-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, eTe5M98WTvsBOS7rkTjUKM4BQ9MIoDXnTmahdIDSFhwRYjv0v1WNGvi92pV/CZoM 08eeyHzKDUeMgtdHPtPmWg== 0000898430-95-000245.txt : 19950301 0000898430-95-000245.hdr.sgml : 19950301 ACCESSION NUMBER: 0000898430-95-000245 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19941127 FILED AS OF DATE: 19950224 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEASUREX CORP /DE/ CENTRAL INDEX KEY: 0000751190 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 941658697 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08770 FILM NUMBER: 95515062 BUSINESS ADDRESS: STREET 1: ONE RESULTS WAY CITY: CUPERTINO STATE: CA ZIP: 95014 BUSINESS PHONE: 4082551500 MAIL ADDRESS: STREET 1: ONE RESULTS WAY CITY: CUPERTINO STATE: CA ZIP: 95014 10-K 1 FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended November 27, 1994. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to . ------------ ------------- Commission File Number 1-8770 M E A S U R E X C O R P O R A T I O N (Exact name of Registrant as specified in its charter) Delaware (State or other jurisdiction of 94-1658697 incorporation or Organization) (I.R.S. Employer Identification No.) One Results Way, Cupertino, California 95014 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (408) 255-1500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- ---------------------------------------- Common Stock, $0.01 par value New York Stock Exchange Pacific Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Aggregate market value of voting stocks held by non-affiliates as of January 31, 1995 $355,356,116 Number of shares of common stock outstanding as of January 31, 1995 16,210,205 -------------------------------------- DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Shareholders for the fiscal year ended November 27, 1994, are incorporated by reference into Parts I, II and IV. Portions of the Proxy Statement for registrant's 1995 Annual Meeting of Shareholders to be held April 18, 1995, are incorporated into Part III. This Report on Form 10-K includes 197 pages with the Index to Exhibits --- located on pages 21 to 22. -- -- MEASUREX CORPORATION INDEX TO ANNUAL REPORT ON FORM 10-K FOR YEAR ENDED NOVEMBER 27, 1994
Page ----- PART I Item 1 Business 3 Item 2 Properties 10 Item 3 Legal Proceedings 10 Item 4 Submission of Matters to a Vote of Security Holders 10 Executive Officers of the Registrant 11-12 PART II Item 5 Market for the Registrant's Common Equity and Related Shareholder Matters 13 Item 6 Selected Financial Data 13 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 8 Financial Statements and Supplementary Financial Data 13 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 13 PART III Item 10 Directors and Executive Officers of the Registrant 14 Item 11 Executive Compensation 14 Item 12 Security Ownership of Certain Beneficial Owners and Management 14 Item 13 Certain Relationships and Related Transactions 14 PART IV Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 15 Signatures 16
2 PART I ITEM 1. BUSINESS GENERAL Measurex Corporation (the "Company") provides its customers computer- integrated manufacturing through design, production, marketing and servicing of sensor-based information and control systems. The Company's broad, integrated product line ensures economic results for customers by increasing productivity, reducing raw material usage and energy consumption, and improving product quality and uniformity. Measurex's primary marketplace is within the manufacturing industries that produce products by continuous or batch processes. The principal industries served by the Company are: pulp and paper, plastics, metals, rubber and chemicals. Measurex supports its systems with a worldwide sales, support and service organization totaling approximately 1,280 employees. Service technicians work directly with customers, in their plants and mills, providing an important and stable source of revenue. The service teams provide quality installations, training and continuing service support to ensure results for the Company's customers. Measurex was originally incorporated in California in 1968. The Company's state of incorporation was changed from California to Delaware in 1984. Measurex's principal executive offices are located at One Results Way, Cupertino, California, 95014-5991; its telephone number is (408) 255-1500. Unless the context otherwise indicates, the terms "Measurex" and "the Company" include Measurex Corporation, the predecessor California corporation, and its subsidiaries. PRODUCT INFORMATION The following table shows the annual shipment revenues (in millions of dollars) and the percentages of annual shipment revenues during the last three fiscal years, attributable to the delivery of systems used in the pulp and paper and industrial systems industries. "Industrial Systems" includes systems for plastics, metals, rubber, and other products.
Fiscal Year --------------------------------------------- 1994 1993 1992 ------------- ------------- ------------- Systems used in: Pulp and Paper $133.0 85% $128.6 84% $116.7 79% Industrial Systems 23.3 15% 24.2 16% 31.7 21% ------ --- ------ --- ------ --- $156.3 100% $152.8 100% $148.4 100% ------ --- ------ --- ------ ---
For information regarding sales by geographic location see the section "Business Segments" under Notes to Consolidated Financial Statements in the Company's 1994 Annual Report to Shareholders. MXOPEN The MXOpen product line was introduced at the Technical Association of the Pulp and Paper Institute (TAPPI) trade show in Atlanta, Georgia in March 1992. MXOpen is an integrated information and control system that uses industry- standard computer and communication protocols. The product line was developed over a three-year period and represents a substantial investment in research and development, manufacturing and marketing expenses. 3 In January 1993, at the Canadian Pulp and Paper Association (CPPA) trade show in Montreal, Quebec, Canada, the Company launched the MXOpen PrecisionPLUS(TM) intelligent measurement system. PrecisionPLUS features new distributed sensor intelligence, advanced sensor technology and faster scanning capabilities. In February 1994, at the Technical Association of the Pulp and Paper Industry (TAPPI) Conference, Measurex announced further enhancements to its MXOpen(TM) product line. The MXOpen Integrated Control System provides end-users with a combination of integration and open architecture. MXOpen features include: . Modular systems with capability for total machine optimization; . Open systems architecture based on international industry standards for flexibility and expandability; and . Integrated information and control with real-time millwide visibility for management decision-making. The MXOpen millwide product line includes: . Intelligent Sensors and Scanners . Distributed Control System . Profile Actuation . Web Inspection . Millwide Information . Integrated Machine Monitoring . Complete Integrated Control System PROPRIETARY SENSORS Measurex provides sensor technology for the process industries, currently offering more than 70 sensors. Its sensors include those that monitor the basis weight, moisture, caliper, ash content, coating, smoothness, gloss, formation, opacity, strength and color of processed paper, as well as the physical properties of other processed products, such as the wire spacing faults on steel belted tires. These sensors use a variety of proprietary applications involving technologies which include microwave, infrared, visible light, ultraviolet, beta, X-ray and gamma radiation. CROSS-DIRECTION CONTROLS Measurex is a leader in the complex technology of cross-direction (CD) profile control. The center of this business is in the Measurex Devron Division, based in Vancouver, British Columbia, Canada. CD control, as used for example in the pulp and paper industry, allows precise control of paper characteristics in small segments across the entire width of the paper sheet. Cross-direction controls are complementary to the average profile taken along the paper's direction of travel, referred to as machine direction. The combined control strategy significantly enhances a customer's ability to achieve optimum quality levels, thus reducing raw material and energy usage, lowering scrappage rates and enhancing the customer's competitive position. Measurex has a variety of CD control products including AutoSlice(TM), ThermaTrol(TM), AquaTrol(R), Devronizer(TM), InfraTrol(TM), CalTrol(TM), Calcoil(TM), Calendizer(TM), ProCoat(TM), and GlossTrol(TM) actuators. 4 CD controls can be ordered with new systems or can be integrated into existing installed systems. The CDOpen(TM) System allows Measurex's cross- direction control products to be integrated with non-Measurex measurement systems. MILLWIDE INFORMATION Measurex's Management Systems Division (MSD), provides plant level computing expertise for production processes. The Division's OptiVISION(TM) Full Spectrum Production and Quality Management System (PQMS) gives Measurex the ability to offer a system that manages processes from long-term planning and order entry through scheduling, product tracking, shipping and invoicing the product. The OptiVISION system provides users with a modular design that reduces development and installation time. INTEGRATED MACHINE MONITORING The Integrated Monitoring System (IMS), marketed as a part of the MXOpen product line, consists of digital systems for on-line process and machine monitoring and analysis of the papermaking process and production machinery. IMS products provide process and machine-condition diagnosis and trending, giving papermakers tools to address maintenance problems before failure. WEB INSPECTION SYSTEMS The MXOpen web inspection system analyzes the moving paper web by measuring the intensity variations of light transmitted through the sheet or reflected from the sheet. The system uses Charge Coupled Device (CCD) camera technology to continuously detect - on line - visual defects in paper or other web-produced material. Like other MXOpen Systems, this web-inspection product helps customers to produce superior quality products at lower cost, adding significantly to the basic value of an Integrated Control System. INDUSTRIAL SYSTEMS The MXOpen Measurement Control System (MCS) was introduced to industrial system customers in October 1992. For plastics, non-wovens and makers of coated materials such as flooring and building products, the MCS is an affordable solution for process improvement - all in a competitive, technologically advanced control system. In September 1994, the Company restructured the Industrial Systems Group (ISD) as an independent division. The formation of the ISD consolidates sales, engineering, marketing and management into one cross-functional unit, focused on opportunities in plastics, nonwovens, metals, rubber and other industries. In October 1994, Measurex introduced its new MetalsMaster(TM) system to the aluminum industry at the Alumitech trade show in Atlanta. The system includes alloy-insensitive PrecisionPLUS(TM) thickness sensors in addition to flatness and shape control. In December, 1994 the Company announced that it had acquired the Webart Division of The Ohmart Corporation, and its family of on-line measurement and control systems, including the ConceptOne(TM) gauging system. The Webart family of products will expand Measurex's existing family of measurement and control offerings for its Industrial Systems Division. Ohmart, headquartered in Cincinnati, Ohio, supplies web measurement and control systems to the plastics, extrusion, nonwovens, and coating industries, as well as level, density, and weight measurements for the general process industries. 5 STRATEGIC ALLIANCES BELOIT CORPORATION In 1990, Measurex and Beloit Corporation, agreed to expand and strengthen their 1987 strategic alliance. This cooperative agreement includes provisions for integrated marketing and sales of all Measurex paper industry products with Beloit's full line of pulp and paper machinery. Simultaneously executed was a seven-year "standstill" agreement between Measurex and Harnischfeger Industries, Inc., Beloit's parent company, following which Harnischfeger purchased 20 percent of Measurex's stock on the open market, the maximum allowed under the agreement. Subsequent to the Company's 1994 fiscal year-end, in December 1994 the Company bought back approximately two million shares of its stock held by Harnischfeger Industries, Inc., reducing Harnischefeger's holdings to approximately ten percent of common stock outstanding. For additional information, see the "Subsequent Event" Note to Consolidated Financial Statements in the Company's 1994 Annual Report to Shareholders. MITSUBISHI HEAVY INDUSTRIES, LTD. In 1988, Measurex and Mitsubishi Heavy Industries, Ltd. (MHI) entered into an agreement whereby the two companies offered certain products and services to the pulp and papermaking industry of Asia. In 1991, MHI became a signatory to the Measurex/Beloit strategic alliance, and a full participant in that agreement. All Measurex products for the pulp and paper industry are now made available to MHI on the same basis as they are made to Beloit. SIEMENS AG In June 1993, Siemens AG, pulp and paper division, selected Measurex as its Original Equipment Manufacturer (OEM) for certain MXOpen products. Siemens has integrated these products with other Siemens products for their total turnkey pulp and paper automation projects. SALES AND SERVICE Measurex offers its systems, related products and services principally through its own worldwide marketing and service organization. This organization offers customers a broad range of on-site and on-call services including 24- hours-a-day, 365-days-a-year service contracts. To support the Company's product line, Measurex maintains 44 regional sales offices and service centers which are located in 30 countries throughout the world. The Company has sold over 4,600 systems in 54 countries, primarily located in North America, Latin America, Europe and the Pacific Rim. The sales and service organization consists of regional and area managers who are responsible for selling Measurex's products and supervising service at customer sites. Under their supervision are software control and application engineers who assist customers in making the most efficient use of their systems, technical service engineers and supervisory personnel who are responsible for the installation, start-up and routine preventive maintenance of the systems, as well as any emergency services that may be required. Customers may acquire Measurex systems either by direct purchase or through Measurex lease plans. For additional information, see the Notes to Consolidated Financial Statements in the Company's 1994 Annual Report to Shareholders. RESEARCH AND PRODUCT DEVELOPMENT 6 Measurex's systems are the result of the integration of a number of complex technologies including electronics, physics, mechanical design and software. Central to the Company's strategic goals is a commitment to research and development. The Company strongly believes the continued investment in new product development is key to its long-term success. Product development costs were $22.7 million in 1994, 9% of total revenues and 15% of system revenue. Product development costs were $22.9 million in 1993 and $25.2 million in 1992. Of this total, Measurex capitalized $2.7 million, $1.7 million, and $4.6 million of software development costs in fiscal 1994, 1993 and 1992, respectively. Measurex amortized $4.2 million, $3.4 million and $1.7 million of capitalized software to systems costs in 1994, 1993 and 1992, respectively. BACKLOG System backlog at November 27, 1994, was $92 million, one percent higher than the backlog of $91 million at the end of fiscal 1993. Approximately 90% of the $92 million year-end 1994 backlog is scheduled to be shipped during fiscal 1995. PATENTS Measurex follows a policy of filing appropriate patent applications on inventions it considers significant. As of November 27, 1994, the Company had 97 United States patents and 167 foreign patents in effect. Although important to the business, Measurex believes that the invalidity or expiration of any single such patent would not have a material adverse effect on its operations. SUPPLY OF MATERIALS AND PURCHASED COMPONENTS Measurex produces most of the software, sensors, scanners, digital logic circuits, peripheral devices and various terminals used in its systems. Many components, such as integrated circuits, video monitors, printers, disks, and microcomputers are purchased from other manufacturers and integrated into the systems. Measurex currently purchases certain components from single sources of supply. In each instance, components performing similar functions are available from alternative sources, except for radioactive source material which is available from only two suppliers. Use of these alternative components might require a change in the design of certain portions of the system which could result in production delays, additional expenses and contract cancellations while changing vendors. The Company has contracts with certain vendors which entitle, but do not require, Measurex to purchase specific quantities of components. MANUFACTURING Systems are manufactured at Measurex's facilities in Cupertino, California; Waterford, Republic of Ireland; Vancouver, British Columbia, Canada; Cincinnati, Ohio; and Kuopio, Finland. Certain subassemblies are manufactured in Cupertino and shipped to other locations for incorporation in the final systems. The systems are generally installed at the customer's site under the supervision of Measurex personnel. 7 COMPETITION The market for process measurement and control is highly competitive and is subject to technological change in both hardware and software development. The principal competitive factors in this market are product quality and reliability, product features, customer support, corporate reputation and relative price/performance. Measurex's competitive strategy is to provide customers with greater economic results than available from competitors by focusing on quality and the unique performance characteristics of the customers' systems. However, any inability of the Company to match or exceed the price/performance or other features of the systems offered by its competitors could adversely affect future operating results. The Company's principal competition is from distributed control systems suppliers and packaged system suppliers, as well as factory automation system suppliers, many of which have substantially greater resources than the Company. In the supervisory measurement and process control business area, competition includes Asea Brown Boveri Process Automation Inc. (ABB); Lippke, a wholly owned subsidiary of Honeywell; the Valmet Automation Group, a division of Valmet Oy; and Yokogawa-YEW in Japan. The distributed control system business area competition includes Honeywell, Fisher, Foxboro (a subsidiary of Siebe, Inc.), Siemens, and many other companies. In the web-inspection products area, the Company faces competition from ABB and other smaller companies. Competition for production management and process analysis and quality management is very fragmented. EMPLOYEES As of November 27, 1994, Measurex had 2,090 full-time employees, of whom approximately 1,050 were located outside of the United States. Measurex has various employee benefit plans, including a stock purchase plan for all United States and Canadian employees, stock option plans for key employees, a Savings and Deferred Profit Sharing Plan, management incentive programs, pension plans in certain foreign countries, and health, dental, life and disability plans. NUCLEAR REGULATORY LICENSES In the United States, Measurex and its customers are subject to licensing and regulation by the United States Nuclear Regulatory Commission (NRC) under the Atomic Energy Act of 1954 (the Act) with respect of those parts of its products and systems which utilize nuclear radiation. The NRC has transferred a portion of its licensing and regulatory functions to several state governments, including California, pursuant to Section 274 of the Act. Measurex holds all such licenses necessary for its current operations. Licenses are renewed periodically as required. Measurex also holds all necessary foreign licenses regarding nuclear radiation for the applicable countries in which it operates. United States customers possessing Measurex systems containing radioactive sources hold the radioactive material under a General or Specific License issued by their state or federal regulatory authority. Similarly, foreign customers hold licenses issued by their local authorities for radioactive material in Measurex systems. LICENSES TO EXPORT FROM THE UNITED STATES Measurex is subject to licensing and regulation by the United States Department of Commerce under the Export Administration Act of 1969, as amended and extended, with respect to Measurex systems or parts thereof, exported from the United States or by any of its subsidiaries. 8 INDUSTRY SEGMENTS Measurex operates within the computer-integrated control and information systems industry. All necessary disclosures regarding revenues, earnings from operations and identifiable assets are included in "Business Segments" under Notes to Consolidated Financial Statements in the Company's 1994 Annual Report to Shareholders. GEOGRAPHIC SEGMENTS For information regarding geographic operations in 1994, 1993, and 1992, see "Business Segments" included in the Notes to Consolidated Financial Statements in the Company's 1994 Annual Report to Shareholders. Measurex is subject to the normal risks of foreign currency fluctuations; however, to the extent practical, Measurex attempts to minimize the exposure from losses associated with such risks with foreign exchange contracts and other hedging activities. See "Summary of Significant Accounting Policies (Foreign Currency Translation and Foreign Exchange Contracts)" and "Interest Income and Other" in the Notes to Consolidated Financial Statements in the Company's 1994 Annual Report to Shareholders. 9 ITEM 2. PROPERTIES Located in Cupertino, California, the Company's headquarters, offices, research and manufacturing plant total 360,000 square feet. The offices, research and manufacturing operations of Measurex Management Systems Division are located in a 43,000 square-foot facility in Cincinnati, Ohio. The U.S. Sales and Service Headquarters are located in a 32,000 square-foot facility in Atlanta, Georgia. All of these facilities are owned by the Company. Measurex leases office space for sales and service operations throughout the United States and various other countries. The Measurex Devron Division owns two facilities for its offices, research and manufacturing operations, totaling 94,000 square feet in Vancouver, British Columbia, Canada. In Waterford, Ireland, the Company owns a 60,000 square foot manufacturing facility and leases a further 20,000 square feet. Measurex Roibox Oy leases two facilities totaling approximately 16,000 square feet in Kuopio, Finland for manufacturing, engineering, and sales support. During 1994, the Company was productively utilizing the space in its facilities, while disposing of space determined to be under-utilized. The Company believes current facilities provide adequate production capacity to meet the Company's planned business activities. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Company or any of its subsidiaries are a party or of which any of their property is the subject, other than ordinary routine litigation incidental to the business. Management believes that the final outcome of such matters will not have a material adverse effect on the Company's consolidated financial position and results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company has not submitted any matters to a vote of security holders during the fourth quarter of the fiscal year ended November 27, 1994. 10 EXECUTIVE OFFICERS OF REGISTRANT The following table shows the executive officers of Measurex Corporation as of January 31, 1995, (ages are as of November 27, 1994), their positions with Measurex, their business experience for the last five years, and the number of years during which they have been executive officers of the Company.
Number of Years as Executive Name Age Title and Business Experience Officer - ----------------- --- ------------------------------------------------------- ----------- David A. Bossen 67 Chairman and Chief Executive Officer and Director since December 1993, President and Chief Executive Officer and Director 1968 to December 1993. 27 John C. Gingerich 58 President and Chief Operating Officer and Director since December 1993; Executive Vice President, Worldwide Sales and Service and President, Measurex International Corporation 1992 to December 1993; President, Americas and Pacific 1991 to 1992 and Executive Vice President 1990-1991; Executive Vice President-U.S. Operations 1989 to 1990; Executive Vice President-Operations 1987 to 1989; President, Industrial Systems Group 1985 to 1987; Executive Vice President 1982 to 1985; Senior Vice President-U.S. Sales and Service 1981 to 1982; Vice President-Sales and Service 1980 to 1981. 14 Glenn R. Wienkoop 47 Executive Vice President and Division President, Industrial Systems Division since September 1994; Executive Vice President, Engineering and Marketing 1991 to September 1994; President-Measurex Automation Systems 1985 to 1991; Vice President U.S. Sales and Service 1982 to 1984, Vice President, Pulp, Paper and Industrial Systems 1980 to 1982. 14 Robert McAdams, Jr. 55 Senior Vice President and Chief Financial Officer since September 1994; Senior Vice President, Operations and Information Services 1992 to September 1994; Senior Vice President-Finance and Administration and Chief Financial Officer 1985 to 1992; Senior Vice President, Finance 1983 to 1985. 11
11
Number of Years as Executive Name Age Title and Business Experience Officer - ---------------------- --- ----------------------------------------------------------- ---------- William J. Weyand 50 Senior Vice President, Worldwide Sales and Service since December 1994; President, North and South America February to December 1994; Senior Vice President, U.S. and Canada Sales and Service 1993 to February 1994; Senior Vice President and Division Manager, U.S. Sales and Service 1991 to 1993; Senior Vice President U.S. Sales and Service, Pulp and Paper Group 1989 to 1991. 0 Lance M. Lissner 44 Vice President, Corporate Planning and Development since 1991; Vice President, Engineering and Marketing, Industry Groups 1989 to 1991; Vice President and General Manager, Pacific Division 1981 to 1989. 5 John G. Preston 51 Vice President, General Manager, Integrated Control Systems Business Unit since September 1994; President - Measurex Europe 1992 to September 1994; President and Chief Executive Officer, Devron Division 1991 to 1992; President, Measurex Canada 1990 to 1991; Vice President, Engineering and Marketing; Industrial Systems Group 1989 to 1990. 1 Charles Van Orden 40 General Counsel and Secretary since 1988. 6
Officers are elected annually but may be removed at any time at the discretion of the Board of Directors. There are no family relationships among any of the above officers. 12 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The information under the heading "Market for the Registrant's Common Stock and Related Security Holder Matters," which appears on page 31 of Registrant's 1994 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K. The Company paid quarterly dividends of $0.11 per quarter in 1994 and 1993. While the Company intends to pay regular quarterly dividends, the payment of any future dividends is within the discretion of the Board of Directors of the Company. ITEM 6. SELECTED FINANCIAL DATA The information under the heading "Selected Financial Data," which appears on page 32 of Registrant's 1994 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information under the heading "Management's Discussion and Analysis" which appears on pages 16 to 18 of Registrant's 1994 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information under the heading "Financial Statements and Supplemental Financial Data," which appears on pages 19 to 31 of Registrant's 1994 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 13 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning the directors of the Company appears in Registrant's definitive Proxy Statement for the annual meeting of shareholders to be held April 18, 1995, under the caption "Election of Directors" and is incorporated herein by reference. Information concerning the executive officers of the Company appears at the end of Part I, pages 11 and 12, of this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 18, 1995. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 18, 1995. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 18, 1995. 14 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a.) 1. The consolidated financial statements of Measurex Corporation included herein are set forth in the Index to Financial Statements and Schedules submitted as a separate section of this Report. 2. The Financial Statement Schedules are contained in the accompanying Index to Financial Statements and Schedules submitted as a separate section of this Report. 3. Exhibits See Index to Exhibits, page 21 and 22 (b.) Reports on Form 8-K. No Report on Form 8-K was filed in the fourth quarter of fiscal year 1994. Subsequent to the Company's fiscal year-end, the Company filed a Report on Form 8-K dated December 29, 1994 in which the Company reported that it had bought back from Harnischfeger Industries, Inc. 2,026,900 shares of outstanding Measurex Common Stock, par value $.01 per share, at a purchase price of $21.50 per share on December 29, 1994. 15 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MEASUREX CORPORATION (Registrant) Date February 24, 1995 By /S/ DAVID A. BOSSEN ------------------- -------------------------------- David A. Bossen Chairman Know all persons by these presents, that each person whose signature appears below constitutes and appoints David A. Bossen and Robert McAdams Jr., jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /S/ DAVID A. BOSSEN Chairman, Chief Executive February 24, 1995 - ---------------------------- Officer and Director (David A. Bossen) (Principal Executive Officer) /S/ JOHN C. GINGERICH President, Chief Operating February 24, 1995 - ---------------------------- Officer and Director (John C. Gingerich) /S/ ROBERT MCADAMS JR. Senior Vice President February 24, 1995 - ---------------------------- (Principal Financial and (Robert McAdams Jr.) Accounting Officer) /S/ PAUL BANCROFT, III Director February 24, 1995 - ---------------------------- (Paul Bancroft, III) /S/ DWIGHT C. BAUM Director February 24, 1995 - ---------------------------- (Dwight C. Baum) /S/ JEFFERY T. GRADE Director February 24, 1995 - ---------------------------- (Jeffery T. Grade) /S/ ORION L. HOCH Director February 24, 1995 - ---------------------------- (Orion L. Hoch) /S/ JOHN W. LARSON Director February 24, 1995 - ---------------------------- (John W. Larson) /S/ J.W. MCKITTRICK Director February 24, 1995 - ---------------------------- (J.W. McKittrick) /S/ GRAHAM TYSON Director February 24, 1995 - ---------------------------- (Graham Tyson)
16 MEASUREX CORPORATION INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Fiscal Year 1994
Exhibit 13 Page ---- (1) Consolidated Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations 1-5 Consolidated Statements of Income Three years ended November 27, 1994 6 Consolidated Balance Sheets November 27, 1994 and November 28, 1993 7 Consolidated Statements of Shareholders' Equity Three years ended November 27, 1994 8 Consolidated Statements of Cash Flows Three years ended November 27, 1994 9 Notes to Consolidated Financial Statements 10-21 Report of Independent Accountants 22 Supplemental Financial Data 23 Selected Financial Data 24
With the exception of the aforementioned information, the 1994 Annual Report to Shareholders is not to be deemed filed as part of this report unless otherwise noted.
Form 10-K Page ---- (2) Financial Statement Schedules for fiscal years 1994, 1993 and 1992 Report of Independent Accountants on Financial Statement Schedules 18 VIII Valuation and Qualifying Accounts 19 X Supplementary Income Statement Information 20
Other schedules have not been filed because the conditions requiring the filing do not exist or the required information is given in the financial statements or notes thereto. 17 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders Measurex Corporation Our report on the consolidated financial statements of Measurex Corporation and Subsidiaries as of November 27, 1994 and November 28, 1993 and for each of the three fiscal years in the period ended November 27, 1994, has been incorporated by reference in this Form 10-K from page 30 of Measurex Corporation's 1994 Annual Report to Shareholders. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed in the index on page 17 of this Form 10-K. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. /S/ COOPERS & LYBRAND L.L.P. ----------------------------- COOPERS & LYBRAND L.L.P. San Jose, California December 14, 1994, except for the note titled "subsequent events", as to which the date is February 10, 1995. 18 SCHEDULE VIII MEASUREX CORPORATION VALUATION AND QUALIFYING ACCOUNTS (1) Fiscal years 1994, 1993 and 1992 (Amounts in thousands)
Balance at Additions Write-offs Balance Beginning Charged to and at End Description of Year Expenses Deductions(2) Other(5) of Year - --------------------- ---------- ---------- ------------- -------- ------- 1994 - --------------------- Allowance for noncollection and system returns $7,147 $1,659 $ (164)(3) -- $8,642(6) ====== ====== ======= ====== Inventory reserves $8,896 $1,343 $(3,660)(4) $(3,579) $3,000 ====== ====== ======= ======= ====== 1993 - --------------------- Allowance for noncollection and system returns $7,250 $2,051 $(2,154)(3) -- $7,147(6) ====== ====== ======= ====== Inventory reserves $6,999 $3,473 $(1,576)(4) -- $8,896 ====== ====== ======= ====== 1992 - --------------------- Allowance for noncollection and system returns $4,952 $4,649 $(2,351)(3) -- $7,250(6) ====== ====== ======= ====== Inventory reserves $6,795 $2,954 $(2,750)(4) -- $6,999 ====== ====== ======= ======
NOTES: (1) See the Notes to Consolidated Financial Statements. (2) Represents write-offs and deductions. (3) Deductions for returns of systems or parts of systems and for write-off of noncollectible amounts. (4) Deductions for write-offs of obsolete and scrapped parts and translation adjustments. (5) Represents the reclassification of reserves from current inventories to service parts. (6) Includes allowance on contracts receivable. 19 SCHEDULE X MEASUREX CORPORATION SUPPLEMENTARY INCOME STATEMENT INFORMATION Fiscal Years 1994, 1993, and 1992 (Amounts in thousands)
1994 1993 1992 ------ ------ ------ Charged to costs and expenses: (1) Amortization of intangible assets (2) $5,218 $4,380 $3,267 ====== ====== ======
NOTES: (1) Items omitted are less than 1% of net sales. (2) Intangible assets include goodwill, patents and capitalized software. 20 MEASUREX CORPORATION INDEX TO EXHIBITS Fiscal Year 1994 Exhibits - -------- 3.1 Certificate of Incorporation of Registrant, (incorporated by reference from Exhibit 3.1 on page 30 of Report on Form 10-K for the fiscal Year ended November 29, 1987). 3.2 Bylaws of Registrant, restated and amended as of April 19, 1994. 4.1 Copy of Registrant's Rights Agreement dated as of December 14, 1988, as amended by Amendment No. 1 thereto dated May 30, 1990, (incorporated by reference from Exhibit 4.1 on page 47 of Report on Form 10-K for the fiscal year ended December 2, 1990). 10.1 Copy of Registrant's Employee's Stock Option Plan (1981) (incorporated by reference from Exhibit 28.1 to Post Effective Amendment No. 2 to Registration Statement No. 33-22589, filed with the SEC on June 25, 1990). 10.2 Copy of Registrant's Employee's Stock Option Plan (1993) (incorporated by reference from Form S-8 Registration Statement No. 33-65762 filed with the SEC on July 8, 1993). 10.3 Copy of Registrant's Management Incentive Plan. (incorporated by reference from Exhibit 10.8 on page 24 of Report on Form 10-K for the fiscal year ended November 30, 1986). 10.4 Copy of Registrant's Employee Stock Purchase Plan, amended and restated effective December 14, 1993. 10.5 Copy of Registrant's Affiliation Agreement dated as of May 30, 1990, between Measurex Corporation and Harnischfeger Industries, Inc. (incorporated by reference from Exhibit 4.1 to Form 8K filed with the SEC on June 12, 1990). 10.6 Copy of Repurchase Agreement dated December 29, 1994 (which contains certain amendments to the Affiliation Agreement referred to in Exhibit 10.5). 10.7 Copy of Registrant's Joint Marketing, Sales and Development Agreement dated May 30, 1990 between Measurex Corporation and Beloit Corporation (incorporated by reference from Exhibit 10.1 to Form 8K filed with the SEC on June 12, 1990). 10.8 Copy of Registrant's Joint Marketing, Sales and Development Agreement dated February 12, 1991 between Measurex Corporation and Enertec, (incorporated by reference from Exhibit 10.8 on page 33 of Report on Form 10-K for the fiscal year ended December 1, 1991). 10.9 Copy of Registrant's Joint Marketing, Sales and Development Agreement dated February 28, 1991 between Measurex Corporation and Mitsubishi Heavy Industries, Ltd., (incorporated by reference from Exhibit 10.9 on page 34 of Report on Form 10-K for the fiscal year ended December 1, 1991). 10.10 Copy of Term Loan Agreement dated as of May 21, 1993, between Measurex Corporation and the Bank of New York (incorporated by reference from Exhibit 10 on Form 10-Q for the period ended May 30, 1993). 21 MEASUREX CORPORATION INDEX TO EXHIBITS Fiscal Year 1994 10.11 Copy of Amendment dated as of February 10, 1995, to Term Loan Agreement referred to in Exhibit 10.10. 10.12 Copy of Credit Agreement dated as of July 22, 1993, between Measurex Corporation and ABN Amro Bank N.V., San Francisco International Branch and/or Cayman Islands Branch (incorporated by reference from Exhibit 10 on Form 10-Q for the period ended August 28, 1994). 10.13 Copy of First Amendment dated as of July 8, 1994 to Credit Agreement referred to in Exhibit 10.12. 10.14 Copy of Second Amendment dated as of December 29, 1994 to Credit Agreement referred to in Exhibit 10.12. 10.15 Copy of Third Amendment dated as of February 10, 1995 to Credit Agreement referred to in Exhibit 10.11. 10.16 Copy of Credit Agreement dated as of February 10, 1995 among Measurex Corporation, Bank of America National Trust and Savings Association, as Agent, and the other financial institutions party hereto. 10.17 Copy of Registrant's Stock Option Agreement (Special Acceleration Grant) dated as of December 14, 1993. (Incorporated by reference from Exhibit 10.10 on page 45 of Report on 10-K for the fiscal year ended November 25, 1993). 11.0 Computation of Net Income per Share of Common Stock of the Registrant. 13.0 Registrant's Annual Report to Shareholders. (In accordance with item 601(B)(13) of Regulation S-K, such Annual Report is not filed as part of this Form 10-K, except to the extent incorporated by reference). 21.0 Subsidiaries of Registrant. 23.0 Consent of Independent Accountants. 24.0 Power of Attorney (included on page 16). 27.0 Financial Data Schedule. Other exhibits have not been filed because conditions requiring the filing do not exist. 22 EX-3.2 2 RESTATED BYLAWS Exhibit 3.2 --- RESTATED BYLAWS OF MEASUREX CORPORATION ARTICLE I OFFICERS Section 1. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders for the election of directors shall be held in the City of Cupertino, State of California, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. 1 Exhibit 3.2 --- Section 2. Annual meetings of stockholders shall be held on the third Thursday of April of each year if not a legal holiday and, if a legal holiday, then on the next secular day following, at 10:00 A.M. or such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting. Section 3. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of a majority of the total number of Directors which the Corporation would have if there were no vacancies, or (c) otherwise properly be requested to be brought before the meeting by a stockholder. For business to be properly requested to be brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder 's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than thirty (30) days prior to the meeting; 2 Exhibit 3.2 --- provided, however, that in the event that the date of the meeting is not publicly announced by the Corporation by mail, press release or otherwise more than thirty (30) days prior to the meeting, notice by the stockholder to be timely must be delivered to the Secretary of the Corporation not later than the close of business on the tenth day following the day on which such announcement of the date of the meeting was communicated to stockholders. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, and (d) any material interest of the stockholder in such business. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section. The Chairman of the Board or such other presiding Director of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 4. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such 3 Exhibit 3.2 --- meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Section 5. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present Section 6. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute may only be called in the manner set forth in the certificate of incorporation. Section 7. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 8. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. 4 Exhibit 3.2 --- Section 9. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 10. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question properly brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 11. Unless otherwise provided in the certificate of incorporation each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such 5 Exhibit 3.2 --- stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. At all elections of directors of the corporation each stockholder having voting power shall be entitled to exercise the right of cumulative voting as provided in the certificate of incorporation. Section 12. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Section 13. Nominations for election to the Board of Directors must be made by the Board of Directors or by any stockholder of any outstanding class of capital stock of the corporation entitled to vote for the election of directors. Nominations, other than those made by the Board of Directors of the corporation, must be preceded by notification in writing in fact received by the Secretary of the corporation not less than ten days prior to any meeting of stockholders called for the election of directors. Such notification shall contain the written consent of each 6 Exhibit 3.2 --- proposed nominee to serve as a director if so elected and the following information as to each proposed nominee and as to each person, acting alone or in conjunction with one or more other persons as a partnership, limited partnership, syndicate or other group, who participates or is expected to participate in making such nomination or in organizing, directing or financing such nomination or solicitation of proxies to vote for the nominee: (a) the name, age, residence, address, and business address of each proposed nominee and of each such person; (b) the principal occupation or employment, the name, type of business and address of the corporation or other organization in which such employment is carried on of each proposed nominee and of each such person; (c) the amount of stock of the corporation owned beneficially, either directly or indirectly, by each proposed nominee and each such person; and (d) a description of any arrangement or understanding of each proposed nominee and of each such person with each other or any other person regarding future employment or any future transaction to which the corporation will or may be a party. The presiding officer of the meeting shall have the authority to determine and declare to the meeting that a nomination not preceded by notification made in accordance with the foregoing procedure shall be disregarded. ARTICLE III 7 Exhibit 3.2 --- DIRECTORS Section 1. The number of directors which shall constitute the whole board shall be (9) nine until changed as provided in the certificate of incorporation. The directors shall be elected at the annual meeting of the stockholders, except as provided in Section 1 of this Article, and each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders. Section 1. Vacancies and new created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office or by a sole remaining director, and a director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his successor shall have been duly elected and qualified, or until his earlier resignation, removal from office, death or incapacity. Section 2. The business of the corporation shall be managed by or under the direction of its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders. MEETINGS OF THE BOARD OF DIRECTORS Section 3. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. 8 Exhibit 3.2 --- Section 4. The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors. Section 5. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. Section 6. Special meetings of the Board of Directors may be called by the president on five (5) days' notice to each director by mail or forty- eight (48) hours notice to each director either personally or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of a majority of the Directors unless the Board of Directors consists of only one director, in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director. Section 7. At all meetings of the Board of Directors a majority of the directors shall constitute a quorum for the transaction of business and the act of a 9 Exhibit 3.2 --- majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 8. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee thereof, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Section 9. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF DIRECTORS Section 10. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may 10 Exhibit 3.2 --- designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the bylaws of the corporation; and, unless the resolution or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Section 11. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. COMPENSATION OF DIRECTORS Section 12. Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have the authority to fix the compensation 11 Exhibit 3.2 --- of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL OF DIRECTORS Section 13. Unless otherwise restricted by the certificate of incorporation or these bylaws, a director may be removed only for good cause shown by a majority of shares entitled to vote at an election of directors. ARTICLE IV NOTICES Section 1. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. 12 Exhibit 3.2 --- Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. The officers of the corporation shall be chosen by the Board of Directors and shall be a president and a secretary. The Board of Directors may elect from among its members a Chairman of the Board and a Vice Chairman of the Board. The Board of Directors may also choose one or more vice- presidents, assistant secretaries, treasurers and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide. Section 2. The Board of Directors at its first meeting after each annual meeting of stockholders shall choose a president and a secretary and may choose a vice-president and a treasurer. Section 3. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. 13 Exhibit 3.2 --- Section 4. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors. Section 5. The officers of the corporation shall hold office until their successors are duly elected and qualified. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the corporation may only be filled by the Board of Directors. THE CHAIRMAN OF THE BOARD Section 6. The Chairman of the Board shall be the Chief Executive Officer of the corporation and shall preside at all meetings of the Board of Directors and of the stockholders at which he shall be present. The Chairman of the Board shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have and may exercise such powers as are, from time to time, assigned by the Board of Directors and as may be provided by law. Section 7. In the absence of the Chairman of the Board of Directors, the Vice Chairman, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he shall be present. The Vice Chairman shall have and may exercise such powers as are, from time to time, assigned to him by the Board of Directors and as may be provided by law. 14 Exhibit 3.2 --- THE PRESIDENT AND VICE-PRESIDENT Section 8. The President shall be the Chief Operating Officer and in the absence of the Chairman and Vice Chairman of the Board of Directors shall preside at all meetings of the stockholders and the Board of Directors. The President shall generally have the management responsibility for the day to day operations of the business of the corporation and shall have and may exercise such powers as are, from time to time, assigned to him by the Board of Directors and the Chairman of the Board. Section 9. The president shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. Section 10. In the absence of the president or in the event of his inability or refusal to act, the vice-president, if any, (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. 15 Exhibit 3.2 --- THE SECRETARY AND ASSISTANT SECRETARY Section 11. The secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or president, under whose supervision he shall be. The secretary shall have custody of the corporate seal of the corporation and the secretary, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 12. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS 16 Exhibit 3.2 --- Section 13. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. Section 14. The treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 15. If required by the Board of Directors, the treasurer shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 16. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise 17 Exhibit 3.2 --- the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. ARTICLE VI CERTIFICATE OF STOCK Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the chairman or vice-chairman of the Board of Directors, or the president or a vice- president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by the shareholder in the corporation. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of Delaware, in 18 Exhibit 3.2 --- lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Section 2. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES Section 3. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give 19 Exhibit 3.2 --- the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. FIXING RECORD DATE Section 5. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, 20 Exhibit 3.2 --- however, that the Board of Directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors 21 Exhibit 3.2 --- from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. CHECKS Section 3. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. FISCAL YEAR Section 4. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. SEAL Section 5. The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION 22 Exhibit 3.2 --- Section 6. The corporation shall indemnify its officers, directors, employees and agents to the full extent permitted by the General Corporation Law of Delaware. Expenses incurred by a director or member of the Executive Committee of the corporation in defending a civil or criminal action, suit or proceeding by reason of the fact that he is or was a director or member of the Executive Committee of the corporation (or was serving at the corporation's request as a director or officer of another corporation) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or member of the Executive Committee to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized by relevant sections of the General Corporation Law of Delaware. BOOKS AND RECORDS Section 7. Any stockholder or any director shall have the right to inspect the books and records of the corporation to the full extent permitted by, and subject to the terms and conditions of, the General Corporation Law of Delaware. ARTICLE VIII AMENDMENTS Section 1. These bylaws may be altered, amended or repealed or new bylaws may be adopted by the stockholders or by the Board of Directors only in the manner set forth in the certificate of incorporation. 23 EX-10.4 3 EMPLOYEE STOCK PURCHASE PLAN EXHIBIT 10.4 ---- MEASUREX CORPORATION -------------------- EMPLOYEE STOCK PURCHASE PLAN (AMENDED AND RESTATED EFFECTIVE DECEMBER 14, 1993) -------------------------------------------------- I. PURPOSE ------- The Measurex Corporation Employee Stock Purchase Plan (the "Plan") is intended to provide eligible employees of Measurex Corporation (the "Company") and such of its wholly-owned United States and Canadian subsidiaries ("Participating Subsidiaries") as the Board of Directors of the Company shall from time to time designate, with an opportunity to acquire a proprietary interest in the Company through their participation in a plan which will allow them to purchase common stock of the Company at a discount through regular payroll deductions. II. ADMINISTRATION -------------- The Plan shall be administered by the Company's Board of Directors (the "Board") or by a committee (the "Committee") comprised of at least three Board members appointed from time to time by, and serving at the pleasure of, the Board. If the Committee is appointed, no member of the Committee while serving as such shall be, or during the one-year period prior to such service shall have been, eligible to participate in the Plan or any other stock option, stock appreciation, stock bonus or other stock plan of the Company or its affiliates (including Participating Subsidiaries), except to the extent such member may become entitled to one or more periodic option grants pursuant to the automatic grant provisions of the Company's 1993 Stock Option Plan (or the predecessor 1981 Stock Option Plan). The Plan Administrator (whether the Board or the Committee) shall have full authority to administer the Plan, including authority to interpret and construe any provision of the Plan and to adopt such rules and regulations for administering the Plan as it may deem necessary. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan. III. PURCHASE PERIODS ---------------- The Plan shall be implemented in a series of Purchase Periods over the term of the Plan. Each Purchase Period shall have a commencement date determined by the Plan Administrator and shall be of a duration of three months. The commencement date of the first Purchase Period shall be June 1, 1980, provided (i) the Plan shall have been approved prior to such date by the Company's shareholders and (ii) the Company shall have complied with all applicable requirements of the Securities Act of 1933 (as amended), all applicable listing requirements of any securities exchange on which the Company's common stock is listed and all other applicable requirements established by law 1 Exhibit 10.4 ---- or regulation. No two Purchase Periods shall run concurrently, and no Purchase Period shall have a commencement date later than the first day of the second fiscal quarter of fiscal year 2000. IV. ELIGIBILITY AND PARTICIPATION ----------------------------- (a) Every employee of the Company or a Participating Subsidiary is eligible to participate in the Plan during a Purchase Period if on the commencement date of such Purchase Period the employee: (i) has completed at least six months of service with the Company or a Participating Subsidiary; (ii) is not employed on a basis which customarily requires less than 20 hours of service per week or less than five months of service per calendar year; and (iii) is on the payroll of either the Company or any Participating Subsidiary. (b) In order to participate in the Plan for a particular Purchase Period, an eligible employee must complete the enrollment forms prescribed by the Plan Administrator (including a purchase right agreement and a payroll deduction authorization) and file such forms, no later than 15 days prior to the commencement date of the Purchase Period, with the Plan Administrator or its designate. 2 Exhibit 10.4 ---- (c) The payroll deduction authorized by a participating employee may be at any rate from 2% through 10% (in a multiple of 1%) of the salary or wages (including bonuses, commissions, overtime pay and any salary deferral contributions made to the qualified Code Section 401(k) program in effect under the Company's Savings and Deferred Profit-Sharing Plan) paid to such employee during the relevant Purchase Period. The deduction rate so authorized shall continue in effect for the entire Purchase Period and each subsequent Purchase Period, unless the employee shall, not less than 15 days prior to the commencement of a Purchase Period, elect a different rate by filing the appropriate form with the Plan Administrator or its designate. The new rate shall become effective as of the Purchase Period commencing immediately after the filing of such form. Payroll deductions, however, will automatically cease if the employee's right to purchase is terminated in accordance with Section VI(d) or (e). V. STOCK SUBJECT TO PLAN --------------------- (a) The stock which is purchasable by employees under the Plan shall be the Company's authorized but unissued shares of common stock, $0.01 par value ("Stock"), or shares of such Stock reacquired by the Company and held as Treasury shares, including shares purchased on the open market. The total number of shares which may be sold to employees under the Plan shall not exceed 1,225,000/*/ shares (subject to adjustment under subparagraph (b) below). (b) In the event any change is made to the Stock purchasable under the Plan (whether by reason of merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination of shares, exchange of shares or other change in corporate structure effected without the Company's receipt of consideration), then unless such change is the result of a transaction described in Section VI(j), appropriate adjustments shall be made by the Plan Administrator to (I) the class and maximum number of shares purchasable under the Plan and (II) the class and number of shares and price per share of Stock subject to outstanding purchase rights held by employees under the Plan. VI. PURCHASE RIGHTS --------------- An eligible employee who participates in the Plan for a particular Purchase Period shall have the right to purchase Stock upon the terms and conditions set forth below and shall execute an agreement embodying such terms and conditions and such other provisions, not inconsistent with the Plan, as the Plan Administrator may deem advisable. ____________________ /*/ The number of shares has been adjusted to reflect (i) the two-for-one stock spilt effected on January 3, 1984, (ii) the two-for-one stock spilt effected on February 20, 1987 and (iii) the 225,000-share increase authorized by the Board on December 14, 1993, subject to maximum number of shares which may be issued under the Plan shall not exceed 322,797 shares, subject to adjustment in the event of certain changes in corporate structure. 3 Exhibit 10.4 ---- (a) Purchase Price. The Purchase Price per share for each purchase -------------- period commencing on or after April 25, 1990 shall be the lesser of (i) 85% of ------ the fair market value per share of Stock on the date on which the purchase right is granted or (ii) 85% of the fair market value per share of Stock on the date on which the right is exercised. For purposes of the preceding sentence, the fair market value per share of Stock on any relevant date shall be the mean of the highest and lowest selling prices per share, as officially quoted on the New York Stock Exchange--Composite Tape, on such date, or, if there are no selling prices quoted for such date, then on the immediately preceding date for which such quotations exist. (b) Number of Shares. The number of shares purchasable by a ---------------- participant for any particular Purchase Period shall be the number of whole shares obtained by dividing the balance credited to the participant's individual account under the Plan as of the last day of the Purchase Period by the Purchase Price in effect for such Purchase Period. (c) Payment. Payment for Stock under the Plan shall be effected by ------- means of the participant's authorized payroll deductions, which shall begin with the first pay period which ends coincident with or immediately following the commencement date of the relevant Purchase Period and shall terminate with the pay period ending with or immediately prior to the last day of the Purchase Period. The amounts so deducted shall be credited to the Plan account maintained on the participant's behalf on the Company's books, and to the extent it is practicable to deposit the deducted amounts in an interest-bearing account maintained for Plan participants with a responsible bank or other financial institution, the amounts credited to participant's account shall accrue interest at the same rate as the interest-bearing account. Should it not be practicable to establish or maintain such an interest-bearing account, then the deducted amounts may be commingled with the general assets of the Company and used for its general corporate purposes without the payment of interest. (d) Termination of Purchase Right. A participant may, at any time ----------------------------- prior to the last 15 days of the Purchase Period, terminate his/her purchase right by filing the prescribed notification form with the Plan Administrator or its designate. Any amounts deducted from the participant's pay or otherwise collected from him/her by reason of his/her participation in the Plan for such Purchase Period shall be refunded, and no further amounts will be collected from the participant (by payroll deduction or otherwise) during the remainder of the Purchase Period. The termination of such right shall be irrevocable with respect to the Purchase Period to which it pertains and shall require the participant to re-enroll in the Plan (by making a timely filing of a new purchase right agreement and payroll deduction authorization) if he/she wishes to resume participation in a subsequent Purchase Period. (e) Termination of Employment. If a participant ceases to be an ------------------------- Employee for any reason (including death or retirement) during a Purchase Period, his/her purchase right shall immediately terminate and all payroll deductions previously collected from the participant for that Purchase Period shall be refunded to the participant or the personal representative of his/her estate. For all purposes under the Plan, an individual shall be deemed to be an Employee for so long as such individual remains in the employ of the Company or any Participating Subsidiary. 4 Exhibit 10.4 ---- (f) Exercise. Each purchase right other than a right which has been -------- previously terminated in accordance with Section VI(d) or (e) shall be exercised automatically on the last business day of the Purchase Period. The exercise of the purchase right shall be effected by applying the amount credited to each participant's account on the exercise date to the purchase of whole shares of Stock at the Purchase Price. Any amount remaining in the participant's account after such application shall be held for the purchase of Stock in the next Purchase Period. (g) Proration of Purchase Rights. If the total number of shares of ---------------------------- Stock for which purchase rights are to be exercised on any particular date exceeds the number of shares then available for issuance under the Plan, the Plan Administrator shall make a pro-rata allocation of the available shares on a uniform and non-discriminatory basis, and any payroll deductions not applied to the purchase of Stock shall be refunded to the participants. (h) Rights as Shareholder. A participant shall have no rights as a --------------------- shareholder with respect to shares covered by any purchase right granted him/her under the Plan until such right is exercised. No adjustments shall be made for dividends, distributions or other rights for which the record date is prior to the date of exercise. As soon as practicable after the date of exercise, the participant shall be issued a stock certificate for the number of shares for which his/her purchase right has been exercised. Such certificate may, upon the participant's request, be issued in the names of the participant and his/her spouse as community property or as joint tenants with right of survivorship. (i) Assignability. No purchase right granted under the Plan shall be ------------- assignable or transferable by a participant, and the purchase right shall be exercisable only by the participant. (j) Merger or Liquidation of Company. In the event the Company or -------------------------------- its shareholders enter into an agreement to dispose of all or substantially all of the assets or outstanding capital stock of the Company by means of a sale, merger or reorganization in which the Company will not be the surviving corporation or in the event the Company is liquidated, then the Plan Administrator may, in connection with the consummation of such sale, merger, reorganization or liquidation, cancel each outstanding purchase right and refund all sums previously collected from participants during the Purchase Period or, in its discretion, provide each participant with an election to exercise one of the two alternatives below: A. receive a cash refund of all sums previously collected from the participant during the Purchase Period; or B. have his/her outstanding purchase right exercised immediately prior to the consummation of such sale, merger, reorganization or liquidation and thereby have the balance of his/her account applied to the purchase of whole shares of 5 Exhibit 10.4 ---- Stock at the Purchase Price. The balance of the account not so applied shall be promptly refunded. (k) Interest. Interest shall be paid on any sums refunded to a -------- participant by reason of the termination of his/her purchase right prior to exercise, provided and only if: (i) the refunded sums were held in an interest- -------------------- bearing account maintained for Plan participants or (ii) the Plan Administrator determines that payment of interest on the refunded sums is necessary to satisfy applicable requirements of Federal or state law or regulation. VII. AMENDMENT --------- The Board may from time to time alter, amend, suspend or discontinue the Plan; provided, however, that no such action shall adversely --------- affect rights and obligations with respect to purchase rights at the time outstanding under the Plan; and provided, further, that no such action of the ------------------ Board may, without the approval of shareholders of the Company, increase the number of shares of Stock issuable under the Plan (unless necessary to effect the adjustment required by Section V(b)), extend the term of the Plan, alter the purchase price formula so as to reduce the purchase price specified in the Plan, otherwise materially increase the benefits accruing to participants under the Plan or materially modify the requirements for eligibility to participate in the Plan. IX. GENERAL PROVISIONS ------------------ (a) The Plan became effective on June 1, 1980. On February 2, 1989, the Board amended the Plan to authorize the issuance of Treasury shares under the Plan, including shares purchased on the open market. The Board further amended the Plan effective April 10, 1989 to except automatic option grants under the Company's Stock Option Plan (1981) from the requirement that members of the Committee administering the Plan be ineligible to participate in the Plan or any other stock option, stock bonus or stock plan of the Company. On April 25, 1990, the Company's shareholders approved an amendment and restatement of the Plan which extended the term of the Plan to the last day of the second fiscal quarter in fiscal year 2000 and reduced the Purchase Price for shares offered under the Plan to the lesser of (i) 85% of the fair market value per ------ share on the date on which the Purchase Period begins or (ii) 85% of the fair market value per share on the date on which the Purchase Period ends. (b) This December 14, 1993 restatement incorporates the amendment to the Plan authorized by the Board on December 14, 1993 which (i) provides explicit authority for eligible employees of the participating Canadian subsidiaries to participate in the Plan and (ii) increases the number of shares available for issuance under the Plan from 1,000,000 shares to 1,225,000 shares of Stock. The 225,000-share increase, however, is subject to shareholder approval at the 1994 Annual Meeting, and none of the shares subject to such increase shall be issued under the Plan until such approval is obtained. Should shareholder approval of the 225,000-share increase not be obtained at the 1994 Annual Meeting, then that increase shall not be implemented, and the number of shares 6 Exhibit 10.4 ---- authorized for issuance over the term of the Plan shall be limited to 1,000,000 shares of Stock, as adjusted from time to time pursuant to Section V(b) above. (c) The Plan shall terminate upon the earlier of (i) the last day ------- of the second fiscal quarter in fiscal year 2000 or (ii) the date on which all shares available for issuance under the Plan shall have been sold pursuant to purchase rights exercised under the Plan. (d) All costs and expenses incurred in the administration of the Plan shall be paid by the Company. (e) Neither the action of the Company in establishing the Plan, nor any action taken under the Plan by the Board or the Plan Administrator, nor any provision of the Plan itself shall be construed so as to grant any person the right to remain in the employ of the Company or any of its subsidiaries for any period of specific duration, and such person's employment may be terminated at any time, with or without cause. (f) The provisions of the Plan shall be governed by the laws of the State of Delaware. 7 EX-10.6 4 STOCK REPURCHASE AGMT EXHIBIT 10.6 ---- STOCK REPURCHASE AGREEMENT THIS STOCK REPURCHASE AGREEMENT (this "Agreement"), dated as of December 29, 1994, is entered into between Measurex Corporation, a Delaware corporation (the "Company"), and Harnischfeger Industries, Inc., a Delaware corporation ("Harnischfeger"), and HIHC, Inc., a Delaware corporation ("Investor"). RECITALS -------- WHEREAS, the Company and Harnischfeger are parties to that certain Affiliation Agreement, dated as of May 30, 1990 (the "Affiliation Agreement") and the Company and Beloit Corporation ("Beloit"), a subsidiary of Harnischfeger, are parties to that certain Joint Marketing, Sales and Development Agreement dated as of May 30, 1990 (the "Marketing Agreement"); and WHEREAS, Investor is a wholly owned subsidiary of Harnischfeger and the direct beneficial owner of certain of the company's outstanding Common Stock par value $.01 per share, acquired in connection with the Affiliation Agreement; and WHEREAS, Harnischfeger has determined to cause Investor to sell to the Company and the Company has determined to purchase from Investor an aggregate of 2,026,900 shares of the Company's outstanding Common Stock, par value $.01 per share, held by Investor (the "Shares"); and WHEREAS, the Company and Harnischfeger have determined to make certain amendments to the Affiliation Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereto agree as follows: 1. The Company will purchase from Investor and Investor will sell to the Company the Shares for an aggregate price of Forty-Three Million, Five Hundred Seventy-Eight Thousand, Three Hundred Fifty Dollars ($43,578,350) (the "Purchase Price")in full consideration for its repurchase of the Shares. 2. In payment of the Purchase Price, the Company will deliver to Investor a Promissory Note in the form attached hereto as Exhibit A (the "Note"). 1 Exhibit 10.6 ---- 3. Investor will deliver to the Company a stock certificate representing the Shares (the "Certificate"), duly endorsed for transfer to the Company (or cause the Shares to be transferred by wire transfer to an account designated by Company for such purpose), in exchange for the Note. The Company will promptly return to Investor a stock certificate representing the remaining shares of the Company's Common Stock, par value $.01 per share, represented by the Certificate in excess of the Shares. 4. The Company represents and warrants to Harnischfeger and Investor that the Board of Directors of the Company has authorized the execution and delivery of this Agreement and the performance of its obligations contained herein. Notwithstanding the provisions of Section 1.02 of the Affiliation Agreement, the Company hereby consents to the sale of the Shares by Investor as contemplated hereby. 5. Harnischfeger and Investor have taken all necessary corporate action and possess the requisite corporate authority to authorize the execution and delivery of this Agreement and the Note and the performance of its obligations contained therein. 6. Section 1.03(a) of the Affiliation Agreement is hereby modified in the following respects: (a) the figure "15%" in lines three and eight thereof is deleted and the figure "10%" is inserted in its place; (b) the term "the total combined voting power of the Voting Securities then outstanding" appearing in lines three and four thereof is deleted and replaced by the term "the total number of securities of the Company entitled to vote generally for the election of directors, including Shares, or outstanding securities convertible into such voting securities, but excluding options, warrants and other rights to acquire such voting securities (collectively "Outstanding Securities")"; (c) the term "the total combined voting power of the Voting Securities then outstanding" appearing in lines eight and nine thereof is deleted and replaced by the term "the Outstanding Securities"; and (d) in all other respects, Section 1.03(a) shall remain unchanged. 2 Exhibit 10.6 ------- 7. Section 6.01(d) of the Affiliation Agreement is hereby modified in the following respects: (a) to delete the term "10% of the total combined voting power of the Voting Securities outstanding at such time" appearing in lines two, three and four thereof and insert the term "10% of the Outstanding Securities at such time" in its place; (b) to delete the term "total combined voting power" appearing in line five and insert the term "Voting Securities" in its place; (c) the reference to "2.03(b)" in the tenth line thereof is deleted and replaced by "2.03"; and (d) in all other respects, Section 6.01(d) shall remain unchanged. 8. With the exception of the waiver contained in paragraph 4 and the modifications contained in paragraphs 6 and 7 of this Agreement, all covenants, undertakings and agreements contained in the Affiliation Agreement and the Marketing Agreement are and shall remain in effect and the respective obligations and rights of the Company, Harnischfeger and Beloit therein are not otherwise amended. 9. This Agreement may not be modified, amended, altered or supplemented except by a written agreement signed by the Company, Harnischfeger and Investor which agreement shall be authorized by all necessary corporate action of each party, provided that paragraphs 1, 2 and 3 may be modified, amended, altered or supplemented without the written agreement of Harnischfeger and provided further that paragraphs 6 and 7 may be modified, amended, altered or supplemented without the written agreement of Investor. All representations, promises or other inducements made to cause either party to enter into this Agreement are set forth herein. Each party may waive any condition to the obligations of such party hereunder; all such waivers to be in writing. 3 Exhibit 10.6 ------ 10. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the successors of the parties hereto. Except as otherwise provided herein, this Agreement shall not be assignable. 11. Each party hereto shall pay its own expenses incurred in connection with this Agreement. 12. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall deemed to have been duly given upon receipt) by delivery, by hand, by mail (registered or certified mail, postage prepaid, return receipt requested), by overnight courier or by telex or telecopy as follows: If to the Company: Measurex Corporation One Results Way Cupertino, California 95014 Attention: Chief Executive Officer With copies to: Brobeck, Phleger & Harrison Spear Street Tower One Market Plaza San Francisco, California 94105 Attention: John W. Larson, Esq. If to Harnischfeger: Harnischfeger Industries, Inc. 13400 Bishops Lane Brookfield, Wisconsin 53005 Attention: Chief Executive Officer With copies to: Harnischfeger Industries, Inc. 13400 Bishops Lane Brookfield, Wisconsin 53005 Attention: General Counsel If to Investor: HIHC, Inc. Bank of Delaware Building 4 Exhibit 10.6 ---- Suite 512, 300 Delaware Avenue Wilmington, Delaware 19801 With copies to: Harnischfeger Industries, Inc. 13400 Bishops Lane Brookfield, Wisconsin 53005 Attention: General Counsel or to such other address as any party may have furnished to the other in writing in accordance herewith. 13. If any term or provision of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 14. This Agreement contains the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, warranties, covenants or undertakings other than those expressly set forth herein with respect to any matter. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. 15. No failure or delay on the part of either party in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights or remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. 16. This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of Delaware. 17. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 5 Exhibit 10.6 ----- IN WITNESS WHEREOF, the Company and Investor have caused this Agreement to be executed as of the day and year first above written. COMPANY: -------- MEASUREX CORPORATION By: __________________________ Senior Vice President and Chief Financial OFficer HARNISCHFEGER: -------------- HARNISCHFEGER INDUSTRIES, INC. By: _________________________ Chairman and Chief Executive Officer INVESTOR: -------- HIHC, INC. By: _________________________ Title: 6 EX-10.13 5 FIRST AMEND CREDIT AGMT Exhibit 10.13 ----- FIRST AMENDMENT TO CREDIT AGREEMENT ----------------------------------- THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") dated as of this ____ day of July, 1994, by and between ABN AMRO BANK N.V. SAN ---------------------- FRANCISCO INTERNATIONAL BRANCH AND/OR CAYMAN ISLANDS BRANCH ("Bank") and - ----------------------------------------------------------- MEASUREX CORPORATION, a Delaware corporation ("Company"), - -------------------- W I T N E S S E T H: WHEREAS, the parties hereto entered into that certain Credit Agreement, dated July 22, 1993 (the "Credit Agreement"), pursuant to which Bank agreed to lend to Company the principal amount of twenty million Dollars ($20,000,000) plus interest thereon with a maturity date of July 21, 1994; and WHEREAS, the parties hereto desire to amend the Credit Agreement to extend the maturity date and to amend certain other provisions of the Credit Agreement as set forth herein: NOW, THEREFORE, in consideration of the premises set forth above and other good and valuable considerations, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. All capitalized terms used herein and not otherwise ----------- defined herein shall have the meanings given to such terms in the Credit Agreement. 2. Extension of Termination Date. ----------------------------- (a) The definition of "Termination Date" contained in Article 1 of the Credit Agreement is hereby amended by deleting the date "July 21, 1994" and replacing such date with the following date: "July 20, 1995." (b) The first sentence of Section 2.6 of the Credit Agreement is hereby deleted in its entirety and replaced with the following sentence: "The Facility established hereunder shall terminate on the Termination Date." 1 Exhibit 10.13 ------- 3. Issuance of Letters of Credit. Section 3.1 of the Credit Agreement is ----------------------------- hereby amended by deleting the phrase "two million five hundred thousand Dollars ($2,500,000)" from the first sentence of such section and replacing such phrase with the following phrase: "five million Dollars ($5,000,000)." 4. Commitment Fee. The first sentence of Section 2.7 of the Credit -------------- Agreement is hereby deleted in its entirety and replaced with the following sentence: "The Company agrees to pay to the Bank a commitment fee (the "Commitment Fee") for the period from the Effective Date to the Termination Date computed (on the basis of days elapsed and a year of three hundred sixty (360) days) on the unused amount of the Maximum Amount as follows: (a) at a rate equal to three eighths of one percent (0.375%) per annum on that portion of the unused amount of the Maximum Amount up to and including five million Dollars ($5,000,000) minus the aggregate undrawn amount of Letters of Credit issued hereunder with expiration dates more than twenty-four (24) months after the date of issuance, and (b) at a rate equal to one quarter of one percent (0.25%) per annum on the remainder of the unused amount of the Maximum Amount." 5. Ratification of Credit Agreement. Except as amended hereby, all of -------------------------------- the provisions set forth in the Credit Agreement remain in full force and effect. From and after the date hereof, any reference in the Credit Agreement to "this Agreement" shall mean the Credit Agreement as amended by this First Amendment. 6. Severability. If any provision of this First Amendment shall be held ------------ to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 7. Governing Law. This First Amendment shall be governed by and ------------- construed in accordance with the internal laws of the State of California. 8. Counterparts. This First Amendment may be executed in any number of ------------ counterparts, all of which together shall constitute a single instrument, and it shall not be necessary that any counterpart be signed by all the parties hereto. 2 Exhibit 10.13 ------- 9. Headings. The headings hereof are for convenience only and are not -------- intended to affect the meaning or interpretation of this First Amendment. 10. Benefit of Agreement. This First Amendment shall inure to the -------------------- benefit of, and be enforceable by Bank, Company, and their respective successors and assigns. IN WITNESS WHEREOF, the undersigned have caused this First Amendment to Credit Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. MEASUREX CORPORATION By _______________________________ Its ___________________________ By _______________________________ Its ___________________________ ABN AMRO BANK N.V. By _______________________________ Carol A. Levine Vice President By _______________________________ Its ___________________________ 3 EX-10.14 6 SECOND AMEND CREDIT AGMT Exhibit 10.14 ------- SECOND AMENDMENT TO CREDIT AGREEMENT ------------------------------------ THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second Amendment") dated as of this 29th day of December, 1994, by and between ABN AMRO BANK N.V. ------------------ SAN FRANCISCO INTERNATIONAL BRANCH AND/OR CAYMAN ISLANDS BRANCH ("Bank") and - --------------------------------------------------------------- MEASUREX CORPORATION, a Delaware corporation ("Company"), - -------------------- W I T N E S S E T H: WHEREAS, the parties hereto entered into that certain Credit Agreement, dated July 22, 1993, as amended by a First Amendment to Credit Agreement dated as of July 8, 1994 (as so amended, the "Credit Agreement"), pursuant to which Bank agreed to provide certain credit facilities to Company; WHEREAS, Company has requested Bank to amend one financial covenant and waive another financial covenant set forth in the Credit Agreement; and WHEREAS, Bank has agreed to such an amendment and waiver upon the terms and subject to the conditions set forth herein: NOW, THEREFORE, in consideration of the premises set forth above and other good and valuable considerations, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. All capitalized terms used ----------- herein and not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. 2. Amendment. The Credit Agreement shall be --------- and hereby is amended by changing clause (iv) of Section 5.7 to read in its entirety as follows: (iv) the lesser of (x) forty-eight million, five hundred thousand Dollars ($48,500,000) or (y) the aggregate amount expended by the Company on and after April 21, 1993 to reacquire up to two million, five hundred thousand (2,500,000) shares of common stock (the "Reacquired Shares"). 3. Waiver. Bank hereby waives compliance by Company with the ------ financial covenant set forth in Section 6.3 of the Credit Agreement for the quarter ending March 5, 1995 (and only for such quarter) and agrees that the failure of Company to comply with 1 Exhibit 10.14 ------- Section 6.3 for such quarter (and only for such quarter) shall not constitute an Event of Default. 4. Ratification of Credit Agreement. Except as amended or waived -------------------------------- hereby, all of the provisions set forth in the Credit Agreement remain in full force and effect. From and after the date hereof, any reference in the Credit Agreement to "this Agreement" shall mean the Credit Agreement as amended by this Second Amendment. 5. Severability. If any provision of this Second Amendment shall be ------------ held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 6. Governing Law. This Second Amendment shall be governed by and ------------- construed in accordance with the internal laws of the State of California. 7. Counterparts. This Second Amendment may be executed in any number ------------ of counterparts, all of which together shall constitute a single instrument, and it shall not be necessary that any counterpart be signed by all the parties hereto. 8. Headings. The headings hereof are for convenience only and are -------- not intended to affect the meaning or interpretation of this Second Amendment. 9. Benefit of Agreement. This Second Amendment shall inure to the -------------------- benefit of, and be enforceable by Bank, Company, and their respective successors and assigns. [The next page is the signature page.] 2 Exhibit 10.14 ------- IN WITNESS WHEREOF, the undersigned have caused this Second Amendment to Credit Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. MEASUREX CORPORATION By ___________________________ Name: _____________________ Title: ____________________ By ___________________________ Name: _____________________ Title: ____________________ ABN AMRO BANK N.V. By ___________________________ Name: _____________________ Title: ____________________ By ___________________________ Name: _____________________ Title: ____________________ 3 EX-10.15 7 THIRD AMEND CREDIT AGMT Exhibit 10.15 ----- THIRD AMENDMENT TO CREDIT AGREEMENT ----------------------------------- THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Third Amendment") dated as of this 10th day of February, 1995, by and between ABN AMRO BANK N.V. SAN ---------------------- FRANCISCO INTERNATIONAL BRANCH AND/OR CAYMAN ISLANDS BRANCH ("Bank") and - ----------------------------------------------------------- MEASUREX CORPORATION, a Delaware corporation ("Company"), - -------------------- W I T N E S S E T H: WHEREAS, the parties hereto entered into that certain Credit Agreement, dated July 22, 1993, as amended by a First Amendment to Credit Agreement dated as of July 8, 1994 and a Second Amendment to Credit Agreement dated as of December 29, 1994 (as so amended, the "Credit Agreement"), pursuant to which Bank agreed to provide certain credit facilities to Company; WHEREAS, Company has requested Bank to amend two financial covenants set forth in the Credit Agreement; and WHEREAS, Bank has agreed to such an amendment upon the terms and subject to the conditions set forth herein: NOW, THEREFORE, in consideration of the premises set forth above and other good and valuable considerations, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. All capitalized terms used herein and not otherwise ----------- defined herein shall have the meanings given to such terms in the Credit Agreement. 2. Amendment. The Credit Agreement shall be and hereby is amended as --------- follows: (a) Section 1.1 is amended by (i) deleting the definition of "Consolidated Tangible Net Worth" set forth therein and (ii) adding thereto, in the appropriate alphabetical order, new definitions of "Subsidiaries" and "Tangible Net Worth" to read in their entirety as follows : "Subsidiary" of any Person shall mean any corporation, association, partnership, joint venture or other business entity of which more than 50% of the voting stock or other equity interests (in the case of 1 Exhibit 10.15 ----- Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of the Company. "Tangible Net Worth" shall mean total assets (exclusive of ------------------ goodwill, patents, trademarks, trade names, organization expense, treasury stock, unamortized debt discount and premium, deferred charges and other like intangibles) less all liabilities (including accrued and deferred income taxes and subordinated liabilities). (b) Section 5.7 is deleted. (c) Section 6.3 is amended to read in its entirety as follows: Section 6.3 Quick Ratio. At the end of each fiscal quarter of ----------- the Company, the Company shall not permit on a consolidated basis the ratio of (a) the sum of cash, cash equivalents, short-term marketable investments (each as determined in accordance with GAAP), and receivables net of bad debt reserves maintained in accordance with GAAP, to (b) the sum of all amounts which would, in accordance with GAAP, be included under current liabilities on a consolidated balance sheet of the Company and its Subsidiaries and, without duplication, all Syndicated Loans, to be less than 1.10 to 1.00. (As used in this Section 6.3, "Syndicated Loans" shall mean all loans outstanding under the Credit Agreement dated as of February 10, 1995 among the Company, the financial institutions from time to time parties to such agreement, and Bank of America National Trust and Savings Association, as agent for such financial institutions, as such agreement is amended, modified or replaced from time to time.) (d) Section 6.5 is amended by adding thereto at the end a new sentence to read in its entirety as follows: This Section 6.5 shall not be deemed to restrict the Company from selling or disposing of any Margin Stock consisting of common stock of the Company. 2 Exhibit 10.15 ----- (e) Article 6 is further amended by adding thereto, immediately after Section 6.6, a new Section 6.7 to read in its entirety as follows: Section 6.7 Tangible Net Worth. At the end of each fiscal ------------------ quarter of the Company, the Company shall not permit on a consolidated basis the Tangible Net Worth for the Company to be less than the sum of (1) $131,421,650 plus (b) 50% of quarterly net income for the Company for each fiscal quarter ending subsequent to the fiscal quarter ended November 27, 1994 with no reduction for net losses, plus (c) the sum of (1) 100% of the net proceeds for any capital stock issued by the Company after the fiscal quarter ended November 27, 1994 less (2) 100% of the net purchase price paid by the Company for repurchases of its outstanding shares of common stock pursuant to the Company's stock option and employee stock option plans; provided, however, that if the ----------------- amount determined pursuant to clause (2) of this clause (c) exceeds the amount under clause (1) of this clause (c) and such excess is greater than $5,00,000, then for purposes of this calculation, $5,000,000 shall be subtracted from the sum of clauses (a) and (b), and provided, -------- further, that the aggregate amount subtracted from the sum of clauses ------- (a) and (b) for any calendar year shall be limited to $5,000,000. (f) Section 8.1(b) is amended to read in its entirety as follows: (b) The Company shall fail to observe or perform any covenant contained in Article 6; 3. Termination of Waiver. In Section 3 of the Second Amendment to Credit --------------------- Agreement dated as of December 29, 1994 between Borrower and Bank (the "Second Amendment"), Bank waived compliance by Company with the financial covenant set forth in Section 6.3 of the Credit Agreement for the quarter ending March 5, 1995 and agreed that the failure of Company to comply with Section 6.3 for such quarter would not constitute an Event of Default. Such waiver and agreement are hereby terminated and are no longer of any force or effect. 4. Ratification of Credit Agreement. Except as amended or waived hereby, -------------------------------- all of the provisions set forth in the Credit Agreement remain in full force and effect. From and after the date hereof, any reference in the Credit Agreement to "this Agreement" shall mean the Credit Agreement as amended by this Third Amendment. 3 Exhibit 10.15 ----- 5. Severability. If any provision of this Third Amendment shall be held ------------ to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 6. Governing Law. This Third Amendment shall be governed by and ------------- construed in accordance with the internal laws of the State of California. 7. Counterparts. This Third Amendment may be executed in any number of ------------ counterparts, all of which together shall constitute a single instrument, and it shall not be necessary that any counterpart be signed by all the parties hereto. 8. Headings. The headings hereof are for convenience only and are not -------- intended to affect the meaning or interpretation of this Third Amendment. 9. Benefit of Agreement. This Third Amendment shall inure to the benefit -------------------- of, and be enforceable by Bank, Company, and their respective successors and assigns. IN WITNESS WHEREOF, the undersigned have caused this Third Amendment to Credit Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. MEASUREX CORPORATION By ___________________________ Name: _____________________ Title: ____________________ By ___________________________ Name: _____________________ Title: ____________________ ABN AMRO BANK N.V. By ___________________________ Name: _____________________ Title: ____________________ 4 Exhibit 10.15 ----- By ___________________________ Name: _____________________ Title: ____________________ 5 EX-10.16 8 CREDIT AGMT DATED 02/10/95 Exhibit 10.16 ----- Execution Copy - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CREDIT AGREEMENT DATED AS OF FEBRUARY 10, 1995 AMONG MEASUREX CORPORATION, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, AS AGENT, AND THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit 10.16 ----- TABLE OF CONTENTS -----------------
Section Page - ------- ---- ARTICLE I DEFINITIONS................................ 1.01 Certain Defined Terms............................................ 1 1.02 Other Interpretive Provisions.................................... 14 1.03 Accounting Principals............................................ 15 ARTICLE II THE CREDITS................................ 16 2.01 Amounts and Terms of Commitments................................. 16 (a) Committed Revolving Loans................................... 16 (b) Discretionary Revolving Loans............................... 16 2.02 Loan Accounts.................................................... 16 2.03 Procedure for Borrowing.......................................... 17 2.04 Local Currency Loans............................................. 18 2.05 Conversion and Continuation Elections............................ 20 2.06 Voluntary Termination or Reduction of Commitments................ 21 2.07 Optional Prepayments............................................. 22 2.08 Repayment and Mandatory Prepayment............................... 22 2.09 Interest......................................................... 22 2.10 Fees (a) Agency Fees................................................. 23 (b) Facility Fees; Commitment Fee............................... 23 2.11 Computation of Fees and Interest................................. 24 2.12 Payments by the Company or Other Borrowing Entities.............. 25 2.13 Payments By the Banks to the Agent............................... 26 2.14 Sharing of Payments, Etc......................................... 26 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY........................... 27 3.01 Taxes............................................................ 27 3.02 Illegality....................................................... 28 3.03 Increased Costs and Reduction of Return.......................... 29 3.04 Funding Losses................................................... 29 3.05 Inability to Determine Rates..................................... 30 3.06 Certificates of Banks............................................ 31 3.07 Survival......................................................... 31
i Exhibit 10.16 ----- ARTICLE IV CONDITIONS PRECEDENT...................... 31 4.01 Conditions to Initial Loans...................................... 31 (a) Credit Agreement; Guaranty.................................. 31 (b) Resolutions; Incumbency.................................... 31 (c) Organization Documents; Good Standing....................... 32 (d) Legal Opinion............................................... 32 (e) Payment of Fees............................................. 32 (f) Certificate................................................. 33 (g) Other Documents............................................. 33 4.02 Conditions to All Borrowings (a) Notice of Borrowing or Conversion/Continuation....................32 (b) Continuation of Representations and Warranties....................32 (c) No Existing Default......................................... 33 4.03 Conditions to All Loans to Other Borrowing Entities....................33 (a) Credit Documentation........................................ 33 (b) Compliance with Conditions Precedent........................ 33 (c) Other Evidence.............................................. 33 ARTICLE V REPRESENTATIONS AND WARRANTIES................ 33 5.01 Corporate Existence and Power.................................... 33 5.02 Corporate Authorization; No Contravention........................ 34 5.03 Governmental Authorization....................................... 34 5.04 Binding Effect................................................... 34 5.05 Litigation....................................................... 35 5.06 No Default....................................................... 35 5.07 ERISA Compliance................................................. 35 5.08 Use of Proceeds; Margin Regulations.............................. 36 5.09 Title to Properties.............................................. 36 5.10 Taxes............................................................ 36 5.11 Financial Condition.............................................. 36 5.12 Environmental Matters............................................ 37 5.13 Regulated Entities............................................... 37 5.14 No Burdensome Restrictions....................................... 37 5.15 Copyrights, Patents, Trademarks and Licenses, etc................ 37 5.16 Subsidiaries..................................................... 38 5.17 Insurance........................................................ 38 5.18 Full Disclosure.................................................. 38 ARTICLE V AFFIRMATIVE COVENANTS..................... 38 6.01 Financial Statements............................................. 38
ii Exhibit 10.16 ----- 6.02 Certificates; Other Information.................................. 39 6.03 Notices.......................................................... 40 6.04 Preservation of Corporate Existence, Etc......................... 41 6.05 Maintenance of Property.......................................... 41 6.06 Insurance........................................................ 41 6.07 Payment of Obligations........................................... 41 6.08 Compliance with Laws............................................. 42 6.09 Compliance with ERISA............................................ 42 6.10 Inspection of Property and Books and Records..................... 42 6.11 Environmental Laws............................................... 42 6.12 Use of Proceeds.................................................. 43 ARTICLE VII NEGATIVE COVENANTS....................... 43 7.01 Limitation on Liens.............................................. 43 7.02 Disposition of Assets............................................ 45 7.03 Consolidations and Mergers....................................... 46 7.04 Loans and Investments............................................ 46 7.05 Limitations on Indebtedness...................................... 47 7.06 Transactions with Affiliates..................................... 48 7.07 Use of Proceeds.................................................. 48 7.08 Contingent Obligations........................................... 48 7.09 Joint Ventures................................................... 49 7.10 Lease Obligations................................................ 49 7.11 Restricted Payments.............................................. 49 7.12 ERISA............................................................ 49 7.13 Change in Business............................................... 50 7.14 Accounting Changes............................................... 50 7.15 Quick Ratio...................................................... 50 7.16 Tangible Net Worth............................................... 50 7.17 Leverage Ratio................................................... 50 7.18 Profitability.................................................... 50 7.19 Capital Expenditures............................................. 51 ARTICLE VIII EVENTS OF DEFAULT....................... 51 8.01 Event of Default................................................. 51 (a) Non-Payment................................................. 51 (b) Representation or Warranty.................................. 51 (c) Specific Defaults........................................... 51 (d) Other Defaults.............................................. 51 (e) Cross-Default............................................... 51 (f) Insolvency; Voluntary Proceedings........................... 52 (g) Involuntary Proceedings..................................... 52 (h) ERISA....................................................... 52 (i) Monetary Judgements......................................... 52
iii Exhibit 10.16 ----- (j) Non-Monetary Judgements..................................... 53 (k) Change of Control........................................... 53 (l) Loss of Licenses............................................ 53 (m) Adverse Change.............................................. 53 (n) Guaranty.................................................... 53 8.02 Remedies......................................................... 53 8.03 Rights Not Exclusive............................................. 54 8.04 Certain Financial Covenant Defaults.............................. 54 ARTICLE IX THE AGENT AND THE ISSUING BANK..... 54 9.01 Appointment and Authorization.................................... 54 9.02 Delegation of Duties............................................. 54 9.03 Liability of Agent............................................... 55 9.04 Reliance by Agent................................................ 55 9.05 Notice of Default................................................ 56 9.06 Credit Decision.................................................. 56 9.07 Indemnification of Agent......................................... 57 9.08 Agent in Individual Capacity..................................... 57 9.09 Successor Agent.................................................. 57 9.10 Withholding Tax.................................................. 58 ARTICLE X 10.01 Amendments and Waivers...................................... 59 10.02 Notices..................................................... 60 10.03 No Waiver; Cumulative Remedies.............................. 61 10.04 Costs and Expenses.......................................... 61 10.05 Company Indemnification..................................... 61 10.06 Payment Set Aside........................................... 62 10.07 Successors and Assigns...................................... 62 10.08 Assignments, Participations, etc............................ 63 10.09 Confidentiality............................................. 64 10.10 Set-off..................................................... 65 10.11 Automatic Debits of Fees.................................... 65 10.12 Notification of Addresses, Lending Offices, Etc................................................ 65 10.13 Counterparts................................................ 66 10.14 Severability................................................ 66 10.15 No Third Parties Benefitted................................. 66 10.16 Governing Law and Jurisdiction.............................. 66 10.17 Waiver of Jury Trial........................................ 66 10.18 Entire Agreement............................................ 67 10.19 Obligations of Other Borrowing Entities..................... 67
iv Exhibit 10.16 ----- SCHEDULES - --------- Schedule 2.01 Commitments and Pro Rata Shares Schedule 5.05 Litigation Schedule 5.06 Certain Defaults Schedule 5.12 Environmental Matters Schedule 5.16 Subsidiaries Schedule 7.01 Permitted Liens Schedule 7.05 Permitted Indebtedness Schedule 10.02 Offshore and Domestic Lending Offices; Addresses for Notices EXHIBITS - -------- Exhibit A Form of Notice of Borrowing Exhibit B Form of Notice of Conversion/Continuation Exhibit C Form of Compliance Certificate Exhibit D Form of Opinion of Counsel Exhibit E Form of Assignment and Acceptance Agreement Exhibit F Form of Promissory Note Exhibit G Form of Guaranty v Exhibit 10.16 ----- CREDIT AGREEMENT ---------------- This CREDIT AGREEMENT is entered into as of February 10, 1995, among Measurex Corporation, a Delaware corporation (the "Company"), the several ------- financial institutions from time to time party to this Agreement (collectively, the "Banks"; individually, a "Bank"), and Bank of America National Trust and ----- ---- Savings Association, as agent for the Banks. WHEREAS, the Banks have agreed to make available to the Company a revolving credit facility upon the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows: ARTICLE I DEFINITIONS ----------- 1.01 Certain Defined Terms. The following terms have the following --------------------- meanings: "Acquisition" means any transaction or series of related transactions ----------- for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of 50% of the capital stock, partnership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary) provided that the Company or the Subsidiary is the surviving entity. "Affiliate" means, as to any Person, any other Person which, directly --------- or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise. "Agent" means BofA in its capacity as agent for the Banks hereunder, ----- and any successor agent arising under Section 9.09. "Agent-Related Persons" means the Agent together with its Affiliates, --------------------- and the officers, directors, employees, agents and attorneys-in-fact of the Agent and its Affiliates. "Agent's Payment Office" means the address for payments set forth on ---------------------- Schedule 10.02 in relation to the Agent, or -------------- 1 Exhibit 10.16 ----- such other address as the Agent may from time to time specify. "Agreement" means this Credit Agreement. --------- "Applicable Margin" means ----------------- (i) with respect to Base Rate Loans, 0.00%; and (ii) with respect to Offshore Rate Loans, 0.75%; provided, however, that on any day when the Utilization Rate is greater than 50%, the Applicable Margin for Offshore Rate Loans shall be 1.00%. "Assignee" has the meaning specified in subsection 10.08(a). -------- "Attorney Costs" means and includes all fees and disbursements of any -------------- law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel. "Bank" has the meaning specified in the introductory clause hereto. ---- "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 --------------- U.S.C. (S)101, et seq.). ------- "Base Rate" means, for any day, the higher of: (a) 0.50% per annum --------- plus the latest Federal Funds Rate; and (b) the rate of interest in effect for such day as publicly announced from time to time by BofA in San Francisco, California, as its "reference rate." (The "reference rate" is a rate set by BofA based upon various factors including BofA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.) Any change in the reference rate announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Loan" means a Loan that bears interest based on the Base -------------- Rate. "BofA" means Bank of America National Trust and Savings Association, a ---- national banking association. "Borrowing" means a borrowing hereunder consisting of (a) Revolving --------- Loans of the same Type made to the Company on the same day by the Banks under Article II, and, other than in the case of Base Rate Loans, having the same Interest Period and (b) Local Currency Loans made to any Other Borrowing Entity on the same day by the Banks under Section 2.04 and having the same Interest Period. 2 Exhibit 10.16 ----- "Borrowing Date" means any date on which a Borrowing occurs under -------------- Section 2.03. "Business Day" means any day other than a Saturday, Sunday or other day ------------ on which commercial banks in New York City or San Francisco are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such a day on which dealings are carried on in the London interbank market and, if the applicable Business Day relates to any Local Currency Loan, means such a day on which commercial banks are open for foreign exchange business in London, England, and on which dealings in the relevant Local Currency are carried on in the applicable offshore foreign exchange interbank market in which disbursement of or payment in such Local Currency will be made or received hereunder. "Capital Adequacy Regulation" means any guideline, request or --------------------------- directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. "Change in Control" means the direct or indirect acquisition by any ----------------- person (as such term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act), or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act), of (a) beneficial ownership of issued and outstanding shares of voting stock of the Company, the result of which acquisition is that such person or such group possesses in excess of 40% of the combined voting power of all then-issued and outstanding voting stock of the Company, or (b) the power to elect, appoint, or cause the election or appointment of at least a majority of the members of the board of directors of the Company. "Closing Date" means the date on which all conditions precedent set ------------ forth in Section 4.01 are satisfied or waived by all Banks (or, in the case of subsection 4.01(e), waived by the Person entitled to receive such payment). "Code" means the Internal Revenue Code of 1986, and regulations ---- promulgated thereunder. "Commitment", as to each Bank, has the meaning specified in Section ---------- 2.01. "Compliance Certificate" means a certificate substantially in the form ---------------------- of Exhibit C. --------- "Computation Date" has the meaning specified in subsection 2.04(f). ---------------- "Contingent Obligation" means, as to any Person, any direct or --------------------- indirect liability of that Person, whether or not contingent, with or without recourse, (a) with respect to any Indebtedness, lease, dividend, letter of credit or other 3 Exhibit 10.16 ----- obligation (the "primary obligations") of another Person (the "primary obligor"), including any obligation of that Person (i) to purchase, repurchase or otherwise acquire such primary obligations or any security therefor, (ii) to advance or provide funds for the payment or discharge of any such primary obligation, or to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings or payments; (c) to purchase any materials, supplies or other property from, or to obtain the services of, another Person if the relevant contract or other related document or obligation requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether delivery of such materials, supplies or other property is ever made or tendered, or such services are ever performed or tendered, or (d) in respect of any Swap Contract. The amount of any Contingent Obligation shall, in the case of Guaranty Obligations, be deemed equal to the stated or determinable amount of the primary obligation in respect of which such Guaranty Obligation is made or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof, and in the case of other Contingent Obligations, shall be equal to the maximum reasonably anticipated liability in respect thereof. "Contractual Obligation" means, as to any Person, any provision of any ---------------------- security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "Conversion/Continuation Date" means any date on which, under Section ---------------------------- 2.05, the Company (a) converts Loans of one Type to another Type, or (b) continues as Loans of the same Type, but with a new Interest Period, Loans having Interest Periods expiring on such date. "Default" means any event or circumstance which, with the giving of ------- notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Dollars", "dollars" and "$" each mean lawful money of the United ------- ------- - States. 4 Exhibit 10.16 ----- "Eligible Assignee" means (i) a commercial bank organized under the ----------------- laws of the United States, or any state thereof, and having a combined capital and surplus of at least $100,000,000; (ii) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least $100,000,000, provided that such bank is acting through a branch or agency located in the United States; and (iii) a Person that is primarily engaged in the business of commercial banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is a Subsidiary. "Environmental Claims" means all claims, however asserted, by any -------------------- Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment. "Environmental Laws" means all federal, state or local laws, statutes, ------------------ common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters. "Equivalent Amount" means the equivalent amount in Dollars of an ----------------- amount expressed in a Local Currency, calculated at the applicable Exchange Rate. "ERISA" means the Employee Retirement Income Security Act of 1974, and ----- regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not --------------- incorporated) under common control with the Company within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). "ERISA Event" means (a) a Reportable Event with respect to a Pension ----------- Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the 5 Exhibit 10.16 ----- termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate. "Eurodollar Reserve Percentage" has the meaning specified in the ----------------------------- definition of "Offshore Rate". "Event of Default" means any of the events or circumstances specified ---------------- in Section 8.01. "Exchange Act" means the Securities and Exchange Act of 1934, and ------------ regulations promulgated thereunder. "Exchange Rate" means for any Local Currency, the rate quoted by BofA ------------- as the spot rate for the purchase by BofA of such Local Currency with Dollars through its Foreign Exchange Trading Center Number 5193 San Francisco, California (or such other of its offices as BofA may designate from time to time) at approximately 8:00 a.m. (San Francisco time) on the date two Business Days prior to the date on which the foreign exchange computation is to be made. "Existing Loan" means the Japanese Yen loan made by BofA through its ------------- Tokyo branch to Measurex Japan Ltd., which loan has a Dollar equivalent principal balance as of the Closing Date of approximately $4,000,000. "FDIC" means the Federal Deposit Insurance Corporation, and any ---- Governmental Authority succeeding to any of its principal functions. "Federal Funds Rate" means, for any day, the rate set forth in the ------------------ weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, "H.15(519)") on the preceding Business Day opposite the caption "Federal Funds (Effective)"; or, if for any relevant day such rate is not so published on any such preceding Business Day, the rate for such day will be the arithmetic mean as determined by the Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Agent. "Fee Letter" has the meaning specified in subsection 2.10(a). ---------- "FRB" means the Board of Governors of the Federal Reserve System, and --- any Governmental Authority succeeding to any of its principal functions. "GAAP" means generally accepted accounting principles set forth from ---- time to time in the opinions and 6 Exhibit 10.16 ----- pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "Governmental Authority" means any nation or government, any state or ---------------------- other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guaranty" means the Guaranty executed by the Company on the Closing -------- Date substantially in the form of Exhibit G. "Guaranty Obligation" has the meaning specified in the definition of ------------------- "Contingent Obligation." "Indebtedness" of any Person means, without duplication, (a) all ------------ indebtedness for borrowed money; (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business on ordinary terms); (c) all non-contingent reimbursement or payment obligations with respect to Surety Instruments; (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by such Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property); (f) all obligations with respect to capital leases; (g) all net obligations with respect to Swap Contracts; (h) all indebtedness referred to in clauses (a) through (g) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (i) all Guaranty Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (g) above. "Indemnified Liabilities" has the meaning specified in Section 10.05. ----------------------- "Indemnified Person" has the meaning specified in Section 10.05. ------------------ 7 Exhibit 10.16 ----- "Independent Auditor" has the meaning specified in subsection 6.01(a). ------------------- "Insolvency Proceeding" means (a) any case, action or proceeding --------------------- before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding- up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "Interest Payment Date" means, as to any Loan other than a Base Rate --------------------- Loan, the last day of each Interest Period applicable to such Loan and, as to any Base Rate Loan, the last Business Day of each calendar quarter and each date such Loan is converted into another Type of Loan, provided, -------- however, that if any Interest Period for an Offshore Rate Loan or a Local ------- Currency Loan exceeds three months, the date that falls three months after the beginning of such Interest Period and after each Interest Payment Date thereafter is also an Interest Payment Date. "Interest Period" means, as to any Offshore Rate Loan or Local --------------- Currency Loan, the period commencing on the Borrowing Date of such Loan or on the Conversion/ Continuation Date on which an Offshore Rate Loan is converted into or continued as an Offshore Rate Loan, and ending on the date one, two, three or six months thereafter as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation; provided that: -------- (i) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day; (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period for any Loan shall extend beyond the Revolving Termination Date. "IRS" means the Internal Revenue Service, and any Governmental --- Authority succeeding to any of its principal functions under the Code. 8 Exhibit 10.16 ----- "Joint Venture" means a single-purpose corporation, limited liability ------------- company, partnership, joint venture or other similar legal arrangement (whether created by contract or conducted through a separate legal entity) now or hereafter formed by the Company or any of its Subsidiaries with another Person in order to conduct a common venture or enterprise with such Person. "Lending Office" means, as to any Bank, the office or offices of such -------------- Bank specified as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as the case may be, on Schedule 10.02, or such -------------- other office or offices as such Bank may from time to time notify the Company and the Agent. "Lien" means any security interest, mortgage, deed of trust, pledge, ---- hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement naming the owner of the asset to which such lien relates as debtor, under the Uniform Commercial Code or any comparable law) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease or any financing statement filed by any such lessor. "Loan" means an extension of credit by a Bank to the Company or an ---- Other Borrowing Entity under Article II, and may be a Base Rate Loan or an Offshore Rate Loan (each, a "Type" of Loan) or any Local Currency Loan. ---- "Loan Documents" means this Agreement, the Guaranty, any Notes, the -------------- Fee Letter and all other documents delivered to the Agent or any Bank in connection herewith (including all documents executed by the Company, any Other Borrowing Entity, the Agent or any of the Banks in connection with the making of any Local Currency Loans). "Local Currency" means a lawful currency other than United States -------------- dollars which is available at branches of each of the Banks located in a country other than the United States and is the legal tender of that country where such branches are located. "Local Currency Loan" means a Loan in a Local Currency made pursuant ------------------- to and in accordance with the provisions of Section 2.04. "Majority Banks" means at any time, Banks then holding at least 51% of -------------- the then aggregate unpaid principal amount of the Loans, or, if no such principal amount is then 9 Exhibit 10.16 ----- outstanding, Banks then having at least 51% of the Commitments. "Margin Stock" means "margin stock" as such term is defined in ------------ Regulation G, T, U or X of the FRB. "Material Adverse Effect" means (a) a material adverse change in, or a ----------------------- material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of the Company or the Company and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Company or any Subsidiary to perform under any Loan Document and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company or any Subsidiary of any Loan Document. "Multiemployer Plan" means a "multiemployer plan", within the meaning ------------------ of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "Note" means a promissory note executed by the Company in favor of a ---- Bank pursuant to subsection 2.02(b), in substantially the form of Exhibit F. --------- "Notice of Borrowing" means a notice in substantially the form of ------------------- Exhibit A. --------- "Notice of Conversion/Continuation" means a notice in substantially --------------------------------- the form of Exhibit B. --------- "Obligations" means all advances, debts, liabilities, obligations, ----------- covenants and duties arising under any Loan Document owing by the Company or any Other Borrowing Entity to any Bank, the Agent, or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. "Offshore Rate" means, for any Interest Period, with respect to ------------- Offshore Rate Loans comprising part of the same Borrowing, the rate of interest per annum (rounded upward to the next 1/16th of 1%) determined by the Agent as follows: Offshore Rate = LIBOR ----------------------------------- 1.00 - Eurodollar Reserve Percentage Where, "Eurodollar Reserve Percentage" means for any day for any ----------------------------- Interest Period the maximum reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day (whether or not applicable to any Bank) under regulations issued from time to time by the FRB for determining the maximum 10 Exhibit 10.16 ----- reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"); and "LIBOR" means the rate of interest per annum determined by the ----- Agent to be the rates (rounded upward to the next 1/16th of 1%) of interest per annum notified to the Agent by the Reference Bank as the rate of interest at which dollar deposits in the approximate amount of the amount of the Loan to be made or continued as, or converted into, an Offshore Rate Loan by the Reference Bank and having a maturity comparable to such Interest Period would be offered to major banks in the London interbank market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period. The Offshore Rate shall be adjusted automatically as to all Offshore Rate Loans then outstanding as of the effective date of any change in the Eurodollar Reserve Percentage. "Offshore Rate Loan" means a Loan that bears interest based on the ------------------ Offshore Rate. "Organization Documents" means, for any corporation, the certificate ---------------------- or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and all applicable resolutions of the board of directors (or any committee thereof) of such corporation. "Other Borrowing Entity" has the meaning specified in subsection ---------------------- 2.01(b). "Other Taxes" means any present or future stamp or documentary taxes ----------- or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any other Loan Document or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents. "Overnight Rate" means, for any day, the rate of interest per annum at -------------- which overnight deposits in the applicable Local Currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by BofA's London Branch to major banks in the London or other applicable offshore interbank market. "Participant" has the meaning specified in subsection 10.08(d). ----------- "PBGC" means the Pension Benefit Guaranty Corporation, or any ---- Governmental Authority succeeding to any of its principal functions under ERISA. 11 Exhibit 10.16 ----- "Pension Plan" means a pension plan (as defined in Section 3(2) of ------------ ERISA) subject to Title IV of ERISA which the Company sponsors or maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years. "Permitted Liens" has the meaning specified in Section 7.01. --------------- "Person" means an individual, partnership, corporation, business ------ trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority. "Plan" means an employee benefit plan (as defined in Section 3(3) of ---- ERISA) which the Company sponsors or maintains or to which the Company makes, is making, or is obligated to make contributions and includes any Pension Plan. "Pro Rata Share" means, as to any Bank at any time, the percentage -------------- equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of such Bank's Commitment divided by the combined Commitments of all Banks. "Reference Bank" means BofA or any successor Bank designated by the -------------- Majority Banks. "Reportable Event" means, any of the events set forth in Section ---------------- 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. "Requirement of Law" means, as to any Person, any law (statutory or ------------------ common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer" means the chief executive officer or the ------------------- president of the Company, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer or the treasurer of the Company, or any other officer having substantially the same authority and responsibility. "Revolving Loan" means Base Rate Loans and Offshore Rate Loans. -------------- "Revolving Termination Date" means the earlier to occur of: -------------------------- (a) February 10, 1998; and 12 Exhibit 10.16 ----- (b) the date on which the Commitments terminate in accordance with the provisions of this Agreement. "SEC" means the Securities and Exchange Commission, or any --- Governmental Authority succeeding to any of its principal functions. "Subsidiary" of a Person means any corporation, association, ---------- partnership, joint venture or other business entity of which more than 50% of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by such Person, or one or more of the Subsidiaries of such Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of the Company. "Surety Instruments" means all letters of credit (including standby ------------------ and commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds and similar instruments. "Swap Contract" means any agreement (including any master agreement ------------- and any agreement, whether or not in writing, relating to any single transaction) that is an interest rate swap agreement, basis swap, forward rate agreement, commodity swap, commodity option, equity or equity index swap or option, bond option, interest rate option, forward foreign exchange agreement, rate cap, collar or floor agreement, currency swap agreement, cross-currency rate swap agreement, swaption, currency option or any other, similar agreement (including any option to enter into any of the foregoing). "Tangible Net Worth" means total assets (exclusive of goodwill, ------------------ patents, trademarks, trade names, organization expense, treasury stock, unamortized debt discount and premium, deferred charges and other like intangibles) less all liabilities (including accrued and deferred income taxes and subordinated liabilities), and when determined with respect to the Company, shall be determined on a consolidated basis. "Taxes" means any and all present or future taxes, levies, imposts, ----- deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Bank and the Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by each Bank's net income by the jurisdiction under the laws of which such Bank or the Agent, as the case may be, is organized or maintains a lending office, or any political subdivision of the related state. "Type" has the meaning specified in the definition of "Loan." ---- 13 Exhibit 10.16 ----- "Unfunded Pension Liability" means the excess of a Plan's benefit -------------------------- liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used for funding that Plan pursuant to Section 412 of the Code for the applicable plan year. "United States" and "U.S." each means the United States of America. ------------- ---- "Utilization Rate" means the daily rate as determined with respect to ---------------- the credit facility described in this Agreement on each day by dividing the amount of the total outstanding Loans for such day by the combined Commitments for such day. For purposes of determining utilization of Local Currency Loans, the amount of any outstanding Local Currency Loan on any date shall be determined by converting the amount of such outstanding Local Currency Loan to its Equivalent Amount in Dollars based upon the Exchange Rate in effect as of the last Business Day of the preceding fiscal quarter. "Wholly-Owned Subsidiary" means any corporation in which (other than ----------------------- directors' qualifying shares required by law) 100% of the capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case, at the time as of which any determination is being made, is owned, beneficially and of record, by the Company, or by one or more of the other Wholly-Owned Subsidiaries, or both. 1.02 Other Interpretive Provisions. (a) The meanings of defined terms ----------------------------- are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (c) (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. (ii) The term "including" is not limiting and means "including without limitation." (iii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." 14 Exhibit 10.16 ----- (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Agreement and the table of contents are for convenience of reference only and shall not affect the interpretation of this Agreement. (f) This Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. (g) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Company, the Other Borrowing Entities and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Banks or the Agent merely because of the Agent's or Banks' involvement in their preparation. 1.03 Accounting Principles. (a) Unless the context otherwise clearly --------------------- requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. (b) References herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the Company. 15 Exhibit 10.16 ----- ARTICLE II THE CREDITS ----------- 2.01 Amounts and Terms of Commitments. -------------------------------- (a) Committed Revolving Loans. Each Bank severally agrees, on the terms ------------------------- and conditions set forth herein, to make Revolving Loans to the Company from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth on Schedule 2.01 (such amount, as the same may ------------- be reduced under Section 2.06 or changed as a result of one or more assignments under Section 10.08, such Bank's "Commitment"); provided, however, that, after ---------- -------- ------- giving effect to any Borrowing of Revolving Loans, the aggregate principal amount of all outstanding Revolving Loans and all Local Currency Loans shall not exceed the combined Commitments. In determining compliance with the immediately preceding sentence, all Loans denominated in Local Currencies shall be deemed to be converted to their Equivalent Amounts in Dollars at such time when such compliance is determined. Within the limits of each Bank's Commitment, and subject to the other terms and conditions hereof, the Company may borrow under this subsection 2.01(a), prepay pursuant to Section 2.07 and reborrow pursuant to this subsection 2.01(a). (b) Discretionary Loans. From time to time on any Business Day during ------------------- the period from the Closing Date to the Revolving Termination Date, upon the request of the Company, and if agreed to by the Agent and all the Banks in their sole discretion (except as provided in subsection 2.04(g)), each Bank agrees severally to make Local Currency Loans to the Company's Subsidiaries in accordance with Section 2.04. If the Agent and the Banks shall agree to make a Local Currency Loan to a Subsidiary of the Company, such Subsidiary shall be deemed then to be an "Other Borrowing Entity" and such Subsidiary shall remain an Other Borrowing Entity for so long as any such Local Currency Loan remains outstanding. The total amount of Revolving Loans and Local Currency Loans made to the Company and the Other Borrowing Entities shall not at any time exceed the combined Commitments. In determining compliance at any time with the immediately preceding sentence, all Local Currency Loans shall be deemed to be converted to their Equivalent Amounts in Dollars at such time when such compliance is determined. 2.02 Loan Accounts. (a) The Loans made by each Bank shall be evidenced ------------- by one or more loan accounts or records maintained by such Bank in the ordinary course of business. The loan accounts or records maintained by the Agent and each Bank shall be conclusive absent manifest error of the amount of the Loans made by the Banks to the Company or any Other Borrowing Entity and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company or any Other Borrowing Entity hereunder. 16 Exhibit 10.16 ----- (b) Upon the request of any Bank made through the Agent, the Loans made by such Bank may be evidenced by one or more Notes, instead of loan accounts. Each such Bank shall endorse on the schedules annexed to its Note(s) the date, amount and maturity of each Loan made by it and the amount of each payment of principal made by the Company or any Other Borrowing Entity with respect thereto. Each such Bank is irrevocably authorized by the Company to endorse its Note(s) and each Bank's record shall be conclusive absent manifest error; provided, however, that the failure of a Bank to make, or an error in -------- ------- making, a notation thereon with respect to any Loan shall not limit or otherwise affect the obligations of the Company hereunder or under any such Note to such Bank. 2.03 Procedure for Borrowing. (a) Each Borrowing of Revolving Loans shall ----------------------- be made upon the Company's irrevocable written notice delivered to the Agent in the form of a Notice of Borrowing (which notice must be received by the Agent prior to 9:00 a.m. (San Francisco time) (i) three Business Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans; and (ii) on the requested Borrowing Date, in the case of Base Rate Loans, specifying: (A) the amount of the Borrowing, which shall be in an aggregate minimum amount of $3,000,000 or any multiple of $1,000,000 in excess thereof; (B) the requested Borrowing Date, which shall be a Business Day; (C) the Type of Loans comprising the Borrowing; and (D) the duration of the Interest Period applicable to such Loans included in such notice. If the Notice of Borrowing fails to specify the duration of the Interest Period for any Borrowing comprised of Offshore Rate Loans, such Interest Period shall be three months; provided, however, that with respect to the Borrowing to be made on the Closing ------- Date, the Notice of Borrowing shall be delivered to the Agent not later than 2:00 p.m. San Francisco time) one Business Day before the Closing Date and such Borrowing will consist of Base Rate Loans only. (b) The Agent will promptly notify each Bank of its receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of the related Borrowing. (c) Each Bank will make the amount of its Pro Rata Share of each Borrowing available to the Agent for the account of the Company at the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date requested by the Company in funds immediately available to the Agent. The proceeds of all such Loans will then be made available to the Company by the Agent at such office by crediting the account of the Company on the books of BofA with the aggregate of the amounts made 17 Exhibit 10.16 ----- available to the Agent by the Banksand in like funds as received by the Agent. (d) After giving effect to any Borrowing, there may not be more than six different Interest Periods in effect. 2.04 Local Currency Loans. -------------------- (a) From time to time from the Closing Date until the Revolving Termination Date, if agreed to by the Agent and all the Banks in each case (in the Agent's and the Banks' sole discretion), the Banks severally agree to consider requests to make Local Currency Loans to the Other Borrowing Entities. If the Banks do decide to make Local Currency Loans, the Agent, the Banks, the Company and the appropriate Other Borrowing Entity shall make their best efforts to agree, at the time of the request for a Local Currency Loan, on the terms of such Borrowing, including the Borrowing Date, the Local Currency in which such Local Currency Loan is to be made, the principal amount of such Local Currency Loan, the principal payment dates, the indicative interest rate and Interest Period, prepayment and overdue payment terms, conversion and continuation terms, and the reserve and tax provisions for such Local Currency Loan. The interest rate for each Local Currency Loan shall be determined on the applicable Borrowing Date by the Agent and shall be equal to the highest interest rate offered by the Banks for the requested Borrowing. Upon determination of the applicable interest rate on each Borrowing Date for a Local Currency Loan, the Agent shall notify the Company and each Bank thereof. Each Local Currency Loan shall be due and payable no later than the Revolving Termination Date. (b) Each Borrowing of Local Currency Loans and each continuance and renewal thereof shall be extended by each Bank on the same terms applicable to each other Bank. If the Banks agree to make a Local Currency Loan and agree to the terms of such Local Currency Loan as provided in subsection 2.04(a), each Bank will make the amount of its Pro Rata Share of such Local Currency Loan available to the Agent for the account of the Company at the Agent's office located in the applicable foreign country by 11:00 a.m. local time on the Borrowing Date requested by the Company in funds immediately available to the Agent and denominated in the applicable Local Currency. The proceeds of all such Loans will then be made available to the applicable Other Borrowing Entity by the Agent at such office. If, upon the maturity or expiration of any Interest Period applicable to a Local Currency Loan, the Company notifies the Agent of its desire to renew or continue such Local Currency Loan, the Agent will promptly notify each Bank, and the Agent, the Banks, the Company and the applicable Other Borrowing Entity shall make their best efforts to agree on the terms of such renewal or continuance; provided, however, that the Banks shall be -------- ------- under no obligation to renew or continue Local Currency Loans if any Bank determines that it cannot continue to provide Loans in the applicable Local Currency. (c) The Company shall notify the Agent of each request for a Local Currency Loan by telephone and confirmed by facsimile not less than ten Business Days prior to the requested Borrowing 18 Exhibit 10.16 ----- Date. The Agent will promptly notify each Bank of its receipt of any such notice. Upon agreement among the Banks of the terms of a Local Currency Loan (other than the interest rate, which shall be determined on the Borrowing Date as provided in subsection 2.04(a)), the Agent will notify the Company thereof and shall provide the Company an indication of the applicable interest rate based on the highest interest rate indicated by the Banks. If the Company agrees to such terms, not less than four Business Days prior to the requested Borrowing Date the Company will provide irrevocable written notice to the Agent in the form of a Notice of Borrowing executed by the Company or, if so required by the Agent (at the request of the Majority Banks), by the Company and the appropriate Other Borrowing Entity, specifying the identity of the Other Borrowing Entity, the applicable Local Currency, the amount of the Borrowing, the requested Borrowing Date, which shall be a Business Day, and the duration of any Interest Period applicable to such Local Currency Loans. Upon the Company's submission of a Notice of Borrowing for a Local Currency Loan, the Agent shall promptly notify each Bank of the amount of each Bank's Pro Rata Share of that Borrowing. (d) The Company acknowledges and agrees (and shall cause each Other Borrowing Entity to acknowledge and agree) that (i) prior to the Banks making any Local Currency Loan, the Agent and the Banks expect to receive such documents or information as may be required by the Banks or the Agent (or any of them in their sole discretion), in accordance with the terms of this Agreement, (ii) reasonable delays are to be anticipated by the Company and the Other Borrowing Entities in connection with the Agent's and the Banks' review of, and satisfaction with, such documents and information required to be received by the Agent and the Banks prior to the Banks making any Local Currency Loan, (iii) the Company and the Other Borrowing Entities assume all of the risks associated with any reasonable delays in the Other Borrowing Entities' receiving any Local Currency Loan from the Banks, and (iv) under no circumstances shall the total amount of Local Currency Loans and Revolving Loans made to the Company and the Other Borrowing Entities at any time exceed the combined Commitments. In determining compliance at any time with clause (iv) of the immediately preceding sentence, all Loans denominated in Local Currencies shall be deemed to be converted to their Equivalent Amounts in Dollars at such time when such compliance is determined. (e) The Equivalent Amount of any Borrowing in a Local Currency will be determined by the Agent for such Borrowing on the Computation Date therefor in accordance with subsection 2.04(f). Upon receipt of a Notice of Borrowing as provided in subsection 2.04(c), the Agent will promptly notify each Bank thereof and of the approximate amount of such Bank's Pro Rata Share of the related Borrowing. Upon the determination of the Equivalent Amount of such Borrowing as specified in the applicable Notice of Borrowing, the Agent will promptly notify the Company and each Bank of the exact amount of such Bank's Pro Rata Share of such Borrowing. (f) The Agent will determine the Equivalent Amount with respect to any (i) Borrowing comprised of Local Currency 19 Exhibit 10.16 ----- Loans, as of the requested Borrowing Date and (ii) outstanding Local Currency Loans, as of the last Business Day of each month (each such date, a "Computation ----------- Date"). The Agent will notify the Company and the Banks as to the determination - ---- of the Equivalent Amounts of outstanding Local Currency Loans upon determination thereof pursuant to clause (ii) in the immediately preceding sentence. (g) The Company shall submit a request to the Agent and shall cause the appropriate Other Borrowing Entity to obtain Local Currency Loans in an amount sufficient to repay the Existing Loan. Such Local Currency Loans shall have a Borrowing Date no later than thirty days following the Closing Date, and the proceeds of such Local Currency Loans will be used to repay the Existing Loan. Each Bank hereby agrees to make such a Local Currency Loan in the amount of its Pro Rata Share of the outstanding Existing Loan and within such period time, and subject to such additional terms as shall be agreed upon by the Agent, the Banks, the Company and the applicable Other Borrowing Entity. 2.05 Conversion and Continuation Elections. (a) The Company may, upon ------------------------------------- irrevocable written notice to the Agent in accordance with subsection 2.05(b): (i) elect, as of any Business Day, in the case of Base Rate Loans, or as of the last day of the applicable Interest Period, in the case of any other Type of Revolving Loans, to convert any such Loans (or any part thereof in an amount not less than $3,000,000, or that is in a multiple of $1,000,000 in excess thereof) into Revolving Loans of any other Type; or (ii) elect, as of the last day of the applicable Interest Period, to continue any Offshore Rate Loans having Interest Periods expiring on such day (or any part thereof in an amount not less than $3,000,000, or that is in a multiple of $1,000,000 in excess thereof); provided, that if at any time the aggregate amount of Offshore Rate Loans in - -------- respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to be less than $1,000,000, such Offshore Rate Loans shall automatically convert into Base Rate Loans, and on and after such date the right of the Company to continue such Loans as, and convert such Loans into, Offshore Rate Loans shall terminate. (b) The Company shall deliver a Notice of Conversion/Continuation to be received by the Agent not later than 9:00 a.m. (San Francisco time) at least (i) three Business Days in advance of the Conversion/Continuation Date, if the Loans are to be converted into or continued as Offshore Rate Loans; and (ii) one Business Day in advance of the Conversion/ Continuation Date, if the Loans are to be converted into Base Rate Loans, specifying: 20 Exhibit 10.16 ----- (A) the proposed Conversion/Continuation Date; (B) the aggregate amount of Revolving Loans to be converted or renewed; (C) the Type of Revolving Loans resulting from the proposed conversion or continuation; and (D) other than in the case of conversions into Base Rate Loans, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to Offshore Rate Loans, the Company has failed to select timely a new Interest Period to be applicable to such Offshore Rate Loans, or if any Default or Event of Default then exists, subject to subsection 2.05(e), the Company shall be deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans effective as of the expiration date of such Interest Period. (d) The Agent will promptly notify each Bank of its receipt of a Notice of Conversion/Continuation, or, if no timely notice is provided by the Company, the Agent will promptly notify each Bank of the details of any automatic conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Revolving Loans with respect to which the notice was given held by each Bank. (e) Unless the Majority Banks otherwise agree, during the existence of a Default or Event of Default, the Company may not elect to have a Revolving Loan converted into or continued as an Offshore Rate Loan. (f) After giving effect to any conversion or continuation of Revolving Loans, there may not be more than six different Interest Periods in effect. 2.06 Voluntary Termination or Reduction of Commitments. The Company may, ------------------------------------------------- upon not less than five Business Days' prior notice to the Agent, terminate the Commitments, or permanently reduce the Commitments by an aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; unless, ------ after giving effect thereto and to any prepayments of Loans made on the effective date thereof, the then outstanding principal amount of the Revolving Loans and Local Currency Loans would exceed the amount of the combined Commitments then in effect. Once reduced in accordance with this Section 2.06, the Commitments may not be increased. Any reduction of the Commitments shall be applied to each Bank according to its Pro Rata Share. All accrued commitment fees to, but not including the effective date of any reduction or termination of Commitments, shall be paid on the effective date of such reduction or termination. The Agent shall notify the Banks of any termination or reduction of the Commitments. 21 Exhibit 10.16 ----- 2.07 Optional Prepayments. Subject to Section 3.04, the Company may, at any -------------------- time or from time to time, upon not less than three Business Days' irrevocable notice to the Agent in the case of Offshore Rate Loans, and upon not less than one Business Day's irrevocable notice to the Agent in the case of Base Rate Loans, ratably prepay Revolving Loans in whole or in part, in minimum amounts of $3,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of prepayment shall specify the date and amount of such prepayment and the Type(s) of Revolving Loans to be prepaid. The Agent will promptly notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata Share of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 3.04. 2.08 Repayment and Mandatory Prepayment. The Company shall (and shall ---------------------------------- cause each Other Borrowing Entity to) repay to the Banks on the Revolving Termination Date the aggregate principal amount of Loans outstanding on such date. The Company shall (and shall cause each Other Borrowing Entity to) immediately prepay that portion of the principal amount of any Loans at any time outstanding which exceeds the combined Commitments, including any such excess that results from foreign currency exchange fluctuations in respect of any Local Currency Loans, and reimburse the Banks for any funding losses incurred by the Banks in connection with such prepayments as set forth in Section 3.04. In determining whether any such prepayment is required at any time in accordance with the immediately preceding sentence, all Local Currency Loans shall be deemed to be converted to their Equivalent Amounts in Dollars at such time when such compliance is determined. 2.09 Interest. (a) Each Revolving Loan shall bear interest on the -------- outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate or the Base Rate, as the case may be (and subject to the Company's right to convert to other Types of Revolving Loans under Section 2.05), plus the Applicable Margin. ---- (b) Interest on each Revolving Loan shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of Revolving Loans under Section 2.07 or 2.08 for the portion of the Revolving Loans so prepaid and upon payment (including prepayment) in full thereof and, during the existence of any Event of Default, interest shall be paid on demand of the Agent at the request or with the consent of the Majority Banks. (c) Notwithstanding subsection (a) of this Section, if any amount of principal of or interest on any Loan, or any other amount payable hereunder or under any other Loan Document is not paid in full when due (whether at stated maturity, by acceleration, demand or otherwise), the Company agrees to pay interest on such unpaid principal or other amount, from the date such amount becomes due until the date such amount is paid in 22 Exhibit 10.16 ----- full, after as well as before any entry of judgment thereon to the extent permitted by law, payable on demand, at a fluctuating rate per annum equal to the Base Rate plus 2%, or, in the case of Offshore Rate Loans, at a fluctuating rate per annum equal to the applicable Offshore Rate plus 2% through the end of the current Interest Period. (d) Anything herein to the contrary notwithstanding, the obligations of the Company to any Bank hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by such Bank would be contrary to the provisions of any law applicable to such Bank limiting the highest rate of interest that may be lawfully contracted for, charged or received by such Bank, and in such event the Company shall pay such Bank interest at the highest rate permitted by applicable law. 2.10 Fees. (a) Agency Fee. The Company shall pay an agency fee to the ---- ---------- Agent for the Agent's own account, as required by the letter agreement ("Fee --- Letter") between the Company and the Agent dated January 25, 1995. - ------ (b) Facility Fees; Commitment Fee. The Company shall pay to the Agent ----------------------------- for the account of each Bank a facility fee on such Bank's Commitment from time to time in effect, computed by the Agent on a quarterly basis in arrears on the last Business Day of each calendar quarter, equal to 0.150 percent per annum. In addition, the Company shall pay to the Agent for the account of each Bank a commitment fee on the average daily unused portion of such Bank's Commitment, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon the daily utilization for that quarter as calculated by the Agent and by converting Local Currency Loans to their Equivalent Amounts in Dollars based upon the Exchange Rate in effect as of the last Business Day of such calendar quarter, equal to 0.125 percent per annum. Such facility fee and commitment fee shall accrue from the Closing Date to the Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter commencing on March 31, 1995 through the Revolving Termination Date, with the final payment to be made on the Revolving Termination Date; provided that, in connection with any reduction or termination of -------- Commitments under Section 2.06, the accrued facility fee and commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction or termination, with the following quarterly payment being calculated on the basis of the period from such reduction or termination date to such quarterly payment date. The facility fees and commitment fees provided in this subsection shall accrue at all times after the above-mentioned commencement date, including at any time during which one or more conditions in Article IV are not met. 23 Exhibit 10.16 ----- 2.11 Computation of Fees and Interest. (a) All computations of interest -------------------------------- for Base Rate Loans when the Base Rate is determined by BofA's "reference rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. (b) Each determination of an interest rate by the Agent shall be conclusive and binding on the Company and the Banks in the absence of manifest error. At the request of the Company or any Bank, the Agent will deliver to the Company or such Bank, as the case may be, a statement showing the quotations used by the Agent in determining any interest rate and the resulting interest rate and the Exchange Rates used in determining any Equivalent Amounts. The Agent will invoice the Company for accrued interest on the Loans and for the fees set forth in Section 2.10 as such interest and fees become due, provided, -------- however, that the Agent's failure to provide any such invoices to the Company - ------- shall not affect the Company's obligation to make all such payments on a timely basis. 24 Exhibit 10.16 ----- 2.12 Payments by the Company or Other Borrowing Entities. (a) All --------------------------------------------------- payments to be made by the Company or any Other Borrowing Entity shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by the Company and the Other Borrowing Entities shall be made to the Agent for the account of the Banks (i) with respect to principal of, interest on, and any other amounts relating to, any Local Currency Loan, at the Agent's local payment office designated by the Agent in connection with each Borrowing of a Local Currency Loan and shall be made in the Local Currency in which such Loan is denominated or payable, and (ii) at the Agent's Payment Office and in Dollars, with respect to all other amounts payable hereunder. Such payments shall be made in immediately available funds, and (x) in the case of Local Currency payments, no later than the time and on the dates specified in the terms that are agreed to among the Company, the applicable Other Borrowing Entity, the Agent and the Banks, as set forth in subsection 2.04(a) (provided that if no time is so specified, no later than 11:00 a.m. -------- ---- local time in the country in which the applicable Local Currency Loan is made, and provided, further, that any amounts due on a date that is not a Business Day -------- ------- shall be due on the next succeeding Business Day), and as may otherwise be determined by the Agent to be necessary for such payment to be credited on such date in accordance with normal banking procedures in the place of payment, and (y) in the case of any Dollar payments, no later than 11:00 a.m. (San Francisco time) on the date specified herein. The Agent will promptly distribute to each Bank its Pro Rata Share (or other applicable share as expressly provided herein) of such payment in like funds as received, and in the case of payments of Local Currency Loans, in each Bank's office located in the applicable foreign country. Any payment received by the Agent later than 11:00 a.m. (San Francisco time) or later than the time specified by the Agent as provided in clause (i) above (in the case of Local Currency payments) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue. (b) Subject to the provisions set forth in the definition of "Interest Period" herein, whenever any payment is due on a day other than a Business Day, such payment shall be made on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. (c) Unless the Agent receives notice from the Company prior to the date on which any payment is due to the Banks that the Company will not make such payment in full as and when required, the Agent may assume that the Company has made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent the Company has not made such payment in full to the Agent, each Bank shall repay to the Agent on demand such amount distributed to such Bank, together with interest thereon at the Federal Funds Rate or, in the case of a payment in a Local Currency, the Overnight Rate, for each day 25 Exhibit 10.16 ----- from the date such amount is distributed to such Bank until the date repaid. 2.13 Payments by the Banks to the Agent. (a) Unless the Agent receives ---------------------------------- notice from a Bank on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one Business Day prior to the date of such Borrowing, that such Bank will not make available as and when required hereunder to the Agent for the account of the Company the amount of that Bank's Pro Rata Share of such Borrowing, the Agent may assume that such Bank has made such amount available to the Agent in immediately available funds on the Borrowing Date and the Agent may (but shall not be so required), in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent any Bank shall not have made its full amount available to the Agent in immediately available funds and the Agent in such circumstances has made available to the Company such amount, that Bank shall on the Business Day following such Borrowing Date make such amount available to the Agent, together with interest at the Federal Funds Rate or, in the case of any Borrowing consisting of Local Currency Loans, the Overnight Rate, for each day during such period. A notice of the Agent submitted to any Bank with respect to amounts owing under this subsection (a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Agent shall constitute such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Agent on the Business Day following the Borrowing Date, the Agent will notify the Company of such failure to fund and, upon demand by the Agent, the Company shall pay such amount to the Agent for the Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing. (b) The failure of any Bank to make any Loan on any Borrowing Date shall not relieve any other Bank of any obligation hereunder to make a Loan on such Borrowing Date, but no Bank shall be responsible for the failure of any other Bank to make the Loan to be made by such other Bank on any Borrowing Date. 2.14 Sharing of Payments, Etc. If, other than as expressly provided ------------------------- elsewhere herein, any Bank shall obtain on account of the Loans made by it any payment (other than pursuant to Section 10.08, and whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall immediately (a) notify the Agent of such fact, and (b) purchase from the other Banks such participations in the Loans made by them as shall be necessary to cause such purchasing Bank to share the excess payment pro rata with each of them; provided, however, that if all or -------- ------- any portion of such excess payment is thereafter recovered from the purchasing Bank, such purchase shall to that extent be rescinded and each other Bank shall repay to the purchasing Bank the purchase price paid therefor, together with an amount equal to such paying Bank's 26 Exhibit 10.16 ----- ratable share (according to the proportion of (i) the amount of such paying Bank's required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered. The Company agrees that any Bank so purchasing a participation from another Bank may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.10) with respect to such participation as fully as if such Bank were the direct creditor of the Company in the amount of such participation. The Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Banks following any such purchases or repayments. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY -------------------------------------- 3.01 Taxes. (a) Any and all payments by the Company or any Other Borrowing ----- Entity to each Bank or the Agent under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, the Company shall and shall cause any Other Borrowing Entity to pay all Other Taxes. (b) The Company agrees to and shall cause each Other Borrowing Entity to indemnify and hold harmless each Bank and the Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section) paid by such Bank or the Agent and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date such Bank or the Agent makes written demand therefor. (c) If the Company or any Other Borrowing Entity shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank or the Agent, then: (i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section) such Bank or the Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions or withholdings been made; (ii) the Company shall, or shall cause any Other Borrowing Entity to, make such deductions and withholdings; 27 Exhibit 10.16 ----- (iii) the Company shall, or shall cause any Other Borrowing Entity to, pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and (iv) the Company shall, or shall cause any Other Borrowing Entity to, also pay to each Bank or the Agent for the account of such Bank, at the time interest is paid, all additional amounts which the respective Bank specifies as necessary to preserve the after-tax yield such Bank would have received if such Taxes or Other Taxes had not been imposed. (d) Within 30 days after the date of any payment by the Company of Taxes or Other Taxes, the Company shall, or shall cause any Other Borrowing Entity to, furnish the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Agent. (e) If the Company or any Other Borrowing Entity is required to pay additional amounts to any Bank or the Agent pursuant to subsection (c) of this Section, then such Bank shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Company or any Other Borrowing Entity which may thereafter accrue, if such change in the judgment of such Bank is not otherwise disadvantageous to such Bank. 3.02 Illegality. (a) If any Bank determines that the introduction of any ---------- Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or any central bank or other Governmental Authority has asserted that it is unlawful, for any Bank or its applicable Lending Office to make Offshore Rate Loans or to make Local Currency Loans in respect of any foreign jurisdiction ("Prohibited LC Loans"), then, on notice thereof by such Bank to the Company or the relevant Other Borrowing Entity through the Agent, any obligation of that Bank to make Offshore Rate Loans or Prohibited LC Loans shall be suspended until such Bank notifies the Agent and the Company that the circumstances giving rise to such determination no longer exist. (b) If a Bank determines or any Governmental Authority has asserted that it is unlawful to maintain any Offshore Rate Loan or Prohibited LC Loan, the Company shall (or shall cause the relevant Other Borrowing Entity to), upon its receipt of notice of such fact and demand from such Bank (with a copy to the Agent), prepay in full such Offshore Rate Loans or Prohibited LC Loan of that Bank then outstanding, together with interest accrued thereon and amounts required under Section 3.04, either on the last day of the Interest Period therefor, if such Bank may lawfully continue to maintain such Offshore Rate Loans or Prohibited LC Loan to such day, or immediately, if such Bank may not lawfully continue to maintain such Offshore Rate Loan or Prohibited LC Loan. If the Company is required to so prepay any Offshore Rate Loan or Prohibited LC Loan, then 28 Exhibit 10.16 ----- concurrently with such prepayment, the Company shall borrow (or shall cause the relevant Other Borrowing Entity to borrow) from the affected Bank, in the amount, or in the case of a Prohibited LC Loan, Equivalent Amount, of such repayment, a Base Rate Loan. (c) If the obligation of any Bank to make or maintain Offshore Rate Loans has been so terminated or suspended, the Company shall elect, by giving notice to such Bank through the Agent that all Revolving Loans which would otherwise be made by such Bank as Offshore Rate Loans shall be instead Base Rate Loans. (d) Before giving any notice to the Agent under this Section, the affected Bank shall designate a different Lending Office with respect to its Offshore Rate Loans or Prohibited LC Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of such Bank, be illegal or otherwise disadvantageous to such Bank. 3.03 Increased Costs and Reduction of Return. (a) If any Bank determines ---------------------------------------- that, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance by that Bank with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Bank of agreeing to make or making, funding or maintaining any Offshore Rate Loans or Local Currency Loans, then the Company shall or the relevant Other Borrowing Entity shall be liable for, and shall (or shall cause the relevant Other Borrowing Entity to), within 30 days after demand therefor by such Bank (with a copy of such demand to be sent to the Agent), pay to the Agent for the account of such Bank, additional amounts as are sufficient to compensate such Bank for such increased costs. (b) If any Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by such Bank (or its Lending Office) or any corporation controlling such Bank with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by such Bank or any corporation controlling such Bank and (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy and such Bank's or such corporation's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitment, loans, credits or obligations under this Agreement, then, within 30 days after demand by such Bank to the Company through the Agent, the Company shall pay to such Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate such Bank or such corporation for such increase. 3.04 Funding Losses. The Company shall (or shall cause the relevant Other -------------- Borrowing Entity to) reimburse each Bank and hold 29 Exhibit 10.16 ----- each Bank harmless from any loss or expense which such Bank may sustain or incur as a consequence of: (a) the failure of the Company or the relevant Other Borrowing Entity to make on a timely basis any payment of principal of any Offshore Rate Loan or Local Currency Loan; (b) the failure of the Company (or the relevant Other Borrowing Entity) to borrow, continue or convert a Loan after the Company has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation; (c) the failure of the Company to make any prepayment in accordance with any notice delivered under Section 2.07; (d) the prepayment (including pursuant to Section 2.08 and Section 3.02) or other payment (including after acceleration thereof) of an Offshore Rate Loan or a Local Currency Loan on a day that is not the last day of the relevant Interest Period; or (e) the automatic conversion under Section 2.05 of any Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant Interest Period; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or Local Currency Loans or from fees payable to terminate the deposits from which such funds were obtained. For purposes of calculating amounts payable by the Company to the Banks under this Section and under subsection 3.03(a), (i) each Offshore Rate Loan made by a Bank (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the Offshore Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the London interbank market for a comparable amount and for a comparable period, whether or not such Offshore Rate Loan is in fact so funded, and (ii) each Local Currency Loan made by a Bank (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the applicable similar interest rate used by the Banks in determining the interest rate for such Local Currency Loan in a comparable amount and for a comparable period, whether or not such Local Currency Loan is in fact so funded. 3.05 Inability to Determine Rates. If the Agent determines that for any ---------------------------- reason adequate and reasonable means do not exist for determining the Offshore Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection 2.09(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly reflect the cost to any Banks of funding such Loan, the Agent will promptly so notify the Company and each Bank. Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans hereunder shall be suspended until the Agent revokes such notice in writing. Upon receipt of such notice, the Company may revoke 30 Exhibit 10.16 ----- any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it. If the Company does not revoke such notice, the Banks shall make, convert or continue the Revolving Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Revolving Loans shall be made, converted or continued as Base Rate Loans instead of Offshore Rate Loans. 3.06 Certificates of Banks. Any Bank claiming reimbursement or --------------------- compensation under this Article III shall deliver to the Company (with a copy to the Agent) a certificate setting forth in reasonable detail the amount payable to such Bank hereunder and such certificate shall be conclusive and binding on the Company and each Other Borrowing Entity in the absence of manifest error. 3.07 Survival. The agreements and obligations of the Company in this -------- Article III shall survive the payment of all other Obligations. ARTICLE IV CONDITIONS PRECEDENT -------------------- 4.01 Conditions of Initial Loans. The obligation of each Bank to make its --------------------------- initial Loan hereunder is subject to the condition that the Agent have received on or before the Closing Date all of the following, in form and substance satisfactory to the Agent and each Bank, and in sufficient copies for each Bank: (a) Credit Agreement; Guaranty. This Agreement and the Guaranty, -------------------------- executed by each party thereto; (b) Resolutions; Incumbency. ----------------------- (i) Copies of the resolutions of the board of directors of the Company authorizing the transactions contemplated hereby, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Company; and (ii) A certificate of the Secretary or Assistant Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to execute, deliver and perform, as applicable, this Agreement, and all other Loan Documents to be delivered by it hereunder; (c) Organization Documents; Good Standing. Each of the following ------------------------------------- documents: (i) the articles or certificate of incorporation and the bylaws of the Company as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of the Company as of the Closing Date; and 31 Exhibit 10.16 ----- (ii) a good standing and tax good standing certificate for the Company from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation and the State of California as of a recent date, together with a bring-down certificate by facsimile, dated the Closing Date or immediately prior thereto; (d) Legal Opinion. An opinion of Brobeck, Phleger & Harrison, counsel ------------- to the Company and addressed to the Agent and the Banks, substantially in the form of Exhibit D; --------- (e) Payment of Fees. Evidence of payment by the Company of all accrued --------------- and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with Attorney Costs of BofA to the extent invoiced prior to or on the Closing Date, including any such costs, fees and expenses arising under or referenced in Sections 2.10 and 10.04; (f) Certificate. A certificate signed by a Responsible Officer, dated ----------- as of the Closing Date, stating that: (i) the representations and warranties contained in Article V are true and correct on and as of such date, as though made on and as of such date; (ii) no Default or Event of Default exists or would result from the initial Borrowing; and (iii) there has occurred since August 28, 1994, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect; and (g) Other Documents. Such other approvals, opinions, documents or --------------- materials as the Agent or any Bank may request. 4.02 Conditions to All Borrowings. The obligation of each Bank to make any ---------------------------- Loan to be made by it (including its initial Loan) or to continue or convert any Revolving Loan under Section 2.05 is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date or Conversion/ Continuation Date: (a) Notice of Borrowing or Conversion/Continuation. The Agent shall ---------------------------------------------- have received (with, in the case of the initial Loan only, a copy for each Bank) a Notice of Borrowing or a Notice of Conversion/Continuation, as applicable; (b) Continuation of Representations and Warranties. The ---------------------------------------------- representations and warranties in Article V shall be true and correct on and as of such Borrowing Date or Conversion/Continuation Date with the same effect as if made on and as of such Borrowing Date or Conversion/Continuation Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date, and Section 5.11 shall be deemed to refer to the last day of the most recent fiscal quarter for 32 Exhibit 10.16 ----- which financial statements have then been delivered hereunder); and (c) No Existing Default. No Default or Event of Default shall exist ------------------- or shall result from such Borrowing or continuation or conversion. Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the Company hereunder shall constitute a representation and warranty by the Company hereunder, as of the date of each such notice and as of each Borrowing Date or Conversion/Continuation Date, as applicable, that the conditions in this Section 4.02 are satisfied. 4.03 Conditions to All Local Currency Loans to Other Borrowing Entities. ------------------------------------------------------------------ Except with respect to the Local Currency Loans to be used to repay the Existing Loan, the Banks shall not make any Loan to an Other Borrowing Entity unless and until all of the Banks have decided, in their sole reasonable discretion, to make any such requested Loan (it being understood by the parties hereto that the Banks have no commitment or obligation to make Loans to the Other Borrowing Entities) and there shall have been delivered, in form and substance satisfactory to the Banks with respect to each such requested Loan: (a) Credit Documentation. Credit documentation relating to the -------------------- requested credit extension executed by the relevant Other Borrowing Entity (such credit documentation shall contain such terms and provisions (including but not limited to the amount of the Loan, interest, fees, conditions precedent, covenants, and events of default) as any Bank deems appropriate for such requested Loan in such Bank's sole reasonable discretion) and such other instruments, agreements, documents, and evidence that any Bank may reasonably require; (b) Compliance with Conditions Precedent. Evidence that all ------------------------------------ conditions precedent relating to such requested credit extension have been complied with; and (c) Other Evidence. Such other evidence as any Bank may reasonably -------------- request to establish and effect fully the consummation of the transactions contemplated thereby, the taking of all proceedings in connection therewith, and compliance with the conditions set forth in the agreements relating to such requested Loan. ARTICLE V REPRESENTATIONS AND WARRANTIES ------------------------------ The Company represents and warrants to the Agent and each Bank that: 5.01 Corporate Existence and Power. The Company and each of its ----------------------------- Subsidiaries: 33 Exhibit 10.16 ----- (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation except where the failure to be so qualified, or to be in good standing, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; (b) has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, carry on its business, except, in the case of any Subsidiary, where any failure could not reasonably be expected to have a Material Adverse Effect, and to execute, deliver, and perform its obligations under the Loan Documents; (c) is duly qualified as a foreign corporation and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license, except where any failure could not reasonably be expected to have a Material Adverse Effect; and (d) is in compliance with all Requirements of Law, except where any failure could not reasonably be expected to have a Material Adverse Effect. 5.02 Corporate Authorization; No Contravention. The execution, delivery ----------------------------------------- and performance by the Company of this Agreement and each other Loan Document to which the Company is party, have been duly authorized by all necessary corporate action, and do not and will not: (a) contravene the terms of any of the Company's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which the Company or any Subsidiary is a party or any order, injunction, writ or decree of any Governmental Authority to which the Company or any Subsidiary or their respective property is subject; or (c) violate any Requirement of Law. 5.03 Governmental Authorization. No approval, consent, exemption, -------------------------- authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Company or any of its Subsidiaries of this Agreement or any other Loan Document. 5.04 Binding Effect. This Agreement and each other Loan Document to which -------------- the Company is a party constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the 34 Exhibit 10.16 ----- enforcement of creditors' rights generally or by equitable principles relating to enforceability. 5.05 Litigation. Except as specifically disclosed in Schedule 5.05, there ---------- ------------- are no actions, suits, proceedings, claims or disputes pending, or to the best knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company, or its Subsidiaries or any of their respective properties which: (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby; or (b) if determined adversely to the Company or its Subsidiaries, would reasonably be expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided. 5.06 No Default. No Default or Event of Default exists or would result ---------- from the incurring of any Obligations by the Company. Except as set forth in Schedule 5.06, as of the Closing Date, neither the Company nor any Subsidiary is - ------------- in default under or with respect to any Contractual Obligation in any respect which, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect, or that would, if such default had occurred after the Closing Date, create an Event of Default under subsection 8.01(e). 5.07 ERISA Compliance. ---------------- (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and, to the best knowledge of the Company, nothing has occurred which would cause the loss of such qualification. The Company and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (b) There are no pending or, to the best knowledge of Company, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. 35 Exhibit 10.16 ----- (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither the Company nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Company nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to ----------------------------------- be used solely for the purposes set forth in and permitted by Section 6.12 and Section 7.07. Neither the Company nor any Subsidiary is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. 5.09 Title to Properties. The Company and each Subsidiary have good record ------------------- and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as could not, individually or in the aggregate, have a Material Adverse Effect. As of the Closing Date, the property of the Company and its Subsidiaries is subject to no Liens, other than Permitted Liens. 5.10 Taxes. The Company and its Subsidiaries have filed all Federal and ----- other material tax returns and reports required to be filed, and have paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Company or any Subsidiary that would, if made, have a Material Adverse Effect. 5.11 Financial Condition. (a) The unaudited consolidated financial ------------------- statements of the Company and its Subsidiaries dated August 28, 1994, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date: (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, subject to ordinary, good faith year end audit adjustments; (ii) fairly present the financial condition of the Company and its Subsidiaries as of the date thereof and results of operations for the period covered thereby; and 36 Exhibit 10.16 ----- (iii) except for other Indebtedness and liabilities incurred since August 28, 1994 and permitted hereunder, show all material indebtedness and other liabilities, direct or contingent, of the Company and its consolidated Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Contingent Obligations. (b) Since August 28, 1994, there has been no Material Adverse Effect. 5.12 Environmental Matters. The Company conducts in the ordinary course of --------------------- business a review of the effect of existing Environmental Laws and existing Environmental Claims on its business, operations and properties, and as a result thereof the Company has reasonably concluded that to the best of its knowledge, except as specifically disclosed in Schedule 5.12, such Environmental Laws and ------------- Environmental Claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 5.13 Regulated Entities. None of the Company, any Person controlling the ------------------ Company, or any Subsidiary, is an "Investment Company" within the meaning of the Investment Company Act of 1940. The Company is not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness. 5.14 No Burdensome Restrictions. Neither the Company nor any Subsidiary is -------------------------- a party to or bound by any Contractual Obligation, or subject to any restriction in any Organization Document, or any Requirement of Law, which could reasonably be expected to have a Material Adverse Effect. 5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company or its ------------------------------------------------- Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably necessary for the operation of their respective businesses, without conflict by, or with the rights of, any other Person (to the best knowledge of the Company). To the best knowledge of the Company, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Company or any Subsidiary infringes upon any rights held by, or is infringed upon by, any other Person where such infringement could reasonably be expected to have a Material Adverse Effect. Except as specifically disclosed in Schedule 5.05, no claim or litigation ------------- regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle, statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Company, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. 37 Exhibit 10.16 ----- 5.16 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries ------------ other than those specifically disclosed in Schedule 5.16 and has no equity ------------- investments in any other corporation or entity. 5.17 Insurance. The properties of the Company and its Subsidiaries are --------- insured with financially sound and reputable insurance companies not Affiliates of the Company, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Company or such Subsidiary operates. 5.18 Full Disclosure. None of the representations or warranties made by --------------- the Company or any Subsidiary in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate furnished by or on behalf of the Company or any Subsidiary in connection with the Loan Documents (including the offering and disclosure materials, if any, delivered by or on behalf of the Company to the Banks prior to the Closing Date), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. ARTICLE VI AFFIRMATIVE COVENANTS --------------------- So long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in writing: 6.01 Financial Statements. The Company shall deliver to the Agent, in form -------------------- and detail satisfactory to the Agent and the Majority Banks, with sufficient copies for each Bank: 38 Exhibit 10.16 ----- (a) as soon as available, but not later than one hundred days after the end of each fiscal year (commencing with the fiscal year ended November 27, 1994), a copy of the audited consolidated balance sheet of the Company and its Subsidiaries as at the end of such year and the related consolidated statements of income or operations, shareholders' equity and cash flows for such year, setting forth in each case in comparative form the figures as of the end of and for the previous fiscal year, and accompanied by the opinion of Coopers & Lybrand or another nationally-recognized independent public accounting firm ("Independent Auditor") which report shall state that such consolidated - --------------------- financial statements present fairly the financial condition as of the date thereof and results of operation for the periods indicated in conformity with GAAP applied on a basis consistent with prior years. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of the Company's or any Subsidiary's records; and (b) as soon as available, but not later than fifty days after the end of each of the first three fiscal quarters of each fiscal year (commencing with the fiscal quarter ending March 5, 1995), a copy of the unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of such quarter and the related consolidated statements of income, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to ordinary, good faith year-end audit adjustments), the financial condition of the Company and its Subsidiaries as of the date thereof and the results of operations for the period covered thereby. Notwithstanding the foregoing, the Company shall be in compliance with the requirements of this Section 6.01 with respect to its obligation to furnish financial statements upon delivery to the Agent, with sufficient copies for each Bank, of its annual and quarterly reports as filed by it with the SEC within the time periods specified above. 6.02 Certificates; Other Information. The Company shall furnish to the ------------------------------- Agent, with sufficient copies for each Bank: (a) concurrently with the delivery of the financial statements referred to in subsections 6.01(a) and (b), a Compliance Certificate executed by a Responsible Officer; (b) promptly, copies of all financial statements and reports that the Company sends to its public shareholders, and not later than five days of filing with the SEC, copies of all financial statements and regular, periodic or special reports (including Forms 10K, 10Q and 8K) that the Company or any Subsidiary may make to, or file with, the SEC; and (c) promptly, such additional information regarding the business, financial or corporate affairs of the Company or 39 Exhibit 10.16 ----- any Subsidiary as the Agent, at the request of any Bank, may from time to time request. 6.03 Notices. The Company shall promptly notify the Agent and each Bank: ------- (a) of the occurrence of any Default or Event of Default, and of the occurrence or existence of any event or circumstance that foreseeably will become a Default or Event of Default; (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Company or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Company or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Company or any Subsidiary, including pursuant to any applicable Environmental Laws; (c) of the occurrence of any of the following events affecting the Company or any ERISA Affiliate (but in no event more than 10 days after such event), and deliver to the Agent and each Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Company or any ERISA Affiliate with respect to such event: (i) an ERISA Event; (ii) a material increase in the Unfunded Pension Liability of any Pension Plan; (iii) the adoption of, or the commencement of contributions to, any Plan subject to Section 412 of the Code by the Company or any ERISA Affiliate; or (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in contributions or Unfunded Pension Liability; and (d) of any material change in accounting policies or financial reporting practices by the Company or any of its consolidated Subsidiaries. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action the Company or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under subsection 6.03(a) shall describe with particularity any and all clauses or provisions of this Agreement or any other Loan Document that have been (or foreseeably will be) breached or violated. 40 Exhibit 10.16 ----- 6.04 Preservation of Corporate Existence, Etc. The Company shall, and ---------------------------------------- shall cause each Subsidiary to: (a) except in connection with a transaction permitted by Section 7.02(d), 7.02(e), 7.02(g) and 7.03, preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation and each state or jurisdiction in which the character of the properties owned or leased by it therein or in which the transaction of its business is such that the failure to maintain its existence or to so qualify could reasonably be expected to have a Material Adverse Effect; (b) preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary or desirable in the normal conduct of its business except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; (c) use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill; and (d) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect. 6.05 Maintenance of Property. The Company shall maintain, and shall cause ----------------------- each Subsidiary to maintain, and preserve all its property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted, and make all necessary repairs thereto and renewals and replacements thereof, except in each case where the failure to do so could not reasonably be expected to have a Material Adverse Effect. The Company and each Subsidiary shall use the standard of care typical in the industry in the operation and maintenance of its facilities. 6.06 Insurance. The Company shall maintain, and shall cause each --------- Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. 6.07 Payment of Obligations. Except where the failure to do so could not ---------------------- reasonably be expected to have a Material Adverse Effect, the Company shall, and shall cause each Subsidiary to, pay and discharge as the same shall become due and payable, all their respective obligations and liabilities, including: (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by 41 Exhibit 10.16 ----- appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property and which would not constitute a Permitted Lien; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. 6.08 Compliance with Laws. The Company shall comply, and shall cause each -------------------- Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act), except such as may be contested in good faith or as to which a bona fide dispute may exist. 6.09 Compliance with ERISA. The Company shall, and shall cause each of its --------------------- ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code. 6.10 Inspection of Property and Books and Records. The Company shall -------------------------------------------- maintain and shall cause each Subsidiary to maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company and such Subsidiary. The Company shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Agent or any Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at the expense of the Company (if an Event of Default exists) and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; provided, however, when an Event of Default -------- ------- exists the Agent or any Bank may do any of the foregoing at the expense of the Company at any time during normal business hours and without advance notice. 6.11 Environmental Laws. The Company shall, and shall cause each ------------------ Subsidiary to, conduct its operations and keep and maintain its property in compliance with all Environmental Laws except where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 42 Exhibit 10.16 ----- 6.12 Use of Proceeds. The Company shall (and shall cause each Other --------------- Borrowing Entity to) use the proceeds of the Loans for the refinancing of the Existing Loan and the "Harnischfeger Note" described in Schedule 7.05, and ------------- working capital and other general corporate purposes, but not in contravention of any Requirement of Law or of any Loan Document. The Company shall request a Local Currency Loan and shall cause the applicable Other Borrowing Entity to obtain such Loan within the time period and as provided in Section 2.04 for the refinancing of the Existing Loan. ARTICLE VII NEGATIVE COVENANTS ------------------ So long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in writing: 7.01 Limitation on Liens. The Company shall not, and shall not suffer or ------------------- permit any Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following ("Permitted --------- Liens"): - ----- (a) any Lien existing on property of the Company or any Subsidiary on the Closing Date and set forth in Schedule 7.01 securing Indebtedness ------------- outstanding on such date; (b) any Lien created under any Loan Document; (c) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 6.07, provided that no notice of lien has been filed or recorded under the Code; (d) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (e) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation; (f) Liens on the property of the Company or its Subsidiaries securing (i) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (ii) contingent obligations on surety and appeal bonds, and (iii) other non-delinquent obligations of a like nature; in each case, incurred in the ordinary course of 43 Exhibit 10.16 ----- business, provided all such Liens in the aggregate would not (even if enforced) cause a Material Adverse Effect; (g) Liens consisting of judgment or judicial attachment Liens, provided that the enforcement of such Liens is effectively stayed and all such Liens in the aggregate at any time outstanding for the Company and its Subsidiaries do not exceed $10,000,000; (h) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Subsidiaries; (i) Liens on assets of corporations which become Subsidiaries after the date of this Agreement, provided, however, that such Liens existed at the -------- ------- time the respective corporations became Subsidiaries and were not created in anticipation thereof; (j) purchase money security interests on any property acquired or held by the Company or its Subsidiaries in the ordinary course of business, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property; provided that (i) any such Lien attaches to -------- ---- such property concurrently with or within 20 days after the acquisition thereof, (ii) such Lien attaches solely to the property so acquired in such transaction, and (iii) the principal amount of the Indebtedness secured thereby does not exceed 100% of the cost of such property; (k) Liens securing obligations in respect of capital leases on assets subject to such leases, provided that such capital leases are otherwise permitted hereunder; (l) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a -------- ---- dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the FRB, and (ii) such deposit account is not intended by the Company or any Subsidiary to provide collateral to such depository institution; (m) Liens on Margin Stock consisting of common stock of the Company; (n) Liens on the property of a Subsidiary in favor of its parent or another Subsidiary; (o) Liens securing Indebtedness, together with Liens permitted by clauses (c) and (d) above, in an aggregate principal amount at any time outstanding of not more than 10% of 44 Exhibit 10.16 ----- the Tangible Net Worth of the Company on a consolidated basis; and (p) Liens in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens described in clauses (i) and (j) above, provided that any such extension, renewal or replacement Lien shall be limited - -------- to the property encumbered by the existing Lien and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase. 7.02 Disposition of Assets. The Company shall not, and shall not suffer or --------------------- permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of (whether in one or a series of transactions) any property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except: (a) dispositions of inventory or the non-exclusive licensing in the ordinary course of business of the Company's intellectual property, or dispositions of used, worn-out or surplus equipment, all in the ordinary course of business; (b) the sale of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; (c) dispositions of Margin Stock consisting of common stock of the Company; (d) the dissolution or liquidation of any Subsidiary, unless a Material Adverse Effect could reasonably be expected to result therefrom; (e) the sale or other disposition of any shares of capital stock of any Subsidiary to the Company or its Subsidiaries; (f) the sale or other disposition of any assets of the Company or any Subsidiary to any other Subsidiary of the Company or to the Company, unless a Material Adverse Effect could reasonably be expected to result therefrom; (g) the sale or other disposition of any shares of capital stock of any Subsidiary for full, fair and reasonable consideration, to the extent that such sale or disposition, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and provided, that (i) at the time -------- of any disposition, no Event of Default shall exist or shall result from such disposition, and (ii) the aggregate value of all shares so sold by the Company and its Subsidiaries, together, shall not exceed in any fiscal year $10,000,000; and 45 Exhibit 10.16 ----- (h) dispositions not otherwise permitted hereunder which are made for full, fair and reasonable consideration; provided, that (i) at the time of any -------- disposition, no Event of Default shall exist or shall result from such disposition, (ii) if such disposition is a sale of accounts receivables, lease receivables or notes receivables, the aggregate sales price from such disposition shall be paid in cash, and (iii) the aggregate value of all assets so sold by the Company and its Subsidiaries, other than sales of assets of a type described in the foregoing clause (ii), together, shall not exceed in any fiscal year $10,000,000. 7.03 Consolidations and Mergers. The Company shall not, and shall not -------------------------- suffer or permit any Subsidiary to, merge, consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except: (a) any Subsidiary may merge with the Company, provided that the Company shall be the continuing or surviving corporation, or with any one or more Subsidiaries, provided that if any transaction shall be between a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be the continuing or surviving corporation; (b) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to the Company or another Wholly- Owned Subsidiary; and (c) the Company may merge with another entity if (i) the Company is the corporation surviving the merger; and (ii) immediately before and after giving effect thereto, no Default or Event of Default would exist. 7.04 Loans and Investments. The Company shall not purchase or acquire, or --------------------- suffer or permit any Subsidiary to purchase or acquire, or make any commitment therefor, any capital stock, equity interest, or obligations or other securities of, or any interest in, any Person, or make or commit to make any Acquisitions, or make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in, any Person including any Affiliate of the Company, except for: (a) investments in cash equivalents and other short term marketable securities and investments; (b) extensions of credit in the nature of accounts receivable, lease receivables or notes receivable arising from the sale or lease of goods or services in the ordinary course of business; (c) extensions of credit by the Company to any of its Wholly-Owned Subsidiaries or by any of its Wholly-Owned Subsidiaries to the Company or another of its Wholly-Owned Subsidiaries; 46 Exhibit 10.16 ----- (d) investments incurred in order to consummate Acquisitions if the Person or business acquired is engaged in or is a business reasonably related to, or is engaged in or is a reasonable extension of, the business of the Company and its Subsidiaries as presently conducted, provided that, (a) at the -------- time of and after giving effect to such Acquisition, no Default or Event of Default shall have occurred and be continuing, and (b) such Acquisitions are undertaken in accordance with all applicable Requirements of Law. Notwithstanding anything to the contrary contained in this Section 7.03, (a) if any Person or business acquired, in accordance with this Section 7.03 (the "Acquiree"), is subject to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act, the prior effective written consent of the board of directors or equivalent governing body of the Acquiree shall be obtained and delivered to the Agent, or (b) if the Acquiree does not meet the qualifications set forth in subclause (a), the prior effective written consent of the board of directors or equivalent governing body and the percent of any and all classes of stock or other equity of such Acquiree the consent of which, notwithstanding any provisions in the organization documents of the Acquiree to the contrary, is required by applicable statute to consummate the Acquisition, shall be obtained and delivered to the Agent; (e) investments in Joint Ventures permitted by Section 7.09; (f) loans to employees of the Company and its Subsidiaries in an aggregate amount not in excess of $2,000,000 at any time outstanding; and (g) loans to employees of the Company made during the month of December in 1995 to finance the exercise by such employees of stock option rights in the Company, provided that such loans shall mature no later than thirty days following the incurrence of such loans and the aggregate amount of such loans at any time outstanding shall not exceed $10,000,000. 7.05 Limitation on Indebtedness. The Company shall not, and shall not -------------------------- suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: (a) Indebtedness incurred pursuant to this Agreement; (b) Indebtedness consisting of Contingent Obligations permitted pursuant to Section 7.08; (c) Indebtedness existing on the Closing Date and set forth in the financial statements of the Company and/or Schedule 7.05, and any extension, ------------- renewal or refinancing thereof; provided that the principal amount of the -------- Indebtedness being extended, renewed or refinanced does not increase; 47 Exhibit 10.16 ----- (d) Indebtedness secured by Liens permitted by subsections 7.01(i) and (j); (e) Indebtedness incurred in connection with leases permitted pursuant to Section 7.10; (f) Indebtedness, in an aggregate principal amount not to exceed $10,000,000 at any time, pursuant to uncommitted "guidance" lines; and (g) other Indebtedness in an aggregate principal amount not to exceed $5,000,000 at any time. 7.06 Transactions with Affiliates. The Company shall not, and shall not ---------------------------- suffer or permit any Subsidiary to, enter into any transaction with any Affiliate of the Company or such Subsidiary, except upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would obtain in a comparable arm's-length transaction with a Person not an Affiliate of the Company or such Subsidiary. 7.07 Use of Proceeds. Except in connection with the refinancing of the --------------- Existing Loan and the "Harnischfeger Note" described in Schedule 7.05, the ------------- Company shall not, and shall not suffer or permit any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock other than Margin Stock constituting the Company's common stock, (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. 7.08 Contingent Obligations. The Company shall not, and shall not suffer ---------------------- or permit any Subsidiary to, create, incur, assume or suffer to exist any Contingent Obligations except: (a) endorsements for collection or deposit in the ordinary course of business; (b) Swap Contracts entered into in the ordinary course of business as bona fide hedging transactions; (c) Contingent Obligations of the Company and its Subsidiaries existing as of the Closing Date and listed in the Company's financial statements; (d) the Guaranty and Contingent Obligations incurred for the benefit of the Company or any Wholly-Owned Subsidiary; (e) Contingent Obligations in favor of customers of the Company or its Subsidiaries incurred in the ordinary course of business; and (f) Guaranties of the obligations of employees of the Company or its Subsidiaries in the ordinary course of 48 Exhibit 10.16 ----- business in an aggregate amount not in excess of $2,000,000 at any time outstanding. 7.09 Joint Ventures. The Company shall not, and shall not suffer or permit -------------- any Subsidiary to enter into any Joint Venture, other than (a) in the ordinary course of business or (b) any Joint Venture engaged in a business reasonably related to, or in a reasonable extension of, the business of the Company and its Subsidiaries as presently conducted, provided that, at the time of and after -------- giving effect to such entry, no Default or Event of Default shall have occurred and be continuing. 7.10 Lease Obligations. The Company shall not, and shall not suffer or ----------------- permit any Subsidiary to, create or suffer to exist any obligations for the payment of rent for any property under lease or agreement to lease, except for: (a) leases of the Company and of Subsidiaries in existence on the Closing Date and any renewal, extension or refinancing thereof; (b) operating leases entered into by the Company or any Subsidiary after the Closing Date in the ordinary course of business; and (c) capital leases other than those permitted under clause (a) of this Section, entered into by the Company or any Subsidiary after the Closing Date to finance the acquisition of equipment. 7.11 Restricted Payments. The Company shall not, and shall not suffer or ------------------- permit any Subsidiary to, declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of its capital stock, or purchase, redeem or otherwise acquire for value any shares of its capital stock or any warrants, rights or options to acquire such shares, now or hereafter outstanding; except that the Company and any Wholly-Owned Subsidiary may: (a) declare and make dividend payments or other distributions payable solely in its common stock; (b) purchase, redeem or otherwise acquire shares of its common stock or warrants or options to acquire any such shares with the proceeds received from the substantially concurrent issue of new shares of its common stock; and (c) declare or pay cash dividends to its stockholders and purchase, redeem or otherwise acquire shares of its capital stock or warrants, rights or options to acquire any such shares for cash, provided, that, immediately after -------- giving effect to such proposed action, no Default or Event of Default would exist. 7.12 ERISA. The Company shall not, and shall not suffer or permit any of ----- its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of the fiduciary 49 Exhibit 10.16 ----- responsibility rules with respect to any Plan which could result or could reasonably be expected to result in liability of the Company in an aggregate amount in excess of 5% of Tangible Net Worth of the Company; or (b) engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 7.13 Change in Business. The Company shall not, and shall not suffer or ------------------ permit any Subsidiary to, engage in any material line of business substantially different from those lines of business carried on by the Company and its Subsidiaries on the date hereof. 7.14 Accounting Changes. The Company shall not, and shall not suffer or ------------------ permit any Subsidiary to, make any significant change in accounting treatment or reporting practices, except as permitted or required by GAAP, or change the fiscal year of the Company or of any Subsidiary. 7.15 Quick Ratio. At the end of each fiscal quarter of the Company, the ----------- Company shall not permit on a consolidated basis the ratio of (a) the sum of cash, cash equivalents, short-term marketable investments (each as determined in accordance with GAAP), and receivables net of bad debt reserves maintained in accordance with GAAP, to (b) all amounts which would, in accordance with GAAP, be included under current liabilities on a consolidated balance sheet of the Company and its Subsidiaries and the outstanding amount of any Loans not included under current liabilities, to be less than 1.10 to 1.00. 7.16 Tangible Net Worth. At the end of each fiscal quarter of the Company, ------------------ the Company shall not permit on a consolidated basis the Tangible Net Worth for the Company to be less than the sum of (a) $131,421,650 plus (b) 50% of quarterly net income for the Company for each fiscal quarter ending subsequent to the fiscal quarter ended November 27, 1994 with no reduction for net losses, plus (c) the sum of (1) 100% of the net proceeds for any capital stock issued by the Company after the fiscal quarter ended November 27, 1994 less (2) 100% of the net purchase price paid by the Company for repurchases of its outstanding shares of common stock pursuant to the Company's stock option and employee stock option plans; provided, however, that if the amount determined pursuant to -------- ------- clause (2) of this clause (c) exceeds the amount under clause (1) of this clause (c) and such excess is greater than $5,000,000, then for purposes of this calculation, $5,000,000 shall be subtracted from the sum of clauses (a) and (b), and provided, further, that the aggregate amount subtracted from the sum of -------- ------- clauses (a) and (b) for any calendar year shall be limited to $5,000,000. 7.17 Leverage Ratio. At the end of each fiscal quarter of the Company, the -------------- Company shall not permit on a consolidated basis the ratio of total liabilities for the Company to Tangible Net Worth for the Company to be greater than 1.00 to 1.00 during the Company's 1995 fiscal year, and 0.90 to 1.00 for each fiscal quarter thereafter. 7.18 Profitability. The Company shall not incur or suffer to exist more ------------- than one quarterly loss for any fiscal year, 50 Exhibit 10.16 ----- whether on a net operating or a net after taxes basis and such loss shall not exceed $5,000,000. 7.19 Capital Expenditures. The Company shall not make any additional -------------------- investment in fixed assets which investments shall exceed, in the aggregate for any fiscal year, $17,500,000, excluding assets acquired as part of any Acquisition. ARTICLE VIII EVENTS OF DEFAULT ----------------- 8.01 Event of Default. Any of the following shall constitute an "Event of ---------------- -------- Default": - ------- (a) Non-Payment. The Company or any Other Borrowing Entity fails to ----------- pay, (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or (b) Representation or Warranty. Any representation or warranty by the -------------------------- Company or any Subsidiary made or deemed made herein or in any other Loan Document, or which is contained in any certificate, document or financial or other statement by the Company, any Subsidiary, or any Responsible Officer, furnished at any time under this Agreement, or in or under any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or (c) Specific Defaults. The Company fails to perform or observe any ----------------- term, covenant or agreement contained in any of Section 6.04, 6.12 or Article VII; or (d) Other Defaults. The Company or any Other Borrowing Entity fails to -------------- perform or observe any other term or covenant contained in this Agreement or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the earlier of (i) the date upon which a Responsible Officer knew or reasonably should have known of such failure or (ii) the date upon which written notice thereof is given to the Company or such Other Borrowing Entity by the Agent or any Bank; or (e) Cross-Default. The Company or any Subsidiary (i) fails to make any ------------- payment in respect of any Indebtedness or Contingent Obligation having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $5,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (ii) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness or Contingent 51 Exhibit 10.16 ----- Obligation, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity, or such Contingent Obligation to become payable or cash collateral in respect thereof to be demanded; or (f) Insolvency; Voluntary Proceedings. The Company or any Subsidiary --------------------------------- (i) ceases or fails to be solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding ----------------------- is commenced or filed against the Company or any Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's or any Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Company or any Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or (h) ERISA. (i) An ERISA Event shall occur with respect to a Pension ----- Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of 5% of Tangible Net Worth of the Company; (ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans at any time exceeds 5% of Tangible Net Worth of the Company; or (iii) the Company or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of 5% of Tangible Net Worth of the Company; or (i) Monetary Judgments. One or more non-interlocutory judgments, non- ------------------ interlocutory orders, decrees or arbitration awards is entered against the Company or any Subsidiary involving in the aggregate a liability as to any 52 Exhibit 10.16 ----- single or related series of transactions, incidents or conditions, of $10,000,000 or more which is not covered by independent third-party insurance as to which the insurer does not dispute coverage, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 15 days after the entry thereof; or (j) Non-Monetary Judgments. Any non-monetary judgment, order or decree ---------------------- is entered against the Company or any Subsidiary which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (k) Change of Control. There occurs any Change of Control; or ----------------- (l) Loss of Licenses. Any Governmental Authority revokes or fails to ---------------- renew any material license, permit or franchise of the Company or any Subsidiary, or the Company or any Subsidiary for any reason loses any material license, permit or franchise, or the Company or any Subsidiary suffers the imposition of any restraining order, escrow, suspension or impound of funds in connection with any proceeding (judicial or administrative) with respect to any material license, permit or franchise; or (m) Adverse Change. There occurs a Material Adverse Effect; or -------------- (n) Guaranty. The Company or any of its Subsidiaries contests the -------- validity or enforceability of any Guaranty. 8.02 Remedies. If any Event of Default occurs and is continuing, the Agent -------- shall, at the request of, or may, with the consent of, the Majority Banks, (a) declare the commitment of each Bank to make Loans to be terminated, whereupon such commitments shall be terminated; (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company and each Other Borrowing Entity; and (c) exercise on behalf of itself and the Banks all rights and remedies available to it and the Banks under the Loan Documents or applicable law; provided, however, that upon the occurrence of any event specified in subsection - -------- ------- (f) or (g) of Section 8.01 (in the 53 Exhibit 10.16 ----- case of clause (i) of subsection (g) upon the expiration of the 60-day period mentioned therein), the obligation of each Bank to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Agent or any Bank and without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company and each Other Borrowing Entity. 8.03 Rights Not Exclusive. The rights provided for in this Agreement and -------------------- the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. 8.04 Certain Financial Covenant Defaults. In the event that, after taking ----------------------------------- into account any extraordinary charge to earnings taken or to be taken as of the end of any fiscal period of the Company (a "Charge"), and if solely by virtue of ------ such Charge, there would exist an Event of Default due to the breach of any of Sections 7.15, 7.16, 7.17 or 7.18 as of such fiscal period end date, such Event of Default shall be deemed to arise upon the earlier of (a) the date after such fiscal period end date on which the Company announces publicly it will take, is taking or has taken such Charge (including an announcement in the form of a statement in a report filed with the SEC) or, if such announcement is made prior to such fiscal period end date, the date that is such fiscal period end date, and (b) the date the Company delivers to the Agent its audited annual or unaudited quarterly financial statements in respect of such fiscal period reflecting such Charge as taken. ARTICLE IX THE AGENT --------- 9.01 Appointment and Authorization. Each Bank hereby irrevocably (subject ----------------------------- to Section 9.09) appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. 9.02 Delegation of Duties. The Agent may execute any of its duties under -------------------- this Agreement or any other Loan Document by or 54 Exhibit 10.16 ----- through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 9.03 Liability of Agent. None of the Agent-Related Persons shall (i) be ------------------ liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Banks for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Company or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent- Related Person shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Company or any of the Company's Subsidiaries or Affiliates. 9.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and ----------------- shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority Banks (or all of the Banks if this Agreement so requires) as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Majority Banks (or all of the Banks if this Agreement so requires) and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Banks. (b) For purposes of determining compliance with the conditions specified in Section 4.01, each Bank that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Agent to such Bank for consent, 55 Exhibit 10.16 ----- approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Bank. 9.05 Notice of Default. The Agent shall not be deemed to have knowledge or ----------------- notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Banks, unless the Agent shall have received written notice from a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". The Agent will notify the Banks of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be requested by the Majority Banks in accordance with Article VIII; provided, however, that unless and until the Agent has received any such -------- ------- request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Banks. 9.06 Credit Decision. (a) Each Bank represents to each other Bank and the --------------- Agent that such Bank, in good faith, has not relied upon any Margin Stock constituting the Company's common stock as collateral in extending or maintaining the extension of credit contemplated by this Agreement. (b) Each Bank acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Agent hereafter taken, including any review of the affairs of the Company and its Subsidiaries, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Bank. Each Bank represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company and its Subsidiaries hereunder. Each Bank also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Banks by the Agent or required to be furnished to the Banks by the Agent pursuant to specific instructions by the Company (with sufficient copies for each Bank), the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning 56 Exhibit 10.16 ----- the business, prospects, operations, property, financial and other condition or creditworthiness of the Company which may come into the possession of any of the Agent-Related Persons. 9.07 Indemnification of Agent. Whether or not the transactions ------------------------ contemplated hereby are consummated, the Banks shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), pro rata, from and against any and all Indemnified Liabilities; provided, however, that no -------- ------- Bank shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified Liabilities resulting solely from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Company. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of the Agent. 9.08 Agent in Individual Capacity. BofA and its Affiliates may make loans ---------------------------- to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Company and its Subsidiaries and Affiliates as though BofA were not the Agent hereunder and without notice to or consent of the Banks except as specifically required hereby. The Banks acknowledge that, pursuant to such activities, BofA or its Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company or such Subsidiary) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to its Loans, BofA shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Agent, and the terms "Bank" and "Banks" include BofA in its individual capacity. 9.09 Successor Agent. The Agent may, and at the request of the Majority --------------- Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent resigns under this Agreement, the Majority Banks shall appoint from among the Banks a successor agent for the Banks, which successor Agent shall be reasonably acceptable to the Company. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Banks and the Company, a successor agent from among the Banks. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean 57 Exhibit 10.16 ----- such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Banks shall perform all of the duties of the Agent hereunder until such time, if any, as the Majority Banks appoint a successor agent as provided for above. 9.10 Withholding Tax. (a) If any Bank is a "foreign corporation, --------------- partnership or trust" within the meaning of the Code and such Bank claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to the Agent: (i) if such Bank claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed IRS Forms 1001 and W-8 before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement; (ii) if such Bank claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Bank, two properly completed and executed copies of IRS Form 4224 before the payment of any interest is due in the first taxable year of such Bank and in each succeeding taxable year of such Bank during which interest may be paid under this Agreement, and IRS Form W-9; and (iii) such other form or forms as may be required under the Code or other laws of the United States as a condition to exemption from, or reduction of, United States withholding tax. Such Bank agrees to promptly notify the Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction. (b) If any Bank claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form 1001 and such Bank sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company owed to such Bank, then such Bank agrees to notify the Agent of the percentage amount in which it is no longer the beneficial owner of Obligations of the Company to such Bank. To the extent of such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid. 58 Exhibit 10.16 ----- (c) If any Bank claiming exemption from United States withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company owed to such Bank, then such Bank agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. (d) If any Bank is entitled to a reduction in the applicable withholding tax, the Agent may withhold from any interest payment to such Bank an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not delivered to the Agent, then the Agent may withhold from any interest payment to such Bank not providing such forms or other documentation an amount equivalent to the applicable withholding tax. (e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Bank (because the appropriate form was not delivered, was not properly executed, or because such Bank failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Bank shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Banks under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Agent. ARTICLE X MISCELLANEOUS ------------- 10.01 Amendments and Waivers. No amendment or waiver of any provision of ---------------------- this Agreement or any other Loan Document, and no consent with respect to any departure by the Company or any Other Borrowing Entity therefrom, shall be effective unless the same shall be in writing and signed by the Majority Banks (or by the Agent at the written request of the Majority Banks) and the Company and each Other Borrowing Entity affected by such amendment or waiver, and acknowledged by the Agent, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, -------- ------- unless in writing and signed by all the Banks, the Company and each Other Borrowing Entity affected by such amendment or waiver, and acknowledged by the Agent, do any of the following: (a) increase or extend the Commitment of any Bank (or reinstate any Commitment terminated pursuant to Section 8.02); 59 Exhibit 10.16 ----- (b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Banks (or any of them) hereunder or under any other Loan Document; (c) reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (ii) below) any fees or other amounts payable hereunder or under any other Loan Document; (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which is required for the Banks or any of them to take any action hereunder; (e) amend this Section, or Section 2.14, or any provision herein providing for consent or other action by all Banks; or (f) release the Company from its obligations under the Guaranty; and, provided further, that (i) no amendment, waiver or consent shall, unless in -------- ------- writing and signed by the Agent in addition to the Majority Banks or all the Banks, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Loan Document, and (ii) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed by the parties thereto. 10.02 Notices. (a) All notices, requests and other communications shall ------- be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company and each Other Borrowing Entity by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on Schedule 10.02, and -------------- (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, faxed or delivered to the address or facsimile number specified for notices on Schedule 10.02; or, as directed to the Company or the Agent, to such -------------- other address as shall be designated by such party in a written notice to the other parties, and as directed to any other party, at such other address as shall be designated by such party in a written notice to the Company, each Other Borrowing Entity and the Agent. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that notices pursuant to Article II or IX shall not be effective until actually received by the Agent. (c) The Company acknowledges and agrees (and shall cause each Other Borrowing Entity to acknowledge and agree) that 60 Exhibit 10.16 ----- any agreement of the Banks in Article II to receive certain notices by telephone and facsimile is solely for the convenience and at the request of the Company and each Other Borrowing Entity. The Agent and the Banks shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company and each Other Borrowing Entity to give such notice and the Agent and the Banks shall not have any liability to the Company or any other Person on account of any action taken or not taken by the Agent or the Banks in reliance upon such telephonic or facsimile notice. The obligation of the Company and each Other Borrowing Entity to repay the Loans shall not be affected in any way or to any extent by any failure by the Agent and the Banks to receive written confirmation of any telephonic or facsimile notice or the receipt by the Agent and the Banks of a confirmation which is at variance with the terms understood by the Agent and the Banks to be contained in the telephonic or facsimile notice. 10.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay ------------------------------ in exercising, on the part of the Agent or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 10.04 Costs and Expenses. The Company shall (or shall cause the relevant ------------------ Other Borrowing Entity to): (a) whether or not the transactions contemplated hereby are consummated, pay or reimburse BofA (including in its capacity as Agent) within five Business Days after demand) for all costs and expenses incurred by BofA (including in its capacity as Agent) in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any other Loan Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including reasonable Attorney Costs incurred by BofA (including in its capacity as Agent) with respect thereto; and (b) pay or reimburse the Agent and each Bank within five Business Days after demand) for all costs and expenses (including Attorney Costs) incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or any other Loan Document during the existence of an Event of Default or after acceleration of the Loans (including in connection with any "workout" or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding). 10.05 Company Indemnification. Whether or not the transactions ----------------------- contemplated hereby are consummated, the Company shall (or shall cause the relevant Other Borrowing Entity to), indemnify and hold harmless the Agent- Related Persons, and each Bank and each of its respective officers, directors, employees, 61 Exhibit 10.16 ----- counsel, agents and attorneys-in-fact (each, an "Indemnified Person") from and ------------------ against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Loans and the termination, resignation or replacement of the Agent or replacement of any Bank) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated hereby or referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided, that the Company and each Other Borrowing ----------------------- -------- Entity shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting solely from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations. 10.06 Payments Set Aside. To the extent that the Company or any Other ------------------ Borrowing Entity makes a payment to the Agent or the Banks, or the Agent or the Banks exercise their right of set-off, and such payment or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Bank severally agrees to pay to the Agent upon demand its pro rata share of any amount so recovered from or repaid by the Agent. 10.07 Successors and Assigns. The provisions of this Agreement shall be ---------------------- binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company and each Other Borrowing Entity may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agent and each Bank. 62 Exhibit 10.16 ----- 10.08 Assignments, Participations, etc. (a) Any Bank may, with the --------------------------------- written consent of the Company at all times other than during the existence of an Event of Default and the Agent, which consent of the Company shall not be unreasonably withheld, at any time assign and delegate to one or more Eligible Assignees (provided that no written consent of the Company or the Agent shall be required in connection with any assignment and delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all, -------- or any ratable part of all, of the Loans, the Commitment and the other rights and obligations of such Bank hereunder and under the other Loan Documents, in a minimum amount of $5,000,000; provided, however, that the Company, each Other -------- ------- Borrowing Entity and the Agent may continue to deal solely and directly with such Bank in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Company, each Other Borrowing Entity and the Agent by such Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered to the Company, each Other Borrowing Entity and the Agent an Assignment and Acceptance in the form of Exhibit E ("Assignment and Acceptance") and (iii) the assignor Bank or --------- ------------------------- Assignee has paid to the Agent a processing fee in the amount of $2,500. (b) From and after the date that the Agent notifies the assignor Bank that it has received (and provided its consent with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents; provided, however, the -------- ------- assignor Bank shall not relinquish its rights under Article III and Sections 10.04 and 10.05 to the extent such rights related to the time prior to the effective date of such assignment. (c) Immediately upon each Assignee's or assignor Bank's making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Bank pro tanto. --- ----- (d) Any Bank may at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a "Participant") participating ----------- interests in any Loans, the Commitment of that Bank and the other interests of that Bank (the "originating Bank") hereunder and under the other Loan Documents; provided, however, that (i) the originating Bank's obligations under this - -------- ------- Agreement shall remain unchanged, 63 Exhibit 10.16 ----- (ii) the originating Bank shall remain solely responsible for the performance of such obligations, (iii) the Company, each Other Borrowing Entity and the Agent shall continue to deal solely and directly with the originating Bank in connection with the originating Bank's rights and obligations under this Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Banks as described in the first proviso ----- ------- to Section 10.01. In the case of any such participation, the Participant shall not have any rights under this Agreement, or any of the other Loan Documents, and all amounts payable by the Company or any Other Borrowing Entity hereunder shall be determined as if such Bank had not sold such participation; except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set- off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement. (e) Notwithstanding any other provision in this Agreement, any Bank may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR (S)203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 10.09 Confidentiality. The Agent and each Bank agrees to take and to cause --------------- its Affiliates to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" or "secret" by the Company and provided to it by the Company or any Subsidiary, or by the Agent on the Company's or such Subsidiary's behalf, under this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any such information other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary; except to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by such Bank, or (ii) was or becomes available on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company known to such Bank; provided, however, that any Bank -------- ------- may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which such Bank is subject or in connection with an examination of such Bank by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably 64 Exhibit 10.16 ----- required in connection with any litigation or proceeding to which the Agent, any Bank or their respective Affiliates may be party; (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (F) to such Bank's independent auditors, counsel and other professional advisors; (G) to any Participant or Assignee, actual or potential, provided that such Person agrees in writing to keep such information confidential to the same extent required of the Banks hereunder; (H) as to any Bank or its Affiliate, as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party or is deemed party with such Bank or such Affiliate; and (I) to its Affiliates. 10.10 Set-off. In addition to any rights and remedies of the Banks ------- provided by law, if an Event of Default exists or the Loans have been accelerated, each Bank is authorized at any time and from time to time, without prior notice to the Company or any Other Borrowing Entity, any such notice being waived by the Company (and, in the case of each Other Borrowing Entity, being caused to be waived by the Company) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Bank to or for the credit or the account of the Company or any Other Borrowing Entity against any and all Obligations owing to such Bank, now or hereafter existing, irrespective of whether or not the Agent or such Bank shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees promptly to notify the Company and the Agent after any such set-off and application made by such Bank; provided, however, that the failure to give such -------- ------- notice shall not affect the validity of such set-off and application. 10.11 Automatic Debits of Fees. With respect to any commitment fee, ------------------------ arrangement fee, or other fee, or any other cost or expense (including Attorney Costs) due and payable to the Agent or BofA under the Loan Documents, the Company hereby irrevocably authorizes (and shall cause each Other Borrowing Entity to irrevocably authorize) BofA to debit any deposit account of the Company with BofA in an amount such that the aggregate amount debited from all such deposit accounts does not exceed such fee or other cost or expense. If there are insufficient funds in such deposit accounts to cover the amount of the fee or other cost or expense then due, such debits will be reversed (in whole or in part, in BofA's sole discretion) and such amount not debited shall be deemed to be unpaid. No such debit under this Section shall be deemed a set-off. The Agent shall notify the Company of the occurrence of any such debit, provided, -------- that the failure of the Agent to so notify the Company shall not affect BofA's rights hereunder. 10.12 Notification of Addresses, Lending Offices, Etc. Each Bank shall ------------------------------------------------ notify the Agent in writing of any changes in the address to which notices to such Bank should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such 65 Exhibit 10.16 ----- other administrative information as the Agent shall reasonably request. 10.13 Counterparts. This Agreement may be executed in any number of ------------ separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument. 10.14 Severability. The illegality or unenforceability of any provision of ------------ this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder. 10.15 No Third Parties Benefited. This Agreement is made and entered into -------------------------- for the sole protection and legal benefit of the Company, the Banks, the Agent and the Agent-Related Persons, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. 10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT SHALL BE ------------------------------ GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS CONSENTS (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES TO CONSENT), FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND THE BANKS IRREVOCABLY WAIVES (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES TO WAIVE) ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER -------------------- HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES TO WAIVE) PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW. 10.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH -------------------- WAIVE (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES TO WAIVE) THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED 66 Exhibit 10.16 ----- PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE AGENT EACH AGREE (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES TO AGREE) THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE (AND THE COMPANY SHALL CAUSE EACH OF THE OTHER BORROWING ENTITIES TO AGREE) THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 10.18 Entire Agreement. This Agreement, together with the other Loan ---------------- Documents, embodies the entire agreement and understanding among the Company, the Other Borrowing Entities, the Banks and the Agent, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof. 10.19 Obligations of Other Borrowing Entities. The parties intend that --------------------------------------- each Other Borrowing Entity will be liable under this Agreement only with respect to Borrowings by it hereunder, and will not have any obligation, direct or indirect, with respect to borrowings by the Company or any other Subsidiary of the Company. The entire Agreement shall be interpreted and enforced accordingly. 67 Exhibit 10.16 ----- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. MEASUREX CORPORATION By: ______________________ Title: ___________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: _________________________ Title: ______________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank By: _________________________ Title: ______________________ ABN AMRO BANK By: _________________________ Title: ______________________ By: _________________________ Title: ______________________ THE BANK OF NEW YORK By: _________________________ Title: ______________________ 68 Exhibit 10.16 ----- SCHEDULE 2.01 ------------- COMMITMENTS ----------- AND PRO RATA SHARES -------------------
Pro Rata Bank Commitment Share ---- ---------- ----- Bank of America National Trust and Savings Association $20,000,000 40% ABN AMRO Bank $15,000,000 30% The Bank of New York $15,000,000 30% TOTAL $50,000,000 100%
69 Exhibit 10.16 ----- SCHEDULE 10.02 -------------- OFFSHORE AND DOMESTIC LENDING OFFICES, -------------------------------------- ADDRESSES FOR NOTICES --------------------- BANK OF AMERICA NATIONAL TRUST - ------------------------------ AND SAVINGS ASSOCIATION, - ----------------------- as a Bank Domestic and Offshore Lending Office: - ------------------------------------- 1850 Gateway Boulevard, Fourth Floor Concord, California 94520 BANK OF AMERICA NATIONAL TRUST - ------------------------------ AND SAVINGS ASSOCIATION, - ----------------------- as Agent Address for Notices: - -------------------- Bank of America National Trust and Savings Association 1455 Market Street, 12th Floor San Francisco, California 94103 Attention: Wendy Young Agency Management Services #5596 Telephone: (415) 953-2506 Facsimile: (415) 622-4894 Address for Notices (other than Borrowing notices and Notices of - ---------------------------------------------------------------- Conversion/Continuation): - ------------------------- Bank of America National Trust and Savings Association Credit Products High Technology #3697 555 California Street, 41st Floor San Francisco, California 94104 Attention: Kevin McMahon Vice President Telephone: (415) 622-8088 Facsimile: (415) 622-2514 Payment Instructions: - -------------------- Bank of America National Trust and Savings Association ABA #121-000-358 Attention: Agency Management Services #5596 Concord, California 94520 For credit to account: No. 12331-14477 Ref: Measurex Corporation ABN AMRO BANK N.V. - ------------------ Domestic and Offshore Lending Office: - ------------------------------------- 70 Exhibit 10.16 ----- ABN AMRO Bank N.V. 101 California Street, Suite 4550 San Francisco, CA 94111-5812 Address for Notices: - -------------------- ABN AMRO Bank N.V. 101 California Street, Suite 4550 San Francisco, CA 94111-5812 Attention: Gloria Chang Lee Money Market & Loan Specialist Telephone: (415) 984-3720 Facsimile: (415) 362-3524 Address for Notices (other than Borrowing Notices and Notices of - ---------------------------------------------------------------- Conversion/Continuation): - ------------------------- ABN AMRO Bank N.V. 101 California Street, Suite 4550 San Francisco, CA 94111-5812 Attention: Inga C. Lapsins Corporate Banking Officer Telephone: (415) 984-3734 Facsimile: (415) 362-3524 Payment Instructions: - --------------------- Federal Reserve Bank of New York ABA #026009580 For Credit To: ABN AMRO San Francisco #6510010545-41 Ref: Measurex Corporation Credit Agreement Dated 2/10/95 BANK OF NEW YORK - ---------------- Domestic & Offshore Lending Office - ---------------------------------- The Bank of New York One Wall Street, 22nd Floor New York, NY 10286 Address for Notices - ------------------- The Bank of New York Loan Administration One Wall Street, 22nd Floor New York, NY 10286 Attention: Sandra Morgan/Lorna Alleyne 71 Exhibit 10.16 ----- Telephone: (212) 635-6737 Facsimile: (212) 635-6399 Address for Notices (other than Borrowing Notices and Notices of - ---------------------------------------------------------------- Conversion/Continuation) - ------------------------ The Bank of New York 10990 Wilshire Blvd., Suite 1700 Los Angeles, CA 90024 Attention: Elizabeth T. Ying Telephone: (310) 996-8661 Facsimile: (310) 996-8664 Payment Instructions: - --------------------- The Bank of New York ABA #021000018 For Credit To: Account of Measurex Revolver, IOC 556 72 Exhibit 10.16 ----- SCHEDULE 7.05 PERMITTED INDEBTEDNESS Part I - ------ Term loan from The Bank of New York, pursuant to the Term Loan Agreement dated as of May 21, 1993, as amended, between the Company and The Bank of New York. The principal amount outstanding under this loan as of the date of the Credit Agreement was $14,000,000. Revolving credit facility in the maximum amount of $20,000,000, pursuant to the Credit Agreement dated as of July 22, 1993, as amended, by and between ABN AMRO Bank N.V. San Francisco International Branch and/or Cayman Islands Branch and the Company. Part II - ------- Revolving credit facility in the maximum amount of $10,000,000, pursuant to the Credit Agreement (Multicurrency) dated as of October 29, 1993, as amended, between Bank of America National Trust and Savings Association and the Company, as amended from time to time. This facility is to be converted to a "guidance" line on the Closing Date. The Japanese Yen loan made by Bank of America National Trust and Savings Association to Measurex Japan Ltd., having a Dollar equivalent principal balance as of the Closing Date of approximately $4,000,000, will remain outstanding thereunder until it is terminated as provided in the Credit Agreement. Certain letters of credit will also be outstanding thereunder, in the amount of $1,279,683.15. This guidance credit facility will not be in addition to the guidance line referred to in Section 7.05(f). Promissory Note in favor of HIHC, Inc., dated November 29, 1994 (the "Harnischfeger Note"), assigned to PNC Bank, N.A., with an outstanding principal balance of $23,000,000. This is to be terminated on or before the Closing Date. 73 Exhibit 10.16 ----- SCHEDULE 5.06 CERTAIN DEFAULTS The Company is in the process of amending certain financial covenants in the Term Loan Agreement with The Bank of New York and the Credit Agreement with ABN AMRO Bank, described in paragraphs 2 and 3 of Schedule 7.05, to conform them to this Credit Agreement. Without these amendments a Default or Event of Default may result from the Company's incurrence of the Obligations. These amendments are to become effective on or before the Closing Date. 74 Exhibit 10.16 ----- SCHEDULE 7.01 PERMITTED LIENS The attached California UCC search constitutes Schedule 7.01. 75 Exhibit 10.16 ----- SCHEDULE 5.12 ENVIRONMENTAL MATTERS None. 76 Exhibit 10.16 ----- SCHEDULE 5.05 LITIGATION None. 77 EX-11 9 COMP OF NET INCOME PER SHARE Exhibit 11 -- MEASUREX CORPORATION COMPUTATION OF NET INCOME PER SHARE Fiscal years 1994, 1993 and 1992 (Amounts in thousands except per share data)
1994 1993 1992 ------- ------- -------- PRIMARY: Average shares outstanding 17,953 17,913 18,111 Net effect of dilutive stock options and warrants based on treasury stock method using average market price 236 138 185 ------- ------- ------- Average common and common equivalent shares outstanding 18,189 18,051 18,296 ------- ------- ------- Income before extraordinary credit and cumulative effect of accounting change $ 5,583 $ 8,215 $ 714 ------- ------- ------- Income before cumulative effect of accounting change $ 5,583 $ 8,215 $ 1,625 ------- ------- ------- Net income $ 6,107 $ 8,215 $ 1,625 ------- ------- ------- Income per share before extraordinary credit and cumulative effect of accounting change $ 0.31 $ 0.46 $ 0.04 ------- ------- ------- Income per share before cumulative effect of accounting change $ 0.31 $ 0.46 $ 0.09 ------- ------- ------- Net income per share $ 0.34 $ 0.46 $ 0.09 ------- ------- ------- FULLY DILUTED: Average shares outstanding 17,953 17,913 18,111 Net effect of dilutive stock options and warrants based on treasury stock method using quarter-end market price or average market price when greater than quarter-end market price 270 184 236 ------- ------- ------- Average common and common equivalent shares outstanding 18,223 18,097 18,347 ------- ------- ------- Income before extraordinary credit and cumulative effect of accounting change $ 5,583 $ 8,215 $ 714 ------- ------- ------- Income before cumulative effect of accounting change $ 5,583 $ 8,215 $ 1,625 ------- ------- ------- Net income $ 6,107 $ 8,215 $ 1,625 ------- ------- ------- Income per share before extraordinary credit and cumulative effect of accounting change $ 0.31 $ 0.45 $ 0.04 ------- ------- ------- Income per share before cumulative effect of accounting change $ 0.31 $ 0.45 $ 0.09 ------- ------- ------- Net income per share $ 0.34 $ 0.45 $ 0.09 ------- ------- -------
Note A: Fully diluted earnings per share have been calculated in accordance with Accounting Principles Board 1 EX-13 10 1994 ANNUAL REPORT EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS LIQUIDITY AND CAPITAL RESOURCES Measurex continues to maintain a strong financial position with cash and cash equivalents and short-term investments of $109.3 million as of the fiscal 1994 year-end. The Company believes that its existing cash balances, lines of credit and cash provided by operations will provide adequate flexibility to fund the Company's operating needs, capital expenditures and cash dividends through fiscal year 1995. Subsequent to year-end, on December 29, 1994, the Company bought back two million shares of its stock held by Harnischfeger Industries, Inc., reducing Harnischfeger's holdings to 10% from 20%. The total value of the transaction is $43.6 million. On December 14, 1994, the Company acquired the Webart Division of The Ohmart Corporation, and its family of on-line measurement and control systems. Under the terms of the agreement, Ohmart transfered Webart products, engineering, services and other assets of the division to Measurex for $3.4 million in cash. On February 10, 1995, the Company entered into a $50 million Credit Agreement with a group of banks providing for an unsecured multi-year revolving credit facility. The Company will be able to borrow funds under this facility through February, 1998. This facility replaces $10 million of the lines of credit in place at November 27, 1994. This expansion of the Company's lines of credit, along with its existing cash balances and cash provided by operations, will be available for general corporate purposes. Net cash generated by operations for the fiscal year ended November 27, 1994 totaled $10.5 million. Net income adjusted for noncash items was $23.9 million, unchanged from 1993. Cash generated by operations was decreased by an $8.8 million increase in accounts and contracts receivable that is a result of higher leasing activity. Contracts receivable from three major customers amounted to approximately $17 million at year-end 1994. The decrease in accounts payable and accrued expenses is related mainly to payments made for restructuring costs and other expenses which were accrued in 1992. 1 Net cash used in investing activities totaled approximately $0.6 million during fiscal 1994 compared to $6.9 million in 1993. In 1994, the Company reduced its investment in preferred stocks by $8.3 million. Investments in property, plant and equipment totaled $6.7 million during fiscal 1994, down from approximately $8.3 million in 1993 as no major facility expansion occurred during the current year. The reduction in cash used for investing activities also reflects the use of approximately $1.7 million in the acquisition of Roibox Oy in April 1993. Offsetting these reductions, capitalized software increased by $1.1 million from 1993 to approximately $2.8 million in 1994. Cash used in financing activities during 1994 was $4.1 million compared with cash provided by financing activities of approximately $8.7 million during fiscal 1993. In May 1993, the Company borrowed $20.0 million under a 5.35% five year unsecured bank loan. Proceeds from the loan were used to support the Company's United States equipment lease portfolio and to provide a hedge against interest rate fluctuations. In July 1994, the Company borrowed $4.1 million against its unsecured multicurrency line of credit. The proceeds of the loan were used to fund the working capital needs of its subsidiary in Japan. The Company was in compliance with all loan covenants at year-end 1994. During 1994, the Company used cash to reduce outstanding debt by approximately $5.0 million and to pay dividends totaling approximately $7.9 million, partially offset by $4.7 million in proceeds received from employee stock option and purchase plans. As a result of the above operating, investing and financing activities and giving effect to exchange rate fluctuations, the Company's cash and cash equivalents increased by $6.2 million from $76.0 million at year-end 1993 to $82.2 million at November 27, 1994 while short-term investments decreased $8.3 million to $27.0 million. The Company's current ratio is 2.5 at November 27, 1994 compared to 2.8 at the end of the prior year. Total debt decreased to 9% of shareholders' equity at the end of 1994, compared to 10% a year ago. As of November 27, 1994, the Company's principal sources of liquidity included cash, cash equivalents and short-term investments of $109.3 million and unsecured bank lines of credit of $30.0 million, of which $9.3 million was committed to letters of credit and $4.1 million to short term debt. The lines of credit increased by $5.0 million over 1993 and expire in 1995. 2 RESULTS OF OPERATIONS System orders for 1994 were $160 million, an increase of $9 million (6%) from $151 million in 1993, and an increase of $4 million (3%) from $156.0 million in 1992. During 1994, increased orders occurred primarily in the United States with declines in Japan and Latin America partially offset by increases in Europe and Asia. In 1993, orders in Canada and Japan increased while Latin American and European orders were lower than in 1992. Worldwide pulp and paper orders were $138 million in 1994, an increase of $11 million (9%) from orders totaling $127 million in 1993 and an increase of $9 million (7%) from 1992. In 1994, pulp and paper orders in the United States increased 25% to $55 million from $44 million in 1993 and 28% from $43 million in 1992, reflecting a strong market share and paper companies' focus on upgrade and replacement of existing systems. Industrial Systems orders were $22 million, a decrease of $2 million (8%) from 1993 and a decline of $5 million (19%) from 1992. System backlog at the end of fiscal 1994 was $92 million which is slightly higher than the backlog of $91 million at the end of 1993. Approximately 90% of the $92 million year-end 1994 backlog is scheduled to be shipped during fiscal 1995. System revenue was $156.3 million in 1994, a $3.5 million (2%) increase from $152.8 million in 1993, and a $7.9 million (5%) increase from $148.4 million in 1992. Increased shipments of web inspection systems from the Measurex Roibox Division is the principal factor in revenue growth in 1994. In 1993, increased revenue over 1992 was due largely to the increased shipments of cross-direction control systems from the Measurex Devron Division. However, overall sales growth continued to be restrained by a depressed European market in the paper industry and ongoing price competition. Service and other revenues of $103.7 million increased $2.5 million (2%) from $101.2 million in 1993, and decreased $0.5 million from $104.2 million in 1992. The increase in service revenue in 1994 is due mainly to increases in spare part sales. The decline in service and other revenue from 1992 to 1993 was due to changes in foreign currency exchange rates. Margins on systems revenue were 36% in fiscal 1994 compared to 35% and 33% in 1993 and 1992, respectively. System margins improved during fiscal 1994 due primarily to the MXOpen product line start-up costs and initial installation costs incurred in 1993. Additionally, the Company had experienced project overruns on systems produced by its Management Systems Division in 1993, which negatively impacted system margins. The system margin improvement in 1993 over 1992 was related to lower spending at the Company's Irish manufacturing facility and more efficient use of existing capacity at Measurex's Devron Division. Service and other margins were 37% in 1994 compared to 36% in 1993, and 35% in 1992. The continued improvement in service margins in 1994 and 1993 reflected ongoing cost controls and better utilization of field service resources. 3 Product development costs were $22.7 million in 1994, down slightly from $22.9 million in 1993 and $25.2 million in 1992. Of this total, Measurex capitalized $2.7 million, $1.7 million, and $4.6 million of software development costs in fiscal 1994, 1993 and 1992, respectively. Measurex amortized $4.2 million, $3.4 million and $1.7 million of capitalized software to systems costs in 1994, 1993 and 1992, respectively. The increase in amortization in 1994 and 1993 is attributable to the MXOpen software released in 1992. Selling and administrative expenses were $63.4 million in 1994, a $2.3 million (4%) increase from $61.1 million in 1993 and a $0.3 million decrease from $63.7 million in 1992. The increase in 1994 profit sharing and commissions were mainly responsible for the increase in selling and administrative expense. In 1994, the pretax profit used in calculating profit sharing expense excluded the charge for exit costs. Additionally, the increase in expenditures in 1994 over 1993 was partially attributable to the inclusion of Roibox operations beginning in the second quarter of 1993. The lower selling and administrative expenses in 1993 compared to 1992 were in part due to reduced spending and a $0.8 million insurance claim settlement received. In September 1994, the Company announced its intention to reorganize a portion of its operations by establishing an independent Industrial Systems Division to better focus on the plastics, aluminum and other industries. The Company indicated that it had also established a cross-functional team organization for the Cupertino and Ireland operations. In addition, some other facilities and organizations are being consolidated. These actions resulted in the reduction of 106 positions. The changes were approved by the Board of Directors on September 7, 1994 and resulted in a $6.4 million charge for exit costs in the fourth quarter of fiscal 1994. In 1992, to reduce annual spending and improve efficiency, the Company provided restructuring reserves of $9.0 million for personnel reductions and plant consolidations. Interest income and other decreased by $.4 million (7%) to $5.7 million in 1994 and decreased by $1.7 million (22%) in 1993 from 1992. In 1994, this reduction is due primarily to a $1.2 million write-off of unrealized losses on short-term investments available-for-sale, that is not expected to be recovered, offset by higher interest rates earned on existing investments. In 1993, both lower average cash balances and lower interest rates, especially in Europe, contributed to the decline in interest income. It is management's expectation that interest income in 1995 will be lower than 1994 due to the purchase of two million shares of common stock from Harnischfeger Industries, Inc. Additionally, interest income in 1995 is dependent upon interest rates and cash flow from operations. 4 In the first quarter of 1994, the Company elected to adopt Financial Accounting Statement No. 115 "Accounting for Certain Investments in Debt and Equity Securities." Investments held-to-maturity are stated at amortized cost. All securities deemed available-for-sale are reported at fair value with net unrealized gains and losses reported net of related taxes as a separate component of shareholders' equity. When the decline in market value is considered other than temporary, the loss is charged to income. The impact of adoption was not material. The Company's effective tax rate in 1994 was 39% compared with 35% and 57% in 1993 and 1992, respectively. This increase during fiscal 1994 reflects a change in the geographic mix of earnings in countries in which the Company operates. Comparing 1994 and 1993 to 1992, the reduction in the effective tax rate was in part due to losses incurred by several subsidiaries which could not be benefited for tax purposes in 1992. In the first quarter of 1994, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The cumulative effect of this change increased net income by $0.5 million, or $0.03 per share for the fiscal year ended November 27, 1994. Net income for 1994 was $6.1 million, a decrease of $2.1 million from $8.2 million in 1993 and an increase of $4.5 million from $1.6 million in 1992. Fiscal 1994 net income was $0.34 per share compared to $0.46 and $0.09 per share in 1993 and 1992, respectively. 5 CONSOLIDATED STATEMENTS OF INCOME Three years ended November 27, 1994 (Dollar amounts in thousands except per share data)
1994 1993 1992 --------- --------- --------- REVENUES Systems $156,294 $152,839 $148,367 Service and other 103,685 101,158 104,220 -------- -------- -------- Total revenues 259,979 253,997 252,587 -------- -------- -------- OPERATING COSTS AND EXPENSES Systems 100,077 99,728 99,244 Service and other 65,288 64,501 67,814 Product development 19,992 21,146 20,612 Selling and administrative 63,441 61,122 63,695 Exit and restructuring costs 6,381 -- 8,974 -------- -------- -------- Total operating costs and expenses 255,179 246,497 260,339 -------- -------- -------- Earnings (loss) from operations 4,800 7,500 (7,752) -------- -------- -------- OTHER INCOME (EXPENSE) Interest expense (1,335) (948) (810) Interest income and other, net 5,687 6,127 7,831 Gain on sale of technology and assets -- -- 2,409 -------- -------- -------- Total other income, net 4,352 5,179 9,430 -------- -------- -------- Income before income taxes, extraordinary credit and cumulative effect of accounting change 9,152 12,679 1,678 Provision for income taxes 3,569 4,464 964 -------- -------- -------- Income before extraordinary credit and cumulative effect of accounting change 5,583 8,215 714 Extraordinary credit from utilization of tax loss carryforwards -- -- 911 -------- -------- -------- Income before cumulative effect of accounting change 5,583 8,215 1,625 Cumulative effect of accounting change 524 -- -- -------- -------- -------- Net income $ 6,107 $ 8,215 $ 1,625 ======== ======== ======== Net income per share: Income before extraordinary credit and cumulative effect of accounting change $ .31 $.46 $.04 Extraordinary credit -- -- .05 Cumulative effect of accounting change $ .03 -- -- -------- -------- -------- Net income per share $ .34 $.46 $.09 ======== ======== ======== Dividends per share $ .44 $.44 $.44 ======== ======== ======== Average number of common and common equivalent shares (thousands) 18,189 18,051 18,296 ======== ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 6 CONSOLIDATED BALANCE SHEETS
November 27, 1994 and November 28, 1993 (Dollar amounts in thousands except per share data) 1994 1993 - ---------------------------------------------------------- -------- -------- ASSETS Current assets: Cash and cash equivalents $ 82,254 $ 76,040 Short-term investments 27,030 35,371 Accounts receivable 61,583 55,126 Inventories 24,685 35,697 Prepaid and other 11,957 11,473 -------- -------- Total current assets 207,509 213,707 -------- -------- Contracts receivable 32,139 26,651 Service parts, net 12,286 3,178 Property, plant and equipment, net 49,655 53,161 Other assets 18,234 21,619 -------- -------- Total assets $319,823 $318,316 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 4,387 $ 4,516 Short term debt 4,063 -- Accounts payable 5,989 6,732 Accrued expenses 65,686 62,594 Income taxes payable 3,848 2,145 -------- -------- Total current liabilities 83,973 75,987 -------- -------- Long-term debt 12,167 16,783 Deferred income taxes 6,500 13,682 Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value; authorized: 10,000,000 shares; issued and outstanding: none Common stock, $.01 par value; authorized: 50,000,000 shares; outstanding 1994 - 19,019,975 shares, 1993 - 19,036,948 shares 190 190 Additional capital 75,115 75,202 Retained earnings 162,836 167,211 Cumulative translation adjustments (3,301) (5,707) Less: Treasury stock at cost: 1994 - 889,562 shares, 1993 - 1,192,726 shares (17,657) (25,032) -------- -------- Total shareholders' equity 217,183 211,864 -------- -------- Total liabilities and shareholders' equity $319,823 $318,316 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 7 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Cumulative Common Additional Retained Translation Treasury Stock Capital Earnings Adjustments Stock Total -------- ----------- --------- ------------ --------- --------- Three years ended November 27, 1994 (Dollar amount in thousands except per share data) Balance December 1, 1991 $190 $75,074 $175,783 $ 4,237 $(23,566) $231,718 Proceeds from treasury stock issued under employee stock purchase and stock option plans (104,539 shares) including related tax benefits -- 107 -- -- 2,953 3,060 Excess of cost of treasury shares issued over proceeds received -- -- (1,334) -- -- (1,334) Foreign currency translation -- -- -- (6,256) -- (6,256) Net income -- -- 1,625 -- -- 1,625 Dividends ($.44 per share) -- -- (7,976) -- -- (7,976) Treasury stock acquired (152,500 shares) -- -- -- -- (2,384) (2,384) ---- ------- -------- ----------- -------- -------- Balance November 29, 1992 190 75,181 168,098 (2,019) (22,997) 218,453 ---- ------- -------- ----------- -------- -------- Proceeds from treasury stock issued under employee stock purchase and stock option plans (115,103 shares) including related tax benefits -- 21 -- -- 3,125 3,146 Excess of cost of treasury shares issued over proceeds received -- -- (1,216) -- -- (1,216) Foreign currency translation -- -- -- (3,688) -- (3,688) Net income -- -- 8,215 -- -- 8,215 Dividends ($.44 per share) -- -- (7,886) -- -- (7,886) Treasury stock acquired (298,600 shares) -- -- -- -- (5,160) (5,160) ---- ------- -------- ----------- -------- -------- Balance November 28, 1993 190 75,202 167,211 (5,707) (25,032) 211,864 ---- ------- -------- ----------- -------- -------- Proceeds from treasury stock issued under employee stock purchase and stock option plans (303,164 shares) including related tax benefits -- (87) -- -- 7,375 7,288 Excess of cost of treasury shares issued over proceeds received -- -- (2,596) -- -- (2,596) Foreign currency translation -- -- -- 2,406 -- 2,406 Net Income -- -- 6,107 -- -- 6,107 Dividends ($.44 per share) -- -- (7,886) -- -- (7,886) ---- ------- -------- ----------- -------- -------- Balance November 27, 1994 $190 $75,115 $162,836 $(3,301) $(17,657) $217,183 ==== ======= ======== =========== ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 8 CONSOLIDATED STATEMENTS OF CASH FLOWS
1994 1993 1992 -------- -------- -------- Three years ended November 27, 1994 (Dollar amounts in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 6,107 $ 8,215 $ 1,625 Non-cash items included in net income: Depreciation and amortization: Service parts 1,032 1,055 1,331 Property, plant and equipment 9,343 9,997 9,933 Capitalized software and goodwill 4,921 3,935 2,318 Deferred income taxes (3,883) (2,307) (5,875) Translation (gain) loss (496) (506) 775 Inventory reserves 2,216 3,473 2,954 Gain on sale of technology -- -- (2,409) Exit and restructuring costs 4,662 -- 8,974 Net (increase) decrease in: Accounts and contracts receivable (8,795) (7,420) (4,998) Inventories and service parts (374) (3,912) (3,687) Prepaid and other 2,034 792 2,533 Net increase (decrease) in: Accounts payable and accrued expenses (4,289) (12,333) (906) Income taxes payable (2,901) 468 (674) Other, net 900 822 (351) -------- -------- -------- Net cash provided by operating activities 10,477 2,279 11,543 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of held-to-maturity securities (37,009) (33,781) (69,799) Purchase of available-for-sale securities (3,360) (31,684) (12,145) Sale of available-for-sale securities 11,864 25,155 13,597 Maturities of held-to-maturity securities 36,846 45,176 42,535 Acquisition of property, plant and equipment (6,716) (8,329) (7,781) Acquisition of subsidiary, net of cash acquired -- (1,668) -- Proceeds from sale of facility and other assets 575 -- 5,955 Capitalized software (2,787) (1,725) (4,636) -------- -------- -------- Net cash used in investing activities (587) (6,856) (32,274) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Additions to short-term debt 4,063 -- -- Additions to long-term debt -- 21,971 -- Payment of long-term debt (4,975) (2,191) (3,967) Dividends (7,886) (7,886) (7,976) Stock issued under employee stock purchase and stock option plans 4,692 1,930 1,726 Payment for treasury stock -- (5,160) (2,384) -------- -------- -------- Net cash provided by (used in) financing activities (4,106) 8,664 (12,601) -------- -------- -------- Effect of exchange rate fluctuations on cash and cash equivalents 430 (2,415) (5,008) Net increase (decrease) in cash and cash equivalents 6,214 1,672 (38,340) Cash and cash equivalents at beginning of year 76,040 74,368 112,708 -------- -------- -------- Cash and cash equivalents at end of year $ 82,254 $ 76,040 $ 74,368 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Interest $ 1,335 $ 948 $ 810 Income taxes $ 8,167 $ 5,509 $ 8,172
The accompanying notes are an integral part of the consolidated financial statements. 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FISCAL YEAR - The Company uses a 52-53 week fiscal year. References to 1994, 1993 and 1992 are for fiscal years ended November 27, 1994, November 28, 1993, and November 29, 1992, respectively. Fiscal years 1994, 1993 and 1992 were 52 week years. CONSOLIDATION - The consolidated financial statements include the accounts of all subsidiaries after elimination of intercompany balances and transactions. The Company has reclassified the presentation of certain prior year information to conform with the current year presentation format. FOREIGN CURRENCY TRANSLATION - Gains and losses resulting from foreign currency translation of the Company's foreign operations (except certain manufacturing operations and operations in hyperinflationary countries) were recorded directly to a separate component of shareholders' equity. For certain manufacturing operations and sales operations in hyperinflationary countries, the functional currency is deemed to be U.S. dollars, and translation gains or losses are reflected in interest income and other. FOREIGN EXCHANGE CONTRACTS - The Company hedges certain international system orders using foreign exchange forward contracts to reduce the risk of loss due to foreign currency fluctuations. In addition, the Company hedges the U.S. dollar value of net asset or liability positions denominated in currencies other than the functional currency of its foreign subsidiaries and records any resulting gains or losses in interest income and other. At November 27, 1994, the Company had foreign exchange forward contracts valued at $35.0 million maturing from December 1994 through August 1995, of which 66% were denominated in European currencies, 15% denominated in Canadian Dollar, and 11% denominated in Yen. The contract amount of the foreign exchange contracts approximates fair value, which has been estimated based on the amount the Company would have had to pay to terminate these agreements at year-end. At year-end 1993 and 1992, the Company had forward contracts in the amount of $29.8 million and $29.5 million, respectively. As of year end, approximately 90% of these contracts are with one financial institution. For the purposes of the statement of cash flows, hedges are classified in the same category as the items being hedged. REVENUE RECOGNITION - The Company generally recognizes revenue from system sales at the time of shipment provided any remaining obligations are insignificant and collection is probable. Revenue on certain software contracts are recognized on a percentage-of-completion basis. Service and other revenues are recognized as the services are provided or ratably over the life of the contracts. PRODUCT DEVELOPMENT EXPENSES - The Company is actively engaged in basic technology and applied research and development programs which are designed to develop new or improved products and process applications. The cost of these programs is charged to expense as incurred except for certain software development costs which are capitalized as described in the "Capitalized Software" policy below. CAPITALIZED SOFTWARE - Costs related to the conceptual formulation and design of software products are expensed as product development. Costs incurred subsequent to establishing the technological feasibility of software products are capitalized. Amortization of capitalized software costs, which begins when products are available for general release to customers, is computed on a straight-line basis over the expected product lives, generally estimated to be three years. 10 INCOME TAXES - The Company adopted Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes" at the beginning of fiscal year 1994, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this "liability" method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities by applying enacted statutory tax rates applicable to future years in which the differences are expected to reverse. Prior to 1994, taxes were provided for items included in the consolidated statements of income regardless of the period when such items may be reported for tax purposes ("deferred" method). The Company provides U.S. and foreign income taxes on the portion of the accumulated earnings of the Company's foreign subsidiaries which are intended to be remitted to the parent Company within the foreseeable future. CASH AND CASH EQUIVALENTS - Cash equivalents generally consist of certificates of deposit, time deposits and treasury notes. The Company considers all highly liquid debt instruments with an original maturity of 90 days or less to be a cash equivalent. A substantial portion of the Company's cash and cash equivalents are held by foreign subsidiaries and are generally held in U.S. dollar denominated holdings. Amounts held by foreign subsidiaries would be subject to U.S. income taxation, net of available foreign tax credits, upon repatriation to the U.S. SHORT-TERM INVESTMENTS - The Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" at the beginning of fiscal year 1994. Short-term investments include investments held-to-maturity and investments available-for-sale. Investments held-to-maturity are stated at amortized cost with original maturities between three and twelve months. Investments that are considered available-for-sale are carried at market value. Unrealized gains and losses are reported net of tax as a separate component of shareholders' equity until realized. As of year-end 1993, the short-term investments comprised debt securities and a portfolio of preferred stock for which cost approximated market. The Company enters into futures contracts to hedge the risk associated with the impact of interest rate fluctuations on its current portfolio of preferred stocks. At year end 1994 and 1993, the Company had interest rate futures contracts with notional value of $11.8 million and $6.4 million, respectively. Gains and losses on such contracts are recognized in income when changes in the value of the investment are realized. INVENTORY VALUATION - Inventories are stated at the lower of standard cost (which approximates actual cost determined on a first-in, first-out basis) or market. Inventory costs include raw materials, direct labor and manufacturing overhead. DEPRECIATION - Property, plant and equipment are depreciated on a straight-line basis over estimated useful lives which range as follows: buildings and improvements - 3 to 40 years; machinery and equipment - 3 to 20 years. Service parts, located in the Sales and Service organization, are depreciated on a 7- year declining balance basis. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are included in income. NET INCOME PER SHARE - Net income per share is computed based on the weighted average number of common shares outstanding during the year adjusted to reflect the assumed exercise of outstanding employee stock options to the extent these items had a dilutive effect on the computation. 11 SHORT TERM INVESTMENTS The Company has adopted Financial Accounting Standard No. 115, "Accounting for Certain Investments in Debt and Equity Securities," effective November 29, 1993. There was no effect on current earnings from the initial application of the new standard. The impact on shareholders' equity and assets was not material. Included in short-term investments at November 27, 1994, are debt securities classified as held-to-maturity with a carrying value of $15.8 million and a preferred stock portfolio classified as available-for-sale with a market value of $10.6 million. The carrying value of held-to-maturity securities at November 27, 1994 approximates market and comprises the following securities:
Held-to-Maturity Carrying Value ------------------------------- Commercial Paper $ 4,220 Canadian Government Obligations 4,123 Foreign Certificates of Deposits 7,433 ------- $15,776 =======
All held-to-maturity securities mature in less than 180 days. At November 27, 1994, the available-for-sale securities have a cost of $11.1 million, a market value of $10.6 million, and gross unrealized holding losses of $0.5 million. The cost basis reflects a $1.2 million write-down for unrealized losses that are not expected to be recovered. The proceeds on sales of investments classified as available-for-sale for the year ended November 27, 1994 were $11.9 million on which $0.7 million of losses were realized. As of November 27, 1994, shareholder's equity included $0.2 million, net of taxes, in unrealized losses comprised of $0.3 million in unrealized losses on the preferred stock portfolio offset by $0.1 million in deferred gains from futures contracts used to hedge the portfolio. . ACCOUNTS RECEIVABLE Accounts receivable consist of the following:
1994 1993 ------- ------- Accounts receivable $56,619 $52,037 Contracts receivable, current portion 11,547 8,579 Less: Allowances for noncollection and system returns (6,583) (5,490) ------- ------- $61,583 $55,126 ======= =======
12 INVENTORIES Inventories consist of the following:
1994 1993 -------- -------- Purchased parts and components $12,417 $18,217 Work in process 7,724 10,733 Finished subassemblies and systems 4,544 6,747 ------- ------- $24,685 $35,697 ======= =======
CONTRACTS RECEIVABLE Contracts receivable consist of the following:
1994 1993 -------- -------- Contracts receivable $51,483 $43,362 Less: Unearned financing income (5,738) (6,475) Allowance for noncollection and system returns (2,059) (1,657) ------- ------- 43,686 35,230 Current portion (11,547) (8,579) -------- ------- $ 32,139 $26,651 ======== =======
The aggregate amount of payments receivable by the Company in fiscal years subsequent to 1994 is set forth below: 1995 - $14,029 1998 - $6,679 1996 - $12,312 1999 - $3,976 1997 - $ 8,919 Thereafter - $5,568
Customer financing for systems is collaterialized by security in the related asset. The Company maintains reserves for potential credit losses and such losses have been within management's expectations. Contracts receivable from three major customers amounted to approximately $17 million at year-end 1994. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recorded at cost and consist of the following:
1994 1993 -------- -------- Land $ 5,533 $ 5,592 Buildings and improvements 38,680 39,463 Machinery and equipment 69,922 64,950 -------- -------- 114,135 110,005 Less: Accumulated depreciation (64,480) (56,844) -------- -------- $ 49,655 $ 53,161 ======== ========
13 OTHER ASSETS Other assets consist of the following:
1994 1993 ------- ------- Capitalized software, net $ 5,852 $ 7,246 Goodwill and other 12,382 14,373 ------- ------- $18,234 $21,619 ======= =======
The decrease in capitalized software in 1994 reflects the amortization of the new MXOpen software released during late 1992. Amortization expense of capitalized software was $4.2 million, $3.4 million and $1.7 million in 1994, 1993 and 1992, respectively. The decrease in goodwill and other is mainly attributable to amortization of goodwill and patents. Goodwill is amortized on a straight-line basis over 15 years and the expected product life for software is generally estimated to be three years. ACCRUED EXPENSES Accrued expenses consist of the following:
1994 1993 ------- ------- Accrued payroll and related items $24,321 $22,333 Accrued initial service 8,903 7,059 Customer deposits 12,377 12,078 Exit restructuring costs 4,862 3,483 Other 15,223 17,641 ------- ------- $65,686 $62,594 ======= =======
LINES OF CREDIT AND DEBT As of November 27, 1994, the Company had unsecured bank line of credit agreements of $30.0 million, which provide for domestic and foreign currency borrowings, advances and guarantees, Bankers' Acceptances, and letters of credit. There was $16.7 million available in connection with these agreements at November 27, 1994. The agreements, which expire during fiscal year 1995, require the Company to adhere to certain covenants regarding working capital, indebtedness, and minimum shareholders' equity. The lines of credit of $30 million include a revolving credit agreement ($20 million) that provides for variable interest rate borrowings based on the London Interbank Offer Rate (LIBOR). Under a multicurrency credit agreement ($10 million), the Company may obtain loans at the lending bank's base rate plus 3/8%. Short-term debt comprises $4.1 million (400,000,000 Yen) borrowed against the Company's unsecured multicurrency line of credit with a bank in July 1994. The proceeds of the loan were used to fund the working capital needs of the Company's subsidiary in Japan. The loan bears interest at 2.7% per annum and is due in 1995. 14 Long-term debt consists of the following:
1994 1993 -------- --------- Long term loan $15,000 $19,000 Other borrowings 1,554 2,299 ------- ------- 16,554 21,299 Less amounts due within one year (4,387) (4,516) ------- ------- $12,167 $16,783 ======= =======
Based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the difference between the carrying amount and fair value of the loans is immaterial. The aggregate future principal payments of long-term debt are $4.4 million, $4.5 million, $4.5 million and $3.2 million in 1995, 1996, 1997, and 1998, respectively. In May 1993, the Company borrowed $20 million under a 5.35% five-year unsecured term loan agreement with a bank. Proceeds from the loan were used principally to support the Company's United States equipment lease portfolio. Interest is payable quarterly, with principal payable in equal quarterly installments of $1.0 million through June 1998. The loan agreement contains certain restrictive covenants which include the maintenance of minimum consolidated cash balances of $40 million, minimum tangible net worth, and certain financial ratios. The Company was in compliance with all covenants at year-end 1994. COMMITMENTS AND CONTINGENCIES The Company leases various facilities and equipment under noncancellable lease agreements. Rent expense under all operating leases was approximately $4.7 million, $4.4 million, and $3.9 million in 1994, 1993 and 1992, respectively. Future minimum lease payments under these noncancellable operating leases as of November 27, 1994 are approximately $3.8 million, $2.3 million, $1.6 million, $1.5 million, and $1.3 million for fiscal years 1995, 1996, 1997, 1998, and 1999, respectively, and approximately $2.9 million in total for years following 1999. At November 27, 1994, the Company was contingently liable for approximately $9.3 million relating principally to letters of credit issued to support collections. The Company is subject to legal proceedings and claims that arise in the normal course of its business. In the opinion of management, these proceedings will not have a material adverse effect on the financial position and results of operations of the Company. EXIT AND RESTRUCTURING COSTS In the fourth quarter of 1994, the Company recorded a $6.4 million charge for exit costs relating to a restructuring plan. This plan included establishment of a cross-functional team organization for Cupertino and Ireland operations as well as consolidation of some other facilities and organizations. As a result of the plan, 106 administrative, technical and management positions were eliminated. The termination benefits cost associated with the action was $5.1 million of which $1.7 million was paid out in 1994 and the cost of the facilities consolidation was $1.3 million. In 1992 the Company recorded a $9.0 million pretax charge for restructuring operations to reduce costs and improve efficiency. Provision was made for severance costs and other expenses related to a worldwide reduction in work force. 15 INTEREST INCOME AND OTHER Interest income and other consist of the following:
1994 1993 1992 -------- ------- ------- Interest income $ 7,040 $6,523 $8,117 Loss on short-term investments (1,220) - - Foreign exchange loss (133) (396) (286) ------- ------ ------ $ 5,687 $6,127 $7,831 ======= ====== ======
In 1994, the Company recorded a loss of $1.2 million relating to an unrealized loss on short-term investments that is not expected to be recovered. STOCK OPTION AND STOCK PURCHASE PLANS Under the Company's stock option plan, 5,110,240 shares of common stock have been reserved for issuance to officers and key employees. Options may be granted at prices not lower than the fair market value of the Company's common stock at the date of grant. Options generally become exercisable in four equal annual installments commencing one year from the date of grant. Options generally expire, if not exercised, within ten years from the date of grant. The stock option plan includes an automatic option grant program for the Company's non-employee directors. Such options expire 10 years from the date of grant. The stock option program also allows selected employees to elect to have a portion of their base salary reduced in return for options to purchase common stock. The option price represents the difference between the fair market value of the Company's common stock at the date of grant and the salary reduction. In 1991 and 1990, options were granted for 13,000 and 6,600 shares at option prices of $5.63 and $7.02 per share, respectively, under this program. Options under this plan are fully vested one year from date of grant and expire if not exercised within 10 years. A summary of transactions relating to options during fiscal years 1992, 1993 and 1994 is set forth below:
Options Outstanding - ------------------- (Amounts in thousands except per share data) Shares Price Per Share Amount ------- --------------- ------- December 1, 1991 2,025.7 $ 5.63-$32.44 $37,873 Granted 535.5 15.63- 22.75 9,814 Terminated (129.6) 16.25- 31.88 (2,561) Exercised (31.3) 16.25- 16.88 (528) ------- ------------- ------- November 29, 1992 2,400.3 $ 5.63-$32.44 $44,598 Granted 594.7 16.31- 19.69 11,099 Terminated (290.5) 5.63- 32.44 (5,791) Exercised (44.5) 15.63- 17.00 (749) ------- ------------- ------- November 28, 1993 2,660.0 $ 5.63-$31.13 $49,157 Granted 622.0 17.88- 21.88 11,705 Terminated (72.6) 15.63- 31.13 (1,483) Exercised (233.7) 7.02- 21.06 (3,926) ------- ------------- ------- November 27, 1994 2,975.7 $ 5.63-$29.00 $55,453 ======= ============= =======
At year end 1994 and 1993, options to purchase 1,401,532 shares and 1,003,416 shares, respectively, were exercisable at prices ranging from $5.63 to $29.00 and from $5.63 to $31.13, respectively. 16 Shares available for option grants at year end 1994 and 1993 were 1,857,922 and 2,407,345, respectively. The Company has a remaining reserve of approximately 29,000 shares of its authorized but unissued common stock for issuance under an employee stock purchase plan. The stock purchase plan covers substantially all employees of the parent company and certain subsidiaries. Common stock purchases are paid through periodic payroll deductions of up to 10% of eligible compensation. The participant's purchase price is 85% of the lower of the closing market price on the first trading day or the last trading day of the quarter in which the stock is purchased by the employee. The Company has issued 971,121 shares of its stock (including 414,768 treasury shares) under this plan as of November 27, 1994. EMPLOYEE BENEFIT PLANS The Company has a Savings and Deferred Profit Sharing Plan qualified under section 401(k) and 401(a) of the Internal Revenue Code. The Company contributes to the Plan up to 10% of consolidated pretax income before contributions under the Plan. Profit sharing expenses under this plan were $0.9 million, $0.7 million and $0.6 million in fiscal years 1994, 1993 and 1992, respectively. The Company matches up to $1,000 of each employee's contributions to the Plan, depending on length of service. Measurex's matching contributions to the Plan were $0.9 million, $0.8 million and $0.9 million in 1994, 1993 and 1992, respectively. Certain foreign employees are eligible to participate in similar profit sharing programs or local pension plans. With respect to these plans, the pension benefit obligations and plan assets were not material. Total pension expense under these foreign pension plans was $1.2 million, $1.2 million and $1.5 million for 1994, 1993 and 1992, respectively. INCOME TAXES The Company adopted FAS Statement No. 109, "Accounting for Income Taxes," as of November 29, 1993, and the cumulative effect of this change in accounting for income taxes was to increase net income by $0.5 million. Prior years' financial statements were not restated. Total income tax expense for the year ended November 27, 1994, was allocated as follows: Income from continuing operations $3,569 Goodwill, for initial recognition of acquired tax benefits (829) Shareholders' equity, for compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes (286) ------ $2,454 ======
The provision (credit) for income taxes before cumulative effect of the accounting change was as follows:
1994 1993 1992 ------- ------- ------- Current income taxes: United States $ 753 $ 386 $ 1,695 Foreign 6,265 6,059 3,838 State 434 326 395 ------- ------- ------- 7,452 6,771 5,928 ------- ------- ------- Deferred income taxes: United States (2,682) (3,862) (2,986) Foreign (1,201) 1,555 (2,889) ------- ------- ------- (3,883) (2,307) (5,875) ------- ------- ------- Extraordinary credit from utilization of foreign tax loss carryforwards -- -- 911 ------- ------- ------- Provision for income taxes $ 3,569 $ 4,464 $ 964 ======= ======= =======
17 The foreign provision for income taxes is based on foreign pretax earnings of approximately $15.5 million, $19.3 million, and $4.6 million in 1994, 1993, and 1992, respectively. In 1993 and 1992, the major components of the provision not currently payable result from:
1993 1992 -------- -------- Taxes provided on undistributed earnings of foreign subsidiaries $ 1,472 $ - Tax accounting for: Finance leases 927 749 Depreciation (537) (898) Inventory and revenue-related reserves (1,568) (773) Deferred compensation 376 137 Capitalized software (557) 818 Installment sales 857 (427) Other accrued expenses 2,868 (2,556) Repatriation of earnings from foreign subsidiaries paid out of previously provided taxes (5,277) (2,471) Unrealized foreign exchange gain (loss) (225) 118 Other (643) (572) ------- ------- $(2,307) $(5,875) ======= =======
The Company has not provided for United States income taxes on the cumulative earnings of certain foreign subsidiaries that are considered invested indefinitely outside the United States in the amount of $64.0 million at November 27, 1994. The manufacturing profits from the Company's subsidiary in the Republic of Ireland are subject to a 10% tax until the year 2010. At November 27, 1994, the Company has in various tax juridictions net operating loss carryforwards of approximately $12.8 million and tax credit carryforwards of approximately $4.8 million at current exchange rates. $7.3 million of the net operating loss carryforwards and $3.5 million of the tax credit carryforwards will expire in varying amounts between 1995 and 2001. A valuation allowance has been provided for a portion of the deferred tax assets related to these carryforwards. 18 The principal items accounting for the difference between income taxes computed at the United States statutory rate and the provision for income taxes are as follows:
1994 1993 1992 ------- ------- ------- United States statutory tax $3,112 $4,310 $ 571 Effect of: Tax credits (230) 35 33 Foreign sales corporation (354) (322) (879) Foreign operations taxed at differing rates 396 (42) 158 Losses of foreign subsidiaries not providing tax benefit - 634 2,029 Tax exempt investment income (305) (288) (268) State income taxes 288 215 230 Change in taxes due to (favorable) unfavorable settlement and/or closing of prior tax years 257 - (864) Valuation allowance 322 - - Other items 83 (78) (46) ------ ------ ------ Provision for income taxes 3,569 4,464 964 Extraordinary credit from utilization of foreign tax loss carryforwards - - (911) ------ ------ ------ Net tax expense $3,569 $4,464 $ 53 ====== ====== ======
The consolidated balance sheet included the following deferred tax assets and deferred tax liabilities at November 27, 1994: Deferred income tax assets: Inventory and revenue-related reserves $ 6,324 Accrued expenses 4,851 Other 2,072 Net operating loss and tax credit carryforwards 9,831 ------- Gross deferred tax assets $23,078 ------- Deferred income tax liabilities: Financial leases $ 3,370 Capitalized software 1,989 Depreciation 1,175 Undistributed earnings of foreign subsidiaries 4,486 Other 481 ------- Gross deferred tax liabilities 11,501 ------- Valuation allowance for deferred tax assets (8,594) ------- Net deferred tax assets $ 2,983 =======
The net change in the total valuation allowance for the year ended November 27, 1994, includes a reduction of approximately $0.8 million in the valuation allowance established at the beginning of the year for certain net operating loss carryforwards which, due to a change in circumstances, were either utilized during 1994 or are expected to be utilized. 19 TRANSACTIONS WITH AFFILIATED COMPANY In the second quarter of 1990, the Company entered into a cooperative arrangement with Beloit Corporation for integrated marketing and sales of all Measurex controls with Beloit's full line of pulp and paper machinery. Simultaneously executed, was a seven-year "standstill" agreement between Measurex and Harnischfeger Industries Inc., Beloit's parent company, whereby Harnischfeger purchased 20% of Measurex's common stock on the open market. Revenues and ending accounts receivable with Beloit for the year ending November 27, 1994 were immaterial. SUBSEQUENT EVENTS On December 29, 1994, the Company bought back two million shares of its stock, held by Harnischfeger Industries, Inc., at $21.50 per share, reducing Harnischfeger's holdings to 10%. Harnischfeger had owned 20% of the Company stock since May of 1990. On February 10, 1995, the Company entered into a $50 million Credit Agreement with a group of banks providing for an unsecured multi-year revoling credit facility. The Company will be able to borrow funds under this facility through February, 1998. This facility replaces $10 million of the lines of credit in place at November 27, 1994. BUSINESS SEGMENTS The Company operates in one principal industry segment: the design, development, manufacture, sales and service of computer-integrated manufacturing systems. The Company sells these products to the pulp and paper, plastics, metals, rubber and chemical industries. Approximately 80% of the Company's system revenue is from the pulp and paper industry in 1994, 1993 and 1992. No single customer accounted for 10% or more of revenues during 1994, 1993 or 1992. The Company's products are principally distributed and serviced through its own marketing and service organizations. Operations are conducted worldwide and are grouped into three geographic areas: United States, Europe, and Other International (primarily Canada, Asia/Pacific, and the Latin American countries). 20 The following table summarizes the geographic operations of the Company:
(Dollar amounts in millions) 1994 1993 1992 - ---------------------------- -------- ------- ------- Revenues from unaffiliated customers: United States $112.8 $ 94.5 $ 88.6 Europe 77.7 79.5 93.4 Other International 69.5 80.0 70.6 ------ ------ ------ Consolidated $260.0 $254.0 $252.6 ====== ====== ====== Earnings (loss) from operations: United States $ 3.3 $ (3.4) $ (4.0) Europe 5.5 4.7 (2.4) Other International 2.3 11.5 4.8 Corporate (6.3) (5.3) (6.2) ------ ------ ------ Consolidated $ 4.8 $ 7.5 $ (7.8) ====== ====== ====== Identifiable assets: United States $120.6 $116.6 $117.1 Europe 60.6 48.5 56.9 Other International 54.5 55.1 45.9 Corporate 84.1 98.1 103.0 ------ ------ ------ Consolidated $319.8 $318.3 $322.9 ====== ====== ======
The Company's manufacturing operations sell systems to its sales and service operations. Sales to non-U.S. subsidiaries from U.S. manufacturing operations were $41.5 million in 1994, $43.7 million in 1993 and $46.6 million in 1992. Sales to United States and European affiliates from the Canadian manufacturing operations acquired in 1991 were $20.2 million in 1994, $21.4 million in 1993 and $16.9 million in 1992. Sales to affiliates from other geographic areas increased to $5.2 million in fiscal year 1994 and were not significant in 1993 and 1992. Internal selling prices are designed to allocate manufacturing profits to manufacturing entities and sales and service profits to sales and service entities. The United States revenues from unaffiliated overseas customers in 1994, 1993 and 1992, were not significant. Corporate identifiable assets include short-term cash investments. 21 REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS, MEASUREX CORPORATION We have audited the accompanying consolidated balance sheets of Measurex Corporation as of November 27, 1994, and November 28, 1993, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three fiscal years in the period ended November 27, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the aforementioned financial statements present fairly, in all material respects, the consolidated financial position of Measurex Corporation as of November 27, 1994 and November 28, 1993, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended November 27, 1994, in conformity with generally accepted accounting principles. As discussed in the notes to the consolidated financial statements titled "income taxes," in 1994 the Company changed its method of accounting for income taxes. /S/ COOPERS & LYBRAND LLP San Jose, California December 14, 1994, except note titled "subsequent events," as to which the date is February 10, 1995. 22 SUPPLEMENTAL FINANCIAL DATA INTERIM FINANCIAL INFORMATION (UNAUDITED)
(Dollar amounts in thousands except per share data) 1994 Quarter Ended ------------------------------------- Feb. 27 May 29 Aug. 28 Nov. 27 ------- ------- ------- ------- Revenues $61,645 $62,578 $65,654 $70,102 Gross margin 22,664 22,981 23,674 25,295 Income before income tax and cumulative effect of accounting change 3,366 3,135 4,161 (1,510) Income before cumulative effect of accounting change 2,188 1,778 2,538 (921) Cumulative effect of accounting change 524 - - - Net income 2,712 1,778 2,538 (921) Net income per share .15 .10 .14 (.05) Dividends per share .11 .11 .11 .11 (Dollar amounts in thousands except per share data) 1993 Quarter Ended ------------------------------------- Feb. 28 May 30 Aug. 29 Nov. 28 ------- ------- ------- ------- Revenues $61,839 $66,141 $64,268 $61,749 Gross margin 20,009 23,678 23,607 22,474 Income before income taxes 2,713 3,344 3,604 3,018 Net income 1,736 2,174 2,343 1,962 Net income per share .10 .12 .13 .11 Dividends per share .11 .11 .11 .11
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS The Company's common shares are listed on the New York and Pacific Stock Exchanges. As of November 27, 1994, there were 1,370 shareholders of record. Dividends of $.44 per share were paid in 1994 and 1993.
1994 Price 1993 Price ----------------- ----------------- High Low High Low ------- ------- ------- ------- 1st Quarter $20 5/8 $18 1/2 $20 $17 3/8 2nd Quarter 19 3/4 17 7/8 18 7/8 16 1/8 3rd Quarter 21 1/4 17 3/8 19 7/8 17 1/8 4th Quarter 22 1/2 19 1/2 20 3/4 18
23 SELECTED FINANCIAL DATA
Six years ended November 27, 1994 (Dollar amounts in thousands except per share data) 1994 1993 1992 1991 1990 1989 - ---------------------------------------- -------- -------- -------- -------- -------- -------- REVENUES: Systems $156,294 $152,839 $148,367 $148,249 $170,619 $195,508 Service and other 103,685 101,158 104,220 105,730 95,579 89,839 - ---------------------------------------- -------- -------- -------- -------- -------- -------- Total revenues 259,979 253,997 252,587 253,979 266,198 285,347 - ---------------------------------------- -------- -------- -------- -------- -------- -------- GROSS MARGIN: Systems $ 56,217 $ 53,111 $ 49,123 $ 54,534 $ 71,712 $ 95,201 Service and other 38,397 36,657 36,406 33,312 33,400 33,206 - ---------------------------------------- -------- -------- -------- -------- -------- -------- Total gross margin 94,614 89,768 85,529 87,846 105,112 128,407 - ---------------------------------------- -------- -------- -------- -------- -------- -------- Earnings (loss) from operations before exit and restructuring costs $ 11,181 $ 7,500 $ 1,222 $ 3,247 $ 19,460 $ 37,915 Earnings (loss) from operations 4,800 7,500 (7,752) (8,448) 19,460 37,915 Income before income taxes, extraordinary credit and cumulative effect of accounting change 9,152 12,679 1,678 519 30,374 50,923 Net income 6,107 8,215 1,625 389 22,522 40,682 Net income per share .34 .46 .09 .02 1.26 2.17 Dividends per share .44 .44 .44 .44 .43 .37 System orders 160,000 151,000 156,000 127,000 168,000 189,000 System backlog 92,000 91,000 95,000 91,000 109,000 109,000 - ---------------------------------------- -------- -------- -------- -------- -------- -------- Gross margin: Systems 36.0% 34.7% 33.1% 36.8% 42.0% 48.7% Service and other 37.0% 36.2% 34.9% 31.5% 34.9% 37.0% Total gross margin 36.4% 35.3% 33.9% 34.6% 39.5% 45.0% Earnings (loss) from operations 1.8% 3.0% (3.1%) (3.3%) 7.3% 13.3% Net income 2.3% 3.2% 0.6% 0.2% 8.5% 14.3% Income tax rate 39.0% 35.2% 57.4% 25.0% 25.9% 20.1% - ---------------------------------------- -------- -------- -------- -------- -------- -------- Working capital $123,536 $137,720 $133,305 $154,744 $185,237 $186,798 Total assets 319,823 318,316 322,884 339,539 337,477 333,010 Total debt 20,617 21,299 891 5,033 5,196 5,257 Shareholders' equity 217,183 211,864 218,453 231,718 238,640 230,074 - ---------------------------------------- -------- -------- -------- -------- -------- -------- Current ratio 2.5:1 2.8:1 2.6:1 2.9:1 3.7:1 3.5:1 Return on beginning equity 2.9% 3.8% .7% .2% 9.8% 19.9% Return on beginning assets 1.9% 2.5% .5% .1% 6.8% 13.4% Book value per share $ 11.98 $ 11.87 $ 12.12 $ 12.82 $ 13.33 $ 12.51 - ---------------------------------------- -------- -------- -------- -------- -------- -------- Total product development costs $ 22,779 $ 22,871 $ 25,292 $ 26,258 $ 28,226 $ 29,970 Reimbursement from co-development programs -- -- (44) (927) (3,451) (5,105) Capitalized software costs (a) (2,787) (1,725) (4,636) (2,332) (4,535) (3,180) - ---------------------------------------- -------- -------- -------- -------- -------- -------- Product development expense $ 19,992 $ 21,146 $ 20,612 $ 22,999 $ 20,240 $ 21,685 - ---------------------------------------- -------- -------- -------- -------- -------- -------- Capital expenditures $ 6,716 $ 8,329 $ 7,781 $ 8,211 $ 15,484 $ 25,010 Number of employees 2090 2,250 2,310 2,530 2,580 2,770 Shares outstanding (thousands) 18,130 17,844 18,028 18,077 17,897 18,394 ======================================== ======== ======== ======== ======== ======== ========
(a) Computer software costs capitalized in accordance with Statement of Financial Accounting Standards No. 86. 24 EX-21 11 LISTING OF SUBSIDIARIES Exhibit 21 -- MEASUREX CORPORATION LISTING OF SUBSIDIARIES The following table sets forth the name and jurisdiction of incorporation of each subsidiary of the Registrant as of November 27, 1994. Each subsidiary is wholly owned by the Registrant or a subsidiary of the Registrant (except in certain instances for directors' qualifying shares or as noted below) and is included in the Registrant's Consolidated Financial Statements.
Subsidiary Name Incorporated In --------------- --------------- (2) Measurex Pty. Limited Australia (2) Measurex International GmbH Austria (1) Measurex Foreign Sales Corporation Barbados (2) Measurex do Brasil Controles de Processamento Ltda. Brazil (1) Measurex Systems, Inc. California (1) Measurex International Corporation California (2) Measurex Latin America California (2) Measurex Asia, Inc. California (2) Measurex Korea, Inc. California (2) Measurex Taiwan, Inc. California (4) Measurex Devron Inc. Canada (2) Measurex Inc. Canada (5) BCF Holding Oy Finland (2) Measurex Oy Finland (7) Roibox Oy Finland (2) Measurex S.A.R.L. France (2) Measurex GmbH Germany (2) Measurex Italia S.R.L. Italy (1) Measurex Japan Limited Japan (6) Measurex S.A. de C.V. Mexico (2) Measurex B.V. The Netherlands (2) Measurex Systems N.Z. Limited New Zealand (2) Measurex Norway A.S. Norway (2) Measurex International Financial, Inc. Panama (2) Measurex (Portugal) Sistemas De Controle, Lda Portugal (2) Measurex (Ireland) Limited Republic of Ireland (2) Measurex Service Company Limited Republic of Ireland (3) Measurex Ireland Finance Republic of Ireland (2) MAP Results Pte. Ltd. Singapore (2) Measurex Africa (Pty) Limited South Africa (2) Measurex Sweden A.B. Sweden (2) Measurex, A.G. (Switzerland) Switzerland (2) Measurex International Systems Limited United Kingdom (2) Measurex De Venezuela, C.A. Venezuela
1 MEASUREX CORPORATION LISTING OF SUBSIDIARIES (CONTINUED) NOTES: (1) Subsidiary of Measurex Corporation (2) Subsidiary of Measurex International Corporation (3) Subsidiary of Measurex (Ireland) Limited (4) Subsidiary of Measurex Inc. (5) Subsidiary of Measurex Oy (6) 99.5% owned by Measurex Latin America, 0.5% owned by Measurex International Corporation (7) 98.4% owned by Measurex Oy and BCF Holding Oy, 1.6% owned by unrelated parties 2 EX-23 12 CONSENT Exhibit 23 -- CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Measurex Corporation and Subsidiaries on Form S-8 (File Nos. 33-65762, 33-22589, 2-76707 and 2-67736) of our report dated December 14, 1994 (except for the note titled "subsequent events" as to which the date is February 10, 1995) on our audits of the consolidated financial statements of Measurex Corporation and Subsidiaries as of November 27, 1994 and November 28, 1993 and for each of the three fiscal years in the period ended November 27, 1994 appearing on page 30 of Measurex Corporation's 1994 Annual Report to Shareholders and incorporated by reference in this Annual Report on Form 10-K and our report dated December 14, 1994 (except for the note titled "subsequent events" as to which the date is February 10, 1995) on the financial statement schedules of Measurex Corporation and Subsidiaries as of November 27, 1994 and November 28, 1993 and for each of the three fiscal years in the period ended November 27, 1994, which report is included in this Annual Report on Form 10-K. /S/ COOPERS & LYBRAND L.L.P. ---------------------------- COOPERS & LYBRAND L.L.P. San Jose, California February 24, 1995 1 EX-27 13 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheets at November 27, 1994 and the Consolidated Statements of Income and Consolidated Statements of Cash Flow for the twelve months ended November 27, 1994, and is qualified in its entirety by reference to such financial statements. 1,000 12-MOS NOV-27-1994 NOV-29-1993 NOV-27-1994 82,254 27,030 61,583 6,583 24,685 207,509 49,655 64,480 319,823 83,973 12,167 190 0 0 216,993 319,823 156,294 259,979 100,077 248,798 4,352 0 1,335 9,152 3,569 5,583 0 0 524 6,107 .34 .34 Amount excludes exit and restructuring costs of approximately $6.381 million.
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