<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the quarterly period ended September 30, 1994
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------- ----------------
Commission File Number 1-6176
AUGAT INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2022285
- - ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
89 Forbes Boulevard, P.O. Box 448, Mansfield, Massachusetts 02048
- - ----------------------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(508) 543-4300
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares of the Registrant's common stock outstanding on
September 30, 1994 was 19,438,022.
<PAGE> 2
<TABLE>
AUGAT INC.
INDEX
<CAPTION>
Financial Statements Page No.
<S> <C>
Statements of Consolidated Income - For the
Three Months and Nine Months Ended September
30, 1994 and 1993 --------------------------------------- 3
Consolidated Balance Sheets - September 30, 1994 4-5
and December 31, 1993 -----------------------------------
Statements of Consolidated Cash Flows For the
Nine Months Ended September 30, 1994 and 1993 ----------- 6
Notes to Unaudited Consolidated Financial Statements ---------- 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations ------------------------ 8-9
Part II - Other Information ----------------------------------- 10
Signatures ---------------------------------------------------- 11
</TABLE>
-2-
<PAGE> 3
PART I - FINANCIAL INFORMATION
<TABLE>
Statements of Consolidated Income
For the Three Months and Nine Months Ended September 30, 1994 and 1993
(Dollars in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- -------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . $127,709 $100,014 $389,511 $307,464
Cost of products sold . . . . . . . . . . . . . . . . . . . . 100,405 77,593 306,230 240,185
-------- -------- -------- --------
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . 27,304 22,421 83,281 67,279
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 16,524 15,232 50,906 47,859
-------- -------- -------- --------
Income from operations . . . . . . . . . . . . . . . . . . . . 10,780 7,189 32,375 19,420
Other income (expense):
Interest income, etc. . . . . . . . . . . . . . . . . . . . (52) 79 (40) 430
Interest expense . . . . . . . . . . . . . . . . . . . . . . (1,028) (1,068) (3,200) (3,495)
-------- -------- -------- --------
Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,080) (989) (3,240) (3,065)
-------- -------- -------- --------
Income before taxes on income . . . . . . . . . . . . . . . . 9,700 6,200 29,135 16,355
Provision for taxes on income . . . . . . . . . . . . . . . . 3,300 2,100 10,085 5,755
-------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,400 $ 4,100 $ 19,050 $ 10,600
======== ======== ======== ========
Earnings per share . . . . . . . . . . . . . . . . . . . . . . $ 0.33 $ 0.22 $ 0.99 $ 0.57
Average common shares outstanding . . . . . . . . . . . . . . 19,366 18,970 19,225 18,711
Dividends paid per share . . . . . . . . . . . . . . . . . . . $ .04 $ .00 $ .04 $ .00
</TABLE>
See notes to unaudited consolidated financial statements.
-3-
<PAGE> 4
<TABLE>
Consolidated Balance Sheets, September 30, 1994 and December 31, 1993
(In thousands)
<CAPTION>
Assets 1994* 1993
-------- --------
<S> <C> <C>
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . $ 11,294 $ 8,540
Accounts receivable-net . . . . . . . . . . . . . . . . . . . . 86,431 73,633
Refundable income taxes . . . . . . . . . . . . . . . . . . . . - 138
Inventories:
Finished goods . . . . . . . . . . . . . . . . . . . . . . . 35,575 33,493
Work in process . . . . . . . . . . . . . . . . . . . . . . 22,632 26,415
Raw materials . . . . . . . . . . . . . . . . . . . . . . . 33,528 26,654
-------- --------
Total inventories . . . . . . . . . . . . . . . . . . . 91,735 86,562
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . 4,556 4,556
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 2,980 3,079
-------- --------
Total current assets . . . . . . . . . . . . . . . . 196,996 176,508
Property, Plant, and Equipment:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,798 3,528
Buildings and building improvements . . . . . . . . . . . . . . 62,083 54,674
Machinery and equipment . . . . . . . . . . . . . . . . . . . . 133,162 115,155
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . 22,583 20,603
Construction in progress - buildings and
machinery . . . . . . . . . . . . . . . . . . . . . . . . . 11,910 10,010
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 233,536 203,970
Less accumulated depreciation . . . . . . . . . . . . . . . . . (118,879) (103,971)
-------- --------
Property, plant, and equipment-net . . . . . . . . . . . . . . . . 114,657 99,999
Other Assets:
Goodwill-net . . . . . . . . . . . . . . . . . . . . . . . . . 25,780 26,759
Property held for sale-net . . . . . . . . . . . . . . . . . . 7,335 9,179
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,349 5,415
-------- --------
Total other assets . . . . . . . . . . . . . . . . . . . . . 39,464 41,353
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $351,117 $317,860
======== ========
<FN>
* Unaudited
</TABLE>
See notes to unaudited consolidated financial statements.
-4-
<PAGE> 5
<TABLE>
Consolidated Balance Sheets, September 30, 1994 and December 31, 1993
(In thousands)
<CAPTION>
Liabilities and Shareholders' Equity
1994* 1993
-------- --------
<S> <C> <C>
Current Liabilities:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000 $ 1,000
Current maturities of long-term debt . . . . . . . . . . . . . 10,970 2,130
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 35,049 28,353
Federal, state and foreign taxes
payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,090 3,352
Accrued restructuring costs . . . . . . . . . . . . . . . . . 262 1,751
Accrued compensation and benefits . . . . . . . . . . . . . . 9,151 10,193
Other accrued expenses . . . . . . . . . . . . . . . . . . . . 9,499 10,801
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . 71,021 57,580
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 36,465 45,797
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . 13,275 12,872
Shareholders' Equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . 1,945 1,903
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . 74,544 69,262
Retained earnings . . . . . . . . . . . . . . . . . . . . . . 137,154 118,878
Cumulative translation adjustment . . . . . . . . . . . . . . 17,582 11,923
Treasury stock, at cost . . . . . . . . . . . . . . . . . . . (110) (110)
Unearned compensation-restricted stock
awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . (759) (245)
-------- --------
Shareholders' equity . . . . . . . . . . . . . . . . . . . 230,356 201,611
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $351,117 $317,860
======== ========
<FN>
* Unaudited
</TABLE>
See notes to unaudited consolidated financial statements.
-5-
<PAGE> 6
<TABLE>
Statements of Consolidated Cash Flows
For the Nine Months Ended September 30, 1994 and 1993
(In thousands)
<CAPTION>
1994* 1993*
(5173
------- -------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,050 $10,600
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,281 12,208
Gain on the sale of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (122) (84)
Deferred federal income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 403 (9)
Amortization of restricted stock awards . . . . . . . . . . . . . . . . . . . . . 205 126
Increase (decrease) in cash from changes in assets
and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,798) (8,175)
Refundable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 138 113
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,173) (11,980)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 (1,049)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,131) (674)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,696 4,777
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 738 3,156
Accrued restructuring, compensation and
other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,832) (2,713)
Effect of exchange rate changes on current assets
and liabilities (other than cash) . . . . . . . . . . . . . . . . . . . . . . . . 552 292
------- -------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . 19,105 6,588
------- -------
Cash Flows From Investing Activities:
Purchase of property, plant, and equipment . . . . . . . . . . . . . . . . . . . . (22,349) (13,805)
Proceeds from the sale of property, plant,
and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285 289
------- -------
Net cash used for investing activities (22,064) (13,516)
------- -------
Cash Flows From Financing Activities:
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (774)
Net increase (decrease) in short-term borrowings . . . . . . . . . . . . . . . . . 1,000 (3,900)
Payments for long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . (492) (9,801)
Common stock issued under employee benefit plans . . . . . . . . . . . . . . . . . 4,605 6,412
------- -------
Net cash provided by (used) for financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,339 (7,289)
Effect of exchange rate changes on
cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,374 (369)
------- -------
Net changes in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . 2,754 (14,586)
Cash and cash equivalents at beginning of the period . . . . . . . . . . . . . . . . . . . 8,540 28,323
------- -------
Cash and cash equivalents at end of the period . . . . . . . . . . . . . . . . . . . . . . $11,294 $13,737
======= =======
<FN>
* Unaudited
</TABLE>
See notes to unaudited consolidated financial statements.
-6-
<PAGE> 7
AUGAT INC.
Notes to Unaudited Consolidated Financial Statements
----------------------------------------------------
1. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as
of September 30, 1994, the results of operations for the three months and
nine months ended September 30, 1994 and 1993 and the cash flows for the
nine month periods then ended.
2. The results of operations for the nine month period ended September 30,
1994 and 1993 are not necessarily indicative of the results to be expected
for the full year.
3. Earnings Per Share - Earnings per share are based on the weighted average
number of shares outstanding during each period. The exercise of all
presently issued outstanding stock options and the issuance of shares under
the "Employee Stock Purchase Plan" would have no material dilutive effect
on earnings per share.
4. The acquisition of National Industries, Inc. included a liability of
approximately $5.4 million to cover the estimated costs of site remediation
for certain National facilities. The Company informed the State of Alabama
about the possible contamination and its desire to voluntarily proceed with
further study and, if necessary, remediation of the possible contamination.
The Company has completed its investigation and provided this information
to the State. The State has informed the Company that it believes further
investigation is necessary. The Company, however, has considered and
disagreed with the State's comments and is voluntarily proceeding to design
and implement an appropriate remedy. The Company has included in its
financial statements an allowance of $4.6 million for estimated
environmental cleanup costs as of September 30, 1994.
5. On July 22, 1994, the Company increased its borrowing limit from $40
million up to $100 million under a new unsecured revolving credit agreement
with several banks. The agreement which expires no sooner than July 1,
1997 requires a commitment fee of one- quarter percent per annum, payable
on any available and unused portion.
6. Subsequent Event:
The Company received on October 20, 1994, $2.9 million in cash (net of
litigation costs) as settlement for its unfair competition case brought in
1985 against Aegis, Inc. and Jeremy D. Scherer. This matter was before the
Massachusetts Superior Court, upon remand from the Supreme Judicial Court
which in April 1994 instructed the Superior Court to recalculate damages
awarded to the Company in 1992. These proceeds will be included in the
Company's operating results in the fourth quarter of 1994.
-7-
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
<TABLE>
NET SALES: Net sales for the quarter ended September 30, 1994 by product group, compared to
the quarter ended September 30, 1993, are as follows (dollars in thousands):
<CAPTION>
- - -------------------------------------------------------------------------------------
Quarters Ended September 30,
1994 1993
------------------- ------------------
<S> <C> <C> <C> <C>
Product Group % %
- - -------------------------------------------------------------------------------------
Interconnection Products Business $ 31,618 24.8% $ 31,632 31.6%
Wiring Systems and Components Business 67,333 52.7% 50,013 50.0%
Communications Products Business 28,758 22.5% 18,369 18.4%
--------- ------ -------- ------
Total $ 127,709 100.0% $100,014 100.0%
========= ====== ======== ======
- - -------------------------------------------------------------------------------------
</TABLE>
<TABLE>
- - -------------------------------------------------------------------------------------
<CAPTION>
Nine Months Ended September 30,
1994 1993
------------------ ------------------
<S> <C> <C> <C> <C>
Product Group % %
- - -------------------------------------------------------------------------------------
Interconnection Products Business $ 97,590 25.0% $ 96,409 31.4%
Wiring Systems and Components Business 216,157 55.5% 157,311 51.2%
Communications Products Business 75,764 19.5% 53,744 17.4%
--------- ------ -------- ------
Total $ 389,511 100.0% $307,464 100.0%
========= ====== ======== ======
- - -------------------------------------------------------------------------------------
</TABLE>
Net sales for the quarter and nine months ended September 30, 1994 increased
primarily due to the Company's expanded role in the worldwide automotive
market, as well as increased volume in the telecommunications and cable
television segments of the communications industry. Worldwide sales of the
Interconnection Products Business were flat primarily due to the continuing
economic recession in the European markets which it serves.
Business conditions in the third quarter and nine months of 1994 continue to
reflect improvement in the domestic markets in which the Company serves. In
the European markets, there has been modest improvements in the automotive
market, but the sluggish economy has adversely affected the other two business
groups. In the Far East markets, slight improvements in the economic
environment have been reflected in the Interconnection Products Business.
Incoming orders for the third quarter and nine months of 1994 were $128 million
and $405 million, respectively compared to $105 million and $320 million for
the same periods of the prior year. The backlog at September 30, 1994 was $121
million compared with $103 million at September 30, 1993. The largest
contributor to the increased backlog was the Communications Products Business
which continues to be the fastest growing business segment in the Company.
-8-
<PAGE> 9
COST OF PRODUCTS SOLD: Cost of products sold increased by 1.0% in the third
quarter and by .5% for the nine months ended September 30, 1994 compared to the
third quarter and nine months of 1993. The margin decline for these periods
can be attributed to the increased sales volume for the Automotive Business
which has higher labor and material costs compared to the other business units,
along with price decreases in selected product lines within all divisions. In
addition the dollars expended to manufacture the Company's products have
increased due to increases in material costs, wage increases and overheads.
These expenses have been partially offset by improved manufacturing methods and
on going cost-cutting programs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: These expenses were 12.9% of
sales in the third quarter of 1994 compared to 15.2% in the comparable quarter
of the prior year. For the nine months ended September 30, 1994, these
expenses were 13.1% of sales compared to 15.6% of sales in the comparable
period of the prior year. While the dollars spent in this area have increased,
the leveraging of such expenses due to increased volume have lowered the SG&A
percent of sales. These expenses may vary from period to period based on
various factors, none of which, individually are significant.
OTHER INCOME (EXPENSE): Interest income, etc. decreased in 1994 due to the
cash available to invest. Interest expense decreased in the 1994 period
compared to the same period in 1993 due to the decrease in total outstanding
debt in 1994 when compared to 1993.
INCOME TAXES: The effective income tax rate for the Company in the third
quarter and nine months ended September 30, 1994 was 34% and 35% respectively.
The third quarter tax rate is lower than the statutory rate primarily due to
income earned in jurisdictions with lower effective tax rates. The tax rate
for the third quarter of 1993 was 34% and 35% for the nine months ended
September 30, 1993. The third quarter 1993 tax rate was lower than the
statutory rate due also to income earned in jurisdictions with lower effective
tax rates.
NET INCOME: The increase in net income for the third quarter and nine months
ended September 30, 1994 resulted principally from increased sales volume in
our worldwide automotive and domestic communications business, and ongoing
productivity and cost control programs.
LIQUIDITY AND CAPITAL RESOURCES: The Registrant continues to maintain
sufficient liquidity and has adequate resources to fund its operations under
current business conditions. During the third quarter of 1994, the Company
increased its borrowing limit up to $100 million under its unsecured revolving
credit agreement with several banks. The income generated from operations
along with the cash on hand and current available borrowings is sufficient to
cover expected sales growth and planned capital expenditure programs.
-9-
<PAGE> 10
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
On October 18, 1994, the Company announced that it had reached agreement
on the terms of the settlement of its unfair competition case brought in 1985
against Aegis, Inc. and Jeremy D. Scherer. This matter was before the
Massachusetts Superior Court, upon remand from the Supreme Judicial Court which
in April 1994 instructed the Superior Court to recalculate damages awarded to
the Company in 1992. The Company previously reported this information in its
First Quarter 10Q dated April 29, 1994. Under the terms of the settlement,
Augat received approximately $2.9 million in cash (net of litigation costs) on
October 20, 1994. These proceeds will be included in the Company's operating
results in the fourth quarter of 1994.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
---------
(10) Material Contracts
(a) Employment Agreement dated August 29, 1994 between the Registrant and
William R. Fenoglio.
(b) Revolving Credit Agreement among Augat Inc. and several banks dated
as of July 22, 1994.
(27) Financial Data Schedule
(b) Reports on 8-K - None
-10-
<PAGE> 11
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
AUGAT INC.
____________________________________
(Registrant)
ELLEN B. RICHSTONE
____________________________________
Ellen B. Richstone
Vice President and
Chief Financial Officer
Date: November 9, 1994
-11-
<PAGE> 1
EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made this 29th day
of August 1994, by and between Augat Inc., a Massachusetts corporation with its
principal place of business at 89 Forbes Boulevard, Mansfield, Massachusetts
02048 (the "Company"), and William R. Fenoglio, an individual residing at 72
Oakengates, Avon, Connecticut (the "Employee").
The Company desires to employ the Employee, and the Employee desires
to be employed by the Company, upon the terms and conditions hereinafter set
forth. In consideration of the mutual covenants and promises contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by the parties hereto, the parties agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the
Employee, and the Employee hereby accepts employment with the Company, upon the
terms and conditions set forth in this Agreement, for the period commencing on
September 6, 1994 (the "Commencement Date") and ending on September 5, 1997
(such period, as it may be extended, the "Employment Period"), unless sooner
terminated in accordance with the provisions of Section 4. The Employment
Period will be automatically extended, after the initial three-year term, for
two years unless terminated by either party by written notice to the other not
less than six months prior to the commencement of the next succeeding two-year
term. Any such termination shall be deemed to be a termination
<PAGE> 2
pursuant to Section 4.4. In the event of a change in control of the Company
(as defined in Schedule B) during the term of this Agreement, the term shall
be automatically renewed upon the same terms as set forth above in this
Section 1.
2. TITLE; CAPACITY. The Employee shall initially serve as
President/Chief Operating Officer. It is the intention of the Company that the
Employee assume the position of President/Chief Executive Officer effective
January 1, 1995, contingent upon a review by the Board of Directors of the
Employee's performance with the Company and such other factors as the Board
deems relevant. In the event that the Employee is not named President/CEO,
effective on or before January 1, 1995 and the Employee chooses to terminate
his employment or the Company chooses to terminate the employment of the
Employee, Company will pay the Employee the compensation that would otherwise
be payable to the Employee under this Agreement for a period of twelve months
after the date of termination of his employment. The Employee shall be based
at the Company's headquarters in Mansfield, Massachusetts, and shall be
expected to relocate his family to the Massachusetts area within a reasonable
period of time. The Employee will be reimbursed (in accordance with Company
Policy) for his relocation and real estate expenses associated with his move to
the Mansfield area. The Employee shall be subject to the supervision of, and
shall have such authority as is delegated to him by, the Chief Executive
Officer of the Company during 1994 and the Board thereafter.
2
<PAGE> 3
The Employee hereby accepts such employment and agrees to undertake
the duties and responsibilities inherent in such position and such other duties
and responsibilities as the Board shall from time to time assign to him. The
Employee agrees to devote his entire business time, attention and energies to
the business and interests of the Company during the Employment Period. The
Employee agrees not to serve on more than one Board of a public or private
company, bank or other institution or organization. The Employee agrees to
abide by the rules, regulations, instructions, personnel practices and policies
of the Company and any changes therein which may be adopted from time to time
by the Company. The Employee acknowledges receipt of copies of all such rules
and policies committed to writing as of the date of this Agreement.
3. COMPENSATION AND BENEFITS.
-------------------------
3.1 SALARY. The Company shall pay the Employee, in
installments every two weeks, a minimum annual base salary of $400,000 during
the term of this Agreement, subject to annual review and adjustment by the
Board.
3.2 BONUSES. The Employee shall be entitled to participate
in bonus plans adopted by the Board.
3.3 FRINGE BENEFITS. The Employee shall be entitled to
participate in the "Deferral Plan for Senior Executives" and all retirement,
insurance and medical benefit programs that the Company establishes and makes
available to its employees to the extent that the Employee's position, tenure,
salary, age, health and other qualifications make him eligible to participate,
3
<PAGE> 4
including, but not limited to, the programs indicated on SCHEDULE A to this
Agreement, and shall be entitled to such other benefits as are indicated on
said SCHEDULE A. In addition, during the term of this Agreement the Employee
shall receive life insurance coverage in a face amount equal to at least three
times his annual base salary.
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse
the Employee for all reasonable travel, entertainment and other expenses
incurred or paid by the Employee in connection with, or related to, the
performance of his duties, responsibilities or services under this Agreement,
upon presentation by the Employee of documentation, expense statements,
vouchers and/or such other supporting information as the Company may request.
3.5 USE OF AUTOMOBILE. The Company shall provide to the
Employee, and the Employee shall have the sole and exclusive use of, an
automobile of make and model of his choice owned or leased by the Company and
the Company shall pay for the expenses of insurance, operation and maintenance.
Each year the Employee shall account to the Company for any personal use of
such vehicle in accordance with applicable standards from time to time
published by the Internal Revenue Service. The Employee shall have the option
of providing his own automobile and will receive reimbursement and a tax
grossup on the same basis as if the Company had provided the automobile.
4
<PAGE> 5
3.6 COUNTRY CLUB MEMBERSHIP. The Company shall pay the
initiation fees, annual dues, and minimum monthly or quarterly spending
requirements, each year during the term of this Agreement in connection with
the Employee's membership at a country club of his selection in the
Massachusetts area.
3.7 STOCK OPTIONS. The Employee will participate in the
Company's Stock Option and Restricted Stock Plans. The options shall be
incentive stock options with respect to as many shares as is permissible under
such plans and under the Internal Revenue Code and shall be nonqualified stock
options with respect to the remaining shares.
4. EMPLOYMENT TERMINATION. The employment of the Employee by the
Company pursuant to this Agreement shall terminate upon the occurrence of any
of the following:
4.1 Expiration of the Employment Period in accordance
with Section 1;
4.2 At the election of the Company, for cause, immediately
upon written notice by the Company to the Employee. Cause for termination
shall be deemed to exist upon (a) a good faith finding by the Board of the
Company of failure of the Employee to perform his assigned duties for the
Company (after six-month prior written notice from the Board to the Employee
setting forth in reasonable detail such failure(s) and requesting the Employee
to remedy the same), dishonesty, negligence or misconduct, or (b) the
conviction of the Employee of, or entry of a pleading of guilty or nolo
contendere by the Employee to, any crime involving moral turpitude or any
felony;
5
<PAGE> 6
4.3 Thirty days after the death or disability of the
Employee. As used in this Agreement, the term "disability" shall mean the
inability of the Employee, due to a physical or mental disability, for a period
of 120 days, whether or not consecutive, during any 360-day period to perform
the services contemplated under this Agreement. A determination of disability
shall be made by a physician satisfactory to both the Employee and the Company,
provided that if the Employee and the Company do not agree on a physician, the
Employee and the Company shall each select a physician and these two together
shall select a third physician, whose determination as to disability shall be
binding on all parties.
4.4 At the election of either party, upon not less than
six months' prior written notice of termination.
5. EFFECT OF TERMINATION.
---------------------
5.1 TERMINATION FOR CAUSE OR AT ELECTION OF EITHER PARTY.
In the event the Employee's employment is terminated for cause pursuant to
Section 4.2, or at the election of the Employee pursuant to Section 4.4, the
Company shall pay to the Employee the compensation and benefits otherwise
payable to him under Section 3 through the last day of his actual employment by
the Company. In the event the Employee's employment is terminated at the
election of the Company pursuant to Section 4.4, the Company shall pay the
Employee the compensation which would otherwise be payable to the Employee up
to the last date to occur of (a) three years from the Commencement Date or (b)
twelve months from the date of termination of his employment. Any payments to
the
6
<PAGE> 7
Employee pursuant to the preceding sentence shall be reduced by any payments
made to the Employee pursuant to Section 4(c)(i) of the Employee's Change of
Control Letter Agreement dated September 6, 1994 with the Company.
5.2 TERMINATION FOR DEATH OR DISABILITY. In the event
the Employee's employment is terminated by death pursuant to Section 4.3, the
Company shall pay to the estate of the Employee the compensation which would
otherwise be payable to the Employee up to the end of the month in which the
termination of his employment because of death occurs. In the event the
Employee's employment is terminated because of disability pursuant to Section
4.3, the Employee shall receive such disability benefits as are provided by the
Company policy in effect at such time.
5.3 SURVIVAL. The provisions of Sections 7 and 8 shall
survive the termination of this Agreement.
6. NON-COMPETE.
-----------
(a) During the Employment Period and for a period of three
years after the termination or expiration thereof, the Employee will not
directly or indirectly:
(i) as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, or in any other
capacity whatsoever (other than as the holder of not more than one percent (1%)
of the total outstanding stock of a publicly-held company), engage in the
business of developing, producing, marketing or selling products of the kind
or type developed or being developed, produced,
7
<PAGE> 8
marketed or sold by the Company while the Employee was employed by the Company;
or
(ii) recruit, solicit or induce, or attempt to
induce, any employee or employees of the Company to terminate their employment
with, or otherwise cease their relationship with, the Company; or
(iii) solicit, divert or take away, or attempt
to divert or to take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or accounts, of the
Company which were contacted, solicited or served by the Employee while
employed by the Company.
(b) If any restriction set forth in this Section 6
is found by any court of competent jurisdiction to be unenforceable because
it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to extend
only over the maximum period of time, range of activities or geographic area as
to which it may be enforceable.
(c) The restrictions contained in this Section 6
are necessary for the protection of the business and goodwill of the
Company and are considered by the Employee to be reasonable for such purpose.
The Employee agrees that any breach of this Section 6 will cause the Company
substantial and irrevocable damage and, therefore, in the event of any such
breach, in addition to such other remedies which may be
8
<PAGE> 9
available, the Company shall have the right to seek specific performance and
injunctive relief.
7. PROPRIETARY INFORMATION AND DEVELOPMENTS.
----------------------------------------
7.1 PROPRIETARY INFORMATION.
-----------------------
(a) Employee agrees that all information and know-how,
whether or not in writing, of a private, secret or confidential nature
concerning the Company's business or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information
may include inventions, compounds, projects, developments, plans, research
data, clinical data, financial data, personnel data, computer programs, and
customer and supplier lists. Employee will not disclose any Proprietary
Information to others outside the Company or use the same for any unauthorized
purposes without written approval by an officer of the Company, either during
or after his employment, unless and until such Proprietary Information has
become public knowledge without fault by the Employee.
(b) Employee agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks, program
listings, or other written, photographic, or other tangible material containing
Proprietary Information, whether created by the Employee or others, which shall
come into his custody or possession, shall be and are the exclusive property of
the Company to be used by the Employee only in the performance of his duties
for the Company.
9
<PAGE> 10
(c) Employee agrees that his obligation not to disclose
or use information, know-how and records of the types set forth in paragraphs
(a) and (b) above also extends to such types of information, know-how, records
and tangible property of customers of the Company or suppliers to the Company
or other third parties who may have disclosed or entrusted the same to the
Company or to the Employee in the course of the Company's business.
7.2 DEVELOPMENTS.
------------
(a) Employee will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods, developments,
software, and works of authorship, whether patentable or not, which are
created, made, conceived or reduced to practice by the Employee or under his
direction or jointly with others during his employment by the Company, whether
or not during normal working hours or on the premises of the Company (all of
which are collectively referred to in this Agreement as "Developments").
(b) Employee agrees to assign and does hereby assign to
the Company (or any person or entity designated by the Company) all his right,
title and interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this Section 7.2
7(b) shall not apply to Developments which do not relate to the present or
planned business or research and development of the Company and which are made
and conceived by the Employee not
10
<PAGE> 11
during normal working hours, not on the Company's premises and not using the
Company's tools, devices, equipment or Proprietary Information.
(c) Employee agrees to cooperate fully with the Company, both
during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights and patents (both in the
United States and foreign countries) relating to Developments. Employee shall
sign all papers, including, without limitation, copyright applications, patent
applications, declarations, oaths, formal assignments, assignment of priority
rights, and powers of attorney, which the Company may deem necessary or
desirable in order to protect its rights and interests in any Development.
7.3 OTHER AGREEMENTS. Employee hereby represents that he
is not bound by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or confidential or
proprietary information in the course of his employment with the Company or to
refrain from competing, directly or indirectly, with the business of such
previous employer or any other party. Employee further represents that his
performance of all the terms of this Agreement and as an employee of the
Company does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by him in confidence or in
trust prior to his employment with the Company.
11
<PAGE> 12
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE EMPLOYEE.
----------------------------------------------------------
8.1 WITH REGARD TO SHARES OF COMMON STOCK. The employee
represents, warrants and agrees that:
(a) unless effectively registered under the Securities
Act of 1933 (the "Act") any shares of Common Stock acquired by him pursuant to
this Agreement and the Offer Letter dated are acquired
for his own account without a view to the distribution thereof or other
dispositions in violation of the Act and he does not intend to subdivide his
acquisition of such shares of Common Stock with any other person; and
(b) unless effectively registered under the Act, any
shares of Common Stock acquired by him shall not be sold, assigned, pledged,
hypothecated or otherwise transferred, disposed of or encumbered, in whole or
in part, unless, prior to the proposed sale, assignment, pledge, hypothecation,
or other transfer, disposition or encumbrance thereof, (i) a registration
statement in compliance with the Act with respect to such shares proposed to be
transferred or encumbered shall then be effective or (ii) the Company shall
have received an opinion of counsel satisfactory to the Company that an
exemption from the registration requirements of the Act is applicable to such
transaction.
8.2 EMPLOYMENT FEES. The Employee has not engaged the
services of any person or company in connection with his
12
<PAGE> 13
employment with the Company who or which would be entitled to a fee for such
services.
9. NOTICES. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon personal
delivery or upon deposit in the United States Post Office, by registered or
certified mail, postage prepaid, addressed to the other party at the address
shown above, or at such other address or addresses as either party shall
designate to the other in accordance with this Section 9.
10. PRONOUNS. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.
12. AMENDMENT. This Agreement may be amended or modified only by
a written instrument executed by both the Company and the Employee.
13. GOVERNING LAW. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the Commonwealth of Massachusetts.
13
<PAGE> 14
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to its assets or business; provided, however, that
the obligations of the Employee are personal and shall not be assigned by him.
15. MISCELLANEOUS.
-------------
15.1 No delay or omission by the Company in exercising any
right under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company on any one occasion shall be
effective only in that instance and shall not be construed as a bar or waiver
of any right on any other occasion.
15.2 The captions of the sections of this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
15.3 In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
AUGAT INC.
Vernon R. Alden
By:___________________________
Title: Chairman - Compensation
-----------------------
Committee of the Board
of Directors
-----------------------
EMPLOYEE
William R. Fenoglio
______________________________
15
<PAGE> 16
SCHEDULE A
Fringe Benefits
---------------
Employee shall be entitled to the benefits set forth in the Augat
Benefits Handbook, except to the extent this Employment Agreement specifically
provides otherwise.
The Employee shall be entitled to have the Company prepare, or cause
to be prepared, his federal and state income tax returns in accordance with
current Company policy.
The Employee may elect to receive the actuarial equivalent (in a lump
sum) of the applicable benefits payable under the Supplemental Pension Plan.
16
<PAGE> 17
SCHEDULE B
Change of Control
-----------------
For purposes of this Agreement, a "change in control" of the Company
shall occur or be deemed to have occurred only if (i) any "person," as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportion as their ownership of stock of
the Company) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities; (ii) during any period of two consecutive years ending
during the term of this Agreement (not including any period prior to the
beginning of such term), the following individuals shall cease for any reason
to constitute a majority of the Board: (a) individuals who at the beginning of
the term of this contract constituted the Board, and (b) any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect any transaction described in clause (i), (iii) or
(iv) of this paragraph) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who were either directors at the beginning
of the term of this contract or whose election or
17
<PAGE> 18
nomination for election was previously so approved; (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 80% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires
more than 30% of the combined voting power of the Company's then outstanding
securities; or (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
18
<PAGE> 1
EXHIBIT 10(b)
REVOLVING CREDIT AGREEMENT
--------- ------ ---------
dated as of July 22, 1994
among
AUGAT INC.
and
THE FIRST NATIONAL BANK OF BOSTON,
SHAWMUT BANK, N.A.,
NATIONSBANK OF NORTH CAROLINA, N.A.,
NATIONAL WESTMINSTER BANK USA
and
THE FIRST NATIONAL BANK OF BOSTON, AS AGENT
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
----- -- --------
<CAPTION>
Page
----
<S> <C> <C>
Section 1. DEFINITIONS AND RULES OF INTERPRETATION 1
Section 1.1. Definitions 1
Section 1.2. Rules of Interpretation 14
Section 2. THE REVOLVING CREDIT FACILITY 14
Section 2.1. Commitment to Lend 14
Section 2.2. Commitment Fee 15
Section 2.3. Reduction of Total Revolver Commitment 15
Section 2.4. The Notes 15
Section 2.5. Interest on Revolving Credit Loans 16
Section 2.6. Requests for Revolving Credit Loans 16
Section 2.7. Conversion Options 17
2.7.1. Conversion to Different Type of Revolving
Credit Loan 17
2.7.2. Continuation of Type of Revolving Credit Loan 17
2.7.3. Eurocurreny Rate Loans 18
Section 2.8. Funds for Revolving Credit Loans 18
2.8.1. Funding Procedures 18
2.8.2. Advances by Agent 18
Section 3. REPAYMENT OF THE REVOLVING CREDIT LOANS 19
Section 3.1. Maturity 19
Section 3.2. Mandatory Repayments of Revolving Credit Loans 19
Section 3.3. Optional Repayments of Revolving Credit Loans 19
Section 4. CERTAIN GENERAL PROVISIONS 20
Section 4.1. Closing Fee 20
Section 4.2. Agent's Fee 20
Section 4.3. Funds for Payments 20
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C> <C>
4.3.1. Payments to Agent 20
4.3.2. No Offset, etc. 20
4.3.3. Withholding 21
Section 4.4. Computations 21
Section 4.5. Inability to Determine Eurocurrency Rate 22
Section 4.6. Impracticability; Illegality 22
Section 4.7. Additional Costs, etc. 22
Section 4.8. Capital Adequacy 24
Section 4.9. Certificate 25
Section 4.10. Indemnity 25
Section 4.11. Interest After Default 25
4.11.1. Overdue Amounts 25
4.11.2. Amounts Not Overdue 26
Section 4.12. Replacement of Individual Banks 26
Section 5. REPRESENTATIONS AND WARRANTIES 26
Section 5.1. Corporate Authority 27
5.1.1. Incorporation; Good Standing 27
5.1.2. Authorization 27
5.1.3. Enforceability 27
Section 5.2. Governmental Approvals 27
Section 5.3. Title to Properties; Leases 28
Section 5.4. Financial Statements 28
Section 5.5. No Material Changes, etc 28
Section 5.6. Franchises, Patents, Copyrights, etc 29
Section 5.7. Litigation 29
Section 5.8. No Materially Adverse Contracts, etc 29
Section 5.9. Compliance with Other Instruments, Laws, etc. 29
Section 5.10. Tax Status 30
Section 5.11. No Event of Default 30
Section 5.12. Holding Company and Investment Company Acts 30
Section 5.13. Absence of Financing Statements, etc. 30
Section 5.14. Certain Transactions 30
Section 5.15. Employee Benefit Plans 31
5.15.1. In General 31
5.15.2. Terminability of Welfare Plans 31
5.15.3. Guaranteed Pension Plans 31
5.15.4. Multiemployer Plans 32
</TABLE>
-3-
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 5.16. Regulations U and X 32
Section 5.17. Environmental Compliance 32
Section 5.18. Subsidiaries, etc 34
Section 6. AFFIRMATIVE COVENANTS OF THE BORROWER 34
Section 6.1. Punctual Payment 34
Section 6.2. Maintenance of Office 34
Section 6.3. Records and Accounts 35
Section 6.4. Financial Statements, Certificates and Information 35
Section 6.5. Notices 37
6.5.1. Defaults 37
6.5.2. Environmental Events 37
6.5.3. Notice of Litigation and Judgments 37
Section 6.6. Corporate Existence; Maintenance of Properties 38
Section 6.7. Insurance 38
Section 6.8. Taxes 38
Section 6.9. Inspection of Properties and Books, etc 39
6.9.1. General 39
6.9.2. Management Letters 39
Section 6.10. Compliance with Laws, Contracts, Licenses, and Permits 39
Section 6.11. Employee Benefit Plans 40
Section 6.12. Use of Proceeds 40
Section 6.13. Further Assurances 40
Section 7. CERTAIN NEGATIVE COVENANTS OF THE BORROWER 40
Section 7.1. Restrictions on Indebtedness 40
Section 7.2. Restrictions on Liens 42
Section 7.3. Restrictions on Investments 43
Section 7.4. Distributions 45
Section 7.5. Merger, Consolidation 45
7.5.1. Mergers and Acquisitions 45
7.5.2. Disposition of Assets 45
Section 7.6. Sale and Leaseback 46
Section 7.7. Compliance with Environmental Laws 46
Section 7.8. Employee Benefit Plans 46
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
Section 8. FINANCIAL COVENANTS OF THE BORROWER 47
Section 8.1. Cash Flow Coverage 47
Section 8.2. Interest Coverage 47
Section 8.3. Current Ratio 47
Section 8.4. Funded Debt Ratio 47
Section 8.5. Consolidated Tangible Net Worth 47
Section 9. CLOSING DOCUMENTS 48
Section 9.1. Loan Documents 48
Section 9.2. Certified Copies of Charter Documents 48
Section 9.3. Corporate Action 48
Section 9.4. Incumbency Certificate 48
Section 9.5. Opinions of Counsel 48
Section 9.6. Payment of Fees 48
Section 9.7. Discharge of Liens; Payoff Letter 48
Section 9.8. Payment of Existing Obligations 49
Section 10. CONDITIONS TO ALL BORROWINGS 49
Section 10.1. Representations True; No Event of Default 49
Section 10.2. No Legal Impediment 49
Section 10.3. Governmental Regulation 49
Section 10.4. Proceedings and Documents 50
Section 11. EVENTS OF DEFAULT; ACCELERATION; ETC 50
Section 11.1. Events of Default and Acceleration 50
Section 11.2. Termination of Commitments 53
Section 11.3. Remedies 53
Section 11.4. Distribution of Proceeds 54
Section 12. SETOFF 54
Section 13. THE AGENT 55
Section 13.1. Authorization 55
Section 13.2. Employees and Agents 55
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C> <C>
Section 13.3. No Liability 55
Section 13.4. No Representations 56
Section 13.5. Payments 56
13.5.1. Payments to Agent 56
13.5.2. Distribution by Agent 56
13.5.3. Delinquent Banks 57
Section 13.6. Holders of Notes 57
Section 13.7. Indemnity 57
Section 13.8. Agent as Bank 58
Section 13.9. Resignation 58
Section 13.10. Notification of Defaults and Events of Default 58
Section 14. EXPENSES 58
Section 15. INDEMNIFICATION 59
Section 16. SURVIVAL OF COVENANTS, ETC. 60
Section 17. ASSIGNMENT AND PARTICIPATION 60
Section 17.1. Conditions to Assignment by Banks 60
Section 17.2. Certain Representations and Warranties;
Limitations; Covenants 61
Section 17.3. Register 62
Section 17.4. New Notes 63
Section 17.5. Participations 63
Section 17.6. Disclosure 63
Section 17.7. Assignee or Participant Affiliated with any Borrower 64
Section 17.8. Miscellaneous Assignment Provisions 64
Section 17.9. Assignment by Borrower 65
Section 18. NOTICES, ETC 65
Section 19. GOVERNING LAW 65
Section 20. HEADINGS 66
Section 21. COUNTERPARTS 66
</TABLE>
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<PAGE> 7
<TABLE>
<S> <C> <C>
Section 22. ENTIRE AGREEMENT, ETC. 66
Section 23. WAIVER OF JURY TRIAL 66
Section 24. CONSENTS, AMENDMENTS, WAIVERS, ETC 67
Section 25. SEVERABILITY 67
</TABLE>
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EXHIBITS:
- - --------
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Loan Request
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Legal Opinion
Exhibit E - Form of Assignment and Acceptance
SCHEDULES:
- - ---------
Schedule 1 - Banks; Commitments; Commitment
Percentages
Schedule 5.3 - Loans
Schedule 5.5 - Distributions
Schedule 5.7 - Litigation
Schedule 5.10 - Taxes
Schedule 5.17 - Environmental Matters
Schedule 5.18 - Subsidiaries
Schedule 7.1 - Existing Indebtedness
Schedule 7.2 - Liens
Schedule 7.3 - Investments
Schedule 7.5.2 - Certain Assets
-8-
<PAGE> 9
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of July 22, 1994 by and among
Augat Inc. (the "Borrower"), a Massachusetts corporation having its principal
place of business at 89 Forbes Boulevard, Mansfield, Massachusetts 02048, The
First National Bank of Boston, Shawmut Bank, N.A., NationsBank of North
Carolina, N.A., National Westminster Bank USA, such other lending institutions
that are or may become parties to this Credit Agreement from time to time in
accordance with the provisions hereof and The First National Bank of Boston as
agent for itself and the other lending institutions party hereto.
DEFINITIONS AND RULES OF INTERPRETATION.
- - ---------------------------------------
DEFINITIONS.
-----------
The following terms shall have the meanings set forth in this Section 1
or elsewhere in the provisions of this Credit Agreement referred to below:
AFFILIATE. Any Person that would be considered to be an affiliate of
the Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
AGENT. The First National Bank of Boston acting as agent for the Banks.
AGENT'S HEAD OFFICE. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
AGENT'S SPECIAL COUNSEL. Bingham, Dana & Gould or such other counsel as
may be approved by the Agent.
APPLICABLE MARGIN. A percentage to be determined for each fiscal
quarter based on the Cash Flow Coverage Ratio (PROVIDED, that for the purpose of
calculating such ratio in connection with determining the Applicable Margin,
Consolidated Principal Payments on Long Term Debt shall exclude payments of
principal on the Private Placement Debt) for the period of four consecutive
fiscal quarters ended one quarter prior to the preceding fiscal quarter in
accordance with the schedule set forth below:
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<PAGE> 10
<TABLE>
<CAPTION>
Applicable Applicable Margin
Cash Flow Margin for for Eurocurrency
Coverage Ratio Base Rate Loans Rate Loans
-------------- --------------- ----------
<S> <C> <C>
Greater than or 0.00% 0.50%
equal to 2.5 to 1
---------------------------------------------------------
Greater than or 0.00% 0.75%
equal to 2.0 to 1
but less than 2.5
to 1
---------------------------------------------------------
Greater than or 0.00% 1.00%
equal to 1.5 to 1
but less than 2.0
to 1
---------------------------------------------------------
Less than 1.5 to 1 0.25% 1.25%
Assignment and Acceptance. See Section 17.1.
-------------------------
Balance Sheet Date. December 31, 1993.
- - ------------------
BANKS. FNBB and the other lending institutions listed on SCHEDULE 1
hereto and any other Person who becomes an assignee of any rights and
obligations of a Bank pursuant to Section 17.
BASE RATE. The higher of (i) the annual rate of interest announced from
time to time by FNBB at its head office in Boston, Massachusetts, as its "base
rate" and (ii) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate"
shall mean, for any day, the rate per annum equal to the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent.
BASE RATE LOANS. Revolving Credit Loans bearing interest calculated by
reference to the Base Rate.
BORROWER. As defined in the preamble hereto.
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<PAGE> 11
BUSINESS DAY. Any day on which banking institutions in Boston and New
York are open for the transaction of banking business and, in the case of
Eurocurrency Rate Loans, also a day which is a Eurocurrency Business Day.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
CAPITAL EXPENDITURES. Amounts paid or indebtedness incurred by the
Borrower or any of its Subsidiaries in connection with the purchase or lease by
the Borrower or any of its Subsidiaries of Capital Assets that would be
required to be capitalized and shown on the balance sheet of such Person in
accordance with generally accepted accounting principles.
CAPITALIZED LEASES. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
CASH FLOW COVERAGE RATIO. The ratio of (i) Consolidated Operating Cash
Flow for any period of four consecutive fiscal quarters to (ii) the sum, for
such period, of Consolidated Total Interest Expense PLUS Consolidated Operating
Lease Expense PLUS Consolidated Principal Payments on Long Term Debt PLUS the
value of any Distributions made by the Borrower or any Subsidiary (other than
Distributions made by a Subsidiary of the Borrower to the Borrower or another
Subsidiary of the Borrower).
CERCLA. See Section 5.17.
CLOSING DATE. The first date on which the conditions set forth in Section
Section 9 and 10 have been satisfied and any Revolving Credit Loans are to be
made.
CODE. The Internal Revenue Code of 1986.
COMMITMENT. With respect to each Bank, the amount set forth on SCHEDULE 1
attached hereto as the amount of such Bank's commitment to make Revolving
Credit Loans to the Borrower, as the same may be reduced from time to time
pursuant to the provisions hereof; or if such commitment is
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<PAGE> 12
terminated pursuant to the provisions hereof, zero.
COMMITMENT FEE. See Section 2.2.
</TABLE>
<TABLE>
COMMITMENT FEE RATE. A percentage to be determined for each fiscal
quarter based on the Cash Flow Coverage Ratio (PROVIDED, that for the purpose
of calculating such ratio in connection with determining the Commitment Fee
Rate, Consolidated Principal Payments on Long Term Debt shall exclude payments
of principal on the Private Placement Debt) for the period of four consecutive
fiscal quarters ended one quarter prior to the preceding fiscal quarter in
accordance with the schedule set forth below:
<CAPTION>
Cash Flow Commitment
Coverage Ratio Fee Rate
-------------- --------
<S> <C>
Greater than or 0.20%
equal to 2.5 to 1
- - ---------------------------------------------------------
Greater than or
equal to 2.0 to 1 0.25%
but less than 2.5 to 1
- - ---------------------------------------------------------
Greater than or
equal to 1.5 to 1 0.375%
but less than 2.0 to 1
- - ---------------------------------------------------------
Less than 1.5 to 1 0.50%
</TABLE>
COMMITMENT PERCENTAGE. With respect to each Bank, the percentage set
forth opposite its name on Schedule 1 attached hereto with respect to Revolving
Credit Loans, as such percentage is adjusted by the Agent from time to time to
reflect assignments made pursuant to Section 20 hereof.
CONSOLIDATED or CONSOLIDATED. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
CONSOLIDATED CURRENT ASSETS. All assets of the Borrower and its
Subsidiaries on a consolidated basis that, in accordance with generally
accepted accounting principles, are properly classified as current assets.
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<PAGE> 13
CONSOLIDATED CURRENT LIABILITIES. All liabilities of the Borrower and its
Subsidiaries on a consolidated basis maturing on demand or within one (1) year
from the date as of which Consolidated Current Liabilities are to be
determined, and such other liabilities as may properly be classified as current
liabilities in accordance with generally accepted accounting principles;
PROVIDED that Consolidated Current Liabilities shall not include the
Obligations.
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated net income (or
deficit) of the Borrower and its Subsidiaries determined in accordance with
generally accepted accounting principles.
CONSOLIDATED OPERATING CASH FLOW. For any period, an amount equal to (i)
the sum of (A) Earnings Before Interest and Taxes for such period, PLUS (B)
Consolidated Operating Lease Expenses for such period, PLUS (C) depreciation
and amortization for such period, LESS (ii) Capital Expenditures made during
such period.
CONSOLIDATED OPERATING LEASE EXPENSE. For any period, amounts paid or accrued
by the Borrower or any of its Subsidiaries with regard to obligations of the
Borrower and its Subsidiaries under rental agreements or leases of personal
property (other than amounts paid or accrued on Capitalized Leases).
CONSOLIDATED PRINCIPAL PAYMENTS ON LONG TERM DEBT. With respect to any
period, an amount equal to the sum of all payments of principal on Indebtedness
(including Capitalized Leases) that were required to be paid during such period
pursuant to any agreement or instrument to which the Borrower or any of its
Subsidiaries is a party relating to the borrowing of money (including
obligations under Capitalized Leases allocable to principal).
CONSOLIDATED TANGIBLE NET WORTH. The excess of Consolidated Total Assets
over Consolidated Total Liabilities, and less the sum of:
(a) the total book value of all assets of the Borrower and its
Subsidiaries properly classified as intangible assets under generally accepted
accounting principles, including such items as good will, the purchase price of
acquired assets in excess of the fair market value thereof, trademarks, trade
names, service marks, brand names, copyrights, patents and licenses, and rights
with respect to the foregoing; PLUS
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<PAGE> 14
(b) all amounts representing any write-up in the book value of any assets
of the Borrower or its Subsidiaries resulting from a revaluation thereof
subsequent to the Balance Sheet Date; PLUS
(c) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any stock subscriptions receivable.
CONSOLIDATED TOTAL ASSETS. All assets of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate amount
of interest required to be paid or accrued by the Borrower and its Subsidiaries
during such period on all Indebtedness of the Borrower and its Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of Capitalized Leases.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles and all Indebtedness of the Borrower and its
Subsidiaries, whether or not so classified.
CONVERSION REQUEST. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Revolving Credit Loan in
accordance with Section 2.7.
CREDIT AGREEMENT. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto.
DEFAULT. See Section 11.
DISTRIBUTION. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrower, directly or indirectly through a Subsidiary of the
Borrower or otherwise; the return of capital by the Borrower to its
shareholders as such; or any other distribution on or in respect of any shares
of any class of capital stock of the Borrower.
-6-
<PAGE> 15
DOLLARS or $. Dollars in lawful currency of the United States of America.
DOMESTIC LENDING OFFICE. Initially, the office of each Bank designated as
such in SCHEDULE 1 hereto; thereafter, such other office of such Bank, if any,
located within the United States that will be making or maintaining Base Rate
Loans.
DRAWDOWN DATE. The date on which any Revolving Credit Loan is made or is
to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with Section 2.7.
EARNINGS BEFORE INTEREST AND TAXES. The consolidated earnings (or loss)
from the operations of the Borrower and its Subsidiaries for any period, after
all expenses and other proper charges but before payment or provision for any
income taxes or interest expense for such period, determined in accordance with
generally accepted accounting principles.
ELIGIBLE ASSIGNEE. Any of (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any
such country, and having total assets in excess of $1,000,000,000, or the
central bank of any country which is a member of OECD, PROVIDED that such bank
(a) is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD and (b) has
delivered to the Agent, on the date on which the Assignment and Acceptance to
which such Eligible Assignee is a party becomes effective, the forms referred
to in Section 4.3.3 hereof; and (iv) if, but only if, an Event of Default has
occurred and is continuing, any other bank, insurance company, commercial
finance company or other financial institution or other Person approved by the
Agent, such approval not to be unreasonably withheld.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
Section 3(2) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
-7-
<PAGE> 16
ENVIRONMENTAL LAWS. See Section 5.17(a).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any Person which is treated as a single employer with
the Borrower under Section 414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
EUROCURRENCY BUSINESS DAY. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in London or
such other Eurocurrency interbank market as may be selected by the Agent in its
sole discretion acting in good faith.
EUROCURRENCY LENDING OFFICE. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of such
Bank, if any, that shall be making or maintaining Eurocurrency Rate Loans.
EUROCURRENCY RATE. For any Interest Period with respect to a Eurocurrency
Rate Loan, the rate of interest equal to (i) the arithmetic average of the
rates per annum for the Agent (rounded upwards to the nearest 1/16 of one
percent) of the rate at which the Agent is offered deposits in the currency in
which the relevant portion of the principal amount of the Loan is to be
denominated, two Eurocurrency Business Days prior to the beginning of such
Interest Period in the interbank eurocurrency market where the eurocurrency and
foreign currency and exchange operations of the Agent are customarily
conducted, at or about [10:00 a.m., Boston] time, for delivery on the first day
of such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurocurrency Rate Loan to which such
Interest Period applies, divided by (ii) a number equal to 1.00 minus the
Eurocurrency Reserve Rate, if applicable.
EUROCURRENCY RATE LOANS. Revolving Credit Loans bearing interest
calculated by reference to the Eurocurrency Rate.
EUROCURRENCY RESERVE RATE. For any day with respect to a Eurocurrency
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in
-8-
<PAGE> 17
Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in the Eurocurrency Reserve Rate.
EVENT OF DEFAULT. See Section 11.
EXISTING CREDIT AGREEMENT. The Revolving Credit Agreement dated as of
September 24, 1992 by and among the Borrower, certain of the Borrower's
Subsidiaries, certain financial institutions and FNBB as Agent, as amended and
in effect from time to time prior to the date hereof.
FNBB. The First National Bank of Boston in its individual capacity.
FUNDED DEBT RATIO. The ratio of (a) the principal amount of Indebtedness
for money borrowed (including obligations under Capitalized Leases allocable to
principal) to (b) the sum of (i) the principal amount of Indebtedness for money
borrowed (including obligations under Capitalized Leases allocable to
principal) PLUS (ii) Consolidated Tangible Net Worth.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. (i) When used in Section 8,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date,
and (B) to the extent consistent with such principles, the accounting practice
of the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date, PROVIDED, that if such accounting principles materially
differ over the term of this Credit Agreement from those in effect on the
Balance Sheet Date, the Borrower and the Banks will endeavor in good faith to
renegotiate the covenants contained in Section 8 hereof in order to reflect
such accounting principles, it being understood that until the Banks and the
Borrower shall reach agreement on such new covenants, the covenants contained
in Section 8 hereof shall continue to be effective, and (ii) when used in
general, other than as provided above, means principles that are (A) consistent
with the principles promulgated or adopted by the Financial Accounting
Standards Board and its predecessors, as in effect from time to time and (B)
consistently applied with past financial statements of the Borrower adopting
the same principles, PROVIDED that in
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<PAGE> 18
each case referred to in this definition of "Generally Accepted Accounting
Principles" a Certified Public Accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in Generally Accepted
Accounting Principles) as to financial statements in which such principles have
been properly applied.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower
or any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
HAZARDOUS SUBSTANCES. See Section 5.17(b).
INDEBTEDNESS. All obligations, contingent and otherwise, that in
accordance with Generally Accepted Accounting Principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, including in any event and whether or not so
classified: (i) all debt and similar monetary obligations, whether direct or
indirect; (ii) all liabilities secured by any mortgage, pledge, security
interest, lien, charge, or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (iii) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit.
INTEREST PAYMENT DATE. (i) As to any Base Rate Loan, the last day of the
calendar quarter which includes the Drawdown Date thereof; and (ii) as to any
Eurocurrency Rate Loan in respect of which the Interest Period is (A) 3 months
or less, the last day of such Interest Period and (B) more than 3 months, the
date that is 3 months from the first day of such Interest Period and, in
addition, the last day of such Interest Period.
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<PAGE> 19
INTEREST PERIOD. With respect to each Loan, (i) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the Borrower in a Loan Request
(A) for any Base Rate Loan, the last day of the calendar quarter; and (B) for
any Eurocurrency Rate Loan, 1, 2, 3, or 6 months; and (ii) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in a Conversion Request; PROVIDED that
all of the foregoing provisions relating to Interest Periods are subject to the
following:
(a) if any Interest Period with respect to a Eurocurrency Rate Loan would
otherwise end on a day that is not a Eurocurrency Business Day, that Interest
Period shall be extended to the next succeeding Eurocurrency Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Eurocurrency Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would end on
a day that is not a Business Day, that Interest Period shall end on the next
succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in Section 2.7,
the Borrower shall be deemed to have requested a conversion of the affected
Eurocurrency Rate Loan to a Base Rate Loan and the continuance of all Base Rate
Loans as Base Rate Loans on the last day of the then current Interest Period
with respect thereto;
(d) any Interest Period relating to any Eurocurrency Rate Loan that
begins on the last Eurocurrency 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 Eurocurrency Business
Day of a calendar month; and
(e) any Interest Period relating to any Eurocurrency Rate Loan that would
otherwise extend beyond the Maturity Date shall end on the Maturity Date.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any
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<PAGE> 20
guaranties (or other commitments as described under Indebtedness), or
obligations of, any Person. In determining the aggregate amount of Investments
outstanding at any particular time: (i) the amount of any Investment
represented by a guaranty shall be taken at not less than the principal amount
of the obligations guaranteed and still outstanding; (ii) there shall be
included as an Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid; (iii) there
shall be deducted in respect of each such Investment any amount received as a
return of capital (but only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (iv) there shall not be
deducted in respect of any Investment any amounts received as earnings on such
Investment, whether as dividends, interest or otherwise, except that accrued
interest included as provided in the foregoing clause (ii) may be deducted when
paid; and (v) there shall not be deducted from the aggregate amount of
Investments any decrease in the value thereof.
LOAN DOCUMENTS. This Credit Agreement and the Notes.
LOAN REQUEST. See Section 2.6.
LOANS. The Revolving Credit Loans.
MAJORITY BANKS. As of any date, the Banks holding at least fifty-one
percent (51%) of the outstanding principal amount of the Notes on such date;
and if no such principal is outstanding, the Banks whose aggregate Commitments
constitute at least fifty-one percent (51%) of the Total Commitment.
MATURITY DATE. July 1, 1997.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of Section
3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
NOTE RECORD. A Record with respect to a Note.
NOTES. See Section 2.4.
OBLIGATIONS. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Agent, individually or collectively,
existing on the date of this Credit Agreement or arising thereafter, direct or
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<PAGE> 21
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise, arising or incurred under this Credit Agreement
or any of the other Loan Documents or in respect of any of the Loans or any of
the Notes or other instruments at any time evidencing any obligations under the
Loan Documents.
OUTSTANDING. With respect to any of the Loans, the aggregate unpaid
principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by Section 7.2.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PRIVATE PLACEMENT DEBT. The Indebtedness of the Borrower incurred
pursuant to the Private Placement Note Agreement and the notes issued in
accordance therewith not exceeding at any time $40,000,000 in aggregate
principal amount.
PRIVATE PLACEMENT DOCUMENTS. The Private Placement Note Agreement and any
other documents or instruments issued in conjunction therewith.
PRIVATE PLACEMENT NOTE AGREEMENT. The Note Agreements dated as of
February 1, 1992 among the Borrower and the purchasers of the Notes listed on
the signature pages thereto, as amended and in effect on the Closing Date.
REAL ESTATE. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
RECORD. The grid attached to a Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
REVOLVING CREDIT LOANS. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to Section 2.
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<PAGE> 22
SECURITY AGREEMENT AND TRUST INDENTURE. Collectively (i) the Security
Agreement and Indenture of Trust dated as of February 1, 1992 between The Bank
of New York as Security Trustee and the Borrower, and (ii) the Pledgor
Subsidiary Security Agreements dated as of February 1, 1992 between the Bank
of New York as Security Trustee and certain Subsidiaries of the Borrower, as
each may be amended, restated, modified or supplemented and in effect from time
to time.
SUBSIDIARY. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority (by number of votes)
of the outstanding Voting Stock.
TOTAL COMMITMENT. One Hundred Million Dollars ($100,000,000), minus the
amount of any reductions effected pursuant to the terms hereof.
TYPE. As to any Revolving Credit Loan its nature as a Base Rate Loan or
a Eurocurrency Rate Loan.
VOTING STOCK. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
RULES OF INTERPRETATION.
-----------------------
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or
supplemented from time to time in accordance with its
terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
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<PAGE> 23
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted
accounting principles applied on a consistent basis by
the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by
generally accepted accounting principles, which terms
are defined in the Uniform Commercial Code as in effect
in the Commonwealth of Massachusetts, have the meanings
assigned to them therein, with the term "instrument"
being that defined under Article 9 of the Uniform
Commercial Code.
(h) Reference to a particular "Section " refers to that
section of this Credit Agreement unless otherwise
indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a
whole and not to any particular section or subdivision
of this Credit Agreement.
THE REVOLVING CREDIT FACILITY.
- - -----------------------------
COMMITMENT TO LEND.
------------------
Subject to the terms and conditions set forth in this Credit Agreement, each of
the Banks severally agrees to lend to the Borrower and the Borrower may borrow,
repay, and reborrow from time to time between the Closing Date and the Maturity
Date upon notice by the Borrower to the Agent given in accordance with Section
2.6, such sums as are requested by the Borrower up to a maximum aggregate
principal amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Bank's Commitment, PROVIDED that the sum of the
outstanding amount of the Revolving Credit Loans (after giving effect to all
amounts requested) shall not at any time exceed the Total Commitment. The
Revolving Credit Loans shall be made PRO RATA in accordance with each Bank's
Commitment Percentage. Each request for a
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<PAGE> 24
Revolving Credit Loan hereunder shall constitute a representation and warranty
by the Borrower that the conditions set forth in Section 9 and Section Section
10.1 and 10.2, in the case of the initial Revolving Credit Loans to be made on
the Closing Date, and Section Section 10.1 and 10.2, in the case of all other
Revolving Credit Loans, have been satisfied on the date of such request.
COMMITMENT FEE.
--------------
The Borrower agrees to pay to the Agent for the account of the Banks in
accordance with their respective Commitment Percentages a commitment fee (the
"Commitment Fee"), which shall be calculated at a per annum rate equal to the
Commitment Fee Rate in effect at such time on the average daily amount during
each calendar quarter or portion thereof from the Closing Date to the Maturity
Date by which the Total Commitment exceeds the outstanding aggregate amount of
Revolving Credit Loans during such calendar quarter. The Commitment Fee shall
be payable quarterly in arrears on the first day of each calendar quarter for
the immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Maturity Date or any
earlier date on which the Total Commitment shall terminate.
REDUCTION OF TOTAL REVOLVER COMMITMENT.
--------------------------------------
The Borrower shall have the right at any time and from time to time upon
five (5) Business Days prior written notice to the Agent to reduce by
$1,000,000 or an integral multiple thereof or terminate entirely the unborrowed
portion of the Total Commitment, whereupon the Commitments of the Banks shall
be reduced PRO RATA in accordance with their respective Commitment Percentages
of the amount specified in such notice or, as the case may be, terminated.
Promptly after receiving any notice of the Borrower delivered pursuant to this
Section 2.3, the Agent will notify the Banks of the substance thereof. Upon
the effective date of any such reduction or termination, the Borrower shall pay
to the Agent for the respective accounts of the Banks the full amount of any
Commitment Fee then accrued on the amount of the reduction. No reduction of
the Commitments may be reinstated.
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<PAGE> 25
THE NOTES.
---------
The Revolving Credit Loans shall be evidenced by separate promissory notes
of the Borrower in substantially the form of EXHIBIT A hereto (each a "Note"),
dated as of the Closing Date and completed with appropriate insertions. One
Note shall be payable to the order of each Bank in a principal amount equal to
such Bank's Commitment or, if less, the outstanding amount of all Revolving
Credit Loans made by such Bank, plus interest accrued thereon, as set forth
below. The Borrower irrevocably authorizes each Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Revolving Credit Loan or
at the time of receipt of any payment of principal on such Bank's Note, an
appropriate notation on such Bank's Note Record reflecting the making of such
Revolving Credit Loan or (as the case may be) the receipt of such payment. The
outstanding amount of the Revolving Credit Loans set forth on such Bank's Note
Record shall be PRIMA FACIE evidence of the principal amount thereof owing and
unpaid to such Bank, but the failure to record, or any error in so recording,
any such amount on such Bank's Note Record shall not limit or otherwise affect
the obligations of the Borrower hereunder or under any Note to make payments of
principal or interest on any Note when due.
INTEREST ON REVOLVING CREDIT LOANS.
----------------------------------
Except as otherwise provided in Section 4.11,
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto equal to
the Base Rate PLUS the Applicable Margin for Base Rate Loans.
(b) Each Eurocurrency Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last
day of the Interest Period with respect thereto equal to the
Eurocurrency Rate determined for such Interest Period PLUS the
Applicable Margin for Eurocurrency Rate Loans.
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<PAGE> 26
(c) The Borrower promises to pay interest on each Revolving Credit
Loan in arrears on each Interest Payment Date with respect thereto.
REQUESTS FOR REVOLVING CREDIT LOANS.
-----------------------------------
The Borrower shall give to the Agent written notice in the form of EXHIBIT
B hereto (or telephonic notice confirmed in a writing in the form of EXHIBIT B
hereto) of each Revolving Credit Loan requested hereunder (a "Loan Request") no
less than 10:00 a.m., Boston time, (i) two (2) Business Days prior to the
proposed Drawdown Date of any Base Rate Loan, and (ii) four (4) Eurocurrency
Business Days prior to the proposed Drawdown Date of any Eurocurrency Rate
Loan. Each such notice shall specify (A) the principal amount of the Revolving
Credit Loan requested, (B) the proposed Drawdown Date of such Revolving Credit
Loan, (C) the Interest Period of such Revolving Credit Loan and (D) the Type of
such Revolving Credit Loan. Promptly upon receipt of any such notice, the
Agent shall notify each of the Banks thereof. Each such notice shall be
irrevocable and binding on the Borrower and shall obligate the Borrower to
accept the Revolving Credit Loan requested from the Banks on the proposed
Drawdown Date. Each Loan Request shall be in a minimum aggregate amount of
$1,000,000 or integral multiples of $100,000 in excess thereof.
CONVERSION OPTIONS.
------------------
CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN.
-----------------------------------------------------
The Borrower may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of another Type, PROVIDED that
(i) with respect to any such conversion of a Revolving Credit Loan to a Base
Rate Loan, the Borrower shall give the Agent at least three (3) Business Days
prior written notice of such election; (ii) with respect to any such conversion
of a Eurocurrency Rate Loan into a Revolving Credit Loan of another Type, such
conversion shall only be made on the last day of the Interest Period with
respect thereto; (iii) with respect to any such conversion of a Base Rate Loan
to a Eurocurrency Rate Loan, the Borrower shall give the Agent at least four
(4) Eurocurrency Business Days prior written notice of such election and (iv)
no Revolving Credit Loan may be converted
-18-
<PAGE> 27
into a Eurocurrency Rate Loan when any Default or Event of Default has occurred
and is continuing. On the date on which such conversion is being made each
Bank shall take such action as is necessary to transfer its Commitment
Percentage of such Revolving Credit Loans to its Domestic Lending Office or its
Eurocurrency Lending Office, as the case may be. All or any part of outstanding
Revolving Credit Loans of any Type may be converted as PROVIDED herein,
provided that partial conversions shall be in an aggregate principal amount of
$1,000,000 or a whole multiple thereof. Each Conversion Request relating to
the conversion of a Revolving Credit Loan to a Eurocurrency Rate Loan shall be
irrevocable by the Borrower.
CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN.
---------------------------------------------
Any Revolving Credit Loans of any Type may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the notice provisions contained in Section 2.7.1; PROVIDED that
no Eurocurrency Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically converted to
a Base Rate Loan on the last day of the first Interest Period relating thereto
ending during the continuance of any Default or Event of Default of which the
officers of the Agent active upon the Borrower's account have actual knowledge.
In the event that the Borrower fails to provide any such notice with respect to
the continuation of any Eurocurrency Rate Loan as such, then such Eurocurrency
Rate Loan shall be automatically converted to a Base Rate Loan on the last day
of the first Interest Period relating thereto. The Agent shall notify the
Banks promptly when any such automatic conversion contemplated by this Section
2.7 is scheduled to occur.
EUROCURRENCY RATE LOANS.
-----------------------
Any conversion to or from Eurocurrency Rate Loans shall be in such amounts
and be made pursuant to such elections so that, after giving effect thereto,
the aggregate principal amount of all Eurocurrency Rate Loans having the same
Interest Period shall not be less than $1,000,000 or a whole multiple of
$100,000 in excess thereof.
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<PAGE> 28
FUNDS FOR REVOLVING CREDIT LOANS.
--------------------------------
FUNDING PROCEDURES.
------------------
Not later than 11 o'clock a.m. (Boston time) on the proposed Drawdown
Date of any Revolving Credit Loans, each of the Banks will make available to the
Agent, at its Head Office, in immediately available funds, the amount of such
Bank's Commitment Percentage of the amount of the requested Revolving Credit
Loans. Upon receipt from each Bank of such amount, and upon receipt of the
documents required by Section Section 9 and 10 and the satisfaction of the other
conditions set forth therein, to the extent applicable, the Agent will make
available to the Borrower the aggregate amount of such Revolving Credit Loans
made available to the Agent by the Banks. The failure or refusal of any Bank to
make available to the Agent at the aforesaid time and place on any Drawdown Date
its Commitment Percentage of the requested Revolving Credit Loans shall not
relieve any other Bank from its several obligation hereunder to make available
to the Agent the amount of such other Bank's Commitment Percentage of any
requested Revolving Credit Loans.
ADVANCES BY AGENT.
-----------------
The Agent may, unless notified to the contrary by any Bank prior to a
Drawdown Date, assume that such Bank has made available to the Agent on such
Drawdown Date the amount of such Bank's Commitment Percentage of the Revolving
Credit Loans to be made on such Drawdown Date, and the Agent may (but it shall
not be required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Bank makes available to the Agent such
amount on a date after such Drawdown Date, such Bank shall pay to the Agent on
demand an amount equal to the product of (i) the average computed for the
period referred to in clause (iii) below, of the weighted average interest rate
paid by the Agent for federal funds acquired by the Agent during each day
included in such period, TIMES (ii) the amount of such Bank's share of such
Revolving Credit Loans, TIMES (iii) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to the date on
which the amount of such Bank's Commitment Percentage of such Revolving Credit
Loans shall become immediately available to the Agent, and the denominator of
which is 365. A statement of the Agent submitted to such Bank with respect to
any amounts owing under this paragraph
-20-
<PAGE> 29
shall be PRIMA FACIE evidence of the amount due and owing to the Agent by such
Bank. If the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans is not made available to the Agent by such Bank within three (3)
Business Days following such Drawdown Date, the Agent shall be entitled to
recover such amount from the Borrower on demand, with interest thereon at the
rate per annum applicable to the Revolving Credit Loans made on such Drawdown
Date, and the Borrower may take the actions permitted under Section 4.12 hereof
to replace such Bank. Any payment by the Borrower to the Agent of such amount
demanded by the Agent shall constitute payment in full of such Bank's PRO RATA
share of such Revolving Credit Loans in accordance with Section 3.1 hereof.
REPAYMENT OF THE REVOLVING CREDIT LOANS.
---------------------------------------
MATURITY.
--------
The Borrower promises to pay on the Maturity Date, and there shall
become absolutely due and payable on the Maturity Date, all of the Revolving
Credit Loans outstanding on such date, together with any and all accrued and
unpaid interest thereon and all unpaid expenses incurred in connection
therewith.
MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS.
----------------------------------------------
If at any time the sum of the outstanding amount of the Revolving Credit
Loans exceeds the Total Commitment, then the Borrower shall immediately pay the
amount of such excess to the Agent for application to the Revolving Credit
Loans.
OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS.
---------------------------------------------
The Borrower shall have the right, at its election, to repay the
outstanding amount of the Revolving Credit Loans, as a whole or in part, at any
time without penalty or premium, PROVIDED that the full or partial prepayment of
the outstanding amount of any Eurocurrency Rate Loans pursuant to this Section
3.3 may be made only on the last day of the Interest Period relating thereto.
The Borrower shall give the Agent, no later than 10:00 a.m., Boston time, at
least three (3) Business Days prior written notice, of any proposed repayment
pursuant to this Section 3.3 of Base Rate Loans,
-21-
<PAGE> 30
and four (4) Eurocurrency Business Days notice of any proposed repayment
pursuant to this Section 3.3 of Eurocurrency Rate Loans, in each case,
specifying the proposed date of payment of Revolving Credit Loans and the
principal amount to be paid. Each such partial prepayment of the Revolving
Credit Loans shall be in an integral multiple of $1,000,000, shall be
accompanied by the payment of accrued interest on the principal repaid to the
date of payment and shall be applied first to the principal of Base Rate Loans
and then to the principal of Eurocurrency Rate Loans. Each partial prepayment
of the Revolving Credit Loans shall be allocated among the Banks, in
proportion, as nearly as practicable, to the respective unpaid principal amount
of each Bank's Note, with adjustments to the extent practicable to equalize any
prior repayments not exactly in proportion.
CERTAIN GENERAL PROVISIONS.
--------------------------
CLOSING FEE.
-----------
The Borrower agrees to pay to the Agent for the pro rata accounts of the
Banks, in accordance with each Bank's Commitment, on the Closing Date a closing
fee in the amount of $100,000.
AGENT'S FEE.
-----------
The Borrower shall pay to the Agent annually in advance, for the Agent's
own account, on the Closing Date and on each anniversary of the Closing Date, an
Agent's fee in the amount of $25,000.
FUNDS FOR PAYMENTS.
------------------
PAYMENTS TO AGENT.
-----------------
All payments of principal, interest, commitment fees and any other
amounts due hereunder or under any of the other Loan Documents shall be made to
the Agent, for the respective accounts of the Banks and the Agent, in
immediately available funds, at the Agent's Head Office or at such other
location in the Boston, Massachusetts, area that the Agent may from time to time
designate, on or prior to 11:00 a.m., Boston time, on the due date of such
payment.
-22-
<PAGE> 31
NO OFFSET, ETC.
--------------
All payments by the Borrower hereunder and under any of the other Loan
Documents shall be made without setoff or counterclaim and free and clear of and
without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If any such obligation
is imposed upon the Borrower with respect to any amount payable by it hereunder
or under any of the other Loan Documents, other than (a) with respect to taxes
based upon the Agent's or any Bank's net income, or (b) with respect to amounts
owing to a Bank that (i) is not incorporated under the laws of the United States
of America and (ii) has not delivered to the agent the forms referred to in
Section 4.3.3 hereof, the Borrower will pay to the Agent, for the account of the
appropriate Bank or Banks or (as the case may be) the Agent, on the date on
which such amount is due and payable hereunder or under such other Loan
Document, such additional amount in Dollars as shall be necessary to enable such
Bank or Banks or the Agent to receive the same net amount which such Bank or
Banks or the Agent would have received on such due date had no such obligation
been imposed upon the Borrower. The Borrower will deliver promptly to the Agent
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the Borrower hereunder or under
such other Loan Document.
WITHHOLDING.
-----------
Each Bank that is a party to this Credit Agreement and that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Agent, within seven (7) Business Days of the
Closing Date, or, in the case of a Bank which becomes a Bank pursuant to an
Assignment and Acceptance, on the date which such Assignment and Acceptance
becomes effective, a copy of United States Internal Revenue Service form 1001 or
4224 (or other applicable form prescribed by the United States Internal Revenue
Service), in each case certifying that such Bank is entitled to receive payments
under this Credit Agreement and the Notes without deduction or withholding of
any United States federal income taxes.
-23-
<PAGE> 32
COMPUTATIONS.
------------
All computations of interest on the Loans and of the Commitment Fees
shall be based on a 365-day year and paid for the actual number of days
elapsed. Each determination by the Agent of an amount of interest or the
Commitment Fees payable by the Borrower hereunder shall, save for manifest
error, be conclusive and binding upon the Borrower and the Banks. Except as
otherwise provided in the definition of the term "Interest Period" with respect
to Eurocurrency Rate Loans, whenever a payment hereunder or under any of the
other Loan Documents becomes due on a day that is not a Business Day, the due
date for such payment shall be extended to the next succeeding Business Day,
and interest shall accrue during such extension.
INABILITY TO DETERMINE EUROCURRENCY RATE.
----------------------------------------
In the event, prior to the commencement of any Interest Period relating
to any Eurocurrency Rate Loan, the Agent shall determine that adequate and
reasonable methods do not exist for ascertaining the Eurocurrency Rate that
would otherwise determine the rate of interest to be applicable to any
Eurocurrency Rate Loan with respect to such Currency during any Interest Period,
the Agent shall forthwith give notice of such determination (which shall be
conclusive and binding on the Borrowers and the Banks) to the Borrower and the
Banks. In such event (i) any Loan Request or Conversion Request with respect to
Eurocurrency Rate Loans shall be automatically withdrawn and shall be deemed a
request for Base Rate Loans, (ii) each Eurocurrency Rate Loan will
automatically, on the last day of the then current Interest Period thereof,
become a Base Rate Loan, and (iii) the obligations of the Banks to make
Eurocurrency Rate Loans shall be suspended until the Agent determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Agent shall so notify the Borrower and the Banks.
IMPRACTICABILITY; ILLEGALITY.
----------------------------
Notwithstanding any other provisions herein, if any Bank shall determine
that any adverse changes effecting the London foreign currency deposits market
or any present or future law, regulation, treaty or directive or in the
interpretation or application thereof shall make it
-24-
<PAGE> 33
impracticable or unlawful for such Bank to make or maintain Eurocurrency Rate
Loans, then such Bank shall forthwith give notice of such circumstances to the
Borrower and the Agent and thereupon (i) the commitment of such Bank to make
Eurocurrency Rate Loans, or to convert Revolving Credit Loans of another Type
to Eurocurrency Rate Loans, as the case may be, shall forthwith be suspended,
and (ii) such Bank's Revolving Credit Loans then outstanding as Eurocurrency
Rate Loans, if any, shall be converted automatically to Base Rate Loans on the
last day of each Interest Period applicable to such Eurocurrency Rate Loans or
within such earlier period as may be required by law. The Borrower hereby
agrees promptly to pay the Agent for the account of such Bank, upon demand by
such Bank, any additional amounts necessary to compensate such Bank for any
costs incurred by such Bank in making any conversion prior to the last day of
the Interest Period applicable to any Eurocurrency Loans in accordance with
this Section 4.6, including any interest or fees payable by such Bank to
lenders of funds obtained by it in order to make or maintain its Eurocurrency
Loans hereunder.
ADDITIONAL COSTS, ETC.
---------------------
If any present or future applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and interpretations
thereof by any competent court or by any governmental or other regulatory body
or official charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Bank or the Agent by any central
bank or other fiscal, monetary or other authority (whether or not having the
force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with
respect to this Credit Agreement, the other Loan Documents,
such Bank's Commitment or the Loans (other than taxes based
upon or measured by the income or profits of such Bank or the
Agent), or
-25-
<PAGE> 34
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts
payable to any Bank or the Agent under this Credit Agreement
or the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit
Agreement) any special deposit, reserve, assessment, liquidity,
capital adequacy or other similar requirements (whether or not
having the force of law) against assets held by, or deposits in
or for the account of, or loans by, or commitments of an office
of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other
Loan Documents, the Loans, such Bank's Commitment, or any class
of loans or commitments of which any of the Loans or such Bank's
Commitment forms a part, and the result of any of the
foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the
Loans or such Bank's Commitment, or
(ii) to reduce the amount of principal, interest or other
amount payable to such Bank or the Agent hereunder on
account of such Bank's Commitment or any of the
Loans, or
(iii) to require such Bank or the Agent to make any payment
or to forego any interest or other sum payable
hereunder, the
-26-
<PAGE> 35
amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum
receivable or deemed received by such Bank or the Agent from the
Borrower hereunder,
then, and in each such case, such Bank or the Agent may notify the Borrower of
such fact. The Borrower and such Bank or (as the case may be) the Agent shall
thereafter attempt to negotiate in good faith, within thirty (30) days of the
day on which the Borrower receives such notice, an adjustment payable hereunder
that will adequately compensate such Bank or the Agent in light of these
circumstances. If the Borrower and such Bank or the Agent are unable to agree
to such adjustment within thirty (30) days of the date on which the Borrower
receives such notice, then the Borrower will pay to such Bank or (as the case
may be) the Agent such additional amounts as will be sufficient to compensate
such Bank or the Agent for such additional cost, reduction, payment or foregone
interest or other sum (without duplication for recovery of such amounts under
any other provision hereof), PROVIDED that the Borrower shall not be liable to
any Bank or the Agent for costs incurred more than sixty (60) days prior to the
date on which the Borrower receives such notice. Each Bank and the Agent shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
CAPITAL ADEQUACY.
----------------
If after the date hereof any Bank or the Agent determines that (i) the
adoption of or change in any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) regarding
capital requirements for banks or bank holding companies or any change in the
interpretation or application thereof by a court or governmental authority with
appropriate jurisdiction, or (ii) compliance by such Bank or the Agent or any
corporation controlling such Bank or the Agent with any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) of any such entity regarding capital adequacy, has the effect of reducing
the return on such Bank's or the Agent's commitment with respect to any Loans to
a level below that which such Bank or the Agent could have achieved but for such
adoption,
-27-
<PAGE> 36
change or compliance (taking into consideration such Bank's or the Agent's then
existing policies with respect to capital adequacy and assuming full
utilization of such entity's capital) by any amount deemed by such Bank or (as
the case may be) the Agent to be material, then such Bank or the Agent may
notify the Borrower of such fact. To the extent that the amount of such
reduction in the return on capital is not reflected in the Base Rate, the
Borrower and such Bank shall thereafter attempt to negotiate in good faith,
within thirty (30) days of the day on which the Borrower receives such notice,
an adjustment payable hereunder that will adequately compensate such Bank in
light of these circumstances. If the Borrower and such Bank are unable to
agree to such adjustment within thirty (30) days of the date on which the
Borrower receives such notice, then the Borrower agrees to pay such Bank or (as
the case may be) the Agent for the amount of such reduction in the return on
capital as will be sufficient to compensate such Bank or the Agent, PROVIDED
that the Borrower shall not be liable to any Bank or the Agent for costs
incurred more than sixty (60) days prior to the date on which such Borrower
receives such notice. Each Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis.
CERTIFICATE.
-----------
Subject to the provisions of Section Section 4.7 and 4.8 hereof, a
certificate setting forth any additional amounts payable pursuant to Section
Section 4.6, 4.7 or 4.8 and a brief explanation of such amounts which are due,
submitted by any Bank or the Agent to the Borrower, shall be conclusive, absent
manifest error, that such amounts are due and owing. If the Borrower is
required to pay any additional amounts pursuant to Section Section 4.6, 4.7 or
4.8 hereof with respect to any Bank, the Borrower may, following payment in full
of the amount or amounts due set forth in such certificate, take the actions
provided by Section 4.12 hereof to replace such Bank.
INDEMNITY.
---------
The Borrower agrees to indemnify each Bank and to hold each Bank
harmless from and against any loss, cost or expense (excluding loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (i)
default by the Borrower in payment of the principal amount of or any interest on
any Eurocurrency Rate Loans as and when due and
-28-
<PAGE> 37
payable, including any such loss or expense arising from interest or fees
payable by such Bank to lenders of funds obtained by it in order to maintain
its Eurocurrency Rate Loans, (ii) default by the Borrower in making a borrowing
after the Borrower has given (or is deemed to have given) (A) a Loan Request,
or (B) a Conversion Request relating thereto in accordance with Section 2.7 or
(iii) the making of any payment on any Eurocurrency Rate Loan or the making of
any conversion of any such Eurocurrency Rate Loan to a Base Rate Loan on a day
that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain any such Eurocurrency Rate Loans.
INTEREST AFTER DEFAULT.
----------------------
OVERDUE AMOUNTS.
---------------
Overdue principal and (to the extent permitted by applicable law)
interest on the Loans and all other overdue amounts payable hereunder or under
any of the other Loan Documents shall bear interest compounded monthly and
payable on demand at a rate per annum equal to three percent (3%) above the rate
of interest otherwise applicable to such Loans hereunder until such amount shall
be paid in full (after as well as before judgment).
AMOUNTS NOT OVERDUE.
-------------------
During the continuance of an Event of Default the principal of the Loans
not overdue shall, until such Event of Default has been cured or remedied or
such Event of Default has been waived by the Majority Banks pursuant to Section
27, bear interest at a rate per annum equal to three percent (3%) above the rate
of interest otherwise applicable to such Loans hereunder.
REPLACEMENT OF INDIVIDUAL BANKS.
-------------------------------
Upon the happening of any of the events set forth in Section Section
2.8.2, 4.6, 4.7, or 4.8 hereof giving rise to the Borrower's rights under
Section Section 2.8.2 or 4.9 hereof, the Borrower may (PROVIDED that at the time
no Default or Event of Default exists or would result after giving effect to the
Borrower's action) prepay in full all Loans and other obligations owing by the
Borrower to any individual Bank
-29-
<PAGE> 38
(the "Substituted Bank"), together with all amounts payable by the Borrower
under Section 4.10 hereof with respect to such prepayment, and terminate the
Commitment(s) of such Bank(s) subject to the following conditions:
(a) the Borrower shall have delivered to the Agent
not less than ten (10) Business Days prior to the
exercise of its rights under this Section 4.12 a
written commitment in form and substance
reasonably satisfactory to the Agent and each of
the Banks from a banking institution (the
"Replacement Bank") reasonably acceptable to the
Agent and each of the remaining Banks (other than
the Substituted Bank) in which such banking
institution agrees to become a "Bank" under this
Credit Agreement, having a Commitment in the
amount of the Substituted Bank's Commitment;
(b) the Borrower shall have given appropriate notice
of any prepayment under this Section 4.12 as
required by Section 3.3 and subject to all other
provisions of this Credit Agreement; and
(c) simultaneously with any prepayment of all Loans
and other obligations owing by the Borrower to a
Substituted Bank under this Section 4.12, the
Agent shall have assigned pursuant to Section 17
hereof of this Credit Agreement the commitment of
such Substituted Bank to the Replacement Bank and
such Replacement Bank shall have become a Bank
under this Credit Agreement, having a Commitment
in the amount of such Substituted Bank's
Commitment and such Replacement Bank shall have
simultaneously funded all such Loans prepaid
hereunder.
-30-
<PAGE> 39
REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the Agent as
follows:
CORPORATE AUTHORITY.
-------------------
INCORPORATION; GOOD STANDING.
----------------------------
The Borrower (i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, (ii)
has all requisite corporate power to own its property and conduct its business
as now conducted and as presently contemplated, and (iii) is in good standing
as a foreign corporation and is duly authorized to do business in each
jurisdiction where such qualification is necessary except where a failure to be
so qualified would not have a materially adverse effect on the business, assets
or financial condition of the Borrower and its Subsidiaries, taken as a whole.
AUTHORIZATION.
-------------
The execution, delivery and performance of this Credit Agreement and
the other Loan Documents to which the Borrower is or is to become a party and
the transactions contemplated hereby and thereby (i) are within the corporate
authority of the Borrower, (ii) have been duly authorized by all necessary
corporate proceedings, (iii) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to which the
Borrower is subject or any judgment, order, writ, injunction, license or permit
applicable to the Borrower, and (iv) do not conflict with any provision of the
corporate charter or bylaws of, or any agreement or other instrument binding
upon, the Borrower.
ENFORCEABILITY.
--------------
The execution and delivery of this Credit Agreement and the other Loan
Documents to which the Borrower is or is to become a party will result in valid
and legally binding obligations of the Borrower enforceable against it in
accordance with the respective terms and provisions hereof
-31-
<PAGE> 40
and thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganizaitn, moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that availability of
the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.
GOVERNMENTAL APPROVALS.
----------------------
The execution, delivery and performance by the Borrower of this Credit
Agreement and the other Loan Documents to which the Borrower is or is to become
a party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained.
TITLE TO PROPERTIES; LEASES.
---------------------------
Except as indicated on SCHEDULE 5.3 hereto, the Borrower and its
Subsidiaries own all of the assets reflected in the consolidated balance sheet
of the Borrower and its Subsidiaries as at the Balance Sheet Date or acquired
since that date (except property and assets sold or otherwise disposed of in
the ordinary course of business since that date), subject to no rights of
others, including any mortgages, leases, conditional sales agreements, title
retention agreements, liens or other encumbrances except Permitted Liens.
FINANCIAL STATEMENTS.
--------------------
(a) There has been furnished to the Agent a
consolidated balance sheet of the
Borrower and its Subsidiaries as at the
Balance Sheet Date, and a consolidated
statement of income for the fiscal year
then ended, certified by the Borrower's
independent certified public accountants.
Such balance sheet and statement of
income have been prepared in accordance
with Generally Accepted Accounting
Principles and fairly present the
financial condition of the Borrower as at
the close of business on the date thereof
and the results of operations for the
fiscal year then ended. There are no
contingent liabilities of the Borrower or
any of its Subsidiaries as
-32-
<PAGE> 41
of such date involving material amounts,
known to the officers of the Borrower not
disclosed in said balance sheet and the
related notes thereto.
(b) There has been furnished to the Agent an
unaudited consolidated balance sheet of
the Borrower and its Subsidiaries as at
March 31, 1994, and an unaudited
consolidated statement of income for the
fiscal quarter then ended. Such balance
sheet and statement of income have been
prepared in accordance with generally
accepted accounting principles and fairly
present the financial condition of the
Borrower and its Subsidiaries as at the
close of business on the date thereof and
the results of operations for the fiscal
quarter then ended (subject to year-end
adjustments). There are no contingent
liabilities of the Borrower or any of its
Subsidiaries as of such date involving
material amounts, known to the officers
of the Borrower not disclosed in said
balance sheet and the related notes
thereto.
NO MATERIAL CHANGES, ETC.
------------------------
Since the Balance Sheet Date there has occurred no materially adverse
change in the financial condition or business of the Borrower and its
Subsidiaries as shown on or reflected in the consolidated balance sheet of the
Borrower and its Subsidiaries as at the Balance Sheet Date, or the consolidated
statement of income for the fiscal year then ended, other than changes in the
ordinary course of business that have not had any materially adverse effect
either individually or in the aggregate on the business or financial condition
of the Borrower or its Subsidiaries. Since the Balance Sheet Date, except as
disclosed on SCHEDULE 5.5, the Borrower has not made any Distribution.
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<PAGE> 42
FRANCHISES, PATENTS, COPYRIGHTS, ETC.
------------------------------------
Each of the Borrower and its Subsidiaries possesses all franchises,
patents, copyrights, trademarks, trade names, licenses and permits, and rights
in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any rights of
others.
LITIGATION.
----------
Except as disclosed on SCHEDULE 5.7, there are no actions, suits,
proceedings or investigations of any kind pending or threatened against the
Borrower or any of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined, might, either in
any case or in the aggregate, materially adversely affect the properties,
assets, financial condition or business of the Borrower and its Subsidiaries or
materially impair the right of the Borrower and its Subsidiaries, considered as
a whole, to carry on business substantially as now conducted by them, or result
in any substantial liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the consolidated balance sheet of the
Borrower, or which question the validity of this Credit Agreement or any of the
other Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.
NO MATERIALLY ADVERSE CONTRACTS, ETC.
------------------------------------
Neither the Borrower nor any of its Subsidiaries is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation that has or is expected in the future to have a materially
adverse effect on the business, assets or financial condition of the Borrower
or any of its Subsidiaries. Neither the Borrower nor any of its Subsidiaries
is a party to any contract or agreement that has or is expected, in the
judgment of the Borrower's officers, to have any materially adverse effect on
the business of the Borrower or any of its Subsidiaries.
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<PAGE> 43
COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.
--------------------------------------------
Neither the Borrower nor any of its Subsidiaries is in violation of any
provision of its charter documents, bylaws, or any agreement or instrument to
which it may be subject or by which it or any of its properties may be bound or
any decree, order, judgment, statute, license, rule or regulation, in any of
the foregoing cases in a manner that could result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of the Borrower or any of its Subsidiaries.
TAX STATUS.
----------
The Borrower and its Subsidiaries (i) have made or filed all federal
and state income and all other tax returns, reports and declarations required
by any jurisdiction to which any of them is subject, (ii) have paid all taxes
and other governmental assessments and charges shown or determined to be due on
such returns, reports and declarations, except those being contested in good
faith and by appropriate proceedings and (iii) have set aside on their books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
Except as disclosed on Schedule 5.10, there are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Borrower know of no basis for any such claim.
NO EVENT OF DEFAULT.
-------------------
No Default or Event of Default has occurred and is continuing.
HOLDING COMPANY AND INVESTMENT COMPANY ACTS.
-------------------------------------------
Neither the Borrower nor any of its Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935; nor is it an "investment company", or a "principal
underwriter" of an "investment company", or a company controlled by an
"investment company", as such terms are defined in the Investment Company Act
of 1940.
-35-
<PAGE> 44
ABSENCE OF FINANCING STATEMENTS, ETC.
------------------------------------
Except with respect to Permitted Liens, there is no financing
statement, security agreement, chattel mortgage, real estate mortgage or other
document filed or recorded with any filing records, registry, or other public
office, that purports to cover, affect or give notice of any present or
possible future lien on, or security interest in, any assets or property of the
Borrower or any of its Subsidiaries or rights thereunder.
CERTAIN TRANSACTIONS.
--------------------
Except for arm's length transactions pursuant to which the Borrower or any
of its Subsidiaries makes payments in the ordinary course of business upon
terms no less favorable than the Borrower or such Subsidiary could obtain from
third parties, none of the officers, directors, or employees of the Borrower or
any of its Subsidiaries is presently a party to any transaction with the
Borrower or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from
any officer, director or such employee or, to the knowledge of the Borrower,
any corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
EMPLOYEE BENEFIT PLANS.
----------------------
IN GENERAL.
----------
Each Employee Benefit Plan has been maintained and operated in compliance
in all material respects with the provisions of ERISA and, to the extent
applicable, the Code, including but not limited to the provisions thereunder
respecting prohibited transactions. The Borrower has heretofore delivered to
the Agent the most recently completed annual report, Form 5500, with all
required attachments, and actuarial statement required to be submitted under
Section 103(d) of ERISA, with respect to each Guaranteed Pension Plan.
-36-
<PAGE> 45
TERMINABILITY OF WELFARE PLANS.
------------------------------
Under each Employee Benefit Plan which is an employee welfare benefit plan
within the meaning of Section 3(1) or Section 3(2)(B) of ERISA, no benefits are
due unless the event giving rise to the benefit entitlement occurs prior to
plan termination (except as required by Title I, Part 6 of ERISA). The Borrower
or an ERISA Affiliate, as appropriate, may terminate each such Plan at any time
(or at any time subsequent to the expiration of any applicable bargaining
agreement) in the discretion of the Borrower or such ERISA Affiliate without
liability to any Person, except for benefits accrued prior to such termination.
GUARANTEED PENSION PLANS.
------------------------
Each contribution required to be made to a Guaranteed Pension Plan,
whether required to be made to avoid the incurrence of an accumulated funding
deficiency, the notice or lien provisions of Section 302(f) of ERISA, or
otherwise, has been timely made. No waiver of an accumulated funding
deficiency or extension of amortization periods has been received with respect
to any Guaranteed Pension Plan. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by the
Borrower or any ERISA Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Reportable Event, or any other event or condition
which presents a material risk of termination of any Guaranteed Pension Plan by
the PBGC. Based on the latest valuation of each Guaranteed Pension Plan (which
in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed for that
valuation, the aggregate benefit liabilities of all such Guaranteed Pension
Plans within the meaning of Section 4001 of ERISA did not exceed the aggregate
value of the assets of all such Guaranteed Pension Plans, disregarding for this
purpose the benefit liabilities and assets of any Guaranteed Pension Plan with
assets in excess of benefit liabilities.
MULTIEMPLOYER PLANS.
-------------------
Neither the Borrower nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan
-37-
<PAGE> 46
under Section 4201 of ERISA or as a result of a sale of assets described in
Section 4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has been
notified that any Multiemployer Plan is in reorganization or insolvent under
and within the meaning of Section 4241 or Section 4245 of ERISA or that any
Multiemployer Plan intends to terminate or has been terminated under Section
4041A of ERISA.
REGULATIONS U AND X.
-------------------
The proceeds of the Loans shall be used for working capital and general
corporate purposes, and Loans made on the Closing Date will be used to pay in
full of all Obligations (as such term is defined in the Existing Credit
Agreement) under the Existing Credit Agreement. No portion of any Loan is to
be used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
ENVIRONMENTAL COMPLIANCE.
------------------------
The Borrower has taken all necessary steps to investigate the past and
present condition and usage of the Real Estate and the operations conducted
thereon and, based upon such diligent investigation, has determined that:
(a) none of the Borrower, its Subsidiaries or any operator of the Real
Estate or any operations thereon is in violation, or alleged violation, of any
judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, or any state or local statute, regulation, ordinance, order or
decree relating to health, safety or the environment (hereinafter
"Environmental Laws"), which violation would have a material adverse effect on
the business, assets or financial condition of the Borrower or its Subsidiaries
taken as a whole;
-38-
<PAGE> 47
(b) neither the Borrower nor any of its Subsidiaries has received notice
from any third party including, without limitation: any federal, state or local
governmental authority, (i) that any one of them has been identified by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any hazardous
waste, as defined by 42 U.S.C. Section 9601(5), any hazardous substances as
defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as defined
by 42 U.S.C. Section 9601(33) and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any Environmental Laws
("Hazardous Substances") which any one of them has generated, transported or
disposed of has been found at any site at which a federal, state or local
agency or other third party has conducted or has ordered that the Borrower or
any of its Subsidiaries conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that it is or shall
be a named party to any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise) arising out
of any third party's incurrence of costs, expenses, losses or damages of any
kind whatsoever in connection with the release of Hazardous Substances, which
liability would have a material adverse affect on the business, assets or
financial condition of the Borrower or its Subsidiaries, taken as a whole;
(c) except as set forth on SCHEDULE 5.17 attached hereto: (i) no portion
of the Real Estate has been used for the handling, processing, storage or
disposal of Hazardous Substances except in accordance with applicable
Environmental Laws; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on any portion of the Real
Estate; (ii) in the course of any activities conducted by the Borrower, its
Subsidiaries or operators of its properties, no Hazardous Substances have been
generated or are being used on the Real Estate except in accordance with
applicable Environmental Laws; (iii) there have been no releases (i.e. any past
or present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened releases
of Hazardous Substances on, upon, into or from the properties of the Borrower
or its Subsidiaries, which releases would have a material adverse effect on the
value of any of the Real
-39-
<PAGE> 48
Estate or adjacent properties; (iv) to the best of the Borrower's knowledge,
there have been no releases on, upon, from or into any real property in the
vicinity of any of the Real Estate which, through soil or groundwater
contamination, may have come to be located on, and which would have a material
adverse effect on the value of, the Real Estate; and (v) in addition, any
Hazardous Substances that have been generated on any of the Real Estate have
been transported offsite only by carriers having an identification number
issued by the EPA, treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities have been and are, to the best of the
Borrower's knowledge, operating in compliance with such permits and applicable
Environmental Laws; and
(d) none of the Borrower and its Subsidiaries, or any of the Real Estate
is subject to any applicable environmental law requiring the performance of
Hazardous Substances site assessments, or the removal or remediation of
Hazardous Substances, or the giving of notice to any governmental agency or the
recording or delivery to other Persons of an environmental disclosure document
or statement by virtue of the transactions set forth herein and contemplated
hereby.
SUBSIDIARIES, ETC.
------------------
SCHEDULE 5.18 sets forth all of the Subsidiaries of the Borrower.
Except as set forth on SCHEDULE 5.18 hereto, neither the Borrower nor any
Subsidiary of the Borrower is engaged in any joint venture or partnership with
any other person.
AFFIRMATIVE COVENANTS OF THE BORROWER.
- - --------------------------------------
The Borrower covenants and agrees (and to the extent applicable to any
Subsidiary, will insure like compliance by each such Subsidiary) that, so long
as any Loan or Note is outstanding or any Bank has any obligation to make any
Loans:
PUNCTUAL PAYMENT.
----------------
The Borrower will duly and punctually pay or cause to be paid the
principal and interest on the Loans, the Commitment
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<PAGE> 49
Fees and the Agent's fee provided for in this Credit Agreement, all in
accordance with the terms of this Credit Agreement and the Notes.
MAINTENANCE OF OFFICE.
---------------------
The Borrower will maintain its chief executive office in Mansfield,
Massachusetts, or at such other place in the United States of America as the
Borrower shall designate upon written notice to the Agent, where notices,
presentations and demands to or upon the Borrower in respect of the Loan
Documents may be given or made.
RECORDS AND ACCOUNTS.
--------------------
The Borrower will (i) keep, and cause each of its Subsidiaries to keep,
true and accurate records and books of account in which full, true and correct
entries will be made in accordance with generally accepted accounting
principles and (ii) maintain adequate accounts and reserves for all taxes
(including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves.
FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION.
--------------------------------------------------
The Borrower will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety (90)
days after the end of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its Subsidiaries, each as at the end of such
year, and the related consolidated statement of income and consolidated
statement of cash flow for such year, each setting forth in comparative form
the figures for the previous fiscal year and all such consolidated statements
to be in reasonable detail, prepared in accordance with generally accepted
accounting principles, and certified without qualification by the Borrower's
accountants or by other independent certified public accountants satisfactory
to the Agent, together with a written statement from such accountants to the
effect that they have read a copy of this Credit Agreement, and that, in making
the examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such accountants shall
have obtained knowledge of any then existing Default or Event of Default they
shall disclose in such statement any such Default or Event of Default;
-41-
<PAGE> 50
PROVIDED that such accountants shall not be liable to the Banks for failure to
obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than forty-five
(45) days after the end of each of the fiscal quarters of the Borrower, copies
of the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries, each as at the end of such quarter, and the related consolidated
statement of income and consolidated statement of cash flow for the portion of
the Borrower's fiscal year then elapsed, all in reasonable detail and prepared
in accordance with generally accepted accounting principles, together with a
certification by the principal financial or accounting officer of the Borrower
that the information contained in such financial statements fairly presents the
financial position of the Borrower and its Subsidiaries on the date thereof
(subject to year-end adjustments);
(c) simultaneously with the delivery of the financial statements referred
to in subsections (a) and (b) above, a statement certified by the principal
financial or accounting officer of the Borrower in substantially the form of
EXHIBIT C hereto and setting forth in reasonable detail computations evidencing
compliance with the covenants contained in Section 8 and (if applicable)
reconciliations to reflect changes in generally accepted accounting principles
since the Balance Sheet Date;
(d) within three (3) days after the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of the Borrower;
(e) as soon as practicable, but in any event not later than ninety (90)
days after the end of each fiscal year, budgets of the Borrower and its
Subsidiaries for the next fiscal year; and
(f) from time to time such other financial data and information as the
Agent or any Bank may reasonably request. All confidential information and
documents concerning the Borrower or any of its Subsidiaries supplied by the
Borrower to the Banks pursuant to the terms hereof will be held in confidence
by the Banks and the Banks shall not disclose such information and documents
except that the Borrower hereby authorizes each Bank to disclose any
information obtained
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<PAGE> 51
pursuant to this Credit Agreement or any other Loan Document (i) to any bank
regulatory authority, (ii) to any independent auditor or counsel or participant
or potential assignee or potential participant of such Bank, PROVIDED that
such independent auditor or counsel or participant or potential assignee or
potential participant enters into a confidentiality agreement with the Borrower
substantially similar to such Bank's agreement with the Borrower, and (iii) to
all other appropriate governmental regulatory authorities to the extent
required by such Bank by law or subpoena, but only to the extent permitted by
applicable laws and regulations, including those applying to classified
material.
NOTICES.
-------
DEFAULTS.
--------
The Borrower will promptly notify the Agent and each of the Banks in
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Credit Agreement
or any other note, evidence of indebtedness, indenture or other obligation to
which or with respect to which the Borrower or any of its Subsidiaries is a
party or obligor, whether as principal or surety, the Borrower shall forthwith
give written notice thereof to each of the Banks, describing the notice or
action and the nature of the claimed default.
ENVIRONMENTAL EVENTS.
--------------------
THE BORROWER WILL PROMPTLY GIVE NOTICE TO THE AGENT (I) OF ANY
VIOLATION OF ANY ENVIRONMENTAL LAW THAT THE BORROWER OR ANY OF ITS SUBSIDIARIES
REPORTS IN WRITING OR IS REPORTABLE BY SUCH PERSON IN WRITING (OR FOR WHICH ANY
WRITTEN REPORT SUPPLEMENTAL TO ANY ORAL REPORT IS MADE) TO ANY FEDERAL, STATE
OR LOCAL ENVIRONMENTAL AGENCY AND (II) UPON BECOMING AWARE THEREOF, OF ANY
INQUIRY, PROCEEDING, INVESTIGATION, OR OTHER ACTION, INCLUDING A NOTICE FROM
ANY AGENCY OF POTENTIAL ENVIRONMENTAL LIABILITY, OR ANY FEDERAL, STATE OR LOCAL
ENVIRONMENTAL AGENCY OR BOARD, THAT HAS THE POTENTIAL TO MATERIALLY AFFECT THE
ASSETS, LIABILITIES, FINANCIAL CONDITIONS OR OPERATIONS OF THE BORROWER OR ITS
SUBSIDIARIES, TAKEN AS A WHOLE.
Notice of Litigation and Judgments.
----------------------------------
The Borrower will, and will cause each of its Subsidiaries to, give notice
to the Agent in writing within fifteen (15) days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation or
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<PAGE> 52
proceedings affecting the Borrower or its Subsidiaries or to which the
Borrower or any of its Subsidiaries is or becomes a party involving an
uninsured claim against the Borrower or any of its Subsidiaries that could
reasonably be expected to have a materially adverse effect on the Borrower or
its Subsidiaries taken as a whole and stating the nature and status of such
litigation or proceedings. The Borrower will, and will cause each of its
Subsidiaries to, give notice to the Agent, in writing, in form and detail
satisfactory to the Agent, within thirty (30) days of any judgment not covered
by insurance, final or otherwise, against the Borrower or any of its
Subsidiaries in an amount in excess of $2,500,000.
CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES.
----------------------------------------------
The Borrower will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate existence, rights and
franchises and those of its Subsidiaries. It (i) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment,
(ii) will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Borrower
may be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (iii) will, and will
cause each of its Subsidiaries to, continue to engage primarily in the
businesses now conducted by them and in related businesses; PROVIDED that
nothing in this Section 6.6 shall prevent the Borrower from discontinuing the
operation and maintenance of any of its properties or those of its Subsidiaries
if such discontinuance is, in the judgment of the Borrower, desirable in the
conduct of its or their business and that do not in the aggregate materially
adversely affect the business of the Borrower and its Subsidiaries on a
consolidated basis.
INSURANCE.
---------
The Borrower will, and will cause each of its Subsidiaries to, maintain
with financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall be
in accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such terms,
in such forms and for such periods as may be reasonable and prudent and in
accordance with the general practices of businesses engaged in similar
activities in similar geographic areas.
-44-
<PAGE> 53
TAXES.
-----
The Borrower will, and will cause each of its Subsidiaries to, duly pay
and discharge, or cause to be paid and discharged, before the same shall become
overdue, all taxes, assessments and other governmental charges (other than
taxes, assessments and other governmental charges imposed by foreign
jurisdictions that in the aggregate are not material to the business or assets
of the Borrower on an individual basis or of the Borrower and its Subsidiaries
on a consolidated basis) imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by
law become a lien or charge upon any of its property; PROVIDED that any such
tax, assessment, charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by appropriate
proceedings and if the Borrower or such Subsidiary shall have set aside on its
books adequate reserves with respect thereto; and PROVIDED FURTHER that the
Borrower and each Subsidiary of the Borrower will pay all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security therefor.
INSPECTION OF PROPERTIES AND BOOKS, ETC.
---------------------------------------
GENERAL.
-------
The Borrower shall permit the Banks, through the Agent, to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries to
examine the books of account of the Borrower and its Subsidiaries (and to make
copies thereof and extracts therefrom), and to discuss the affairs, finances
and accounts of the Borrower and its Subsidiaries with, and to be advised as to
the same by, its and their officers, all at such reasonable times and intervals
as the Agent may reasonably request.
MANAGEMENT LETTERS.
------------------
The Borrower agrees that it will provide to the Agent and the Banks any
accountants' management letters which have been provided to the audit committee
of the Borrower's Board of Directors.
COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS.
------------------------------------------------------
The Borrower will, and will cause each of its Subsidiaries to, comply with
(i) the applicable laws and regulations wherever its business is conducted,
including all
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<PAGE> 54
Environmental Laws, the noncompliance with which might have a material adverse
effect on the business or financial condition of the Borrower and its
Subsidiaries, taken as a whole, (ii) the provisions of its charter documents
and by-laws, the noncompliance with which might have a material adverse effect
on the business or financial condition of the Borrower and its Subsidiaries,
taken as a whole, (iii) all agreements and instruments by which it or any of
its properties may be bound, the noncompliance with which might have a material
adverse effect on the business or financial condition of the Borrower and its
Subsidiaries, taken as a whole, and (iv) all applicable decrees, orders, and
judgments, the noncompliance with which might have a material adverse effect on
the business or financial condition of the Borrower and its Subsidiaries, taken
as a whole. If at any time while any Loan or Note is outstanding or any Bank
has any obligation to make Loans hereunder, any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any
government shall become necessary or required in order that the Borrower or any
of its Subsidiaries may fulfill any of its obligations hereunder, the Borrower
will immediately take or cause to be taken all reasonable steps within the
power of the Borrower or such Subsidiary to obtain such authorization, consent,
approval, permit or license and furnish the Banks with evidence thereof.
EMPLOYEE BENEFIT PLANS.
----------------------
The Borrower will (i) promptly upon filing the same with the Department of
Labor or Internal Revenue Service, furnish to the Agent a copy of the most
recent actuarial statement required to be submitted under Section 103(d) of
ERISA and Annual Report, Form 5500, with all required attachments, in respect
of each Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch,
furnish to the Agent any notice, report or demand sent or received in respect
of a Guaranteed Pension Plan under Section Section 302, 4041, 4042, 4043, 4063,
4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan, under
Section Section 4041A, 4202, 4219, 4242, or 4245 of ERISA.
USE OF PROCEEDS.
---------------
The Borrower will use the proceeds of the Loans solely for working
capital for itself and its Subsidiaries and for general corporate purposes
(including acquisitions permitted by this Credit Agreement), and Loans made on
the Closing Date will be used to pay in full all Obligations (as such terms is
defined in the Existing Credit Agreement) under the Existing Credit Agreement.
-46-
<PAGE> 55
FURTHER ASSURANCES.
------------------
The Borrower will, and will cause each of its Subsidiaries to, cooperate
with the Banks and the Agent and execute such further instruments and documents
as the Banks or the Agent shall reasonably request to carry out to their
satisfaction the transactions contemplated by this Credit Agreement and the
other Loan Documents.
CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
------------------------------------------
The Borrower covenants and agrees (and, to the extent applicable to any
Subsidiary, will insure like compliance by each such Subsidiary) that, so long
as any Loan or Note is outstanding or any Bank has any obligation to make any
Loans:
RESTRICTIONS ON INDEBTEDNESS.
----------------------------
The Borrower will not, and will not permit any of its Subsidiaries to,
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of the Loan
Documents;
(b) the Private Placement Debt and, subject to compliance with subsection
(k) hereof, any refinancing of the Private Placement Debt;
(c) current liabilities of the Borrower and its Subsidiaries incurred in
the ordinary course of business not incurred through (i) the borrowing of
money, or (ii) the obtaining of credit except for credit on an open account
basis customarily extended and in fact extended in connection with normal
purchases of goods and services;
(d) Indebtedness in respect of taxes, assessments, governmental charges
or levies and claims for labor, materials and supplies to the extent that
payment therefor shall not at the time be required to be made in accordance
with the provisions of Section 6.8;
(e) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower and its
Subsidiaries shall at the time in good faith be prosecuting an appeal or
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<PAGE> 56
proceedings for review and in respect of which a stay of execution shall have
been obtained pending such appeal or review;
(f) endorsements for collection, deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of business;
(g) Indebtedness existing on the date of this Credit Agreement and listed
and described on SCHEDULE 7.1 hereto and, subject to compliance with subsection
(k) hereof, any refinancing of such Indebtedness;
(h) Indebtedness of a Subsidiary of the Borrower to the Borrower or
any other Subsidiary of the Borrower, and Indebtedness of the Borrower to any
Subsidiary of the Borrower; and
(i) Indebtedness of the Borrower or any of its Subsidiaries in respect of
guaranties of the Indebtedness of an Affiliate of the Borrower or such
Subsidiary;
(j) Indebtedness of the Borrower and its Subsidiaries in respect of
reimbursement obligations under letters of credit, PROVIDED that at no time
shall the aggregate amount of all such reimbursement obligations outstanding
exceed $10,000,000; and
(k) other Indebtedness for borrowed money and credit received (including
Capitalized Leases) PROVIDED that at no time shall the Funded Debt Ratio exceed
0.55 to 1.
RESTRICTIONS ON LIENS.
---------------------
The Borrower will not, and will not permit any of its Subsidiaries to, (i)
create or incur or suffer to be created or incurred or to exist any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest
of any kind upon any of its property or assets of any character whether now
owned or hereafter acquired, or upon the income or profits therefrom; (ii)
transfer any of such property or assets or the income or profits therefrom for
the purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to payment of its general
creditors; (iii) acquire, or agree or have an option to acquire, any property
or assets upon conditional sale or other title retention or purchase money
security agreement, device or arrangement; (iv) suffer to exist for a period of
more than thirty (30) days after the same shall have been incurred any
Indebtedness or claim or demand against it that if unpaid might by law or upon
bankruptcy or
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<PAGE> 57
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or (v) sell, assign, pledge or otherwise transfer any accounts,
contract rights, general intangibles, chattel paper or instruments, with or
without recourse; PROVIDED that the Borrower and any Subsidiary of the Borrower
may create or incur or suffer to be created or incurred or to exist:
(a) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of the
Borrower to the Borrower;
(b) liens to secure taxes, assessments and other government charges in
respect of obligations or liens on properties to secure claims for labor,
material or supplies in respect of obligations which in each case are not
overdue or which are being contested in good faith and by appropriate
proceedings and for which the Borrower or such Subsidiary has set aside on its
books adequate reserves with respect hereto;
(c) deposits or pledges made in connection with, or to secure payment of,
workmen's compensation, unemployment insurance, old age pensions or other
social security obligations;
(d) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 7.1(e);
(e) liens of carriers, warehousemen, mechanics and materialmen, and other
like liens on properties, in existence less than 120 days from the date of
creation thereof in respect of obligations not overdue;
(f) encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under leases
to which the Borrower or a Subsidiary of the Borrower is a party, and other
minor liens or encumbrances none of which in the opinion of the Borrower
interferes materially with the use of the property affected in the ordinary
conduct of the business of the Borrower and its Subsidiaries, which defects do
not individually or in the aggregate have a materially adverse effect on the
business of the Borrower individually or of the Borrower and its Subsidiaries
on a consolidated basis;
(g) liens existing on the date hereof and listed on SCHEDULE 7.2 hereto;
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(h) liens on assets acquired by the Borrower or any Subsidiary, or liens
on the assets of any new Subsidiary acquired by the Borrower or any Subsidiary,
in each case in accordance with the provisions of Section 7.5.1 so long as such
liens were not placed on such assets in connection with or in anticipation of
the acquisition of such assets, or such new Subsidiary, by the Borrower or any
Subsidiary;
(i) purchase money security interests in or purchase money mortgages
on real or personal property acquired after the date hereof to secure purchase
money Indebtedness, so long as the aggregate amount of such Indebtedness does
not exceed $20,000,000, incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or personal
property so acquired; and
(j) liens on the assets of the Borrower or any of its Subsidiaries to
secure reimbursement obligations under letters of credit, PROVIDED that at no
time shall the aggregate amount of all such reimbursement obligations
outstanding exceed $10,000,000.
RESTRICTIONS ON INVESTMENTS.
---------------------------
The Borrower will not, and will not permit any of its Subsidiaries to,
make or permit to exist or to remain outstanding any Investment except
Investments in:
(a) marketable direct or guaranteed obligations of the United States of
America that mature within one (1) year from the date of purchase by the
Borrower or any of its Subsidiaries;
(b) direct obligations of the Dominion of Canada, the payment of which
constitutes a full faith and credit obligation of the Dominion of Canada
maturing in twelve months or less from the date of acquisition thereof,
PROVIDED that (i) the aggregate amount thereof shall not exceed $10,000,000 at
any time outstanding and (ii) at the time of acquisition by the Borrower or any
of its Subsidiaries such Investment is accorded a rating of AA+ or better by
Standard & Poor's Corporation or Aa-1 or better by Moody's Investors Service,
Inc.;
(c) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks having total assets in excess of
$1,000,000,000;
(d) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the
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laws of the United States of America or any state thereof that at the time of
purchase have been rated and the ratings for which are not less than "P 2" if
rated by Moody's Investors Services, Inc., and not less than "A 2" if rated by
Standard and Poor's;
(e) Investments existing on the date hereof and listed on SCHEDULE 7.3
hereto;
(f) Investments with respect to Indebtedness permitted by Section 7.1(h);
(g) Investments consisting of Investments by the Borrower in Subsidiaries
of the Borrower, and Investments by Subsidiaries of the Borrower in other
Subsidiaries of the Borrower;
(h) Investments in the form of guaranties of the Indebtedness of an
Affiliate of the Borrower or any of its Subsidiaries to the extent the
Indebtedness so guarantied is permitted by Section 7.1;
(i) Investments in certificates of deposit maturing within one year from
the date of issuance thereof issued by a bank or trust company organized under
laws other than those of the United States or any state thereof, having
capital, surplus and undivided profits aggregating at least $100,000,000 and
having a credit rating of B/C or better and a "legal rating" of 3 or better by
IBCA Banking Analysis Ltd.;
(j) Investments in new Subsidiaries of the Borrower acquired in
accordance with the provisions of Section 7.5.1;
(k) Investments consisting of loans and advances in the ordinary course
of business to officers, directors and employees of the Borrower or any of its
Subsidiaries for expenses (including moving expenses related to a transfer)
incidental to carrying on the business of the Borrower or any of its
Subsidiaries; and
(l) other Investments not to exceed $10,000,000 in the aggregate.
DISTRIBUTIONS.
-------------
After or during the continuance of a Default or an Event of Default,
neither the Borrower will, nor will any of its Subsidiaries, make any
Distributions, other than Distributions by Subsidiaries of the Borrower to the
Borrower (whether or not such Distribution is passed through an intermediate
Subsidiary of the Borrower).
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<PAGE> 60
MERGER, CONSOLIDATION.
---------------------
MERGERS AND ACQUISITIONS.
------------------------
The Borrower will not, and will not permit any of its Subsidiaries to,
become a party to any merger or consolidation or acquire the stock or assets of
any Person (other than the acquisition of assets in the ordinary course of
business), except (a) the merger or consolidation of one or more of the
Subsidiaries of the Borrower with and into the Borrower, or the merger or
consolidation of two or more Subsidiaries of the Borrower, or (b) the
acquisition (whether of stock or assets or by means of a merger) of lines of
business complementary to the business of the Borrower or any Subsidiary so
long as the Borrower can demonstrate to the Agent and the Banks that on a PRO
FORMA basis if such acquisition had been consummated at the beginning of the
period covering the most recently completed four fiscal quarters of the
Borrower, (i) the Cash Flow Coverage Ratio for such four quarters would not be
less than 1.30 to 1 and (ii) the Funded Debt Ratio for such four quarters would
not exceed 0.55 to 1.
DISPOSITION OF ASSETS.
---------------------
The Borrower will not, and will not permit any of its Subsidiaries to,
become a party to or agree to or effect any material disposition of assets,
other than the disposition of assets in the ordinary course of business,
consistent with past practices; PROVIDED THAT, the Borrower and its
Subsidiaries may dispose of (a) the assets listed on SCHEDULE 7.5.2 attached
hereto and (b) other assets outside the ordinary course of business PROVIDED,
THAT (i) the Total Commitment shall be reduced by an amount equal to the amount
by which (A) the aggregate net proceeds of such asset dispositions (after
payment of all costs and expenses of such sale and the payment and satisfaction
of all liens on such assets) disposed of after the date hereof (excluding the
assets listed on SCHEDULE 7.5.2 attached hereto) exceeds (B) $10,000,000, and
(ii) during the continuance of a Default or an Event of Default the net
proceeds of such asset dispositions (whether under clause (a) or (b) hereof)
shall be used to repay outstanding amounts of the Revolving Credit Loans as
provided by Section 11.4 hereof.
SALE AND LEASEBACK.
------------------
The Borrower will not, and will not permit any of its Subsidiaries to,
enter into any arrangement, directly or indirectly, whereby the Borrower or
any Subsidiary of the Borrower
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<PAGE> 61
shall sell or transfer any property owned by it in order then or thereafter to
lease such property or lease other property that the Borrower or any Subsidiary
of the Borrower intends to use for substantially the same purpose as the
property being sold or transferred ("Sale and Leaseback Arrangements").
Notwithstanding the foregoing, such Sale and Leaseback Arrangements shall be
permitted, PROVIDED, that after giving effect to any such Sale and Leaseback
Arrangements the Funded Debt Ratio does not exceed 0.55 to 1.
COMPLIANCE WITH ENVIRONMENTAL LAWS.
----------------------------------
The Borrower will not, and will not permit any of its Subsidiaries to, (i) use
any of the Real Estate or any portion thereof for the handling, processing,
storage or disposal of Hazardous Substances except in material compliance with
all Environmental Laws, (ii) cause or permit to be located on any of the Real
Estate any underground tank or other underground storage receptacle for
Hazardous Substances except in material compliance with all Environmental Laws,
(iii) generate any Hazardous Substances on any of the Real Estate except in
material compliance with all Environmental Laws, (iv) conduct any activity at
any Real Estate or use any Real Estate in any manner so as to cause a release
(i.e. releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) or threatened
release of Hazardous Substances on, upon or into the Real Estate in material
violation of any Environmental Laws or (v) otherwise conduct any activity at
any Real Estate or use any Real Estate in any manner that would violate any
Environmental Law in any material respect or bring such Real Estate in material
violation of any Environmental Law.
EMPLOYEE BENEFIT PLANS.
----------------------
Neither the Borrower nor any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code which could result in a material
liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA, whether
or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent which,
or terminate any Guaranteed Pension Plan in a manner which, could result in the
imposition of a lien or encumbrance on the assets of the Borrower or any of its
Subsidiaries pursuant to Section 302(f) or Section 4068 of ERISA; or
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<PAGE> 62
(d) permit or take any action which would result in the aggregate benefit
liabilities (with the meaning of Section 4001 of ERISA) of all Guaranteed
Pension Plans exceeding the value of the aggregate assets of such Plans,
disregarding for this purpose the benefit liabilities and assets of any such
Plan with assets in excess of benefit liabilities.
FINANCIAL COVENANTS OF THE BORROWER.
- - -----------------------------------
CASH FLOW COVERAGE.
------------------
As of the end of any fiscal quarter the Borrower will not permit the
Cash Flow Coverage Ratio for the period of four (4) fiscal quarters then ended
to be less than 1.30 to 1.
INTEREST COVERAGE.
-----------------
As of the end of any fiscal quarter, the Borrower will not permit the
ratio of (i) the sum of Earnings Before Interest and Taxes plus Consolidated
Operating Lease Expense, to (ii) the sum of Consolidated Total Interest Expense
PLUS Consolidated Operating Lease Expense, in each case for the period of four
(4) fiscal quarters then ended, to be less than 1.75 to 1.
CURRENT RATIO.
-------------
The Borrower will not permit the ratio of Consolidated Current Assets to
Consolidated Current Liabilities, to be less than 2.0 to 1 at the end of any
fiscal quarter of the Borrower.
FUNDED DEBT RATIO.
-----------------
The Borrower will not permit the Funded Debt Ratio to exceed 0.55 to 1 at
any time.
CONSOLIDATED TANGIBLE NET WORTH.
-------------------------------
The Borrower will not at any time permit Consolidated Tangible Net Worth
to be less than the sum of (i) $155,000,000, PLUS (ii) on a cumulative basis,
50% of positive Consolidated Net Income for each complete fiscal year
subsequent to the fiscal year ended December 31, 1993, PLUS (iii) the proceeds
of any issuance by the Borrower or any of its Subsidiaries of shares of capital
stock or rights to purchase shares of capital stock, other than shares of
capital stock of any such Subsidiary issued to the Borrower or any other
Subsidiary of the Borrower.
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<PAGE> 63
CLOSING CONDITIONS.
- - ------------------
The obligations of the Banks to make the initial Revolving Credit Loans
shall be subject to the satisfaction of the following conditions precedent:
LOAN DOCUMENTS.
--------------
Each of the Loan Documents shall have been duly executed and delivered
by the respective parties thereto, shall be in full force and effect and shall
be in form and substance satisfactory to each of the Banks. Each Bank shall
have received a fully executed copy of each such document.
CERTIFIED COPIES OF CHARTER DOCUMENTS.
-------------------------------------
Each of the Banks shall have received from the Borrower a copy, certified
by a duly authorized officer of the Borrower to be true and complete on the
Closing Date, of each of (i) its charter or other incorporation documents as in
effect on such date of certification, and (ii) its by-laws as in effect on such
date.
CORPORATE ACTION.
----------------
All corporate action necessary for the valid execution, delivery and
performance by the Borrower of this Credit Agreement and the other Loan
Documents to which it is or is to become a party shall have been duly and
effectively taken, and evidence thereof satisfactory to the Banks shall have
been provided to each of the Banks.
INCUMBENCY CERTIFICATE.
----------------------
Each of the Banks shall have received from the Borrower an incumbency
certificate, dated as of the Closing Date, signed by a duly authorized officer
of the Borrower, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (i) to sign, in the name and on behalf of
the Borrower each of the Loan Documents to which the Borrower is or is to
become a party; (ii) to make Loan Requests and Conversion Requests; and (iii)
to give notices and to take other action on its behalf under the Loan
Documents.
OPINIONS OF COUNSEL.
-------------------
Each of the Banks and the Agent shall have received a favorable opinion
addressed to the Banks and the Agent, dated as of the Closing Date, in form and
substance satisfactory to
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the Banks and the Agent and substantially in the form of EXHIBIT D hereof, from
Hale & Dorr, counsel to the Borrower.
PAYMENT OF FEES.
---------------
The Borrower shall have paid to the Agent for the account of the Banks or
the Agent, as appropriate, the closing fees and the Agent's fee pursuant to
Section Section 4.1. and 4.2.
DISCHARGE OF LIENS; PAYOFF LETTER.
---------------------------------
The Agent shall have received a payoff letter indicating the amount of the
obligations of the Borrower under the Existing Credit Agreement to be
discharged on the Closing Date. Upon the discharge of such obligations the
Banks and the holders of the Private Placement Debt shall direct the Security
Trustee (as such term is defined in the Security Agreement and Trust Indenture)
to forthwith execute and deliver for filing all termination statements and take
such other actions as may be necessary to discharge all security interests and
mortgages granted by the Borrower in favor of the Security Trustee in respect
of the Existing Credit Agreement and the Security Agreement and Trust
Indenture.
PAYMENT OF EXISTING OBLIGATIONS.
-------------------------------
Simultaneously with the borrowing of the initial Loans the Borrower
shall pay in full all obligations under the Existing Credit Agreement.
CONDITIONS TO ALL BORROWINGS.
- - ----------------------------
The obligations of the Banks to make any Loan whether on or after the
Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
REPRESENTATIONS TRUE; NO EVENT OF DEFAULT.
-----------------------------------------
Each of the representations and warranties of any of the Borrower and its
Subsidiaries contained in this Credit Agreement, the other Loan Documents or in
any document or instrument delivered pursuant to or in connection with this
Credit Agreement shall be true as of the date as of which they were made and
shall also be true at and as of the time of the making of such Loan, with the
same effect as if made at and as of that time (except to the extent of changes
resulting from transactions contemplated or permitted by this Credit Agreement
and the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and to the
extent that
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<PAGE> 65
such representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing. The Agent
shall have received a certificate of the Borrower signed by an authorized
officer of the Borrower to such effect.
NO LEGAL IMPEDIMENT.
-------------------
No change shall have occurred in any law or regulations thereunder or
interpretations thereof that in the reasonable opinion of any Bank would make
it illegal for such Bank to make such Loan.
GOVERNMENTAL REGULATION.
-----------------------
Each Bank shall have received such statements in substance and form
reasonably satisfactory to such Bank as such Bank shall require for the purpose
of compliance with any applicable regulations of the Comptroller of the
Currency or the Board of Governors of the Federal Reserve System.
PROCEEDINGS AND DOCUMENTS.
-------------------------
All proceedings in connection with the transactions contemplated by this
Credit Agreement, the other Loan Documents and all other documents incident
thereto shall be satisfactory in substance and in form to the Banks and to the
Agent and the Agent's Special Counsel, and the Banks, the Agent and such
counsel shall have received all information and such counterpart originals or
certified or other copies of such documents as the Agent may reasonably
request.
EVENTS OF DEFAULT; ACCELERATION; ETC.
- - ------------------------------------
EVENTS OF DEFAULT AND ACCELERATION.
----------------------------------
If any of the following events ("Events of Default" or, if the giving of
notice or the lapse of time or both is required, then, prior to such notice or
lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of any of the Loans when
the same shall become due and payable, whether at the stated date of maturity
or any accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the Loans, the
Commitment Fees, the Agent's fee, or other sums due hereunder or under any of
the other Loan Documents, within five (5) days after the same shall become due
and payable,
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<PAGE> 66
whether at the stated date of maturity or any accelerated date of maturity or
at any other date fixed for payment;
(c) (i) the Borrower shall fail to comply with any of the covenants
contained in Section Section 6, 7 or 8 (other than Section Section 6.10, 6.11
or 7.7), or (ii) the Borrower shall fail to comply with any of the covenants
contained in Section Section 6.10, 6.11 or 7.7 and such failure shall not be
remedied within thirty (30) days after the earlier of (A) the day on which the
Borrower first obtains knowledge of such default, or (B) the day which is
fifteen (15) days after written notice of such failure has been given to the
Borrower by the Agent;
(d) the Borrower or any of its Subsidiaries shall fail to perform any
term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this Section 11) for fifteen
(15) days after written notice of such failure has been given to the Borrower
by the Agent;
(e) any material representation or warranty of the Borrower in this
Credit Agreement or any of the other Loan Documents or in any other document or
instrument delivered pursuant to or in connection with this Credit Agreement
shall prove to have been false in any material respect upon the date when made
or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, (i) the Private Placement
Debt, (ii) any other obligation for borrowed money or credit received in an
aggregate amount of $2,000,000 or more, or (iii) any obligation in respect of
any Capitalized Leases in an aggregate amount of $2,000,000 or more, or fail to
observe or perform any material term, covenant or agreement contained in any
agreement by which it is bound, (x) evidencing or securing the Private
Placement Debt, (y) evidencing or securing borrowed money or credit received in
an aggregate amount of $5,000,000 or more, or (z) in respect of any Capitalized
Leases in an aggregate amount of $5,000,000 or more, for such period of time as
would permit (assuming the giving of appropriate notice if required) the holder
or holders thereof or of any obligations issued thereunder to accelerate the
maturity thereof;
(g) the Borrower or any of its Subsidiaries shall make an assignment for
the benefit of creditors, or admit in writing its inability to pay or generally
fail to pay its debts as they mature or become due, or shall petition or apply
for the appointment of a trustee or other custodian, liquidator or receiver of
the Borrower or any of its Subsidiaries or of any substantial part of the
assets of the
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Borrower or any of its Subsidiaries or shall commence any case or other
proceeding relating to the Borrower or any of its Subsidiaries under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or hereafter
in effect, or shall take any action to authorize or in furtherance of any of
the foregoing, or if any such petition or application shall be filed or any
such case or other proceeding shall be commenced against the Borrower or any of
its Subsidiaries and the Borrower or any of its Subsidiaries shall indicate its
approval thereof, consent thereto or acquiescence therein;
(h) a decree or order is entered appointing any such trustee, custodian,
liquidator or receiver or adjudicating the Borrower or any of its Subsidiaries
bankrupt or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of the
Borrower or any Subsidiary of the Borrower in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and unstayed,
for more than thirty days, whether or not consecutive, any final judgment
against the Borrower or any of its Subsidiaries that, with other outstanding
final judgments, undischarged, against the Borrower or any of its Subsidiaries
exceeds in the aggregate $1,000,000;
(j) if any of the Loan Documents shall be canceled, terminated, revoked
or rescinded otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Banks, or any
action at law, suit or in equity or other legal proceeding to cancel, revoke or
rescind any of the Loan Documents shall be commenced by or on behalf of the
Borrower or any of its Subsidiaries party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory authority or
agency of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance with the
terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Majority Banks shall have determined in their
reasonable discretion that such event reasonably could be expected to result in
liability of the Borrower or any of its Subsidiaries to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $2,000,000 and such
event in the circumstances occurring reasonably could constitute grounds for
the
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<PAGE> 68
termination of such Guaranteed Pension Plan by the PBGC or for the appointment
by the appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan; or a trustee shall have been appointed by the United
States District Court to administer such Guaranteed Pension Plan; or the PBGC
shall have instituted proceedings to terminate such Guaranteed Pension Plan,
which have not been dismissed within thirty (30) days after the commencement
thereof;
(l) the Borrower or any of its Subsidiaries shall be enjoined, restrained
or in any way prevented by the order of any court or any administrative or
regulatory agency from conducting any material part of its business and such
order shall continue in effect for more than thirty (30) days; and
(m) any person or group of persons (within the meaning of Section 13 or
14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 30% or more of the
outstanding shares of common stock of the Borrower; or, during any period of
twelve consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period (together with any new directors whose
election by such Board of Directors was approved by a vote of 66-2/3% of the
Directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) shall cease to constitute a majority of the board of directors of the
Borrower; then, and in any such event, so long as the same may be continuing,
the Agent may, and upon the request of the Majority Banks shall, by notice in
writing to the Borrower declare all amounts owing with respect to this Credit
Agreement, the Notes and any other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower; PROVIDED that in the event of any Event of Default
specified in Section 11.1(g) or 11.1(h) all such amounts shall become
immediately due and payable automatically and without any requirement of notice
from the Agent or any Bank.
TERMINATION OF COMMITMENTS.
--------------------------
If any one or more of the Events of Default specified in Section 11.1(g),
or Section 11.1(h) shall occur, any unused portion of the credit hereunder
shall forthwith terminate and each of the Banks shall be relieved of all
obligations to make Loans to the Borrower. If any other Event of Default shall
have occurred and be continuing, the Agent may and, upon the request of the
Majority Banks, shall, by notice to the
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Borrower, terminate the unused portion of the credit hereunder, and upon such
notice being given such unused portion of the credit hereunder shall terminate
immediately and each of the Banks shall be relieved of all further obligations
to make Loans. If any such notice is given to the Borrower the Agent will
forthwith furnish a copy thereof to each of the Banks. No termination of the
credit hereunder shall relieve the Borrower of any of the Obligations or any of
its existing obligations to any of the Banks arising under other agreements or
instruments.
REMEDIES.
--------
In case any one or more of the Events of Default shall have occurred and
be continuing, and whether or not the Banks shall have accelerated the maturity
of the Loans pursuant to Section 11.1, each Bank, if owed any amount with
respect to the Loans, may, with the consent of the Majority Banks but not
otherwise, proceed to protect and enforce its rights by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank are
evidenced, including as permitted by applicable law the obtaining of the EX
PARTE appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any
Bank or the Agent or the holder of any Note is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or any other provision of law.
DISTRIBUTION OF PROCEEDS.
------------------------
In the event that, following the occurrence or during the continuance of
any Default or Event of Default, the Agent or any Bank, as the case may be,
receives any monies in connection with the enforcement of the Loan Documents,
such monies shall be distributed for application as follows:
(a) First, to the payment of all obligations in such order or preference
as the Majority Banks may determine; PROVIDED, HOWEVER, that (i) distributions
in respect of such obligations shall be made PARI PASSU among Obligations with
respect to the Agent's fee payable under Section 4.2 and all other Obligations
and (ii) Obligations owing to the Banks with respect to each type of Obligation
such as interest, principal, fees and expenses, shall be made among the Banks
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PRO RATA in accordance with the outstanding principal in respect of the Loans;
and PROVIDED, FURTHER, that the Agent may in its discretion make proper
allowance to take into account any Obligations not then due and payable; and
(b) Second, the excess, if any, shall be returned to the Borrower or to
such other Persons as are entitled thereto.
SETOFF.
- - ------
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank
against the payment of Obligations and any and all other liabilities, direct,
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (i) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
this Credit Agreement or the Notes held by such Bank, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness of the
Borrower hereunder, and (ii) if such Bank shall receive from the Borrower,
whether by voluntary payment, exercise of the right of setoff, counterclaim,
cross action, enforcement of the claim evidenced by this Credit Agreement or
the Notes held by such Bank, by proceedings against the Borrower at law or in
equity or by proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall retain and apply
to the payment of the Borrower's Indebtedness to the Bank hereunder, any amount
in excess of its ratable portion of the payments received by all of the Banks,
such Bank will make such disposition and arrangements with the other Banks
with respect to such excess, either by way of distribution, PRO TANTO
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving, in respect the Indebtedness to it hereunder of the Borrower, such
Bank's proportionate payment as contemplated by this Credit Agreement; PROVIDED
that if all or any part of such excess payment is thereafter recovered from
such Bank, such disposition and arrangements shall be rescinded and the amount
restored to the extent of such recovery, but without interest.
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THE AGENT.
- - ---------
AUTHORIZATION.
-------------
The Agent is authorized to take such action on behalf of each of the Banks
and to exercise all such powers as are hereunder and under any of the other
Loan Documents and any related documents delegated to the Agent, together with
such powers as are reasonably incident thereto, PROVIDED that no duties or
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Agent. The relationship between the Agent and the
Banks is and shall be that of agent and principal only, and nothing contained
in this Credit Agreement or any of the other Loan Documents shall be construed
to constitute the Agent as a trustee for any Bank.
EMPLOYEES AND AGENTS.
--------------------
The Agent may exercise its powers and execute its duties by or through
employees or agents and shall be entitled to take, and to rely on, advice of
counsel concerning all matters pertaining to its rights and duties under this
Credit Agreement and the other Loan Documents. The Agent may utilize the
services of such Persons as the Agent in its sole discretion may reasonably
determine, and all reasonable fees and expenses of any such Persons shall be
paid by the Borrower.
NO LIABILITY.
------------
Neither the Agent nor any of its shareholders, directors, officers or
employees nor any other Person assisting them in their duties nor any agent or
employee thereof, shall be liable for any waiver, consent or approval given or
any action taken, or omitted to be taken, in good faith by it or them hereunder
or under any of the other Loan Documents, or in connection herewith or
therewith, or be responsible for the consequences of any oversight or error of
judgment whatsoever, except that the Agent or such other Person, as the case
may be, may be liable for losses due to its willful misconduct or gross
negligence.
NO REPRESENTATIONS.
------------------
The Agent shall not be responsible for the execution or validity or
enforceability of this Credit Agreement, the Notes, any of the other Loan
Documents or any instrument at anytime constituting, or intended to constitute,
collateral security for the Notes, or for the value of any such collateral
security or for the validity, enforceability or
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collectability of any such amounts owing with respect to the Notes, or for any
recitals or statements, warranties or representations made herein or in any of
the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrower or any of its Subsidiaries, or
be bound to ascertain or inquire as to the performance or observance of any of
the terms, conditions, covenants or agreements herein or in any instrument at
any time constituting, or intended to constitute, collateral security for the
Notes or to inspect any of the properties, books or records of the Borrower or
any of its Subsidiaries. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower or any
holder of any of the Notes shall have been duly authorized or is true, accurate
and complete. The Agent has not made nor does it now make any representations
or warranties, express or implied, nor does it assume any liability to the
Banks, with respect to the credit worthiness or financial conditions of the
Borrower or any of its Subsidiaries. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
upon such information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
PAYMENTS.
--------
PAYMENTS TO AGENT.
-----------------
A payment by the Borrower to the Agent hereunder or any of the other Loan
Documents for the account of any Bank shall constitute a payment to such Bank.
The Agent agrees promptly to distribute to each Bank such Bank's PRO RATA share
of payments received by the Agent for the account of the Banks except as
otherwise expressly provided herein or in any of the other Loan Documents.
DISTRIBUTION BY AGENT.
---------------------
If in the opinion of the Agent the distribution of any amount received by
it in such capacity hereunder, under the Notes or under any of the other Loan
Documents might involve it in liability, it may refrain from making
distribution until its right to make distribution shall have been adjudicated
by a court of competent jurisdiction. If a court of competent jurisdiction
shall adjudge that any amount received and distributed by the Agent is to be
repaid, each Person to whom any such distribution shall have been made shall
either repay to the Agent its proportionate share of the amount so adjudged to
be repaid or shall pay over the same in such manner and to such Persons as
shall be determined by such court.
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DELINQUENT BANKS.
----------------
Notwithstanding anything to the contrary contained in this Credit
Agreement or any of the other Loan Documents, any Bank that fails (i) to make
available to the Agent its PRO RATA share of any Loan or (ii) to comply with
the provisions of Section 12 with respect to making dispositions and
arrangements with the other Banks, where such Bank's share of any payment
received, whether by setoff or otherwise, is in excess of its PRO RATA share of
such payments due and payable to all of the Banks, in each case as, when and to
the full extent required by the provisions of this Credit Agreement, shall be
deemed delinquent (a "Delinquent Bank") and shall be deemed a Delinquent Bank
until such time as such delinquency is satisfied. A Delinquent Bank shall be
deemed to have assigned any and all payments due to it from the Borrower,
whether on account of outstanding Loans, interest, fees or otherwise, to the
remaining nondelinquent Banks for application to, and reduction of, their
respective PRO RATA shares of all outstanding Loans. The Delinquent Bank
hereby authorizes the Agent to distribute such payments to the nondelinquent
Banks in proportion to their respective PRO RATA shares of all outstanding
Loans. A Delinquent Bank shall be deemed to have satisfied in full a
delinquency when and if, as a result of application of the assigned payments to
all outstanding Loans of the nondelinquent Banks, the Banks' respective pro
rata shares of all outstanding Loans have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
HOLDERS OF NOTES.
----------------
The Agent may deem and treat the payee of any Note as the absolute owner
thereof for all purposes hereof until it shall have been furnished in writing
with a different name by such payee or by a subsequent holder.
INDEMNITY.
---------
The Banks ratably agree hereby to indemnify and hold harmless the Agent
from and against any and all claims, actions and suits (whether groundless or
otherwise), losses, damages, costs, expenses (including any expenses for which
the Agent has not been reimbursed by the Borrower as required by Section 14),
and liabilities of every nature and character arising out of or related to this
Credit Agreement, the Notes, or any of the other Loan Documents or the
transactions contemplated or evidenced hereby or thereby, or the Agent's
actions taken hereunder or thereunder, except to the extent that any of the
same shall be directly caused by the Agent's willful misconduct or gross
negligence.
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AGENT AS BANK.
-------------
In its individual capacity, FNBB shall have the same obligations and the
same rights, powers and privileges in respect to its Commitment, the Revolving
Credit Loans made by it, and as the holder of any of the Notes, as it would
have were it not also the Agent.
RESIGNATION.
-----------
The Agent may resign at any time by giving sixty (60) days prior written
notice thereof to the Banks and the Borrower. Upon any such resignation, the
Majority Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Banks and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Unless a Default or Event of Default shall have occurred and be
continuing, any such successor Agent (whether appointed under the second or
third sentence of this Section 13.9) shall be reasonably acceptable to the
Borrower. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation, the provisions
of this Credit Agreement and the other Loan Documents shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.
NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT.
----------------------------------------------
Each Bank hereby agrees that, upon learning of the existence of a Default
or an Event of Default, it shall promptly notify the Agent thereof. The Agent
hereby agrees that upon receipt of any notice under this Section 13.10 it shall
promptly notify the other Banks of the existence of such Default or Event of
Default.
EXPENSES.
- - --------
The Borrower agrees to pay (i) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (ii) any taxes (including any
interest and
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penalties in respect thereto) payable by the Agent or any of the Banks (other
than taxes based upon the Agent's or any Bank's net income) on or with respect
to the transactions contemplated by this Credit Agreement (the Borrower hereby
agreeing to indemnify the Agent and each Bank with respect thereto), (iii) the
reasonable fees, expenses and disbursements of the Agent's Special Counsel or
any local counsel to the Agent incurred in connection with the preparation,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, each closing hereunder, and amendments, modifications,
approvals, consents or waivers hereto or hereunder, (iv) the fees, expenses and
disbursements of the Agent incurred by the Agent in connection with the
preparation, administration or interpretation of the Loan Documents and other
instruments mentioned herein, and (v) all reasonable out-of-pocket expenses
(including without limitation reasonable attorneys' fees and costs, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Bank or the Agent in connection
with (A) the enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or any of its Subsidiaries or the administration
thereof after the occurrence of a Default or Event of Default and (B) any
litigation, proceeding or dispute whether arising hereunder or otherwise, in
any way related to any Bank's or the Agent's relationship with the Borrower or
any of its Subsidiaries. The covenants of this Section 14 shall survive
payment or satisfaction of payment of amounts owing with respect to the Loans
hereunder.
INDEMNIFICATION.
- - ---------------
The Borrower agrees to indemnify and hold harmless the Agent and the Banks
from and against any and all claims, actions and suits whether groundless or
otherwise, and from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of this Credit Agreement or
any of the other Loan Documents or the transactions contemplated hereby
including, without limitation, (i) any actual or proposed use by the Borrower
or any of its Subsidiaries of the proceeds of any of the Loans, (ii) the
Borrower or any of its Subsidiaries entering into or performing this Credit
Agreement or any of the other Loan Documents or (iii) with respect to the
Borrower and its Subsidiaries and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or threatened release of any
Hazardous Substances or any action, suit, proceeding or investigation brought
or threatened with respect to any Hazardous Substances
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(including, but not limited to claims with respect to wrongful death, personal
injury or damage to property), in each case including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding. In litigation, or the
preparation therefor, the Banks and the Agent shall be entitled to select their
own counsel and, in addition to the foregoing indemnity, the Borrower agrees to
pay promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower under this Section 15 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained in this Section 15
shall survive payment of satisfaction in full of all other obligations.
SURVIVAL OF COVENANTS, ETC.
- - --------------------------
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and the
Agent, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Banks of the Loans, as herein
contemplated, and shall continue in full force and effect so long as any amount
due under this Credit Agreement or the Notes or any of the other Loan Documents
remains outstanding or any Bank has any obligation to make any Loans, and for
such further time as may be otherwise expressly specified in this Credit
Agreement. All statements contained in any certificate or other paper
delivered to any Bank or the Agent at any time by the Borrower or any of its
Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrower or such Subsidiary hereunder.
ASSIGNMENT AND PARTICIPATION.
- - ----------------------------
CONDITIONS TO ASSIGNMENT BY BANKS.
---------------------------------
Except as provided herein, each Bank may assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations under this
Credit Agreement (including all or a portion of its Commitment Percentage, the
Commitment, and the same portion of the Revolving Credit Loans at the time
owing to it) and the Notes held by it; PROVIDED that (i) each of the Agent and
the Borrower shall have given its prior
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written consent to such assignment, which consent will not be unreasonably
withheld or delayed PROVIDED, however that no consent of the Borrower shall be
required upon the occurrence or during the continuance of a Default or Event of
Default, (ii) each such assignment shall be of a constant, and not a varying,
percentage of the assigning Bank's rights and obligations under this Credit
Agreement, (iii) each assignment shall be in a minimum amount of $6,000,000 or
a larger integral multiple of $1,000,000, (iv) each Bank which is a bank on the
date hereof shall retain, free of any such assignment, an amount of its
Commitment of not less than $7,000,000, PROVIDED, however that no such
restrictions shall apply upon the occurrence or during the continuance of a
Default or Event of Default, and (v) the parties to such assignment shall
execute and deliver to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and Acceptance, substantially in the form of EXHIBIT E
hereto (an "Assignment and Acceptance"), together with any Notes subject to
such assignment. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (i) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of
a Bank hereunder, and (ii) the assigning Bank shall, to the extent provided in
such assignment and upon payment to the Agent of the registration fee referred
to in Section 17.3, be released from its obligations under this Credit
Agreement.
CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
--------------------------------------------------------------
By executing and delivering an Assignment and Acceptance, the parties to
the assignment thereunder confirm to and agree with each other and the other
parties hereto as follows:
(a) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, the assigning Bank makes no representation or warranty, express
or implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents or any
other instrument or document furnished pursuant hereto or the attachment,
perfection or priority of any security interest or mortgage;
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(b) the assigning Bank makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower and
its Subsidiaries or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the Borrower and
its Subsidiaries or any other Person primarily or secondarily liable in respect
of any of the Obligations of any of their obligations under this Credit
Agreement or any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements
referred to in Section 5.4 and Section 6.4 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto;
(g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Credit Agreement are
required to be performed by it as a Bank; and
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.
REGISTER.
--------
The Agent shall maintain a copy of each Assignment and Acceptance
delivered to it and a register or similar list (the "Register") for the
recordation of the names and addresses of the Banks and the Revolving Credit
Commitment Percentage of, and principal amount of the Revolving Credit
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Loans owing to the Banks from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrower, the Agent
and the Banks may treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Credit Agreement. The Register shall
be available for inspection by the Borrower and the Banks at any reasonable
time and from time to time upon reasonable prior notice. Upon each such
recordation, the assigning Bank agrees to pay to the Agent a registration fee
in the sum of $2,500.
NEW NOTES.
---------
Upon its receipt of an Assignment and Acceptance executed by the parties
to such assignment, together with each Note subject to such assignment, the
Agent shall (i) record the information contained therein in the Register, and
(ii) give prompt notice thereof to the Borrower and the Banks (other than the
assigning Bank). Within five (5) Business Days after receipt of such notice,
the Borrower, at its own expense, shall execute and deliver to the Agent, in
exchange for each surrendered Note, a new Note to the order of such Eligible
Assignee in an amount equal to the amount assumed by such Eligible Assignee
pursuant to such Assignment and Acceptance and, if the assigning Bank has
retained some portion of its obligations hereunder, a new Note to the order of
the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes. Within five (5) days of issuance of any new Notes
pursuant to this Section 17.4, the Borrower shall deliver an opinion of
counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such new Notes and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Banks. The surrendered Notes shall be canceled and returned to the Borrower.
PARTICIPATIONS.
--------------
Each Bank may sell participations to one or more banks or other entities
in all or a portion of such Bank's rights and obligations under this Credit
Agreement and the other Loan Documents; PROVIDED that (i) each such
participation shall be in an amount of not less than $5,000,000, (ii) any such
sale or participation shall not affect the rights and duties of the selling
Bank hereunder to the Borrower and
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(iii) the only rights granted to the participant pursuant to such participation
arrangements with respect to waivers, amendments or modifications of the Loan
Documents shall be the rights to approve waivers, amendments or modifications
that would reduce the principal of or the interest rate on any Loans, extend
the term or increase the amount of the Commitment of such Bank as it relates to
such participant, reduce the amount of any commitment fees to which such
participant is entitled or extend any regularly scheduled payment date for
principal or interest.
DISCLOSURE.
----------
The Borrower agrees that in addition to disclosures made in accordance
with standard and customary banking practices any Bank may disclose information
obtained by such Bank pursuant to this Credit Agreement to assignees or
participants and potential assignees or participants hereunder; provided that
such assignees or participants or potential assignees or participants shall
agree (i) to treat in confidence such information unless such information
otherwise becomes public knowledge, (ii) not to disclose such information to a
third party, except as required by law or legal process and (iii) not to make
use of such information for purposes of transactions unrelated to such
contemplated assignment or participation.
ASSIGNEE OR PARTICIPANT AFFILIATED WITH ANY BORROWER.
----------------------------------------------------
If any assignee Bank is an Affiliate of the Borrower, then any such
assignee Bank shall have no right to vote as a Bank hereunder or under any of
the other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Agent pursuant to Section
11.1 or Section 11.2, and the determination of the Majority Banks shall for all
purposes of this Agreement and the other Loan Documents be made without regard
to such assignee Bank's interest in any of the Loans. If any Bank sells a
participating interest in any of the Loans to a participant, and such
participant is the Borrower or an Affiliate of the Borrower, then such
transferor Bank shall promptly notify the Agent of the sale of such
participation. A transferor Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the Agent
pursuant to Section 11.1 or Section 11.2 to the extent that such participation
is beneficially owned by the Borrower or any
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Affiliate of the Borrower, and the determination of the Majority Banks shall
for all purposes of this Agreement and the other Loan Documents be made without
regard to the interest of such transferor Bank in the Loans to the extent of
such participation.
MISCELLANEOUS ASSIGNMENT PROVISIONS.
-----------------------------------
Any assigning Bank shall retain its rights to be indemnified pursuant to
Section 15 with respect to any claims or actions arising prior to the date of
such assignment. If the Agent transfers all of its interests, rights and
obligations under this Credit Agreement, the Agent shall, in consultation with
the Borrower and with the consent of the Borrower and the Majority Banks,
appoint another Bank to act as a reference Bank for the purpose of determining
the Eurocurrency Rate hereunder. Anything contained in this Section 17 to the
contrary notwithstanding, any Bank may at any time pledge all or any portion of
its interest and rights under this Credit Agreement (including all or any
portion of its Notes) to any of the twelve Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or the enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents.
ASSIGNMENT BY BORROWER.
----------------------
The Borrower shall not assign or transfer any of its rights or
obligations under any of the Loan Documents without the prior written consent
of each of the Banks.
NOTICES, ETC.
- - ------------
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes shall be in writing and shall be delivered in
hand, mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by telegraph, telecopy, telefax or
telex and confirmed by delivery via courier or postal service, addressed as
follows:
(a) if to the Borrower, at 89 Forbes Boulevard, Mansfield, Massachusetts
02048, Attention: Chief Financial Officer, or at such other address for notice
as the Borrower shall last have furnished in writing to the Person giving the
notice;
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(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Richard D. Hill, Jr., Vice President, or such other
addresses for notice as the Agent shall last have furnished in writing to the
Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on SCHEDULE 1
hereto, or such other address for notice as such Bank shall have last furnished
in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile
and (ii) if sent by registered or certified first-class mail, postage prepaid,
on the third Business Day following the mailing thereof.
GOVERNING LAW.
- - -------------
THIS CREDIT AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH (EXCLUDING THE
LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY
SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR
ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN Section 18. THE BORROWER HEREBY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
HEADINGS.
- - --------
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
-74-
<PAGE> 83
COUNTERPARTS.
- - ------------
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
ENTIRE AGREEMENT, ETC.
- - ----------------------
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to
the transactions contemplated hereby. Neither this Credit Agreement nor any
term hereof may be changed, waived, discharged or terminated, except as
provided in Section 24.
WAIVER OF JURY TRIAL.
- - --------------------
The Borrower hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of such rights and
obligations. Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (i)
certifies that no representative, agent or attorney of any Bank or the Agent
has represented, expressly or otherwise, that such Bank or the Agent would not,
in the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that the Agent and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
CONSENTS, AMENDMENTS, WAIVERS, ETC.
- - ----------------------------------
Except as otherwise expressly provided in this Credit Agreement, any
consent or approval required or permitted by this Credit Agreement to be given
by one or more or all of the Banks may be given, and any term of this Credit
Agreement or of any other instrument related hereto or mentioned herein
-75-
<PAGE> 84
may be amended, and the performance or observance by the Borrower of any terms
of this Credit Agreement or such other instrument or the continuance of any
Default or Event of Default may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
written consent of the Borrower and the written consent of the Majority Banks.
Notwithstanding the foregoing, the rate of interest on the Loans (other than
interest accruing pursuant to Section 4.11.2 following the effective date of
any waiver by the Majority Banks of the Event of Default relating thereto), the
term or Maturity Date of the Loans, the amount of the Commitments of the Banks,
and the amount of commitment fees hereunder may not be changed without the
written consent of the Borrower and the written consent of each Bank affected
thereby; the definition of Majority Banks may not be amended without the
written consent of all of the Banks; and the amount of the Agent's fee and
Section 13 may not be amended without the written consent of the Agent. No
waiver shall extend to or affect any obligation not expressly waived or impair
any right consequent thereon. No course of dealing or delay or omission on the
part of either Bank in exercising any right shall operate as a waiver thereof
or otherwise be prejudicial thereto. No notice to or demand upon the Borrower
shall entitle the Borrower to other or further notice or demand in similar or
other circumstances.
SEVERABILITY.
- - ------------
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction,
and shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Credit Agreement in any
jurisdiction.
[Intentionally Left Blank]
-76-
<PAGE> 85
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
AUGAT INC.
By: Marcel P. Joseph
Name: Marcel P. Joseph
Title: President
THE FIRST NATIONAL BANK
OF BOSTON, individually, and as
Agent
By: Richard D. Hill, Jr.
Name: Richard D. Hill, Jr.
Title: Vice President
SHAWMUT BANK, N.A.
By: Robert T. Lord
Name: Robert T. Lord
Title: Director
NATIONSBANK OF NORTH CAROLINA, N.A.
By: George R. Van
Name: George R. Van
Title: Senior Vice President
NATIONAL WESTMINSTER BANK
USA
By: Al R. Bonfantini
Name: Al R. Bonfantini
Title: Vice President
-77-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AUGAT INC. FOR THE QUARTER ENDED SEPTEMBER 30, 1994,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 11,294
<SECURITIES> 0
<RECEIVABLES> 87,672
<ALLOWANCES> (1,241)
<INVENTORY> 91,735
<CURRENT-ASSETS> 196,996
<PP&E> 233,536
<DEPRECIATION> (118,879)
<TOTAL-ASSETS> 351,117
<CURRENT-LIABILITIES> 71,021
<BONDS> 36,465
<COMMON> 1,945
0
0
<OTHER-SE> 228,411
<TOTAL-LIABILITY-AND-EQUITY> 351,117
<SALES> 389,511
<TOTAL-REVENUES> 389,511
<CGS> 306,230
<TOTAL-COSTS> 306,230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 90
<INTEREST-EXPENSE> 3,200
<INCOME-PRETAX> 29,135
<INCOME-TAX> 10,085
<INCOME-CONTINUING> 19,050
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,050
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
