writing executed by the parties
thereto.
10.02 Notices. (a) All notices, requests and other communications shall
-------
be in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Company and
each Other Borrowing Entity by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 10.02, and
--------------
(ii) shall be followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered to the address or facsimile number specified for
notices on Schedule 10.02; or, as directed to the Company or the Agent, to such
--------------
other address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company, each Other
Borrowing Entity and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX shall not be effective until actually
received by the Agent.
(c) The Company acknowledges and agrees (and shall cause each Other
Borrowing Entity to acknowledge and agree) that
60
<PAGE>
Exhibit 10.16
-----
any agreement of the Banks in Article II to receive certain notices by telephone
and facsimile is solely for the convenience and at the request of the Company
and each Other Borrowing Entity. The Agent and the Banks shall be entitled to
rely on the authority of any Person purporting to be a Person authorized by the
Company and each Other Borrowing Entity to give such notice and the Agent and
the Banks shall not have any liability to the Company or any other Person on
account of any action taken or not taken by the Agent or the Banks in reliance
upon such telephonic or facsimile notice. The obligation of the Company and each
Other Borrowing Entity to repay the Loans shall not be affected in any way or to
any extent by any failure by the Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Banks of a confirmation which is at variance with the terms understood
by the Agent and the Banks to be contained in the telephonic or facsimile
notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
------------------------------
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
10.04 Costs and Expenses. The Company shall (or shall cause the relevant
------------------
Other Borrowing Entity to):
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand) for all costs and expenses incurred by BofA
(including in its capacity as Agent) in connection with the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any other Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including reasonable Attorney
Costs incurred by BofA (including in its capacity as Agent) with respect
thereto; and
(b) pay or reimburse the Agent and each Bank within five Business Days
after demand) for all costs and expenses (including Attorney Costs) incurred by
them in connection with the enforcement, attempted enforcement, or preservation
of any rights or remedies under this Agreement or any other Loan Document during
the existence of an Event of Default or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding).
10.05 Company Indemnification. Whether or not the transactions
-----------------------
contemplated hereby are consummated, the Company shall (or shall cause the
relevant Other Borrowing Entity to), indemnify and hold harmless the Agent-
Related Persons, and each Bank and each of its respective officers, directors,
employees,
61
<PAGE>
Exhibit 10.16
-----
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") from and
------------------
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the termination,
resignation or replacement of the Agent or replacement of any Bank) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated hereby or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company and each Other Borrowing
----------------------- --------
Entity shall have no obligation hereunder to any Indemnified Person with respect
to Indemnified Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
10.06 Payments Set Aside. To the extent that the Company or any Other
------------------
Borrowing Entity makes a payment to the Agent or the Banks, or the Agent or the
Banks exercise their right of set-off, and such payment or the proceeds of such
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agent or such Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Bank severally agrees to pay to the
Agent upon demand its pro rata share of any amount so recovered from or repaid
by the Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall be
----------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company and each Other Borrowing Entity
may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Agent and each Bank.
62
<PAGE>
Exhibit 10.16
-----
10.08 Assignments, Participations, etc. (a) Any Bank may, with the
---------------------------------
written consent of the Company at all times other than during the existence of
an Event of Default and the Agent, which consent of the Company shall not be
unreasonably withheld, at any time assign and delegate to one or more Eligible
Assignees (provided that no written consent of the Company or the Agent shall be
required in connection with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all,
--------
or any ratable part of all, of the Loans, the Commitment and the other rights
and obligations of such Bank hereunder and under the other Loan Documents, in a
minimum amount of $5,000,000; provided, however, that the Company, each Other
-------- -------
Borrowing Entity and the Agent may continue to deal solely and directly with
such Bank in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions, addresses
and related information with respect to the Assignee, shall have been given to
the Company, each Other Borrowing Entity and the Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to the Company,
each Other Borrowing Entity and the Agent an Assignment and Acceptance in the
form of Exhibit E ("Assignment and Acceptance") and (iii) the assignor Bank or
--------- -------------------------
Assignee has paid to the Agent a processing fee in the amount of $2,500.
(b) From and after the date that the Agent notifies the assignor Bank
that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents; provided, however, the
-------- -------
assignor Bank shall not relinquish its rights under Article III and Sections
10.04 and 10.05 to the extent such rights related to the time prior to the
effective date of such assignment.
(c) Immediately upon each Assignee's or assignor Bank's making its
processing fee payment under the Assignment and Acceptance, this Agreement shall
be deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Bank pro tanto.
--- -----
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Company (a "Participant") participating
-----------
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
- -------- -------
Agreement shall remain unchanged,
63
<PAGE>
Exhibit 10.16
-----
(ii) the originating Bank shall remain solely responsible for the performance of
such obligations, (iii) the Company, each Other Borrowing Entity and the Agent
shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in the first proviso
----- -------
to Section 10.01. In the case of any such participation, the Participant shall
not have any rights under this Agreement, or any of the other Loan Documents,
and all amounts payable by the Company or any Other Borrowing Entity hereunder
shall be determined as if such Bank had not sold such participation; except
that, if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and payable upon the occurrence of
an Event of Default, each Participant shall be deemed to have the right of set-
off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31
CFR (S)203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
10.09 Confidentiality. The Agent and each Bank agrees to take and to cause
---------------
its Affiliates to take normal and reasonable precautions and exercise due care
to maintain the confidentiality of all information identified as "confidential"
or "secret" by the Company and provided to it by the Company or any Subsidiary,
or by the Agent on the Company's or such Subsidiary's behalf, under this
Agreement or any other Loan Document, and neither it nor any of its Affiliates
shall use any such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents or in connection with other
business now or hereafter existing or contemplated with the Company or any
Subsidiary; except to the extent such information (i) was or becomes generally
available to the public other than as a result of disclosure by such Bank, or
(ii) was or becomes available on a non-confidential basis from a source other
than the Company, provided that such source is not bound by a confidentiality
agreement with the Company known to such Bank; provided, however, that any Bank
-------- -------
may disclose such information (A) at the request or pursuant to any requirement
of any Governmental Authority to which such Bank is subject or in connection
with an examination of such Bank by any such authority; (B) pursuant to subpoena
or other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
64
<PAGE>
Exhibit 10.16
-----
required in connection with any litigation or proceeding to which the Agent, any
Bank or their respective Affiliates may be party; (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (F) to such Bank's independent auditors, counsel and other
professional advisors; (G) to any Participant or Assignee, actual or potential,
provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Banks hereunder; (H) as to any
Bank or its Affiliate, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the Company or any
Subsidiary is party or is deemed party with such Bank or such Affiliate; and (I)
to its Affiliates.
10.10 Set-off. In addition to any rights and remedies of the Banks
-------
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company or any Other Borrowing Entity, any such notice being
waived by the Company (and, in the case of each Other Borrowing Entity, being
caused to be waived by the Company) to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Bank to or for the credit or the account of the Company or any
Other Borrowing Entity against any and all Obligations owing to such Bank, now
or hereafter existing, irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Company and the Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
-------- -------
notice shall not affect the validity of such set-off and application.
10.11 Automatic Debits of Fees. With respect to any commitment fee,
------------------------
arrangement fee, or other fee, or any other cost or expense (including Attorney
Costs) due and payable to the Agent or BofA under the Loan Documents, the
Company hereby irrevocably authorizes (and shall cause each Other Borrowing
Entity to irrevocably authorize) BofA to debit any deposit account of the
Company with BofA in an amount such that the aggregate amount debited from all
such deposit accounts does not exceed such fee or other cost or expense. If
there are insufficient funds in such deposit accounts to cover the amount of the
fee or other cost or expense then due, such debits will be reversed (in whole or
in part, in BofA's sole discretion) and such amount not debited shall be deemed
to be unpaid. No such debit under this Section shall be deemed a set-off. The
Agent shall notify the Company of the occurrence of any such debit, provided,
--------
that the failure of the Agent to so notify the Company shall not affect BofA's
rights hereunder.
10.12 Notification of Addresses, Lending Offices, Etc. Each Bank shall
------------------------------------------------
notify the Agent in writing of any changes in the address to which notices to
such Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
65
<PAGE>
Exhibit 10.16
-----
other administrative information as the Agent shall reasonably request.
10.13 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.14 Severability. The illegality or unenforceability of any provision of
------------
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.15 No Third Parties Benefited. This Agreement is made and entered into
--------------------------
for the sole protection and legal benefit of the Company, the Banks, the Agent
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.
10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT SHALL BE
------------------------------
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE
BANKS CONSENTS (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES
TO CONSENT), FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING
ENTITIES TO WAIVE) ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
--------------------
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND
THE BANKS EACH WAIVE (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING
ENTITIES TO WAIVE) PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH
--------------------
WAIVE (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES TO
WAIVE) THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED
66
<PAGE>
Exhibit 10.16
-----
PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE AGENT EACH AGREE (AND THE
COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES TO AGREE) THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE (AND THE COMPANY SHALL CAUSE
EACH OF THE OTHER BORROWING ENTITIES TO AGREE) THAT THEIR RESPECTIVE RIGHT TO A
TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
10.18 Entire Agreement. This Agreement, together with the other Loan
----------------
Documents, embodies the entire agreement and understanding among the Company,
the Other Borrowing Entities, the Banks and the Agent, and supersedes all prior
or contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
10.19 Obligations of Other Borrowing Entities. The parties intend that
---------------------------------------
each Other Borrowing Entity will be liable under this Agreement only with
respect to Borrowings by it hereunder, and will not have any obligation, direct
or indirect, with respect to borrowings by the Company or any other Subsidiary
of the Company. The entire Agreement shall be interpreted and enforced
accordingly.
67
<PAGE>
Exhibit 10.16
-----
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
MEASUREX CORPORATION
By: ______________________
Title: ___________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: _________________________
Title: ______________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: _________________________
Title: ______________________
ABN AMRO BANK
By: _________________________
Title: ______________________
By: _________________________
Title: ______________________
THE BANK OF NEW YORK
By: _________________________
Title: ______________________
68
<PAGE>
Exhibit 10.16
-----
SCHEDULE 2.01
-------------
COMMITMENTS
-----------
AND PRO RATA SHARES
-------------------
<TABLE>
<CAPTION>
Pro Rata
Bank Commitment Share
---- ---------- -----
<S> <C> <C>
Bank of America National
Trust and Savings
Association $20,000,000 40%
ABN AMRO Bank $15,000,000 30%
The Bank of New York $15,000,000 30%
TOTAL $50,000,000 100%
</TABLE>
69
<PAGE>
Exhibit 10.16
-----
SCHEDULE 10.02
--------------
OFFSHORE AND DOMESTIC LENDING OFFICES,
--------------------------------------
ADDRESSES FOR NOTICES
---------------------
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
AND SAVINGS ASSOCIATION,
- -----------------------
as a Bank
Domestic and Offshore Lending Office:
- -------------------------------------
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
BANK OF AMERICA NATIONAL TRUST
- ------------------------------
AND SAVINGS ASSOCIATION,
- -----------------------
as Agent
Address for Notices:
- --------------------
Bank of America National Trust
and Savings Association
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Wendy Young
Agency Management Services #5596
Telephone: (415) 953-2506
Facsimile: (415) 622-4894
Address for Notices (other than Borrowing notices and Notices of
- ----------------------------------------------------------------
Conversion/Continuation):
- -------------------------
Bank of America National Trust
and Savings Association
Credit Products High Technology #3697
555 California Street, 41st Floor
San Francisco, California 94104
Attention: Kevin McMahon
Vice President
Telephone: (415) 622-8088
Facsimile: (415) 622-2514
Payment Instructions:
- --------------------
Bank of America National Trust
and Savings Association
ABA #121-000-358
Attention: Agency Management Services #5596
Concord, California 94520
For credit to account:
No. 12331-14477
Ref: Measurex Corporation
ABN AMRO BANK N.V.
- ------------------
Domestic and Offshore Lending Office:
- -------------------------------------
70
<PAGE>
Exhibit 10.16
-----
ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Address for Notices:
- --------------------
ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attention: Gloria Chang Lee
Money Market & Loan Specialist
Telephone: (415) 984-3720
Facsimile: (415) 362-3524
Address for Notices (other than Borrowing Notices and Notices of
- ----------------------------------------------------------------
Conversion/Continuation):
- -------------------------
ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111-5812
Attention: Inga C. Lapsins
Corporate Banking Officer
Telephone: (415) 984-3734
Facsimile: (415) 362-3524
Payment Instructions:
- ---------------------
Federal Reserve Bank of New York
ABA #026009580
For Credit To: ABN AMRO San Francisco
#6510010545-41
Ref: Measurex Corporation Credit Agreement
Dated 2/10/95
BANK OF NEW YORK
- ----------------
Domestic & Offshore Lending Office
- ----------------------------------
The Bank of New York
One Wall Street, 22nd Floor
New York, NY 10286
Address for Notices
- -------------------
The Bank of New York
Loan Administration
One Wall Street, 22nd Floor
New York, NY 10286
Attention:
Sandra Morgan/Lorna Alleyne
71
<PAGE>
Exhibit 10.16
-----
Telephone: (212) 635-6737
Facsimile: (212) 635-6399
Address for Notices (other than Borrowing Notices and Notices of
- ----------------------------------------------------------------
Conversion/Continuation)
- ------------------------
The Bank of New York
10990 Wilshire Blvd., Suite 1700
Los Angeles, CA 90024
Attention: Elizabeth T. Ying
Telephone: (310) 996-8661
Facsimile: (310) 996-8664
Payment Instructions:
- ---------------------
The Bank of New York
ABA #021000018
For Credit To: Account of Measurex Revolver, IOC 556
72
<PAGE>
Exhibit 10.16
-----
SCHEDULE 7.05
PERMITTED INDEBTEDNESS
Part I
- ------
Term loan from The Bank of New York, pursuant to the Term Loan Agreement
dated as of May 21, 1993, as amended, between the Company and The Bank of
New York. The principal amount outstanding under this loan as of the date
of the Credit Agreement was $14,000,000.
Revolving credit facility in the maximum amount of $20,000,000, pursuant to
the Credit Agreement dated as of July 22, 1993, as amended, by and between
ABN AMRO Bank N.V. San Francisco International Branch and/or Cayman Islands
Branch and the Company.
Part II
- -------
Revolving credit facility in the maximum amount of $10,000,000, pursuant to
the Credit Agreement (Multicurrency) dated as of October 29, 1993, as
amended, between Bank of America National Trust and Savings Association and
the Company, as amended from time to time. This facility is to be converted
to a "guidance" line on the Closing Date. The Japanese Yen loan made by
Bank of America National Trust and Savings Association to Measurex Japan
Ltd., having a Dollar equivalent principal balance as of the Closing Date
of approximately $4,000,000, will remain outstanding thereunder until it is
terminated as provided in the Credit Agreement. Certain letters of credit
will also be outstanding thereunder, in the amount of $1,279,683.15. This
guidance credit facility will not be in addition to the guidance line
referred to in Section 7.05(f).
Promissory Note in favor of HIHC, Inc., dated November 29, 1994 (the
"Harnischfeger Note"), assigned to PNC Bank, N.A., with an outstanding
principal balance of $23,000,000. This is to be terminated on or before the
Closing Date.
73
<PAGE>
Exhibit 10.16
-----
SCHEDULE 5.06
CERTAIN DEFAULTS
The Company is in the process of amending certain financial covenants
in the Term Loan Agreement with The Bank of New York and the Credit Agreement
with ABN AMRO Bank, described in paragraphs 2 and 3 of Schedule 7.05, to conform
them to this Credit Agreement. Without these amendments a Default or Event of
Default may result from the Company's incurrence of the Obligations. These
amendments are to become effective on or before the Closing Date.
74
<PAGE>
Exhibit 10.16
-----
SCHEDULE 7.01
PERMITTED LIENS
The attached California UCC search constitutes Schedule 7.01.
75
<PAGE>
Exhibit 10.16
-----
SCHEDULE 5.12
ENVIRONMENTAL MATTERS
None.
76
<PAGE>
Exhibit 10.16
-----
SCHEDULE 5.05
LITIGATION
None.
77
<PAGE>
Exhibit 11
--
MEASUREX CORPORATION
COMPUTATION OF NET INCOME PER SHARE
Fiscal years 1994, 1993 and 1992
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
PRIMARY:
Average shares outstanding 17,953 17,913 18,111
Net effect of dilutive stock options and
warrants based on treasury stock
method using average market price 236 138 185
------- ------- -------
Average common and common
equivalent shares outstanding 18,189 18,051 18,296
------- ------- -------
Income before extraordinary credit and
cumulative effect of accounting change $ 5,583 $ 8,215 $ 714
------- ------- -------
Income before cumulative effect of
accounting change $ 5,583 $ 8,215 $ 1,625
------- ------- -------
Net income $ 6,107 $ 8,215 $ 1,625
------- ------- -------
Income per share before extraordinary credit
and cumulative effect of accounting change $ 0.31 $ 0.46 $ 0.04
------- ------- -------
Income per share before cumulative effect of
accounting change $ 0.31 $ 0.46 $ 0.09
------- ------- -------
Net income per share $ 0.34 $ 0.46 $ 0.09
------- ------- -------
FULLY DILUTED:
Average shares outstanding 17,953 17,913 18,111
Net effect of dilutive stock options and
warrants based on treasury stock
method using quarter-end market
price or average market price when
greater than quarter-end market price 270 184 236
------- ------- -------
Average common and common
equivalent shares outstanding 18,223 18,097 18,347
------- ------- -------
Income before extraordinary credit and
cumulative effect of accounting change $ 5,583 $ 8,215 $ 714
------- ------- -------
Income before cumulative effect of
accounting change $ 5,583 $ 8,215 $ 1,625
------- ------- -------
Net income $ 6,107 $ 8,215 $ 1,625
------- ------- -------
Income per share before extraordinary credit
and cumulative effect of accounting change $ 0.31 $ 0.45 $ 0.04
------- ------- -------
Income per share before cumulative effect of
accounting change $ 0.31 $ 0.45 $ 0.09
------- ------- -------
Net income per share $ 0.34 $ 0.45 $ 0.09
------- ------- -------
</TABLE>
Note A: Fully diluted earnings per share have been calculated in accordance
with Accounting Principles Board
1
<PAGE>
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
Measurex continues to maintain a strong financial position with cash and cash
equivalents and short-term investments of $109.3 million as of the fiscal 1994
year-end. The Company believes that its existing cash balances, lines of credit
and cash provided by operations will provide adequate flexibility to fund the
Company's operating needs, capital expenditures and cash dividends through
fiscal year 1995.
Subsequent to year-end, on December 29, 1994, the Company bought back two
million shares of its stock held by Harnischfeger Industries, Inc., reducing
Harnischfeger's holdings to 10% from 20%. The total value of the transaction is
$43.6 million.
On December 14, 1994, the Company acquired the Webart Division of The Ohmart
Corporation, and its family of on-line measurement and control systems. Under
the terms of the agreement, Ohmart transfered Webart products, engineering,
services and other assets of the division to Measurex for $3.4 million in cash.
On February 10, 1995, the Company entered into a $50 million Credit Agreement
with a group of banks providing for an unsecured multi-year revolving credit
facility. The Company will be able to borrow funds under this facility through
February, 1998.
This facility replaces $10 million of the lines of credit in place at November
27, 1994.
This expansion of the Company's lines of credit, along with its existing cash
balances and cash provided by operations, will be available for general
corporate purposes.
Net cash generated by operations for the fiscal year ended November 27, 1994
totaled $10.5 million. Net income adjusted for noncash items was $23.9 million,
unchanged from 1993. Cash generated by operations was decreased by an $8.8
million increase in accounts and contracts receivable that is a result of
higher leasing activity. Contracts receivable from three major customers
amounted to approximately $17 million at year-end 1994. The decrease in
accounts payable and accrued expenses is related mainly to payments made for
restructuring costs and other expenses which were accrued in 1992.
1
<PAGE>
Net cash used in investing activities totaled approximately $0.6 million during
fiscal 1994 compared to $6.9 million in 1993. In 1994, the Company reduced its
investment in preferred stocks by $8.3 million. Investments in property, plant
and equipment totaled $6.7 million during fiscal 1994, down from approximately
$8.3 million in 1993 as no major facility expansion occurred during the current
year. The reduction in cash used for investing activities also reflects the use
of approximately $1.7 million in the acquisition of Roibox Oy in April 1993.
Offsetting these reductions, capitalized software increased by $1.1 million from
1993 to approximately $2.8 million in 1994.
Cash used in financing activities during 1994 was $4.1 million compared with
cash provided by financing activities of approximately $8.7 million during
fiscal 1993. In May 1993, the Company borrowed $20.0 million under a 5.35% five
year unsecured bank loan. Proceeds from the loan were used to support the
Company's United States equipment lease portfolio and to provide a hedge against
interest rate fluctuations. In July 1994, the Company borrowed $4.1 million
against its unsecured multicurrency line of credit. The proceeds of the loan
were used to fund the working capital needs of its subsidiary in Japan. The
Company was in compliance with all loan covenants at year-end 1994. During
1994, the Company used cash to reduce outstanding debt by approximately $5.0
million and to pay dividends totaling approximately $7.9 million, partially
offset by $4.7 million in proceeds received from employee stock option and
purchase plans.
As a result of the above operating, investing and financing activities and
giving effect to exchange rate fluctuations, the Company's cash and cash
equivalents increased by $6.2 million from $76.0 million at year-end 1993 to
$82.2 million at November 27, 1994 while short-term investments decreased $8.3
million to $27.0 million. The Company's current ratio is 2.5 at November 27,
1994 compared to 2.8 at the end of the prior year. Total debt decreased to 9%
of shareholders' equity at the end of 1994, compared to 10% a year ago.
As of November 27, 1994, the Company's principal sources of liquidity included
cash, cash equivalents and short-term investments of $109.3 million and
unsecured bank lines of credit of $30.0 million, of which $9.3 million was
committed to letters of credit and $4.1 million to short term debt. The lines
of credit increased by $5.0 million over 1993 and expire in 1995.
2
<PAGE>
RESULTS OF OPERATIONS
System orders for 1994 were $160 million, an increase of $9 million (6%) from
$151 million in 1993, and an increase of $4 million (3%) from $156.0 million in
1992. During 1994, increased orders occurred primarily in the United States
with declines in Japan and Latin America partially offset by increases in Europe
and Asia. In 1993, orders in Canada and Japan increased while Latin American
and European orders were lower than in 1992. Worldwide pulp and paper orders
were $138 million in 1994, an increase of $11 million (9%) from orders totaling
$127 million in 1993 and an increase of $9 million (7%) from 1992. In 1994,
pulp and paper orders in the United States increased 25% to $55 million from $44
million in 1993 and 28% from $43 million in 1992, reflecting a strong market
share and paper companies' focus on upgrade and replacement of existing systems.
Industrial Systems orders were $22 million, a decrease of $2 million (8%) from
1993 and a decline of $5 million (19%) from 1992.
System backlog at the end of fiscal 1994 was $92 million which is slightly
higher than the backlog of $91 million at the end of 1993. Approximately 90% of
the $92 million year-end 1994 backlog is scheduled to be shipped during fiscal
1995.
System revenue was $156.3 million in 1994, a $3.5 million (2%) increase from
$152.8 million in 1993, and a $7.9 million (5%) increase from $148.4 million in
1992. Increased shipments of web inspection systems from the Measurex Roibox
Division is the principal factor in revenue growth in 1994. In 1993, increased
revenue over 1992 was due largely to the increased shipments of cross-direction
control systems from the Measurex Devron Division. However, overall sales
growth continued to be restrained by a depressed European market in the paper
industry and ongoing price competition. Service and other revenues of $103.7
million increased $2.5 million (2%) from $101.2 million in 1993, and decreased
$0.5 million from $104.2 million in 1992. The increase in service revenue in
1994 is due mainly to increases in spare part sales. The decline in service and
other revenue from 1992 to 1993 was due to changes in foreign currency exchange
rates.
Margins on systems revenue were 36% in fiscal 1994 compared to 35% and 33% in
1993 and 1992, respectively. System margins improved during fiscal 1994 due
primarily to the MXOpen product line start-up costs and initial installation
costs incurred in 1993. Additionally, the Company had experienced project
overruns on systems produced by its Management Systems Division in 1993, which
negatively impacted system margins. The system margin improvement in 1993 over
1992 was related to lower spending at the Company's Irish manufacturing facility
and more efficient use of existing capacity at Measurex's Devron Division.
Service and other margins were 37% in 1994 compared to 36% in 1993, and 35% in
1992. The continued improvement in service margins in 1994 and 1993 reflected
ongoing cost controls and better utilization of field service resources.
3
<PAGE>
Product development costs were $22.7 million in 1994, down slightly from $22.9
million in 1993 and $25.2 million in 1992. Of this total, Measurex capitalized
$2.7 million, $1.7 million, and $4.6 million of software development costs in
fiscal 1994, 1993 and 1992, respectively. Measurex amortized $4.2 million, $3.4
million and $1.7 million of capitalized software to systems costs in 1994, 1993
and 1992, respectively. The increase in amortization in 1994 and 1993 is
attributable to the MXOpen software released in 1992.
Selling and administrative expenses were $63.4 million in 1994, a $2.3 million
(4%) increase from $61.1 million in 1993 and a $0.3 million decrease from $63.7
million in 1992. The increase in 1994 profit sharing and commissions were
mainly responsible for the increase in selling and administrative expense. In
1994, the pretax profit used in calculating profit sharing expense excluded the
charge for exit costs. Additionally, the increase in expenditures in 1994 over
1993 was partially attributable to the inclusion of Roibox operations beginning
in the second quarter of 1993. The lower selling and administrative expenses in
1993 compared to 1992 were in part due to reduced spending and a $0.8 million
insurance claim settlement received.
In September 1994, the Company announced its intention to reorganize a portion
of its operations by establishing an independent Industrial Systems Division to
better focus on the plastics, aluminum and other industries. The Company
indicated that it had also established a cross-functional team organization for
the Cupertino and Ireland operations. In addition, some other facilities and
organizations are being consolidated. These actions resulted in the reduction
of 106 positions. The changes were approved by the Board of Directors on
September 7, 1994 and resulted in a $6.4 million charge for exit costs in the
fourth quarter of fiscal 1994. In 1992, to reduce annual spending and improve
efficiency, the Company provided restructuring reserves of $9.0 million for
personnel reductions and plant consolidations.
Interest income and other decreased by $.4 million (7%) to $5.7 million in 1994
and decreased by $1.7 million (22%) in 1993 from 1992. In 1994, this reduction
is due primarily to a $1.2 million write-off of unrealized losses on short-term
investments available-for-sale, that is not expected to be recovered, offset by
higher interest rates earned on existing investments. In 1993, both lower
average cash balances and lower interest rates, especially in Europe,
contributed to the decline in interest income. It is management's expectation
that interest income in 1995 will be lower than 1994 due to the purchase of two
million shares of common stock from Harnischfeger Industries, Inc. Additionally,
interest income in 1995 is dependent upon interest rates and cash flow from
operations.
4
<PAGE>
In the first quarter of 1994, the Company elected to adopt Financial Accounting
Statement No. 115 "Accounting for Certain Investments in Debt and Equity
Securities." Investments held-to-maturity are stated at amortized cost. All
securities deemed available-for-sale are reported at fair value with net
unrealized gains and losses reported net of related taxes as a separate
component of shareholders' equity. When the decline in market value is
considered other than temporary, the loss is charged to income. The impact of
adoption was not material.
The Company's effective tax rate in 1994 was 39% compared with 35% and 57% in
1993 and 1992, respectively. This increase during fiscal 1994 reflects a change
in the geographic mix of earnings in countries in which the Company operates.
Comparing 1994 and 1993 to 1992, the reduction in the effective tax rate was in
part due to losses incurred by several subsidiaries which could not be benefited
for tax purposes in 1992. In the first quarter of 1994, the Company adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." The cumulative effect of this change increased net income by $0.5
million, or $0.03 per share for the fiscal year ended November 27, 1994.
Net income for 1994 was $6.1 million, a decrease of $2.1 million from $8.2
million in 1993 and an increase of $4.5 million from $1.6 million in 1992.
Fiscal 1994 net income was $0.34 per share compared to $0.46 and $0.09 per share
in 1993 and 1992, respectively.
5
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Three years ended November 27, 1994
(Dollar amounts in thousands except per share data)
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Systems $156,294 $152,839 $148,367
Service and other 103,685 101,158 104,220
-------- -------- --------
Total revenues 259,979 253,997 252,587
-------- -------- --------
OPERATING COSTS AND EXPENSES
Systems 100,077 99,728 99,244
Service and other 65,288 64,501 67,814
Product development 19,992 21,146 20,612
Selling and administrative 63,441 61,122 63,695
Exit and restructuring costs 6,381 -- 8,974
-------- -------- --------
Total operating costs and expenses 255,179 246,497 260,339
-------- -------- --------
Earnings (loss) from operations 4,800 7,500 (7,752)
-------- -------- --------
OTHER INCOME (EXPENSE)
Interest expense (1,335) (948) (810)
Interest income and other, net 5,687 6,127 7,831
Gain on sale of technology and assets -- -- 2,409
-------- -------- --------
Total other income, net 4,352 5,179 9,430
-------- -------- --------
Income before income taxes, extraordinary credit
and cumulative effect of accounting change 9,152 12,679 1,678
Provision for income taxes 3,569 4,464 964
-------- -------- --------
Income before extraordinary credit and
cumulative effect of accounting change 5,583 8,215 714
Extraordinary credit from utilization of
tax loss carryforwards -- -- 911
-------- -------- --------
Income before cumulative effect of accounting
change 5,583 8,215 1,625
Cumulative effect of accounting change 524 -- --
-------- -------- --------
Net income $ 6,107 $ 8,215 $ 1,625
======== ======== ========
Net income per share:
Income before extraordinary credit and
cumulative effect of accounting change $ .31 $.46 $.04
Extraordinary credit -- -- .05
Cumulative effect of accounting change $ .03 -- --
-------- -------- --------
Net income per share $ .34 $.46 $.09
======== ======== ========
Dividends per share $ .44 $.44 $.44
======== ======== ========
Average number of common and
common equivalent shares (thousands) 18,189 18,051 18,296
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
November 27, 1994 and November 28, 1993
(Dollar amounts in thousands except per share data) 1994 1993
- ---------------------------------------------------------- -------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 82,254 $ 76,040
Short-term investments 27,030 35,371
Accounts receivable 61,583 55,126
Inventories 24,685 35,697
Prepaid and other 11,957 11,473
-------- --------
Total current assets 207,509 213,707
-------- --------
Contracts receivable 32,139 26,651
Service parts, net 12,286 3,178
Property, plant and equipment, net 49,655 53,161
Other assets 18,234 21,619
-------- --------
Total assets $319,823 $318,316
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,387 $ 4,516
Short term debt 4,063 --
Accounts payable 5,989 6,732
Accrued expenses 65,686 62,594
Income taxes payable 3,848 2,145
-------- --------
Total current liabilities 83,973 75,987
-------- --------
Long-term debt 12,167 16,783
Deferred income taxes 6,500 13,682
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value;
authorized: 10,000,000 shares;
issued and outstanding: none
Common stock, $.01 par value;
authorized: 50,000,000 shares; outstanding
1994 - 19,019,975 shares, 1993 - 19,036,948 shares 190 190
Additional capital 75,115 75,202
Retained earnings 162,836 167,211
Cumulative translation adjustments (3,301) (5,707)
Less: Treasury stock at cost: 1994 - 889,562 shares,
1993 - 1,192,726 shares (17,657) (25,032)
-------- --------
Total shareholders' equity 217,183 211,864
-------- --------
Total liabilities and shareholders' equity $319,823 $318,316
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Cumulative
Common Additional Retained Translation Treasury
Stock Capital Earnings Adjustments Stock Total
-------- ----------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Three years ended November 27, 1994 (Dollar amount in thousands except per share data)
Balance December 1, 1991 $190 $75,074 $175,783 $ 4,237 $(23,566) $231,718
Proceeds from treasury stock
issued under employee
stock purchase and stock
option plans (104,539 shares)
including related tax benefits -- 107 -- -- 2,953 3,060
Excess of cost of treasury shares
issued over proceeds received -- -- (1,334) -- -- (1,334)
Foreign currency translation -- -- -- (6,256) -- (6,256)
Net income -- -- 1,625 -- -- 1,625
Dividends ($.44 per share) -- -- (7,976) -- -- (7,976)
Treasury stock acquired
(152,500 shares) -- -- -- -- (2,384) (2,384)
---- ------- -------- ----------- -------- --------
Balance November 29, 1992 190 75,181 168,098 (2,019) (22,997) 218,453
---- ------- -------- ----------- -------- --------
Proceeds from treasury stock
issued under employee
stock purchase and stock
option plans (115,103 shares)
including related tax benefits -- 21 -- -- 3,125 3,146
Excess of cost of treasury shares
issued over proceeds received -- -- (1,216) -- -- (1,216)
Foreign currency translation -- -- -- (3,688) -- (3,688)
Net income -- -- 8,215 -- -- 8,215
Dividends ($.44 per share) -- -- (7,886) -- -- (7,886)
Treasury stock acquired
(298,600 shares) -- -- -- -- (5,160) (5,160)
---- ------- -------- ----------- -------- --------
Balance November 28, 1993 190 75,202 167,211 (5,707) (25,032) 211,864
---- ------- -------- ----------- -------- --------
Proceeds from treasury stock
issued under employee
stock purchase and stock
option plans (303,164 shares)
including related tax benefits -- (87) -- -- 7,375 7,288
Excess of cost of treasury shares
issued over proceeds received -- -- (2,596) -- -- (2,596)
Foreign currency translation -- -- -- 2,406 -- 2,406
Net Income -- -- 6,107 -- -- 6,107
Dividends ($.44 per share) -- -- (7,886) -- -- (7,886)
---- ------- -------- ----------- -------- --------
Balance November 27, 1994 $190 $75,115 $162,836 $(3,301) $(17,657) $217,183
==== ======= ======== =========== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
8
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Three years ended November 27, 1994 (Dollar amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 6,107 $ 8,215 $ 1,625
Non-cash items included in net income:
Depreciation and amortization:
Service parts 1,032 1,055 1,331
Property, plant and equipment 9,343 9,997 9,933
Capitalized software and goodwill 4,921 3,935 2,318
Deferred income taxes (3,883) (2,307) (5,875)
Translation (gain) loss (496) (506) 775
Inventory reserves 2,216 3,473 2,954
Gain on sale of technology -- -- (2,409)
Exit and restructuring costs 4,662 -- 8,974
Net (increase) decrease in:
Accounts and contracts receivable (8,795) (7,420) (4,998)
Inventories and service parts (374) (3,912) (3,687)
Prepaid and other 2,034 792 2,533
Net increase (decrease) in:
Accounts payable and accrued expenses (4,289) (12,333) (906)
Income taxes payable (2,901) 468 (674)
Other, net 900 822 (351)
-------- -------- --------
Net cash provided by operating activities 10,477 2,279 11,543
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of held-to-maturity securities (37,009) (33,781) (69,799)
Purchase of available-for-sale securities (3,360) (31,684) (12,145)
Sale of available-for-sale securities 11,864 25,155 13,597
Maturities of held-to-maturity securities 36,846 45,176 42,535
Acquisition of property, plant and equipment (6,716) (8,329) (7,781)
Acquisition of subsidiary, net of cash acquired -- (1,668) --
Proceeds from sale of facility and other assets 575 -- 5,955
Capitalized software (2,787) (1,725) (4,636)
-------- -------- --------
Net cash used in investing activities (587) (6,856) (32,274)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to short-term debt 4,063 -- --
Additions to long-term debt -- 21,971 --
Payment of long-term debt (4,975) (2,191) (3,967)
Dividends (7,886) (7,886) (7,976)
Stock issued under employee stock purchase and
stock option plans 4,692 1,930 1,726
Payment for treasury stock -- (5,160) (2,384)
-------- -------- --------
Net cash provided by (used in) financing activities (4,106) 8,664 (12,601)
-------- -------- --------
Effect of exchange rate fluctuations on cash and
cash equivalents 430 (2,415) (5,008)
Net increase (decrease) in cash and cash equivalents 6,214 1,672 (38,340)
Cash and cash equivalents at beginning of year 76,040 74,368 112,708
-------- -------- --------
Cash and cash equivalents at end of year $ 82,254 $ 76,040 $ 74,368
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 1,335 $ 948 $ 810
Income taxes $ 8,167 $ 5,509 $ 8,172
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR - The Company uses a 52-53 week fiscal year. References to 1994,
1993 and 1992 are for fiscal years ended November 27, 1994, November 28, 1993,
and November 29, 1992, respectively. Fiscal years 1994, 1993 and 1992 were 52
week years.
CONSOLIDATION - The consolidated financial statements include the accounts of
all subsidiaries after elimination of intercompany balances and transactions.
The Company has reclassified the presentation of certain prior year information
to conform with the current year presentation format.
FOREIGN CURRENCY TRANSLATION - Gains and losses resulting from foreign currency
translation of the Company's foreign operations (except certain manufacturing
operations and operations in hyperinflationary countries) were recorded directly
to a separate component of shareholders' equity. For certain manufacturing
operations and sales operations in hyperinflationary countries, the functional
currency is deemed to be U.S. dollars, and translation gains or losses are
reflected in interest income and other.
FOREIGN EXCHANGE CONTRACTS - The Company hedges certain international system
orders using foreign exchange forward contracts to reduce the risk of loss due
to foreign currency fluctuations. In addition, the Company hedges the U.S.
dollar value of net asset or liability positions denominated in currencies other
than the functional currency of its foreign subsidiaries and records any
resulting gains or losses in interest income and other. At November 27, 1994,
the Company had foreign exchange forward contracts valued at $35.0 million
maturing from December 1994 through August 1995, of which 66% were denominated
in European currencies, 15% denominated in Canadian Dollar, and 11% denominated
in Yen. The contract amount of the foreign exchange contracts approximates fair
value, which has been estimated based on the amount the Company would have had
to pay to terminate these agreements at year-end. At year-end 1993 and 1992,
the Company had forward contracts in the amount of $29.8 million and $29.5
million, respectively. As of year end, approximately 90% of these contracts are
with one financial institution. For the purposes of the statement of cash
flows, hedges are classified in the same category as the items being hedged.
REVENUE RECOGNITION - The Company generally recognizes revenue from system sales
at the time of shipment provided any remaining obligations are insignificant and
collection is probable. Revenue on certain software contracts are recognized on
a percentage-of-completion basis. Service and other revenues are recognized as
the services are provided or ratably over the life of the contracts.
PRODUCT DEVELOPMENT EXPENSES - The Company is actively engaged in basic
technology and applied research and development programs which are designed to
develop new or improved products and process applications. The cost of these
programs is charged to expense as incurred except for certain software
development costs which are capitalized as described in the "Capitalized
Software" policy below.
CAPITALIZED SOFTWARE - Costs related to the conceptual formulation and design
of software products are expensed as product development. Costs incurred
subsequent to establishing the technological feasibility of software products
are capitalized.
Amortization of capitalized software costs, which begins when products are
available for general release to customers, is computed on a straight-line basis
over the expected product lives, generally estimated to be three years.
10
<PAGE>
INCOME TAXES - The Company adopted Statement of Financial Accounting Standard
No. 109, "Accounting for Income Taxes" at the beginning of fiscal year 1994,
which requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statement or tax returns. Under this "liability" method, deferred tax
liabilities and assets are determined based on the temporary differences between
the financial statement and tax bases of assets and liabilities by applying
enacted statutory tax rates applicable to future years in which the differences
are expected to reverse.
Prior to 1994, taxes were provided for items included in the consolidated
statements of income regardless of the period when such items may be reported
for tax purposes ("deferred" method).
The Company provides U.S. and foreign income taxes on the portion of the
accumulated earnings of the Company's foreign subsidiaries which are intended to
be remitted to the parent Company within the foreseeable future.
CASH AND CASH EQUIVALENTS - Cash equivalents generally consist of certificates
of deposit, time deposits and treasury notes. The Company considers all highly
liquid debt instruments with an original maturity of 90 days or less to be a
cash equivalent. A substantial portion of the Company's cash and cash
equivalents are held by foreign subsidiaries and are generally held in U.S.
dollar denominated holdings. Amounts held by foreign subsidiaries would be
subject to U.S. income taxation, net of available foreign tax credits, upon
repatriation to the U.S.
SHORT-TERM INVESTMENTS - The Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" at the beginning of fiscal year 1994. Short-term investments
include investments held-to-maturity and investments available-for-sale.
Investments held-to-maturity are stated at amortized cost with original
maturities between three and twelve months. Investments that are considered
available-for-sale are carried at market value. Unrealized gains and losses are
reported net of tax as a separate component of shareholders' equity until
realized. As of year-end 1993, the short-term investments comprised debt
securities and a portfolio of preferred stock for which cost approximated
market. The Company enters into futures contracts to hedge the risk associated
with the impact of interest rate fluctuations on its current portfolio of
preferred stocks. At year end 1994 and 1993, the Company had interest rate
futures contracts with notional value of $11.8 million and $6.4 million,
respectively. Gains and losses on such contracts are recognized in income when
changes in the value of the investment are realized.
INVENTORY VALUATION - Inventories are stated at the lower of standard cost
(which approximates actual cost determined on a first-in, first-out basis) or
market. Inventory costs include raw materials, direct labor and manufacturing
overhead.
DEPRECIATION - Property, plant and equipment are depreciated on a straight-line
basis over estimated useful lives which range as follows: buildings and
improvements - 3 to 40 years; machinery and equipment - 3 to 20 years. Service
parts, located in the Sales and Service organization, are depreciated on a 7-
year declining balance basis. When assets are sold or retired, the cost and
related accumulated depreciation are removed from the accounts and the resulting
gains or losses are included in income.
NET INCOME PER SHARE - Net income per share is computed based on the weighted
average number of common shares outstanding during the year adjusted to reflect
the assumed exercise of outstanding employee stock options to the extent these
items had a dilutive effect on the computation.
11
<PAGE>
SHORT TERM INVESTMENTS
The Company has adopted Financial Accounting Standard No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," effective November 29, 1993.
There was no effect on current earnings from the initial application of the new
standard. The impact on shareholders' equity and assets was not material.
Included in short-term investments at November 27, 1994, are debt securities
classified as held-to-maturity with a carrying value of $15.8 million and a
preferred stock portfolio classified as available-for-sale with a market value
of $10.6 million.
The carrying value of held-to-maturity securities at November 27, 1994
approximates market and comprises the following securities:
<TABLE>
<CAPTION>
Held-to-Maturity Carrying Value
-------------------------------
<S> <C>
Commercial Paper $ 4,220
Canadian Government Obligations 4,123
Foreign Certificates of Deposits 7,433
-------
$15,776
=======
</TABLE>
All held-to-maturity securities mature in less than 180 days.
At November 27, 1994, the available-for-sale securities have a cost of $11.1
million, a market value of $10.6 million, and gross unrealized holding losses of
$0.5 million. The cost basis reflects a $1.2 million write-down for unrealized
losses that are not expected to be recovered.
The proceeds on sales of investments classified as available-for-sale for the
year ended November 27, 1994 were $11.9 million on which $0.7 million of losses
were realized.
As of November 27, 1994, shareholder's equity included $0.2 million, net of
taxes, in unrealized losses comprised of $0.3 million in unrealized losses on
the preferred stock portfolio offset by $0.1 million in deferred gains from
futures contracts used to hedge the portfolio. .
ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Accounts receivable $56,619 $52,037
Contracts receivable, current portion 11,547 8,579
Less:
Allowances for noncollection
and system returns (6,583) (5,490)
------- -------
$61,583 $55,126
======= =======
</TABLE>
12
<PAGE>
INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Purchased parts and
components $12,417 $18,217
Work in process 7,724 10,733
Finished subassemblies
and systems 4,544 6,747
------- -------
$24,685 $35,697
======= =======
</TABLE>
CONTRACTS RECEIVABLE
Contracts receivable consist of the following:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Contracts receivable $51,483 $43,362
Less:
Unearned financing income (5,738) (6,475)
Allowance for noncollection
and system returns (2,059) (1,657)
------- -------
43,686 35,230
Current portion (11,547) (8,579)
-------- -------
$ 32,139 $26,651
======== =======
</TABLE>
The aggregate amount of payments receivable by the Company in fiscal years
subsequent to 1994 is set forth below:
<TABLE>
<S> <C>
1995 - $14,029 1998 - $6,679
1996 - $12,312 1999 - $3,976
1997 - $ 8,919 Thereafter - $5,568
</TABLE>
Customer financing for systems is collaterialized by security in the related
asset. The Company maintains reserves for potential credit losses and such
losses have been within management's expectations. Contracts receivable from
three major customers amounted to approximately $17 million at year-end 1994.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and consist of the following:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Land $ 5,533 $ 5,592
Buildings and improvements 38,680 39,463
Machinery and equipment 69,922 64,950
-------- --------
114,135 110,005
Less:
Accumulated depreciation (64,480) (56,844)
-------- --------
$ 49,655 $ 53,161
======== ========
</TABLE>
13
<PAGE>
OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Capitalized software, net $ 5,852 $ 7,246
Goodwill and other 12,382 14,373
------- -------
$18,234 $21,619
======= =======
</TABLE>
The decrease in capitalized software in 1994 reflects the amortization of the
new MXOpen software released during late 1992. Amortization expense of
capitalized software was $4.2 million, $3.4 million and $1.7 million in 1994,
1993 and 1992, respectively. The decrease in goodwill and other is mainly
attributable to amortization of goodwill and patents. Goodwill is amortized on a
straight-line basis over 15 years and the expected product life for software is
generally estimated to be three years.
ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Accrued payroll and related
items $24,321 $22,333
Accrued initial service 8,903 7,059
Customer deposits 12,377 12,078
Exit restructuring costs 4,862 3,483
Other 15,223 17,641
------- -------
$65,686 $62,594
======= =======
</TABLE>
LINES OF CREDIT AND DEBT
As of November 27, 1994, the Company had unsecured bank line of credit
agreements of $30.0 million, which provide for domestic and foreign currency
borrowings, advances and guarantees, Bankers' Acceptances, and letters of
credit. There was $16.7 million available in connection with these agreements
at November 27, 1994.
The agreements, which expire during fiscal year 1995, require the Company to
adhere to certain covenants regarding working capital, indebtedness, and minimum
shareholders' equity.
The lines of credit of $30 million include a revolving credit agreement ($20
million) that provides for variable interest rate borrowings based on the London
Interbank Offer Rate (LIBOR). Under a multicurrency credit agreement ($10
million), the Company may obtain loans at the lending bank's base rate plus
3/8%.
Short-term debt comprises $4.1 million (400,000,000 Yen) borrowed against the
Company's unsecured multicurrency line of credit with a bank in July 1994. The
proceeds of the loan were used to fund the working capital needs of the
Company's subsidiary in Japan. The loan bears interest at 2.7% per annum and is
due in 1995.
14
<PAGE>
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1994 1993
-------- ---------
<S> <C> <C>
Long term loan $15,000 $19,000
Other borrowings 1,554 2,299
------- -------
16,554 21,299
Less amounts due within
one year (4,387) (4,516)
------- -------
$12,167 $16,783
======= =======
</TABLE>
Based on the borrowing rates currently available to the Company for bank loans
with similar terms and average maturities, the difference between the carrying
amount and fair value of the loans is immaterial.
The aggregate future principal payments of long-term debt are $4.4 million, $4.5
million, $4.5 million and $3.2 million in 1995, 1996, 1997, and 1998,
respectively.
In May 1993, the Company borrowed $20 million under a 5.35% five-year unsecured
term loan agreement with a bank. Proceeds from the loan were used principally
to support the Company's United States equipment lease portfolio. Interest is
payable quarterly, with principal payable in equal quarterly installments of
$1.0 million through June 1998. The loan agreement contains certain restrictive
covenants which include the maintenance of minimum consolidated cash balances of
$40 million, minimum tangible net worth, and certain financial ratios. The
Company was in compliance with all covenants at year-end 1994.
COMMITMENTS AND CONTINGENCIES
The Company leases various facilities and equipment under noncancellable lease
agreements. Rent expense under all operating leases was approximately $4.7
million, $4.4 million, and $3.9 million in 1994, 1993 and 1992, respectively.
Future minimum lease payments under these noncancellable operating leases as of
November 27, 1994 are approximately $3.8 million, $2.3 million, $1.6 million,
$1.5 million, and $1.3 million for fiscal years 1995, 1996, 1997, 1998, and
1999, respectively, and approximately $2.9 million in total for years following
1999.
At November 27, 1994, the Company was contingently liable for approximately $9.3
million relating principally to letters of credit issued to support collections.
The Company is subject to legal proceedings and claims that arise in the normal
course of its business. In the opinion of management, these proceedings will
not have a material adverse effect on the financial position and results of
operations of the Company.
EXIT AND RESTRUCTURING COSTS
In the fourth quarter of 1994, the Company recorded a $6.4 million charge for
exit costs relating to a restructuring plan. This plan included establishment
of a cross-functional team organization for Cupertino and Ireland operations as
well as consolidation of some other facilities and organizations. As a result
of the plan, 106 administrative, technical and management positions were
eliminated. The termination benefits cost associated with the action was $5.1
million of which $1.7 million was paid out in 1994 and the cost of the
facilities consolidation was $1.3 million.
In 1992 the Company recorded a $9.0 million pretax charge for restructuring
operations to reduce costs and improve efficiency. Provision was made for
severance costs and other expenses related to a worldwide reduction in work
force.
15
<PAGE>
INTEREST INCOME AND OTHER
Interest income and other consist of the following:
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- -------
<S> <C> <C> <C>
Interest income $ 7,040 $6,523 $8,117
Loss on short-term investments (1,220) - -
Foreign exchange loss (133) (396) (286)
------- ------ ------
$ 5,687 $6,127 $7,831
======= ====== ======
</TABLE>
In 1994, the Company recorded a loss of $1.2 million relating to an unrealized
loss on short-term investments that is not expected to be recovered.
STOCK OPTION AND STOCK PURCHASE PLANS
Under the Company's stock option plan, 5,110,240 shares of common stock have
been reserved for issuance to officers and key employees.
Options may be granted at prices not lower than the fair market value of the
Company's common stock at the date of grant. Options generally become
exercisable in four equal annual installments commencing one year from the date
of grant. Options generally expire, if not exercised, within ten years from the
date of grant. The stock option plan includes an automatic option grant program
for the Company's non-employee directors. Such options expire 10 years from the
date of grant.
The stock option program also allows selected employees to elect to have a
portion of their base salary reduced in return for options to purchase common
stock. The option price represents the difference between the fair market value
of the Company's common stock at the date of grant and the salary reduction. In
1991 and 1990, options were granted for 13,000 and 6,600 shares at option prices
of $5.63 and $7.02 per share, respectively, under this program. Options under
this plan are fully vested one year from date of grant and expire if not
exercised within 10 years.
A summary of transactions relating to options during fiscal years 1992, 1993 and
1994 is set forth below:
<TABLE>
<CAPTION>
Options Outstanding
- -------------------
(Amounts in thousands
except per share data)
Shares Price Per Share Amount
------- --------------- -------
<S> <C> <C> <C>
December 1, 1991 2,025.7 $ 5.63-$32.44 $37,873
Granted 535.5 15.63- 22.75 9,814
Terminated (129.6) 16.25- 31.88 (2,561)
Exercised (31.3) 16.25- 16.88 (528)
------- ------------- -------
November 29, 1992 2,400.3 $ 5.63-$32.44 $44,598
Granted 594.7 16.31- 19.69 11,099
Terminated (290.5) 5.63- 32.44 (5,791)
Exercised (44.5) 15.63- 17.00 (749)
------- ------------- -------
November 28, 1993 2,660.0 $ 5.63-$31.13 $49,157
Granted 622.0 17.88- 21.88 11,705
Terminated (72.6) 15.63- 31.13 (1,483)
Exercised (233.7) 7.02- 21.06 (3,926)
------- ------------- -------
November 27, 1994 2,975.7 $ 5.63-$29.00 $55,453
======= ============= =======
</TABLE>
At year end 1994 and 1993, options to purchase 1,401,532 shares and 1,003,416
shares, respectively, were exercisable at prices ranging from $5.63 to $29.00
and from $5.63 to $31.13, respectively.
16
<PAGE>
Shares available for option grants at year end 1994 and 1993 were 1,857,922 and
2,407,345, respectively.
The Company has a remaining reserve of approximately 29,000 shares of its
authorized but unissued common stock for issuance under an employee stock
purchase plan.
The stock purchase plan covers substantially all employees of the parent company
and certain subsidiaries. Common stock purchases are paid through periodic
payroll deductions of up to 10% of eligible compensation. The participant's
purchase price is 85% of the lower of the closing market price on the first
trading day or the last trading day of the quarter in which the stock is
purchased by the employee. The Company has issued 971,121 shares of its stock
(including 414,768 treasury shares) under this plan as of November 27, 1994.
EMPLOYEE BENEFIT PLANS
The Company has a Savings and Deferred Profit Sharing Plan qualified under
section 401(k) and 401(a) of the Internal Revenue Code. The Company contributes
to the Plan up to 10% of consolidated pretax income before contributions under
the Plan. Profit sharing expenses under this plan were $0.9 million, $0.7
million and $0.6 million in fiscal years 1994, 1993 and 1992, respectively. The
Company matches up to $1,000 of each employee's contributions to the Plan,
depending on length of service. Measurex's matching contributions to the Plan
were $0.9 million, $0.8 million and $0.9 million in 1994, 1993 and 1992,
respectively.
Certain foreign employees are eligible to participate in similar profit sharing
programs or local pension plans. With respect to these plans, the pension
benefit obligations and plan assets were not material. Total pension expense
under these foreign pension plans was $1.2 million, $1.2 million and $1.5
million for 1994, 1993 and 1992, respectively.
INCOME TAXES
The Company adopted FAS Statement No. 109, "Accounting for Income Taxes," as of
November 29, 1993, and the cumulative effect of this change in accounting for
income taxes was to increase net income by $0.5 million. Prior years' financial
statements were not restated.
Total income tax expense for the year ended November 27, 1994, was allocated as
follows:
<TABLE>
<S> <C>
Income from continuing operations $3,569
Goodwill, for initial recognition of acquired tax benefits (829)
Shareholders' equity, for compensation expense for tax purposes
in excess of amounts recognized for financial reporting purposes (286)
------
$2,454
======
</TABLE>
The provision (credit) for income taxes before cumulative effect of the
accounting change was as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Current income taxes:
United States $ 753 $ 386 $ 1,695
Foreign 6,265 6,059 3,838
State 434 326 395
------- ------- -------
7,452 6,771 5,928
------- ------- -------
Deferred income taxes:
United States (2,682) (3,862) (2,986)
Foreign (1,201) 1,555 (2,889)
------- ------- -------
(3,883) (2,307) (5,875)
------- ------- -------
Extraordinary credit from
utilization of foreign
tax loss carryforwards -- -- 911
------- ------- -------
Provision for income taxes $ 3,569 $ 4,464 $ 964
======= ======= =======
</TABLE>
17
<PAGE>
The foreign provision for income taxes is based on foreign pretax earnings of
approximately $15.5 million, $19.3 million, and $4.6 million in 1994, 1993, and
1992, respectively.
In 1993 and 1992, the major components of the provision not currently payable
result from:
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Taxes provided on
undistributed earnings of
foreign subsidiaries $ 1,472 $ -
Tax accounting for:
Finance leases 927 749
Depreciation (537) (898)
Inventory and revenue-related reserves (1,568) (773)
Deferred compensation 376 137
Capitalized software (557) 818
Installment sales 857 (427)
Other accrued expenses 2,868 (2,556)
Repatriation of earnings from
foreign subsidiaries paid out
of previously provided taxes (5,277) (2,471)
Unrealized foreign exchange gain (loss) (225) 118
Other (643) (572)
------- -------
$(2,307) $(5,875)
======= =======
</TABLE>
The Company has not provided for United States income taxes on the cumulative
earnings of certain foreign subsidiaries that are considered invested
indefinitely outside the United States in the amount of $64.0 million at
November 27, 1994.
The manufacturing profits from the Company's subsidiary in the Republic of
Ireland are subject to a 10% tax until the year 2010.
At November 27, 1994, the Company has in various tax juridictions net operating
loss carryforwards of approximately $12.8 million and tax credit carryforwards
of approximately $4.8 million at current exchange rates. $7.3 million of the
net operating loss carryforwards and $3.5 million of the tax credit
carryforwards will expire in varying amounts between 1995 and 2001. A valuation
allowance has been provided for a portion of the deferred tax assets related to
these carryforwards.
18
<PAGE>
The principal items accounting for the difference between income taxes computed
at the United States statutory rate and the provision for income taxes are as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
United States statutory tax $3,112 $4,310 $ 571
Effect of:
Tax credits (230) 35 33
Foreign sales corporation (354) (322) (879)
Foreign operations taxed at differing
rates 396 (42) 158
Losses of foreign subsidiaries not
providing tax benefit - 634 2,029
Tax exempt investment income (305) (288) (268)
State income taxes 288 215 230
Change in taxes due to (favorable) unfavorable
settlement and/or closing of prior
tax years 257 - (864)
Valuation allowance 322 - -
Other items 83 (78) (46)
------ ------ ------
Provision for income taxes 3,569 4,464 964
Extraordinary credit from
utilization of foreign
tax loss carryforwards - - (911)
------ ------ ------
Net tax expense $3,569 $4,464 $ 53
====== ====== ======
</TABLE>
The consolidated balance sheet included the following deferred tax assets and
deferred tax liabilities at November 27, 1994:
<TABLE>
<S> <C>
Deferred income tax assets:
Inventory and revenue-related reserves $ 6,324
Accrued expenses 4,851
Other 2,072
Net operating loss and tax credit
carryforwards 9,831
-------
Gross deferred tax assets $23,078
-------
Deferred income tax liabilities:
Financial leases $ 3,370
Capitalized software 1,989
Depreciation 1,175
Undistributed earnings of foreign subsidiaries 4,486
Other 481
-------
Gross deferred tax liabilities 11,501
-------
Valuation allowance for deferred tax assets (8,594)
-------
Net deferred tax assets $ 2,983
=======
</TABLE>
The net change in the total valuation allowance for the year ended November 27,
1994, includes a reduction of approximately $0.8 million in the valuation
allowance established at the beginning of the year for certain net operating
loss carryforwards which, due to a change in circumstances, were either utilized
during 1994 or are expected to be utilized.
19
<PAGE>
TRANSACTIONS WITH AFFILIATED COMPANY
In the second quarter of 1990, the Company entered into a cooperative
arrangement with Beloit Corporation for integrated marketing and sales of all
Measurex controls with Beloit's full line of pulp and paper machinery.
Simultaneously executed, was a seven-year "standstill" agreement between
Measurex and Harnischfeger Industries Inc., Beloit's parent company, whereby
Harnischfeger purchased 20% of Measurex's common stock on the open market.
Revenues and ending accounts receivable with Beloit for the year ending November
27, 1994 were immaterial.
SUBSEQUENT EVENTS
On December 29, 1994, the Company bought back two million shares of its stock,
held by Harnischfeger Industries, Inc., at $21.50 per share, reducing
Harnischfeger's holdings to 10%. Harnischfeger had owned 20% of the Company
stock since May of 1990.
On February 10, 1995, the Company entered into a $50 million Credit Agreement
with a group of banks providing for an unsecured multi-year revoling credit
facility. The Company will be able to borrow funds under this facility through
February, 1998. This facility replaces $10 million of the lines of credit in
place at November 27, 1994.
BUSINESS SEGMENTS
The Company operates in one principal industry segment: the design, development,
manufacture, sales and service of computer-integrated manufacturing systems.
The Company sells these products to the pulp and paper, plastics, metals, rubber
and chemical industries. Approximately 80% of the Company's system revenue is
from the pulp and paper industry in 1994, 1993 and 1992.
No single customer accounted for 10% or more of revenues during 1994, 1993 or
1992.
The Company's products are principally distributed and serviced through its own
marketing and service organizations. Operations are conducted worldwide and are
grouped into three geographic areas: United States, Europe, and Other
International (primarily Canada, Asia/Pacific, and the Latin American
countries).
20
<PAGE>
The following table summarizes the geographic operations of the Company:
<TABLE>
<CAPTION>
(Dollar amounts in millions) 1994 1993 1992
- ---------------------------- -------- ------- -------
<S> <C> <C> <C>
Revenues from unaffiliated
customers:
United States $112.8 $ 94.5 $ 88.6
Europe 77.7 79.5 93.4
Other International 69.5 80.0 70.6
------ ------ ------
Consolidated $260.0 $254.0 $252.6
====== ====== ======
Earnings (loss) from
operations:
United States $ 3.3 $ (3.4) $ (4.0)
Europe 5.5 4.7 (2.4)
Other International 2.3 11.5 4.8
Corporate (6.3) (5.3) (6.2)
------ ------ ------
Consolidated $ 4.8 $ 7.5 $ (7.8)
====== ====== ======
Identifiable assets:
United States $120.6 $116.6 $117.1
Europe 60.6 48.5 56.9
Other International 54.5 55.1 45.9
Corporate 84.1 98.1 103.0
------ ------ ------
Consolidated $319.8 $318.3 $322.9
====== ====== ======
</TABLE>
The Company's manufacturing operations sell systems to its sales and service
operations. Sales to non-U.S. subsidiaries from U.S. manufacturing operations
were $41.5 million in 1994, $43.7 million in 1993 and $46.6 million in 1992.
Sales to United States and European affiliates from the Canadian manufacturing
operations acquired in 1991 were $20.2 million in 1994, $21.4 million in 1993
and $16.9 million in 1992. Sales to affiliates from other geographic areas
increased to $5.2 million in fiscal year 1994 and were not significant in 1993
and 1992. Internal selling prices are designed to allocate manufacturing
profits to manufacturing entities and sales and service profits to sales and
service entities.
The United States revenues from unaffiliated overseas customers in 1994, 1993
and 1992, were not significant.
Corporate identifiable assets include short-term cash investments.
21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS, MEASUREX CORPORATION
We have audited the accompanying consolidated balance sheets of Measurex
Corporation as of November 27, 1994, and November 28, 1993, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three fiscal years in the period ended November 27, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the aforementioned financial statements present fairly, in all
material respects, the consolidated financial position of Measurex Corporation
as of November 27, 1994 and November 28, 1993, and the consolidated results of
their operations and their cash flows for each of the three fiscal years in the
period ended November 27, 1994, in conformity with generally accepted accounting
principles.
As discussed in the notes to the consolidated financial statements titled
"income taxes," in 1994 the Company changed its method of accounting for income
taxes.
/S/ COOPERS & LYBRAND LLP
San Jose, California
December 14, 1994, except note titled "subsequent events," as to which the date
is February 10, 1995.
22
<PAGE>
SUPPLEMENTAL FINANCIAL DATA
INTERIM FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
(Dollar amounts in thousands
except per share data)
1994 Quarter Ended
-------------------------------------
Feb. 27 May 29 Aug. 28 Nov. 27
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $61,645 $62,578 $65,654 $70,102
Gross margin 22,664 22,981 23,674 25,295
Income before income tax and
cumulative effect of accounting
change 3,366 3,135 4,161 (1,510)
Income before cumulative effect
of accounting change 2,188 1,778 2,538 (921)
Cumulative effect of accounting
change 524 - - -
Net income 2,712 1,778 2,538 (921)
Net income per share .15 .10 .14 (.05)
Dividends per share .11 .11 .11 .11
<CAPTION>
(Dollar amounts in thousands
except per share data)
1993 Quarter Ended
-------------------------------------
Feb. 28 May 30 Aug. 29 Nov. 28
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $61,839 $66,141 $64,268 $61,749
Gross margin 20,009 23,678 23,607 22,474
Income before income taxes 2,713 3,344 3,604 3,018
Net income 1,736 2,174 2,343 1,962
Net income per share .10 .12 .13 .11
Dividends per share .11 .11 .11 .11
</TABLE>
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
The Company's common shares are listed on the New York and Pacific Stock
Exchanges.
As of November 27, 1994, there were 1,370 shareholders of record. Dividends of
$.44 per share were paid in 1994 and 1993.
<TABLE>
<CAPTION>
1994 Price 1993 Price
----------------- -----------------
High Low High Low
------- ------- ------- -------
<S> <C> <C> <C> <C>
1st Quarter $20 5/8 $18 1/2 $20 $17 3/8
2nd Quarter 19 3/4 17 7/8 18 7/8 16 1/8
3rd Quarter 21 1/4 17 3/8 19 7/8 17 1/8
4th Quarter 22 1/2 19 1/2 20 3/4 18
</TABLE>
23
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Six years ended November 27, 1994
(Dollar amounts in thousands
except per share data) 1994 1993 1992 1991 1990 1989
- ---------------------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Systems $156,294 $152,839 $148,367 $148,249 $170,619 $195,508
Service and other 103,685 101,158 104,220 105,730 95,579 89,839
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Total revenues 259,979 253,997 252,587 253,979 266,198 285,347
- ---------------------------------------- -------- -------- -------- -------- -------- --------
GROSS MARGIN:
Systems $ 56,217 $ 53,111 $ 49,123 $ 54,534 $ 71,712 $ 95,201
Service and other 38,397 36,657 36,406 33,312 33,400 33,206
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Total gross margin 94,614 89,768 85,529 87,846 105,112 128,407
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Earnings (loss) from operations
before exit and restructuring costs $ 11,181 $ 7,500 $ 1,222 $ 3,247 $ 19,460 $ 37,915
Earnings (loss) from operations 4,800 7,500 (7,752) (8,448) 19,460 37,915
Income before income taxes,
extraordinary credit and cumulative
effect of accounting change 9,152 12,679 1,678 519 30,374 50,923
Net income 6,107 8,215 1,625 389 22,522 40,682
Net income per share .34 .46 .09 .02 1.26 2.17
Dividends per share .44 .44 .44 .44 .43 .37
System orders 160,000 151,000 156,000 127,000 168,000 189,000
System backlog 92,000 91,000 95,000 91,000 109,000 109,000
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Gross margin:
Systems 36.0% 34.7% 33.1% 36.8% 42.0% 48.7%
Service and other 37.0% 36.2% 34.9% 31.5% 34.9% 37.0%
Total gross margin 36.4% 35.3% 33.9% 34.6% 39.5% 45.0%
Earnings (loss) from operations 1.8% 3.0% (3.1%) (3.3%) 7.3% 13.3%
Net income 2.3% 3.2% 0.6% 0.2% 8.5% 14.3%
Income tax rate 39.0% 35.2% 57.4% 25.0% 25.9% 20.1%
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Working capital $123,536 $137,720 $133,305 $154,744 $185,237 $186,798
Total assets 319,823 318,316 322,884 339,539 337,477 333,010
Total debt 20,617 21,299 891 5,033 5,196 5,257
Shareholders' equity 217,183 211,864 218,453 231,718 238,640 230,074
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Current ratio 2.5:1 2.8:1 2.6:1 2.9:1 3.7:1 3.5:1
Return on beginning equity 2.9% 3.8% .7% .2% 9.8% 19.9%
Return on beginning assets 1.9% 2.5% .5% .1% 6.8% 13.4%
Book value per share $ 11.98 $ 11.87 $ 12.12 $ 12.82 $ 13.33 $ 12.51
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Total product development costs $ 22,779 $ 22,871 $ 25,292 $ 26,258 $ 28,226 $ 29,970
Reimbursement from
co-development programs -- -- (44) (927) (3,451) (5,105)
Capitalized software costs (a) (2,787) (1,725) (4,636) (2,332) (4,535) (3,180)
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Product development expense $ 19,992 $ 21,146 $ 20,612 $ 22,999 $ 20,240 $ 21,685
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Capital expenditures $ 6,716 $ 8,329 $ 7,781 $ 8,211 $ 15,484 $ 25,010
Number of employees 2090 2,250 2,310 2,530 2,580 2,770
Shares outstanding (thousands) 18,130 17,844 18,028 18,077 17,897 18,394
======================================== ======== ======== ======== ======== ======== ========
</TABLE>
(a) Computer software costs capitalized in accordance with Statement of
Financial Accounting Standards No. 86.
24
<PAGE>
Exhibit 21
--
MEASUREX CORPORATION
LISTING OF SUBSIDIARIES
The following table sets forth the name and jurisdiction of incorporation of
each subsidiary of the Registrant as of November 27, 1994. Each subsidiary is
wholly owned by the Registrant or a subsidiary of the Registrant (except in
certain instances for directors' qualifying shares or as noted below) and is
included in the Registrant's Consolidated Financial Statements.
<TABLE>
<CAPTION>
Subsidiary Name Incorporated In
--------------- ---------------
<C> <S> <C>
(2) Measurex Pty. Limited Australia
(2) Measurex International GmbH Austria
(1) Measurex Foreign Sales Corporation Barbados
(2) Measurex do Brasil Controles de
Processamento Ltda. Brazil
(1) Measurex Systems, Inc. California
(1) Measurex International Corporation California
(2) Measurex Latin America California
(2) Measurex Asia, Inc. California
(2) Measurex Korea, Inc. California
(2) Measurex Taiwan, Inc. California
(4) Measurex Devron Inc. Canada
(2) Measurex Inc. Canada
(5) BCF Holding Oy Finland
(2) Measurex Oy Finland
(7) Roibox Oy Finland
(2) Measurex S.A.R.L. France
(2) Measurex GmbH Germany
(2) Measurex Italia S.R.L. Italy
(1) Measurex Japan Limited Japan
(6) Measurex S.A. de C.V. Mexico
(2) Measurex B.V. The Netherlands
(2) Measurex Systems N.Z. Limited New Zealand
(2) Measurex Norway A.S. Norway
(2) Measurex International Financial, Inc. Panama
(2) Measurex (Portugal) Sistemas De Controle, Lda Portugal
(2) Measurex (Ireland) Limited Republic of Ireland
(2) Measurex Service Company Limited Republic of Ireland
(3) Measurex Ireland Finance Republic of Ireland
(2) MAP Results Pte. Ltd. Singapore
(2) Measurex Africa (Pty) Limited South Africa
(2) Measurex Sweden A.B. Sweden
(2) Measurex, A.G. (Switzerland) Switzerland
(2) Measurex International Systems Limited United Kingdom
(2) Measurex De Venezuela, C.A. Venezuela
</TABLE>
1
<PAGE>
MEASUREX CORPORATION
LISTING OF SUBSIDIARIES (CONTINUED)
NOTES:
(1) Subsidiary of Measurex Corporation
(2) Subsidiary of Measurex International Corporation
(3) Subsidiary of Measurex (Ireland) Limited
(4) Subsidiary of Measurex Inc.
(5) Subsidiary of Measurex Oy
(6) 99.5% owned by Measurex Latin America, 0.5% owned by Measurex International
Corporation
(7) 98.4% owned by Measurex Oy and BCF Holding Oy, 1.6% owned by unrelated
parties
2
<PAGE>
Exhibit 23
--
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Measurex Corporation and Subsidiaries on Form S-8 (File Nos. 33-65762, 33-22589,
2-76707 and 2-67736) of our report dated December 14, 1994 (except for the note
titled "subsequent events" as to which the date is February 10, 1995) on our
audits of the consolidated financial statements of Measurex Corporation and
Subsidiaries as of November 27, 1994 and November 28, 1993 and for each of the
three fiscal years in the period ended November 27, 1994 appearing on page 30 of
Measurex Corporation's 1994 Annual Report to Shareholders and incorporated by
reference in this Annual Report on Form 10-K and our report dated December 14,
1994 (except for the note titled "subsequent events" as to which the date is
February 10, 1995) on the financial statement schedules of Measurex Corporation
and Subsidiaries as of November 27, 1994 and November 28, 1993 and for each of
the three fiscal years in the period ended November 27, 1994, which report is
included in this Annual Report on Form 10-K.
/S/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
San Jose, California
February 24, 1995
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets at November 27, 1994 and the Consolidated Statements
of Income and Consolidated Statements of Cash Flow for the twelve months ended
November 27, 1994, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-27-1994
<PERIOD-START> NOV-29-1993
<PERIOD-END> NOV-27-1994
<CASH> 82,254
<SECURITIES> 27,030
<RECEIVABLES> 61,583
<ALLOWANCES> 6,583
<INVENTORY> 24,685
<CURRENT-ASSETS> 207,509
<PP&E> 49,655
<DEPRECIATION> 64,480
<TOTAL-ASSETS> 319,823
<CURRENT-LIABILITIES> 83,973
<BONDS> 12,167
<COMMON> 190
0
0
<OTHER-SE> 216,993
<TOTAL-LIABILITY-AND-EQUITY> 319,823
<SALES> 156,294
<TOTAL-REVENUES> 259,979
<CGS> 100,077
<TOTAL-COSTS> 248,798<F1>
<OTHER-EXPENSES> 4,352
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,335
<INCOME-PRETAX> 9,152
<INCOME-TAX> 3,569
<INCOME-CONTINUING> 5,583
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 524
<NET-INCOME> 6,107
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
<FN>
<F1> Amount excludes exit and restructuring costs of approximately
$6.381 million.</FN>
</TABLE>
